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Robust Feasibility Study with Low CAPEX Moves Euro Sun’s Rovina Valley Project to Financing Phase

Euro Sun Mining Inc. (TSX: ESM) is developing the gold-copper Rovina Valley Project in Romania that hosts the second-largest undeveloped gold deposit in Europe at 7 million ounces gold and 1.5 billion pounds of copper.

Last month, Euro Sun released a Definitive Feasibility Study (DFS) for Phase 1 of the project. In Phase 1, the project focuses on the exploitation of two open-pit gold-copper deposits, Colnic and Rovina. In Phase 2, the Ciresata underground deposit is expected to be mined once the open pit deposits are depleted.

Highlights of the Feasibility Study

  • Average annual gold of 106,000 ounces of gold and 19 million pounds of copper per year in years 1-10, with annual average gold production of 81,000 ounces and 24.3 million pounds of copper for Life of Mine (LOM).
  • Production of over 1.36 million ounces of gold and 408 million pounds of copper over a mine life of 16.8 years.
  • All-in Sustaining Costs (AISC) of US$790 per gold equivalent ounce in years 1-10 and US$813 for LOM.
  • Initial CAPEX is expected to be US$399.2 million including the pre-strip capital.
  • After-Tax Net Present Value (NPV) of US$359 million using an interest rate of 5% with an Internal Rate of Return (IRR) of 19.2% at US$1,550 per ounce gold and US$3.30 per pound copper.
  • Processing 21,000 tonnes per day incorporating simple flotation, dry stack tailings, and no cyanide.

The Rovina Valley Project lies in the Western part of the Tethyan Belt, a proven mining region stretching from Eastern Europe to Asia that has a long history of mining activity, stretching as far back to at least the Roman Empire.

The project benefits from the local infrastructure and the Company does not have the extra expense of building a mining camp or access roads.

In addition, the project ranks high on the Environmental, Social, and Corporate Governance (ESG) scale as the power for the ore processing comes from low-cost hydroelectric or nuclear power.

Euro Sun plans to produce a copper concentrate and is targeting the burgeoning battery metals market in Europe that is looking to address upcoming supply concerns as the market transitions to a green economy.

NI 43-101 Technical Report

Last week, the Company filed a National Instrument 43-101 compliant Technical Report supporting the DFS on the Rovina Valley Project.

The Technical Report provided an updated mineral resource estimate and the maiden mineral reserve statement for the open pit deposits (Colnic and Rovina), incorporating feasibility level operating parameters and metal price update for the resources.

With the filing of the NI 43-101 report, Euro Sun can now start discussions with banks and other lenders on credit financing, as well as off-take or royalty agreements with other 3rd parties to organize and optimize a funding package for the initial US$399 million CAPEX.

Balance Sheet

In June 2020, Euro Sun closed a $22.3 million equity financing led by Sprott Capital Partners with participation from institutional investors including three large gold funds – Ruffer, Franklin Resources, and ASA Gold.

The capital raised from the financing should provide the Company with funding through the permitting process. As of December 30, 2020, the Company had C$10.9 million in Cash and Short-term investments.

In addition, Euro Sun is moving forward with a listing on the LSE to increase shareholder reach as it targets European institutional investors looking to invest in an ESG-friendly battery metal project.

Next Steps

Euro Sun has already initiated an Environmental Assessment process on the project and the rezoning of land to mining from farm and pasture lands.

Investors should expect continual news flow as the permitting progress with the goal of starting construction as soon as possible and mine production in 2024.

Final Thoughts

With a low CAPEX of US$399.2 million, including the pre-strip capital, the project should find financing, lowering the finance risk on the project.

Although the Rovina Valley Project hosts 7 million ounces of gold and 1.5 billion tonnes of copper, the DFS only covers the production of over 1.36 million ounces of gold and 408 million pounds of copper from the two main pits in Phase 1.

The Phase 2 underground potential at Ciresata could address a Mineral Resource Estimate of 3.82 million ounces of gold and 515 million pounds of copper in the Measured & Indicated category.

Euro Sun closed yesterday at C$0.40 with a Market Cap of C$68 million, valuing the Company at only US$25 per gold equivalent ounce and not giving any credit for Phase 2 or the other untapped resources on the project site.




Will 2021 be the year of M&A in the gold industry?

2021 looks like being a record year for monetary stimulus, and this should mean a strong year for gold prices. Given the difficulty and cost in finding new gold discoveries and the potential for higher gold prices a year from now, it looks likely that 2021 will see plenty of action in the mergers and acquisition (M&A) space for gold companies.

