Refinancing and production numbers positions Harte Gold to prosper
It’s been a very interesting last few weeks and it could be argued that President Trump is likely to continue to take a hard line in the trade dealings with China. The talk of a global slowdown or recession is a real threat especially with the prospect ahead of full scale tariff war between the world’s two largest economies. In turbulent times such as we are seeing right now, gold has always been considered a safe haven for investors.
Harte Gold Corp. (TSX: HRT) is focused on its 100% owned Sugar Zone Property in Ontario Canada which encompasses 79,335 hectares. The Company state they have a 30 km strike potential with only 5km so far explored.
The Sugar Zone Property Resource estimate
The Sugar Zone Property’s NI 43-101 compliant Mineral Resource Estimate dated February 19, 2019 contains an Indicated Mineral Resource of 4,243,000 tonnes grading 8.12 g/t for 1,108,000 ounces contained gold and an Inferred Mineral Resource of 2,954,000 tonnes, grading 5.88 g/t for 558,000 ounces contained gold, all at a 3 g/t cut off. This means the total indicated and inferred resource is now at 1.666m ounces of gold, and at good grades.
Stephen G. Roman, Chairman, President and CEO of Harte Gold Corp. stated: “We do a lot of exploration at Harte Gold around the Sugar Zone mine. We have been extending the deposit from an initial small resource of about 100,000 ounces, were now getting close I would say to 2 million ounces and that’s been done along a five-kilometer strike length.”
Get our daily investorintel update
Harte’s latest discovery is south of the Sugar Zone in an area that is called the upper zone of the actual Sugar Zone deposit. This is an area that hasn’t been previously drilled and extends the ore body 200 meters further south. This has the potential to add a significant amount of new ounces to the Company’s resource.
Sugar Zone Feasibility Study
In April Harte announced a positive Feasibility Study with a declaration of a Probable Mineral Reserve of 3.9 million tonnes at 7.1 g/t Au, containing 890,000 ounces of gold. Based on a 800 TPD operation that will produce 61,000 gold ounces pa over a 14 year mine life, the post-tax NPV 5% was C$266.9 million. Operating costs were estimated at a cash operating cost of US$643/oz and an all in sustaining cost (“AISC”) of US$845/oz. Regarding CapEx the Company state: “Effective March 31, 2019, all capital expenditures for process plant construction and related site infrastructure have been spent. The largest sustaining capital item is future underground development costs.”
Expansion plan to move from 61,000 oz pa in 2020 to 95,000 oz pa from 2022
The Feasibility Study also confirmed the mine is capable of 1,200 TPD based on current mineral reserves enabling production to increase to 95,000 gold ounces annually. Through the benefit of increased scale, this can potentially reduce cash costs.
Gold production at the Sugar Zone mine is now progressing well
Declaring commercial production in January 2019 during the middle of winter and the problems associated with it, the Company went on to have a better March having equipment and labor in place. Harte’s Q1 results reflected these winter difficulties with production 10% below plan; however, Harte did manage to produce 5,476 ounces of gold. Overall revenues for the quarter were 17% below plan as a result of lower gold production and sales.
CEO Stephen G. Roman commented: “The quarter started with many winter challenges affecting our mining operations. We have progressed through our start-up issues and operations continue to improve.”
Harte secures US$82.5 million financing package
On June 12, 2019 the Company announced that it has signed a credit agreement with BNP Paribas in respect of its previously-announced US$72.5 million debt financing package. US$10m is coming from ANR Investments B.V. (“Appian”). The proceeds of the Credit Agreement will be used for general corporate purposes and the refinancing of existing indebtedness of the Company.
Next steps for Harte Gold
2019 is a development year for the Harte Gold with a focus to ramp up underground operations and gold production. 2020 should be the year Harte produce positive cash flow and hit their goal of 61,000 ounces of gold.
Harte Gold continues to prosper with only 10% of their land package so far explored. With close to 1.7 million ounces (Indicated and Inferred) of gold at good grades and further exploration upside, current gold production ramping up, and cash flow just starting to come in; things are looking pretty good at Harte Gold, and may soon get even better.
Harte Gold Corp. is headquartered in Toronto, Canada; and has a market cap of C$ 163 million. Analyst’s consensus price target is C$ 0.75, representing 183% upside.
Matthew Bohlsen holds a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in Financial Planning. He has 30 years ... <Read more about Matthew Bohlsen>