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Minera Alamos – Recapping The Robust PEA Economics For The Cerro De Oro Gold Project

Doug Ramshaw, President and CEO of Minera Alamos (TSX.V:MAI – OTCQX:MAIFF), joins us to review the PEA at their key development Cerro De Oro gold project in Zacatecas, Mexico.   We start off by recapping the robust economics:

 

  • LOM All-In Sustaining Cost (AISC) of $873/oz — averaging $763/oz in Years 1 through 4.
  • After-Tax NPV at 5% of $150.5M and IRR of 111%.
  • Average annual gold production approaching 60,000oz (~60,000oz to 70,000oz in Years 1 through 4).
  • 8.2 year mine life based on initial mineable total of 59 Mt of mineralization
  • – Pre-production capital costs of $28.1M (includes 30% contingency).
  • Payback period of 11 months.

 

The company is still advancing permitting, engineering, metallurgical work, geological, and other geotechnical work to continue to de-risk the Cerro de Oro Gold Project as it moves down the pathway into production as the Company’s second operating gold mine next year.

 

We discuss the growth-oriented production profile where Santana will be able to  grow from 30k ounces per year in gold production up to over 40k ounces, and where  Cerro De Oro is projected to produce 60k-65k ounces of gold per year taking the company up to a 100,000+ ounces per annum mid-tier gold producer.  After that the 3rd Project, La Fortuna,  is projected to produce about 50k ounce of gold per year taking things up to about 150,000 ounces per year production in just the next few years.   In addition to all the production growth on tap over the next few years, the company also has is continuing to explore and expand on all projects and Doug highlights how there is management upside expectation to continue to grow resources at all 3 Projects, funded by organic revenue growth.

 

We wrapped up with Doug outlining the general plan for financing the Cerro de Oro project into production, and that with the modest $28 million capex, and about $13 million already in house at present, that it’s likely going to be something like a $20 million debt facility, slated to be paid right back in about 11 months, based on the economics in the PEA.

 

Please email us with any follow up questions for Doug regarding Minera Alamos. Our email addresses are Fleck@kereport.com and Shad@kereport.com.

 

Click here to visit the Minera Alamos website and read over the recent news.

Discussion
18 Comments
    Oct 19, 2022 19:01 PM

    We talk often about finding the “holy grail” companies…. ie. companies which combine a substantial growth in gold production over the next few years, and also still have solid exploration upside… In my personal opinion, (MAI) Minera Alamos is a great example of one of these growth-oriented companies, with a solid trajectory planned for the next few years.

    They are going to be growing production from 30k-40K at Santana, to adding another 60K-65K at Cerro de Oro, then adding another 50K at La Fortuna… So in a few years that will be ~ 150K of annual production from 3 mines built and grown by a team that’s done it before.

    In addition, at each mine and project, the company believes there is still big exploration upside to expand and increase resources, and instead of burning through money like most pre-revenue drill-plays, they’ll be exploring using their revenues from organic growth.

    >Note: I’m biased as a shareholder of MAI, and as a fan of Doug’s transparency and candid honesty as one of the good guys in this industry, so not investment advice, but just sharing my thoughts. However, even a person skeptical of the perpetual disappointments in the mining industry has to admit that is a solid plan if they can execute on it as they’ve shown they’ve done at each step of the way.

      Oct 19, 2022 19:58 PM

      To this same point about growth oriented gold producers, 6ix is hosting a webinar tomorrow with 4 peer companies – Orezone, Karora Resources, Minera Alamos, and Steppe Gold. (of which I have positions in all 4 personally). If only they’d add I-80 Gold and Mako Mining then they’d have a half dozen of the better growth stories from the smaller to mid-tier gold producers.

      __________________________________________________________________________________________________________

      From First To Last Pour: The Lifecycle Of Gold Producers

      “Join Orezone Gold, Karora Resources, Steppe Gold and Minera Alamos as they discuss the journey of gold mining companies, including challenges and opportunities, from the late development stage to the ramp-up of gold production.”

      https://6ix.com/event/from-construction-to-last-pour-the-life-cycle-of-gold-producers/

        Oct 20, 2022 20:46 AM

        Still like Orezone but as I said I sold out of my warrants as they expire in January and the short term volatility with the political turmoil made it tough to hold. Hope to get back in when things are more settled. Still see it as takeover target.

        For the most part my portfolio has been spinning it’s wheels more or less for the past month or so…..

          Oct 20, 2022 20:01 AM

          Yeah, I was tempted to reduce down further my position in Orezone since they have moved into production and sometimes companies struggle the first year, but I elected to just hold my remaining core position for a sentiment boost in the PMs next year, and in case a larger company like Endeavour Mining or one of the other big boys comes in to take them over. So far I’ve been impressed with their team continuing to hit milestones on time as they’ve guided from explorer to developer and now to producer, so fingers crossed that they can keep doing the same thing on this next chapter of generating revenues as they pull the yellow metal out of the ground. 🙂

    Oct 19, 2022 19:48 PM

    The madness in the conventional stock market is over, the only thing that keeps it alive is The Federal Reserve buying up stocks on the open market through its intermediary’s The Central Banks. The Fed can’t stop speculation, it is a total Ponzi scheme that has kept the system from crashing. Stocks are rising and falling uncertainly but no general liquidation has taken place. The Reserve authorities can’t stop speculation, they can’t even guide it, the system is out of control.