Flush with cash and while interest rates remain low, mid-tier and large-tier gold miners will be looking to boost their gold reserves/resources by acquiring promising junior gold miners. Today I look at some of the junior gold miners that have significant gold resources that would be ripe for takeover.

Troilus Gold Corp. (TSX: TLG | OTCQB: CHXMF)

Troilus Gold has a market cap of just C$163 million (US$128 million) and has one of the largest undeveloped gold resources in Canada. The Troilus Project, located in Quebec Canada, has an Indicated Resource of 4.96 million ounces of contained AuEq @ 0.87g/t AuEq and an Inferred Resource of 3.15 million ounces of contained AuEq @0.84g/t. Valuable by-products include copper and silver. At gold US$1,950 the PEA post-tax NPV5% is US$1.156 billion and the Project has US$350 million worth of existing infrastructure in place. I could definitely see some gold companies taking a look at Troilus Gold in 2021. You can read more here.

Euro Sun Mining Inc. (TSX: ESM)

Euro Sun Mining is developing their large 100% owned gold-copper porphyry Rovina Valley Project in Romania. The Project has a M&I Resource of 7.05 million gold ounces and 1.39 billion copper pounds, a completed positive 2019 PEA, and a 20 year renewable Romanian Mining Licence. The Rovina Valley Project intends to be a large-scale bulk tonnage open pit mine for gold and copper production. On a market cap of C$55 million (US$42 million) Euro Sun Mining could attract considerable interest from larger gold miners comfortable with the Romanian sovereign risk. You can read more here.

The Rovina Valley Project is comprised of three main deposits less than 3kms apart – Rovina, Colnic, & Ciresata (combined M&I 7M ozs gold & 1.39B lbs copper)

Source

Ascot Resources Ltd. (TSX: AOT | OTCQX: AOTVF)

Ascot Resources has a market cap of C$401 million (US$316 million) and a M&I Resource of 7.3Mt @ 7.85g/t & Inferred 5.5Mt @ 7.11g/t (containing ~ 3.1 Mozs of gold & 11.6 Mozs of silver), noting this includes only 48% of the resource that was included in the 2020 Feasibility Study (FS). The FS post-tax NPV 5% is C$341 million (at US$1,400/oz Au), with a post tax 51% IRR. An initial low CapEx of C$147 million is also favorable, as is the low forecast All In Sustaining Cost (AISC) of US$769/oz. Assuming a spot gold price of US$1,710 per ounce and spot CAD to US exchange rate of 0.71, the project economics increase to an post-tax NPV5% of C$602 million and IRR of 78%.

Source

Closing remarks

It is looking very likely we will have a stronger gold price in 2021 as the Biden administration looks to boost stimulus monies into the US economy. The COVID-19 stimulus checks and a possible 2 trillion green infrastructure plan will likely be just the beginning of stimulus in the Biden era. For investors this means well valued gold junior miners can do very well in 2021. Those that become takeover targets can do even better.

All three gold juniors discussed above are strong takeover candidates in 2021, or at the very least should benefit if gold price rises in 2021. This is because they all have very significant amounts of gold but their market caps are still not too high.

InvestorIntel would be happy to hear from any gold juniors that think they are undervalued and possible takeover targets in 2021, as well as investor’s thoughts on any attractive gold juniors.

Further reading

Disclosure: The author is long Troilus Gold Corp. (TSX: TLG)




Euro Sun Mining is receiving large institutional gold investor attention as the BFS is due soon

Euro Sun Mining Inc. (TSX: ESM) is developing their large 100% owned gold-copper porphyry Rovina Valley Project in Romania. The Project has a M&I Resource of 7.05 million gold ounces and 1.39 billion copper pounds, a completed positive 2019 PEA, and a 20 year renewable Romanian Mining Licence. The Rovina Valley Project intends to be a large-scale bulk tonnage open pit mine for gold and copper production.

The Rovina Valley Project covers 27.68 km² in west-central Romania and is 300 km northwest of the capital city of Bucharest. This historic mining district is known as the “Golden Quadrilateral” and is one of the largest gold producing areas in Europe where it is estimated that more that 55 M oz of gold has been produced.

