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 [email protected]% 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.
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.
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.
Dundee Capital Markets, Rye Patch Gold Corp. Research Report, Aug. 30, 2016
Research Analyst Certification: Each Research Analyst involved in the preparation of this research report hereby certifies that: (1) the views and recommendations expressed herein accurately reflect his/her personal views about any and all of the securities or issuers that are the subject matter of this research report; and (2) his/her compensation is not and will not be directly related to the specific recommendations or views expressed by the Research Analyst in this research report. The Research Analyst involved in the preparation of this research report does not have authority whatsoever (actual, implied or apparent) to act on behalf of any issuer mentioned in this research report.
Dundee Capital Markets has written procedures designed to identify and manage potential conflicts of interest that arise in connection with its research and other businesses. The compensation of each Research Analyst/Associate involved in the preparation of this research report is based competitively upon several criteria, including performance assessment criteria based on quality of research. The Research Analyst compensation pool includes revenues from several sources, including sales, trading and investment banking. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. Dundee Capital Markets generally restricts any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers.