ANTILLES GOLD ACCELERATES DRILLING PROGRAM IN CUBA
Antilles Gold Limited ( ASX Code : AAU ) advises that it intends to accelerate the current 25,000 m diamond drilling program for the La Demajagua gold /silver mine development in Cuba.
A second drill rig is now on site with a third anticipated next month. Results from the Canadian laboratory undertaking assays should commence in approximately six weeks and continue through to August 2021.
The results will compliment existing data from 50,000 m of drilling previously undertaken by Canadian mining companies, and permit initial JORC Resources to be established as well as completion of associated metallurgical test work, and the open pit mine plan.
These elements comprise integral components of the current Bankable Feasibility Study for the first stage mine development.
The Study is expected to confirm the robust results of the Company’s Preliminary Economic Assessment for the planned six year open pit operation, and be completed in time for a development decision in Q4 2022. The planned second stage underground operations will be the subject of a separate study in around five years.
AAU - oops Brian bought more than he reported first announcement
Brian says sorry everyone, forgot to tell you about the extra $10k purchased, totalling $30K not $20k as previously announced.
Ammended announcement accordingly
Good suppoprt of the company there Brian and it seems you feel the shares at current prices are worth on-market buying even boyond your already 70m shares held.
AAU - Executive Chairman Brian Johnson further on-market buying
Just released in after hours reporting, Executive Chairman Brian Johnson continues to make on-market purchases to add to his already susbtantial holding of 70m shares.
All of this as shareholders eagerly await progress updates on matters such as the $20m dispute settlement, progress of the feasibility drilling for the initial Cuban mine project and the US OTC listing.
It should also be noted that these purchases are towards the upper range of average price (from memory) than those previoulsy announced by Brian.
200,000 qty for $20,275 consideration
AAU - Investor Update Presentation
AAU has just released this Investor Update, which brings together the two projects being explored in Cuba and a few other clarifications around the company.
but some of the most positive statements IMO, was on the final Summary page:
So not alot of new news, but more a coming together of prior advised news and announcements, with a few clarifications in the summary.
AAU - second Cuban mine project to be investigated
The company have just announced a second possible mine project that they have applied to the Cuban government to progress with a mine licence agreement to do the preliminary evaluation.
It alludes to a similar 49:51 joint venture with the Cuban govenrment too as a sepearte mining agreement.
This make further sense now with yesterday's update regarding an intention to list on the US OTC counter to leverage the Cuban mine sector amongst US investors.
AAU - seeking listing in the US OTC market
With AAU's Cuban mine project activity starting to ramp up, the company has just announced that it intends to list in the US marketplace.
Quoting the Cuban project as giving the company a profile that it feels will create strong interest in its shares and the emerging mining sector within Cuba.
AAU - Executive Chairman still buying on-market
Executive Chairman Brian Johnson is yet again purchasing on-market, this time on the 11th and 12th of March for a total of 250,000 shares at a total cost around $25,160
This purchase is consistently within two weeks of his prior market announcement and works out to an avg cost of 10.06c per share
Current share price is 10c at close
This is certainly accumulation before some big news breaks in my opinion, and not forgetting he already owns 36% of the company.
AAU – Profitable Gold / Silver Refractory Miner with significant project in Cuba
Current share price 9.5c (2021-03-12)
Definitely DYOR on this one as there is a lot to consider and take on
Antilles Gold initially came onto my radar due to the frequent on-market buying by Executive Chairman Brian Johnson (roughly every two weeks in parcel sizes around $25K, most recently 25th Feb 2021)
Market Cap is $18m with 195,141,646 shares issued with Top 20 owning 74%
AAU is in the refractory mining process where it uses modern technology to process and extract gold and silver from sites long ago identified and proven non-feasible using traditional mining techniques (“a world first in using Albion/CIL process plant for precious metals” as quoted in the Investor Update)
Having a sound balance sheet with no debt, and NTA of 3.3 cents / share, AAU recently reported a $3.7m profit with 1.9 cent EPS, despite being in the final stages of wrapping up its main project in the Dominican Republic and having decommissioned its plant and equipment.
There are disputes with the Dominican Republic Government involving a possible $20m settlement in favour of AAU which are currently before the International Court of Arbitration. This amount has already been fully accounted for in prior periods and would represent a write back when and if settled. Current incoming government has indicated a willingness to work towards settlement.
There is $4.5m (salvage value) of fully depreciated decommissioned plant and equipment from the Dominican Republic mine ready to be sold, however if that were to be recommissioned at AAU’s next project in Cuba it would have a $15m operational value. Being fully depreciated, any receipt for sale or re-use would have positive effect to the balance sheet.
Operationally AAU has moved onto its next project and started metallurgic drilling studies for its next 15 year project being a 49:51 joint partnership in Cuba with the Cuban Government at La Demajagua on the Isle of Youth in SW Cuba incorporating the workings of the old Delita gold mine (1995). Stage 1 of this mine is open cut, with stage 2 becoming an underground operation.
That joint government arrangement is in place, with AAU having equal board member representation and full operational autonomy with respects to hiring skilled management and operating the mine itself.
As taken from the Investor Presentation, the Preliminary Economic Assessment of La Demajagua is:
· Pre-Development and Development Costs US$73 million
· Equity Contribution from Antilles Gold US$13 million
· Project Loan US$35 million
· Supplier Credit (extended) US$25 million
· Estimate Concentrate Production Costs (60,000tpa) US$650 per tonne
· Quoted Concentrate Purchase Price (60,000tpa) US$1500 per tonne
@US$1500 per oz Au and US$20 per oz Ag
The agreement is incentivised by the Cuban Government offering:
· Free transfer abroad of loans, profits and dividends without taxes or levies
· No asset may be explored without compensation in convertible currency, as determined by independent experts
· Disputes to be submitted to arbitration for resolution at International Court for Arbitration, Paris
· Corporate tax rate 15%, waived for 8 years
· Goods and services tax 10%, reduced by 50%
· Witholding tax not applicable
· Import duties not applicable for project development
Back to the possible re-use of the decommissioned processing plant, there is another joint venture agreement with a regional concentrate processor being considered. Again the company makes statement of the realistic option to re-use fully depreciated equipment and restore $15m of balance sheet equity in doing so. The second step processing plant extracts +95% gold from clean refractory concentrate and is a lower cost alternative to transporting concentrate to China or Russia for processing.
So in summary;
· The Executive Chairman Brian Johnson is and has been regularly buying on-market at current prices
· The $20m settlement for arbitration with the Dominican Republic would cover the intended capital injection by AAU into the La Demajagua stage 1 Open Pit mining operation
· A favourable $20m settlement would be cash +10.2 cents per share, which is below the current share price
· Re-use of the de-commissioned plant and equipment to re-establish 15m in working assets would have a +7.7 cents per share effect on the balance sheet assets
· Projected mining cost $650 versus sales of $1500 per tonne (131% profit on mining cost expenditure) with a 16,000,000 tonne lower end ore deposit size @ 2.3 g/t Gold and 17 g/t Silver
· Current Gold price $1727 / oz and Silver price $25 / oz
· Favourable tax regime granted by the Cuban Government to operate the mine
· Executive Chairman Brian Johnsons is a majority shareholder with almost 70m shares and 36.5% holding, having a market value of $6.6 million @ 9.5c share price