Yesterday, Marc Davis published a remarkable article about Golden Dawn Minerals Inc., in which he assessed the company´s recent acquisition of Kettle Resources along with the significance of taking over the past producing mines and exploration targets, becoming the dominant landholder in the historic Greenwood Mining District.
One may think that this acquisition will only have a longer termed effect on Golden Dawn´s future. However, I suspect that it has made the company even more attractive for institutional investors. The time (and share price) appears favorable.
As drilling has started at the May Mac and Amigo Mines a few weeks ago, I anticipate the release of drill results any time. The next weeks should provide an increased newsflow. The processing of a first bulk sample from May Mac is scheduled for early 2017. Assuming average grades of about 6 g/t gold, a 10´000 t bulk sample may yield up to 1´900 ounces of gold, valued at $2.4 million USD at current gold prices. The generation of a first cash flow will be a significant milestone.
As Marc Davis repeatedly highlighted, the Lexington mine is already permitted, i.e. no regulatory roadblocks stand in the way. And virtually all the necessary mining infrastructure is already in place to service all 3 deposits (Lexington, Golden Crown and May Mac) and any additional mining operations in the district. In excess of $40 million CAD had been invested into the project by previous operators, yet the low gold prices in 2008 (at about $750 USD/oz) put a spoke in its wheel. With projected all-in production costs of only $820 USD/oz for the Lexington Mine and gold prices trading much higher today, a great opportunity is provided to Golden Dawn now to demonstrate the profitability of the mine. Institutional investors typically get in much earlier than that, especially when the resource base is poised to get expanded significantly thanks to excellent "blue sky" exploration potential.
Golden Dawn: B.C.´s next powerhouse gold miner?
By Marc Davis, Mining.com, October 19, 2016
Stealth is often a winning strategy in the high-stakes world of high tech innovation.
But how advantageous is such craftiness in the gold mining world?
For a junior gold mining company manoeuvring to establish a competitive edge, it is sometimes the surest way to unlocking the secret to success.
Vancouver-based Golden Dawn Minerals (TSX.V: GOM, Frankfurt: 3G8A) is a good example.
The company just took the next major step towards its ultimate goal of amassing over a million ounces of high-grade gold in an historic gold district in southern British Columbia.
This came by way of the milestone announcement: Golden Dawn is in the process of virtually tripling its land holdings in the gold-rich Greenwood gold fields near the city of Grand Forks.
Most significantly, this pending new acquisition of an additional 10,400 hectares to its project portfolio in the Greenwood gold fields includes several small historic mines and undeveloped deposits. (These new mineral claims, which are being acquired from Nadina Resources, can be seen in purple shading below.)
In so doing, Golden Dawn can successfully build upon its existing gold inventory, which consists of three small past-producing gold mines — namely Lexington, May Mac and Golden Crown.
This is where the company is initiating pilot-scale production as early as Q1 of next year, beginning with a 10,000-tonne bulk sample from certain high-grade veins at the May Mac mine.
Following that, plans are underway to re-commission the Lexington mine in Q2 of 2017. Most importantly, the mine is already permitted, meaning that no regulatory roadblocks stand in its way.
It’s also important to note that virtually all the necessary mining infrastructure is already in-place to service all three deposits and any additional mining operations in the area. This includes a modern mill and a tailings storage facility. These mines also benefit from ready access to a power grid, a water supply and a nearby highway.
All told, a minimum 500,000 ounces of high-grade gold and “gold equivalent” (the combined value of the gold, silver and copper) has been targeted at Lexington, May Mac and Golden Crown. The company hopes to achieve this goal by way of exploratory drilling and in-fill drilling, especially in known high-grade gold zones.
The Phoenix Mine: A New Jewel in the Crown?
Among Golden Dawn’s new assets are several historic gold mines. They include the past-producing Phoenix mine, which yielded in excess of one million ounces of gold, nearly 6.5 million ounces of silver and 518,523,951 ounces of copper before the mine closed in 1978.
Now here’s where things get really interesting: Just south of the border, the Greenwood gold fields also encompasses a number of high-grade gold mines in Washington State. Collectively, they have produced in excess of 7.5 million ounces of gold. This includes several mines that were discovered as recently as the 1990s in what is known as the Boundary District.
Much of this gold production — particularly in the Republic and Rossland localities — comes from high-grade epithermal vein systems with “bonanza” grades averaging at least 16 grams per tonne (g/t).
These mines have similar geological characteristics to many well-mineralized exploration prospects among Golden Dawn’s new land holdings. Yet the fact that gold in the Boundary District is structurally-controlled by fault zones has only been recognized by geologists in recent years.
The solving of this geological puzzle now empowers Golden Dawn to apply the same proven geological model to finding more gold in previously under-explored areas of the Greenwood gold fields.
In particular, none of the past exploration at the Phoenix mine site and surrounding property had targeted a structurally-controlled style of mineralization. This helps explain the limited success of the mine’s past operators.
Yet untapped vein “shoots” with bonanza grades as high as 55 g/t (virtually two ounces per tonne) are known to still exist. However, many more may yet be waiting to be discovered.
