Gold producer Anaconda Mining will be drilling again on its Goldboro property in eastern Nova Scotia in a few weeks in a bid to beef up the size of its mineable reserves as gold prices soar.
“Gold prices are not at record highs in American dollars . . . but they are at record highs in Canadian dollars and that helps when you have projects in Canada and Australia,” said Anaconda CEO Kevin Bullock in an interview.
In Canadian dollars, gold hit $2,458.25 per ounce in mid-May, then slid back to $2,262.70 on Friday last week. That’s still almost 27 per cent higher than the Canadian price for gold last year and some of the highest gold prices in Canada since the early 1970s.
Those prices make it more profitable for Canadian gold producers to start up new operations and expand existing ones.
Gaining weight in the market
“I don’t think we could have a better time to start building than next year because I think the peak price will be a year after that.”
Anaconda’s top executive thinks it only makes sense for the company to do more drilling to transform some of Goldboro property’s inferred reserves, which come with a low level of confidence as to what is actually in the ground, into indicated reserves that carry more weight with the markets.
“We hope to convert 160,000 inferred ounces of gold into about 110,000 indicated ounces,” said Bullock.
“That’s about 25 per cent more (than the company has so far indicated). That’s amazing.”
That drilling program is expected to start within the next week or two, roughly a year after Anaconda finished its previous drilling round and prepared its initial feasibility study for Goldboro.
The COVID-19 global pandemic has persuaded many to seek a safe haven for investments and further inflated gold prices already on an upward trend. Bullock thinks those prices will remain high for the next three years.
“People are going to run to gold – and a few other things, whatever they may be,” he said.
“Try and buy gold now. There’s a premium on it. You can’t find it.”
Goldboro project
The company’s feasibility study for the Goldboro property is expected to be completed by the end of this year.
“The earliest we can get a permit is halfway through next year so the earliest we could start is in the autumn of 2021. Then, it’s 12 to 24 months to build out,” said Bullock.
“I don’t think we could have a better time to start building than next year because I think the peak price will be a year after that.”
The startup phase of a mine on the Goldboro property is expected to create 300 jobs, and the mine itself would likely employ around 200 workers once in operation, he said.
Anaconda, which trades on the Toronto Stock Exchange under the symbol ANX, closed at 27 cents a share at the end of last week and has a market capitalization of roughly $36.6 million.
In mid-May, the junior miner announced it had boosted its gold production by 20 per cent, to 4,997 ounces during the first quarter of this year compared with the same period in 2019.
The company’s cash costs per ounce sold at its Point Rousse project in the Baie Verte mining district of Newfoundland and Labrador rose by roughly 19.2 per cent during that quarter. But its earnings before interest, taxes, depreciation and amortization improved by 18.4 per cent, rising to $4.5 million for the first quarter of this year compared to $3.8 million for the same period in 2019 for the Point Rousse project.
Anaconda’s net income for that quarter was also up by 25 per cent, to $1.5 million from $1.2 million for the same period last year.
COVID and the gold industry
When the pandemic hit Canada, Anaconda Mining laid off roughly two per cent of its workforce. Those jobs were on the exploration side of the operation in the Baie Verte mining district.
“The exploration work would have required contractors to come in from outside the province and we didn’t want anything coming into the Baie Verte operation,” said Bullock.
With precautionary measures that include fogging, disinfecting, increasing cleaning and staggering shifts, Anaconda has been able to prevent COVID-19 cases among its workforce.
Other gold producers have also taken precautionary measures. Atlantic Gold, a subsidiary of Australia-based St. Barbara Ltd., operates the Moose River mine in Nova Scotia and has three proposed sites. Since the start of the pandemic, Atlantic Gold has gotten some staff to work from home, restricted social gatherings and enforced social distancing. It has also upped its cleaning schedule, provided mental health services and has employees working closely wear masks.
“Due to the implementation of these measures, we are proud to confirm that there have been zero cases of COVID-19 identified at the Moose River gold mine,” said Atlantic Gold spokesman Dustin O’Leary.
The company employs more than 300 people in Moose River and is meeting its production targets.
Atlantic Gold is expected to soon submit an environmental impact statement for its Fifteen Mile Stream project, about 95 kilometres northeast of Halifax. It is also preparing a similar report for a proposed open-pit mine on its Cochrane Hill site in Guysborough County.
Even with the pandemic and safety precautions, Anaconda is hoping to resume some exploration on the Baie Verte peninsula at Tilt Cove, 30 kilometres from its main mining operations.
“It would be a totally different location,” said Bullock.
“People would be dedicated and stay there and be self-contained and not be going in and out.”
