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RE: SECOND QUARTER
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terrancekeenan
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July 14, 2016 - 5:18 pm
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RE:RE:Second Quarter

Mangazeya`s gold production in 2015 was:

Q1 -  zero ounces
Q2 -  5,054 
Q3 - 15,954
Q4 - 12,900

Total 2015 = 33,919 ounces of gold production

The 2016 target is excess of 30,000 (my guess is they will hit 2015 levels again - perhaps go beyond, if we have a very successful second half).  They are also advancing a new area for production at Savkino, called Klebniy.  That is probably for production in future years, to continue producing at current (34,000 oz) level (I don`t think it is intented to increase annual production levels).

Savkino is a heap leach processing operation.  Heap leach processing is far slower than conventional milling operations.  With heap leach, the ore is stacked on pads and mineral separating fluids are applied.  It is a slow process that separates the minerals slowly over time - a bit at a time.  The process could take a good 4 or 5 (or more months) to get to a desired, say, 60% recovery. 

The company stacked a huge amount of ore onto the pads in Q1, 2016.  However, the ore grade was substantially lower versus Q1 2015 due to the temporary flooding in part of the pit.  They lower grade will likely offset the extra stacked ore in Q1.

Mangazeya produced 1,900 ounces of gold in Q1, 2016, but that was from leftover ore stacked in 2015.

We should expect a similar production number in Q2, 2016 as posted in Q2, 2015.  Perhaps something in the 3,000 to 7,000 oz range.

Q3 and Q4 are our big production months.  The gold separating solutions should become extremely pregnant starting in Q3 - with the pregnant pond pull to the rim.  I think they increased the absorption unit capacity in 2015 to process more pregnant volume in a short period of time - I think this also contributed to our success in 2015 (it allows us to produce big numbers in Q3 and Q4).

The US gold price is $1,340 per oz.  The Cdn price is $1,731 - a stone throw away from the all time Cdn $ gold price.  The Russian price is 85,600 rubles - a very good price.  This is a good time to be a gold producer.  The price could really take off in the second half of 2016 (in the meat of Mangazeya`s production season) - if not 2016 then 2017, but I simply cannot see it being put off until 2017 as there are way too many big events happening in the second half of 2016.

As a side note, I think Mangazeya relaunched its small scale placer production program in Q1, 2016 at Zolin-Arkiinsk (extremely small scale though).  As such, we could get a few extra ounces on the side.  They have teams (and I assume camps) over there to perform aggressive drilling at Zolin-Arkiinsk.  They could run the placer production program out of the same facilities.  The company has a placer mining permit for Zolin-Arkiisk.  I don`t think the permit allows for bedrock mining (unless there is a one time bulk tonnage component for bedrock), but my guess is that it allows them to mine and process as much placer ore as they like (I think it is a full permit for placer).  With the new environment of higher gold prices, profits from any placer production at Zolin-Arkiinsk can go towards subsidizing the aggressive drill program, especially if the gold prices really take off in the second half of 2016.

 

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