This is why Golden Dawn intends to make the Phoenix property a top priority with a view to proving up additional high-grade ounces. With this in mind, the prospective re-commissioning of this mine represents a rich vein of opportunity for Golden Dawn.
Additionally, the Phoenix mine acquisition comes with a sizeable tailings inventory that can be reprocessed at Golden Dawn’s proximal mill to recover residual gold and copper resources.
On-Track for Near-Term, Low-Cost Production
Once all three of Golden Dawn’s three in-development mines are up-and-running, this will also allow the company to benefit from cost-cutting economies of scale.
Furthermore, the prospect of bringing additional mines and deposits on-stream at Golden Dawn’s significantly expanded land holdings will lower overall mining costs even more and further benefit the company’s balance sheet.
Independent engineering studies already suggest a profitable business model is in the offing. For instance, the studies demonstrate that gold can be produced at the Lexington mine with a very enviable operating margin of up to US $500/oz, based on current gold prices.
In fact, the gold can be mined, processed and shipped to market for as little as US $820/oz in “all-in sustaining costs” (which includes all other corporate operating expenditures, as well as royalties).
At the Lexington mine, alone, the projected payback on the capital expenditures (start-up costs) is a little less than two years, which is fast for any business, and especially mining.
Golden Dawn has an increasingly attractive risk/reward profile that is underpinned by the pending eventuality of meaningful near-term gold production as early as Q2 of next year.
Most importantly, the Lexington mine is already permitted, meaning that no regulatory roadblocks stand in the way of it becoming a turnkey-solution money-maker.
Let’s not forget that Golden Dawn is also working towards commercializing the nearby past-producing May Mac and Golden Crown mines next year, too. Hence, the advent of steady cash flow from three small mines and eventually solid earnings should build meaningful value into the company’s share price.
At the same time, the opportunity to breathe new life into the prolific, high-grade Phoenix gold mine and several other smaller proximal mines offers plenty of so-called “blue sky” potential. So too does the prospect of discovering other structurally-controlled, high-grade gold deposits.
By operating stealthily, Golden Dawn is consolidating its grip on the richly-mineralized, yet under-explored Greenwood gold fields — which is in one of the world’s safest mining jurisdictions.
The company’s growing stable of mines also benefits from ready access to a power grid, a water supply and a nearby highway. They are also close to the city of Greenwood, where a skilled labour force and mining supplies can be easily sourced.
All of these key dynamics demonstrate how Golden Dawn has systematically de-risked its gold assets while on an expedited timeline to relatively low-cost gold production. And the more past-producing mines that Golden Dawn revitalizes, the more cost-cutting synergies can be achieved to further strengthen the company’s bottom line.
Simply stated, Golden Dawn is a success story in-the-making. And patient investors should be well-rewarded as it transitions from a cash-strapped explorer to a near-term gold producer on an expedited timeline to steady cash flow and probable profitability.
Click on below charts to view 15 min. delayed version:
Golden Dawn Minerals Inc.
Suite 900 - 525 Seymour Street
Vancouver, B.C. V6B 3H7 Canada
Phone: +1 604 221 8936
Shares Issued & Outstanding: 87‘272‘907
Canadian Symbol (TSX.V): GOM
Current Price: $0.26 CAD (10/19/2016)
Market Capitalization: $23 million CAD
German Symbol / WKN (Frankfurt): 3G8A / A1XBWD
Current Price: €0.17 EUR (10/20/2016)
Market Capitalization: €15 million EUR
Golden Dawn acquires several major past producing mines and becomes largest land holder in the Greenwood District next to Kinross
Report #6 (October 18, 2016)
Today, Golden Dawn Minerals Inc. announced the 100% acquisition of Kettle River Resources Ltd. (“KRR”), which makes Golden Dawn the owner of most historic mines and deposits in British Columbia’s historic Greenwood Mining District.
Golden Dawn has recognized the opportunity for renewed exploration activities to add resources and to consolidate the entire district. Just at the right moment, management took advantage of the gold price pullback and has acquired KRR’s mines and land positions to add more value to the company and its shareholders.
KRR discovered a high-grade silver zone with up to 1’044 g/t silver over 6.2 m and a near-by high-grade gold zone with 30.2 g/t gold over 7.3 m and 9.8 g/t gold over 9.8 m. Prior to that, KRR discovered another deposit and delineated a (historic) resource averaging 8.6 g/t gold. These 3 separate zones/deposits alone are projected to become additional sources for feeding Golden Dawn’s Greenwood Mill.
Today’s announced acquisitions add significant mineral rights and upside potential to the Golden Dawn’s 100% owned May Mac, Lexington and Golden Crown Mines, all within a 15 km radius of its 200/440 t/d Greenwood Mill. In early September, Bob Moriarty hit the nail on the head when assessing the value of Golden Dawn’s modern processing facility, which is currently being reactivated to start production in early 2017:
“The increase in the price of silver and gold has made several other small-scale mines in the Greenwood district economically viable and the company may do toll milling or simply buy out the owners.”
