Tuesday, March 22, 2016

Newmarket Gold - Here Is The Strength Of This Gold Miner

Yesterday Newmarket Gold published an update to its mineral resources. Some of the readers of this blog were interested in the company's mineral resources so it is a good moment to look at this issue a little bit closer.

The most important mine in Newmarket Gold's portfolio is Fosterville, located in Victoria, Australia. That is why I am discussing this particular deposit.

The table below shows the Fosterville mineral base, as of the end of 2015:

                                                            source: Newmarket Gold

For those unfamiliar with such tables - please, look mainly at the rows titled "Fosterville Underground" because it is that part of the mineral base, which is / will be currently / in the future mined.

As the table shows, the economically viable part of the mineral base, reserves, amounts to 244 thousand ounces of gold.

Another thing - due to the succesfull 2015 exploration program, the company added 62 thousand ounces of gold to the Fosterville reserves, compared to the end of 2014.  Well, let me stop at this point because it is a littly bit tricky issue.
As a matter of fact, the company added much more ounces of gold because in 2015 as many as 123,095 ounces of gold were produced at Fosterville. To complicate the matter further, the amount of gold produced at a mine is not equal to the amount of gold mined. Why? Here is why - in 2015 the company mined 704,211 tons of ore at Fosterville. This ore was grading 6.11 grams per ton so it means that the company mined 704,211 x 6.11 = 4,302,729 grams of gold. This amount is equal to 138,338 ounces of gold. Then this gold was processed at the Fosterville processing facility (mill) resulting in 123,095 ounces of gold finally produced (the amount of gold produced is lower than the amount of gold mined because part of the gold is lost, mainly due to chemical processing) . However, the amount of gold depleted was standing at 138,338 ounces (it is an amount, which should be subtracted from the reserves reported at the beginning of the year).

Now, the best thing - because the reserves at the end of 2015 are higher than reserves at the end of 2014 (by 62,000 ounces),after adding to that figure 138,338 ounces of gold depleted, I get 200,338 ounces of gold. It is the amount added to the mineral base due to the succesfull exploration program. In my opinion it is quite an impressive figure.

What is more, the company adds new ounces of gold every ear, starting from 2013:

The third row, titled "reserves added through exploration" depicts the effectivness of the company's geologicial team. It seems that these guys aim at keeping the Fosterville reserves stable at around 350 thousand ounces of gold, which is enough for  3 years of mining. In my opinion, it is the greatest strength of Newmarket Gold.

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