The Rovina Valley Project is comprised of three main deposits less than 3kms apart – Rovina, Colnic, & Ciresata (combined M&I 7m ozs gold & 1.39b lbs copper)

Source

What to expect in the upcoming Bankable Feasibility Study (BFS): 

Of interest is that the February 2019 PEA was based on just the Colnic deposit and only on a 12 year mine life, and at a US$1,325/oz gold price. Today with spot gold prices about 40% higher than in the PEA, it means the NPV is now about 300% higher if using current spot prices. Or put in dollar terms the NPV rises from US$228M to US$684M, based on the gold prices shown in the chart below. That is a super impressive leverage to gold prices. The reverse is also true if gold prices fall back.

Added to this is the fact that the BFS will now address two of the deposits Colnic and Rovina, which can mean higher gold and copper production and/or a longer mine life (18-20 years), with minimal change to the initial CapEx. This usually serves to give the NPV a nice boost.

Furthermore if there is a higher project NPV in the upcoming BFS it will mean that the CapEx of US$339.7m is quite reasonable given the size of the resource, due to the fact that one central processing plant can serve all 3 deposits (2 initially).

President and CEO of Euro Sun Mining Inc., Scott Moore, stated to InvestorIntel:

“We are probably one of the cleanest projects out there. We don’t use cyanide. We don’t use wet tailings…..Porphyry projects usually have big CapEx. We don’t have a big CapEx,” he added, owing to cheap power, skilled labour force and great infrastructure. “It is big. We can move earth inexpensively and we can make a lot of money particularly with the simple processing that we have.”

Local infrastructure is excellent with a modern network of roads and rail in place, low-cost hydro power generation and distribution all installed, a nearby township, and available skilled labor force.

Near term catalysts for Euro Sun Mining include the BFS in late 2020, Construction License to build the project during Q1, 2021; then all going well project funding to follow the BFS and a start to project construction sometime in 2021. Longer term there is the upside potential that can come from bringing the M&I 3.8M gold oz Ciresata underground deposit also into production.

Euro Sun Mining continues to trade somewhat under retail investors radar; however a recent C$12M bought deal financing was increased to about C$23M to meet demand, with institutions grabbing C$17M of the financing. These institutions included several well known gold funds.

All indicators are pointing towards a very robust BFS to be released soon and further interest from investors. My best guesstimate would be for the NPV to be above US$700M due to higher gold prices, boosted production and/or a longer mine life. Given the current market cap is C$56M (US$42M) there should be plenty of interest generated once the BFS is released. Of course the project is in Romania (part of the EU) and is not yet project funded, which adds some risk. Management has been boosted recently with personnel to advance the permitting and engineering work, and the Board has added two independent directors. Given the recent stock price pull back it looks to be a good time to take a look again at Euro Sun Mining.

Further learning




Euro Sun Mining’s Rovina Valley Gold Project getting the attention it deserves

InvestorIntel’s Peter Clausi talks with Scott Moore, President and CEO of Euro Sun Mining Inc. (TSX: ESM)  about Euro Sun’s Rovina Valley Gold Project. “We are probably one of the cleanest projects out there. We don’t use cyanide. We don’t use wet tailings,” Scott said. “Porphyry projects usually have big CapEx. We don’t have a big CapEx,” he added, owing to cheap power, skilled labour force and great infrastructure. “It is big. We can move earth inexpensively and we can make a lot of money particularly with the simple processing that we have.”

Scott also provided an update on Euro Sun’s recently closed C$22.3 million bought deal financing. “We had $17 million of institutional demand in the financing,” he said. “The institutional demand was international, from United States, Hong Kong, Paris, and London with three of the largest funds that are out there – Ruffer, Franklin Templeton and ASA Gold taking significant positions.” Commenting on what’s coming up for Euro Sun, Scott noted that “the stock has gone from 15 cents in March to 60 cents now,” with “some significant catalysts coming up in the next 6 to 12 months.”

To watch the complete interview, click here

Disclaimer: Euro Sun Mining Inc. is an advertorial member of InvestorIntel Corp.




Winners flying high as gold hits US$2,000/oz

A look at some winners and who might be the next

Gold just hit a new all-time record high, breaking through the US$2,000/oz mark as the gold bull run continues in 2020. Gold started 2020 at US$1,498, and as I write this article is at US$2,013, for an impressive 37% gain YTD. Many gold miners are up much more than that due to their leverage to the gold price. Today we look at some of the strong performers and some others that may soon play catch up.

Gold breaks through US$2,000/oz to hit a new record high

Source: Trading Economics

Looking at the gold companies we follow at InvestorIntel, here are the past 1 year performances:

Alkane Resources had the best year of the above group as they continued to produce good volumes of gold in a rising gold price environment. Harte Gold had the least impressive year of the group as their mine had start up issues and a COVID-19 interruption. They also had higher operating expenses (OpEx) as they have not yet dug deep enough to reach the high grade gold.

