Friday, January 8, 2016

Claude Resources Provides 2015 Production Results

Claude Resources accounts for 25% of my gold miners portfolio. It is also a leading company in this portfolio - I believe that in 2016 this miner should perform very well.

Yesterday Claude announced its 2015 production summary. The most important info is that Claude produced 75,748 ounces of gold in 2015. Both deposits, Santoy Gap and Seabee, performed very well:

The chart shows that 2015 was a milestone year for the company. Claude shifted the burden of its production to the Santoy Gap mine - as many as 42,399 ounces of gold were delivered by this deposit while the Seabee mine (a former leading mine) delivered 33,349 ounces. Somebody could ask why Claude increased production at the Santoy Gap and decreased at Seabee? The answer is simple - the mill. The Claude processing plant (mill) is able to mill around 800 tonnes of ore per day. In 2015 Claude was milling 463 tonnes of ore per day from Santoy Gap (on average) and 297 tonnes of ore per day from Seabee (760 tonnes totally). The charts below show basic operating measures related to both deposits:

As the charts show, despite the fact that head grades demonstrated by Seabee were higher than those reported at Santoy Gap, the company decided to increase mining operations at Santoy Gap. Simply put, Santoy Gap is currently the most prospective deposit for the company.

On the other hand Claude plans to increase the mill capacity by 20%. If such is the case, the company could easily increase its production. Let me present the slide from the company's last presentation:

As the slide shows, in 2016 Claude plans to extract around 14 thousand ounces of gold from the Santoy Gap deposit. Let me cite the company's announcement:

"At the Seabee Gold Operation in 2016, production is expected to be between 65,000 and 72,000 ounces of gold. The majority of tonnes and ounces in the 2016 business plan are expected to be sourced from the Santoy Gap deposit as it ramps up to an average of approximately 700 tonnes per day."

Well, there is a problem. Since in 2016 Claude plans to produce around 56 thousand ounces of gold at Santoy Gap (up 32%, comparing to 2015) only 9 - 16 thousand ounces are to be delivered by the Seabee Mine. Let me count - at the end of 2014 there were 85,200 ounces of gold at the Seabee Mine, classified as mineral reserves. In 2015 the company depleted this deposit by around 33.3 thousand ounces of gold so there should be around 52 thousand ounces of gold left. So the company has quite a lot of gold at Seabee to produce more than 9 - 16 thousand ounces per year. Hmmm...I guess that Claude is underestimating its planned 2016 gold production. With higher mill capacity it should deliver more gold in 2016 than the planned 72 thousand ounces (maximum).  

O.K. Let us wait until March 2016, when the company is going to publish its operating and financial update.

Anyway, Claude looks very good at the moment. I am confident that the company should perform well in 2016.

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