I have been updating the list of mining companies that have been able to increase production and earnings in recent quarters. Junior producer Primero Mining will not be one of them. The company reported guidance for 2012 for its mining operations in Mexico, indicating that it expects slightly lower gold output for the full year.
North American Palladium also presented disappointing production news with the announcement that the company would close its Sleeping Giant gold mine in Quebec. This mine has been a pebble in the shoe for the company since operations commenced, as it has been unable to generate an operating profit even with the high price gold regime currently adding a tailwind to the performance for most mines. North American Palladium is focused on further development at its flagship Lac Des Iles platinum group metals mine, where production is projected to increase and the company has been earning recurring profits from operations.
Kinross announced this week that gold production growth targets for 2012 would be restrained due to delays in getting the Tasiast Mine into production. The company has opted to hold off on advancing this project until further studies are completed and other development options are considered. The company has issued guidance for the year that indicates flat gold production roughly in line with that achieved in 2011 as it struggles to maintain cost controls for capital development programs.
The market reaction to disappointing news or guidance, as we have seen this week from Primero, North American Palladium, and Kinross Gold, has been heavy selling and sharp reduction in share price for these companies. This has also been reported in previous weekly commentaries on bearish news items from Agnico-Eagle and Hecla Mining. Overall, these specific examples illustrate how the current sentiment levels in the sector are extremely bearish, as investors are quick to punish companies that miss production targets or encounter operating issues.
On the exploration front, joint venture partners B2 Gold and Calibre Mining have reported a discovery at the Primavera Project in Nicaragua. Earlier trenching and sampling work had outlined a large target area on this property and three drill holes were completed to follow up. It now appears the property is host to a large porphyry-style deposit, as all three drill holes encountered lower grade gold-copper mineralization extending from surface to several hundred meters in depth. Further drilling work will target further expansion of the discovery area that remains open laterally and to depth, and this new deposit area opens the potential for a bulk tonnage prospect. There are several other untested target areas on this property.
Kootenay Gold has reported further drill results from its exploration program at the Promontorio Project in Mexico. The company has been actively exploring at this formerly producing mine property, to outline new resource areas and advance the large polymetallic deposit to the development stage. The latest batch of 20 drill cores announced by Kootenay included an interval of 16 meters bearing 370 g/t silver plus 7.79% combined lead-zinc mineralization.
Avino Silver & Gold Mines has issued an update on the development progress at the San Gonzalo Mine. Exploration drilling continues to encounter economic intervals of silver and gold mineralization, highlighted by a 2.05 meter section of 996 g/t silver and 6.21 g/t gold. The company has extended development down to access a third level of the mine, and continues work to open the fourth level in the weeks ahead. This work will allow increased overall production and will contribute to achieving economies of scale that will lower the mining costs. Avino has been active at the property since 1996 and aspires to continue its expansion efforts towards a multimillion ounce silver production target.
In Africa, Pelangio Exploration has reported another round of successful drilling at the Pokukrom East Zone of its Manfo Project. A large deposit area has been outlined to date, extending more than 850 meters laterally, and open to further expansion. This deposit is characterized by a high grade gold core surrounded by a lower grade disseminated zone. The latest results included the best interval encountered so far, a 113 meter section grading 1.19 g/t gold. Within another drill hole a higher grade interval was encountered bearing 16.72 g/t gold over a width of 4 meters. These encouraging results will be incorporated into the first compliant resource estimate for the project that will be presented later this year.
Puma Exploration has encountered new zones of alteration at the Nicholas-Denys Silver Project in New Brunswick. The latest results included 24.6 meters bearing 100 g/t silver, and 2.7% combined lead-zinc from the Dante target area. The zone remains open in all directions. Work was also completed at the Lavigne Brook target area, located roughly 6 kilometers further along strike on the main fault structure. Again, these drill holes encountered high grade silver and base metals with the potential for further expansion. The company is reviewing the results and has now advanced the exploration model that the individual deposit areas along this structure may in fact represent part of a larger, continuous alteration corridor up to 10 kilometers in length. Puma plans to continue drilling work in 2012 with the objective to increase the resources and test for extensions to these earlier zones.
Michael Kachanovsky |
