Rye Patch Gold Corp. (RPM:TSX.V; RPMGF:OTCQX) announced the construction start in an Aug. 29 press release. Since completing the Florida Canyon mine purchase on July 29, the company states it has "crushed the under-liner material for the South Heap Leach facility; prepared the primary crusher for the move from the Standard Gold mine located 6 kilometres to the south to its new home adjacent to the South Heap Leach facility; completed maintenance on the mining fleet; and is now breaking ground for the ponds and pad of the South Heap Leach facility."
"We believe RPM offers a compelling value creation opportunity over the next 6 to 12 months as they initiate production and join the junior producer ranks." Stewart wrote in an Aug. 30 research report. "Looking further out, we see excellent potential for the company to extend the mine life and expand the operation to over 100K oz/a within the next three to four years."
According to the Rye Patch release, the fully permitted Florida Canyon mine "has been in continuous production since 1986." The company goes on to state, "[a] total of 63.81Mtons (58Mtonnes) of ore is planned to be mined over an 8-year period. An estimated average recovery of 71.1% would yield 602,000 ounces of gold over the life of mine."
In addition, the company "expects Initial production from the South Heap Leach facility to occur in the fourth quarter of 2016 and anticipates achieving commercial production from the new leach pad by the second quarter of 2017."
According to Stewart, Dundee's model "suggests Florida Canyon will produce 67K oz/a over a 12 year life at total cash costs of ~US$900/oz and AISC of US$1,020/oz. . .Based on our gold price assumption of US$1,350/oz this generates an after-tax NPV@5% of $117MM and IRR of 59%."
Rye Patch's release also states that, following the Florida Canyon restart, the company "intends to advance its other nearby resource projects as well as drill oxide targets at the mine and along the mine trend between Florida Canyon and the Standard Gold mine (approximately 10 kms). . .From an operational viewpoint, substantial synergies exist with Florida Canyon and the nearby Lincoln Hill and Wilco resource projects."
The possibilities offered by other Rye Patch projects in the area are not lost on Dundee. "We also point out the potential to increase gold production to over 100K oz/a by developing the satellite Lincoln Hill deposit, located 30 miles southwest of Florida Canyon," Stewart wrote in his report.
Read what other experts are saying about:
Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC. Tracy Salcedo provides services to Streetwise Reports as an independent contractor. She owns, or her family owns, shares of the following companies mentioned in this article: None.
2) Rye Patch Gold Corp. is a sponsor of Streetwise Reports. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.
Additional disclosures about the sources cited in this article
