Important technical breakouts are beginning to occur in some our long term featured Gold Stock Trades situations as investors are beginning to bid on top quality junior miners and the ETF's which track them. The GDXJ is breaking through the critical 200 Day Moving Average however it may be short term overbought. I would like to see a consolidation at the 200 Day Moving Average before attempting to make a new six month high breakout at $23.50.
Keep a close eye on copper. Freeport's Grasberg Mine in Indonesia produces 2% of world supply. The Indonesian Government is giving them a hard time to renew their license. Indonesia may be playing hard ball to acquire some of the asset. This could put some supply pressure on the copper price.
Watch Excelsior Mining (MIN.V or EXMGF) which just released an updated Prefeasibility Study that demonstrated a post-tax NPV of $829 million USD and reduced Initial Capital Costs 84% on the Gunnison Copper Project in Southeastern Arizona. Some of the most exciting numbers that stood out to me was the all in cost of $1.24/lb. This means that even if copper stays at this depressed $2 per pound level Excelsior could be profitable. The mine life is 27 years so copper should average higher over the next 5-10 years especially as the higher cost players shut down their mines.
The Updated Pre Feasibility Study shows the strategy of acquiring the neighboring Johnson Camp Mine with a Solvent Extraction Processing Facility which reduces the upfront capital costs significantly. The Gunnison Project stands out as one the most economically viable projects in North America with a post tax IRR of 26% at $2 per pound copper.
|FINANCIAL ANALYSIS SUMMARY|
|Initial Capital Payback (years)||1.8||2.6|
|NPV (million $) @7.5%||1,204||829|
|Ratio of Initial Capital to NPV7.5||0.038||0.06|
|Direct Operating Costs||1,505||0.70|
|Royalties and Other Production Costs||402||0.18|
|Initial Capital Costs||45.9||0.02|
|Sustaining Capital Costs||735||0.34|
|All-in Cost (all capital + operating)||2,688||1.24|
Another critical piece of information which was released with the PFS today is a permitting and timeline update with the recently purchased Johnson Camp. Excelsior is expecting draft permits in early 2017, operating permits by mid 2017 and the commencement of production by early 2018. The Johnson Camp acquisition cuts down the timeline significantly.
Stephen Twyerould added, "Based upon what we believe to be one of the most environmentally friendly copper mining projects in the world today, we look forward to working with the State and Federal regulatory agencies, stakeholders and local communities to deliver long needed economic growth for southeastern Arizona.”
Excelsior Mining (MIN.V or EXMGF) is breaking out of a six month downtrend on the news today on increasing volume. I expect as more investors become aware of the highly attractive economics the stock price should break above 200 Day Moving Average. Remember over 40% of the shares are institutional hands so if this company gains US retail interest it could be rerated higher.
Excelsior's Gunnison Project could be a game changer economically for the people of Arizona. Over 800 jobs could be created and close to $320 million added to Arizona revenue. I believe this project could make it to production by 2018 and be an economic boom for Arizona. The in situ mining method has many benefits with less enviromental issues.
Disclosure: I own Excelsior shares and the company is a website sponsor. I would benefit if share price rises so there is a conflict of interest. Please do your own due diligence as mining development is risky.
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For informational purposes only. This is not investment advice. May contain forward looking statements.