    The crash that is coming is looking for a place to happen, The Fed is beaten. DT

      Oct 19, 2022 19:47 PM

      Keep the dollar up and algos running….

        Oct 19, 2022 19:47 PM

        Yep, that has been the theme in 2022 for sure.

          Oct 20, 2022 20:32 AM

          The Financial Media Goes Gaga For The Greenback

          Jesse Felder – The Felder Report (10/19/2022)

          “Recently, we saw not only one but two magazine cover indicators trigger for the dollar. First, it was BusinessWeek proclaiming it ‘unstoppable’ with an image of a dollar sign blasting through a variety of other currency symbols. Then Barron’s followed up with it’s own cover story on the ‘superstrong’ dollar featuring a musclebound George Washington.”

          “Normally, one cover story like this would be a loud enough signal, pointing to the fact that bullish sentiment had reached an extreme, but the two together are nearly deafening. And if the trend in the dollar is poised to reverse, then it has important implications for asset prices, inflation and the economy.”

          https://thefelderreport.com/2022/10/19/the-financial-media-goes-gaga-for-the-greenback/

    Oct 19, 2022 19:15 PM

    Thanks for that great interview. Sounds like a company that has their stuff together.

      Oct 19, 2022 19:46 PM

      Thanks Lakedweller2. In my personal opinion Minera Alamos is a very well run company, with a solid team, quality and profitable assets (despite the 3 projects being individually on the smaller side), and as a small Jr producer with 1 mine Santana in production — there is a clear path to bring Cerro de Oro into production next year, and then La Fortuna into production as mine #3…. graduating them up to 150,000 ounces of gold production per year at that point and a mid-tier producer status.

      I accumulated my position in Minera Alamos from 2016-2019, trading around the core position and then was thrilled to see it really take off in 2020. Unlike most gold juniors it’s done a better job of holding onto it’s value the last 2 years. One contributing factor was that it was in it’s “golden runway” phase from 2020-2021 as a developer that moved into production the end of last year, and has held up better in 2022 than many of it’s peers. It’s similar to Orezone in that respect, based on where it was on the Lassonde curve from 2020 into 2022. Both of them have mostly been holds for me these last 2 years with a little window dressing trading for adding on dips, and trimming on rips.

    Oct 19, 2022 19:36 PM

    Another unrecognized bump on a log

      Oct 19, 2022 19:52 PM

      There is a good core group of Minera Alamos shareholders that have stuck with the company the last 2 years, as noted above, but yes, overall MAI is still pretty unrecognized with most PM investors, and many don’t even realize that they’ve already graduated into a growth-oriented producer at this point.

      By the middle of next year in 2023, when Cerro de Oro is under construction, my hunch is that the prospect of mine #2 coming online and the production profile more than doubling to over 100,000 ounces of annual production after that (in 2024) should get Minera Alamos a bit more recognition and a rerating higher. After the big run up in 2020, things have channeled sideways to down in MAI, and it has been somewhat more boring than other stocks, but in a corrective period, sometimes boring is good and means less selling pressure.

    Oct 20, 2022 20:57 AM

    The Key To Being A Great Speculator: Position Sizing

    by @Goldfinger on 18 Oct 2022

    “Too often novice investors in micro-cap stocks take positions that are far too big for the volatility that these stocks can experience. The end result is usually these positions being liquidated after big losses.”

    “Most investors do not have the risk tolerance for the junior mining sector. While it may seem like a great idea to own these stocks when they are rising during a bull market phase, they can also experience very large declines and go through periods of being relatively illiquid during bear market phases.”

    “Looking back, we may regret not holding a larger position in a stock that has become a big winner. But hindsight is 20/20, and we should not fool ourselves by making things seem more clear than they actually were in the moment we took a position.”

    “If one is ever debating on how large to size a new position, I invite you to err on the side of caution and choose a smaller position size. You can always buy more later if/when your thesis is getting stronger based upon evidence.”

    https://ceo.ca/@goldfinger/the-key-to-being-a-great-speculator-position-sizing

      BDC
      Oct 20, 2022 20:36 AM

      One idea to consider is the $2 Window.
      You win, or the ‘horse’ dies.

    Oct 20, 2022 20:43 AM

    Despite the PM resigning and the dollar being down, my miners have some up and some down in the continuing trend that nothing matters but Wall Street profits.

      Oct 20, 2022 20:20 AM

      NG Energy (GASXF) hit another well. (Doc Jones)

    Oct 20, 2022 20:17 PM

    EX…………….Asante gold………ASE ……..another high growth gold story………….at some point I will own some

    Going from100,000 ounces to 400,000 ounces in next few years………

      Oct 20, 2022 20:40 PM

      LarryC – Thanks for the heads up on Asante’s growth profile. I’m vaguely familiar with them as a producer, but had no idea they were going to grow production 4 fold over the next few years. That sounds like a similar trajectory that I-80 Gold is on to double each of the next few years from 50k, to 100K, to 200k, to 400k.

      It’s amazing how bad the sentiment is in this sector and how low these growth oriented producers are trading, compared to how they would have been in 2011 at similar metals prices.