Today’s acquired property package covers 10’400 hectares and includes several significant historic mines, deposits and exploration targets that have already demonstrated, by historic exploration and production, great potential for resources to be defined and added to the resource inventory of Golden Dawn.
• In 1995-1996, Kettle River discovered high-grade gold. Results of chip samples across the zone included 30.2 g/t gold over 7.3 m and 9.8 g/t gold over 10 m.
• The Minnie Moore Showing was discovered in 2006. Trenching in 2007 showed 1’044 g/t silver over 6.2 m, 432 g/t silver over 5.8 m and 414 g/t silver over 8.5 m.
• Discovered by Kettle River in a 1983 drilling program.
• Historic resource estimate of 50’000-100’000 t averaging 8.6 g/t gold. Grades are typically in the order of 8.5 g/t gold for the massive sulfide mineralization and about 10 g/t gold for the footwall style mineralization.
• Previously explored by Golden Dawn in 2011-2012, resulting in an inferred resource of 24.5 million t averaging 0.53 g/t gold, inclusive of the contiguous Wild Rose Property.
• The historic Phoenix Mine (including production from the Snowshoe, Brooklyn-Idaho and Stemwinder Mines) was active between 1900-1919 and 1956-1978, with production totaling over 1 million ounces of gold at grades of about 1.1 g/t gold, 18 million ounces of silver and 575 million pounds of copper at grades of about 0.9% copper.
• After mine closure (due to low copper prices and a shortage of coal for the smelter), the property was purchased by Noranda in 1979 and later by Kettle River.
• Great exploration potential to discover the high-grade source of mineralization below the underground mine workings. The geological origin of the copper-gold deposits at Phoenix is traditionally thought to be replacement or skarn-type deposits formed by interaction between mineralized fluids and Brooklyn limestone unit. However, the source of the fluids has not been discovered and it is generally assumed that granitic rocks under the mine area produced the mineralizing solutions. In addition to excellent potential for discovery of new replacement type deposits, the inferred source intrusions are a high priority exploration target for porphyry copper-gold deposits.
• 3 separate tailings sites situated on 2 claim blocks covering a total area of 413 hectares.
• Historical production records indicate that a total of approximately 13.2 million t of tailings were produced during the operation.
• From 1959-1967, the Tremblay Tailings consist of 4.19 million t of tailings, grading 0.15% copper, 0.38 g/t gold and 3.8 g/t silver.
• From 1967-1976, 7.33 million t of tailings with an average grade of 0.08% copper, 0.31 g/t gold and 3.1 g/t silver were discharged to the Twin Creek site.
• In the final years of operation, tailings were discharged into the open pit, which is estimated to contain 1.64 million t of tailings grading 0.09% copper, 0.17 g/t gold and 2.23 g/t silver.
• The results of metallurgical studies on material from 2 holes drilled into tailings indicate that re-grinding and cleaner flotation would produce a concentrate grading of approximately 18% copper and 207 g/t gold. Although very encouraging, considerably more information is required to assess the tailings resource and economic viability of tailings re-processing.
Bottom-line: As Bob Moriarty recently concluded in an article on Golden Dawn:
“If management executes their plan as well as they have over the last six month, investors have a nice alternative to buy into a small but profitable gold mining operation in the safest of jurisdictions. Don’t be confused by the small resource, this was a major gold district in Canada and Golden Dawn has the only mill. That puts them in the catbird’s seat.”
Recent pictures from the past producing May Mac and Amigo Mines, where surface and underground drilling have started and are expected to be completed by year’s end. Until then, a strong newsflow reporting drilling results is anticipated, besides news about the reactivation of the Greenwood Mill processing facility and dewatering the Lexington-Grenoble Mine.
Bulk sampling and test mining at May Mac is said to start in the first quarter of 2017 (assuming that a 10’000 t bulk sample averages 6 g/t gold, some 1’900 oz of gold worth $2.4 million USD could be produced with gold at $1’250 USD/oz, putting Golden Dawn into a first cashflow position).
Recent picture of surface drilling at the historic Amigo Mine (near May Mac):
Greenwood Project Update Video (click on image or here to view):
The Greenwood Mill was built and commissioned in 2008 and is in excellent shape:
Rougher and First Cleaner Float Cells: Golden Dawn‘s modern floatation circuit can produce gold doré bars to be sold directly to smelters. The facility was in operation only for a short period of time in 2008 and put on care and maintenance due to low gold prices of about $750 USD/oz (June 2016 PEA indicated all-in production costs of $820 USD/oz):
Conveyor Belts at the Greenwood Mill in excellent condition:
Primary ball mill:
Larox pressure filter for reagents:
Report #5: “Golden Dawn moving rapidly toward renewed operation“
Report #4: “Starting Shot for the May Mac Mine“
Report #3: “Ascend from explorer to producer secured: A Just-in-Time success story par excellence “
Report #2: “Golden Dawn secures funding to go into gold production in BC “
Report #1: “Perfect timing to go into gold production in British Columbia“
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.