Reviewing the top 5 performers yesterday on InvestorChannel’s Gold Watchlist Update, we see Granada Gold doing the best, up an impressive almost 35% on no news.

The top 5 gold performers yesterday as gold broke through US$2,000/oz

Source: InvestorChannel’s Gold Watchlist Update

Just last month I wrote “Granada Gold looks to be ‘underestimated’ by the market as drilling continues” and it looks like the market agreed with this yesterday.

Looking ahead, it is abundantly clear that those gold miners that can deliver will be handsomely rewarded. Investors need to always review the management to see if they have a good track record. Certainly if a gold miner can either increase their production and profits, grow their resource, or discover more gold (ideally high grade above 5 g/t), then at US$2,000/oz the shareholders will likely be very well rewarded.

Of the seven gold stocks InvestorIntel covers above, all look promising in a strong gold price environment.

Even the laggards Angkor Resources and Harte Gold can turn things around very fast. In the case of Angkor the current market cap (C$14m) looks cheap considering their numerous gold, silver, base metals, oil & gas exploration assets in Cambodia. With Harte Gold it is more just a matter of patience as the mine gets deeper they can access the higher grade gold, thereby reducing operating costs and increasing profits. This means investors willing to give the Company another 1-2 years may be well rewarded at the current reduced market cap (C$132m). Quebec Precious Metals is probably the most unloved and under the radar gold miner of the group covered, explaining their 0% one year return. With some good past drill results (1.15 g/t over 80.1 m, 14.20 g/t Au over 2 m, 5.05 g/t Au over 5.06 m, and 4.66 g/t Au over 3.50 m) and further results expected soon, a maiden resource estimate at the Sakami Project due by late 2020/early 2021, and with a market cap of just C$18m, this is one to get excited about. You can read more in my recent article “Quebec Precious Metals announces a ‘very promising gold discovery’ in James Bay.”

Of the recent winners – namely Alkane Resources, Euro Sun Mining, Granada Gold Mine, and West Red Lake Gold Mines – I would probably say Granada Gold Mine appears to have the most exciting potential given their existing ~1.2m I&I gold Resource, some exciting high grade drill results (including 11.45 g/t gold over 33 meters), and a market cap of only C$27m. West Red Lake Gold Mines also continues to look very promising after the one year +126% return. That’s because West Red Lake’s 3,100 hectare property has a 12 km strike length and 3 former gold mines, and contains 1.1 million inferred ounces of high-grade gold (7.57g/t) open at depth. The market cap is still only C$30m.

What a wonderful time to be following the gold miners. Let’s hope the Bank of America forecast comes true and I am writing about US$3,000/oz gold in the near future.

Disclosure: The author Matthew Bohlsen owns shares in Harte Gold, Eastmain Resources and Granada Gold. The information in this article is general in nature and should not be relied upon as personal financial advice.




Euro Sun’s Scott Moore on the competitive advantage of being a gold developer in today’s market

“We are not an explorer. We are a developer. We have got the 10 million ounces (of gold equivalent) in M&I. We have got the mining license granted by the government. So that significantly de-risks. It (The Rovina Valley Gold and Copper Project) will be a mine…It will probably move ahead in the construction phase in the next 12 months.” States Scott Moore, President and CEO of Euro Sun Mining Inc. (TSX: ESM), in an interview with InvestorIntel’s Tracy Weslosky.

Scott went on to provide an update on Euro Sun’s acquisition of Vilhelmina Mineral Inc. which holds a 46.9% ownership interest in Vilhelmina Mineral AB, a private Swedish company with past producing mines in Sweden and Norway. He said that Euro Sun decided to up its stake in the company because they have been working on the mines for the last two years and believed that mines had potential. Scott further added that Euro Sun is working on the feasibility study and construction license for its Rovina Valley Gold and Copper Project which is an environmentally responsible gold project as it uses no wet tailings or cyanide. He also said that gold has been around $1,500 for more than 60 days and if it maintains even at $1400 it will be a whole new gold environment in the new year.

To access the complete interview, click here

Disclaimer: Euro Sun Mining Inc. is an advertorial member of InvestorIntel Corp.




Scott Moore on Euro Sun Mining’s Rovina Valley Gold-Copper Project Advantage

“The Rovina Valley Project is roughly 10 million ounces of gold equivalent. That is broken down into 7 million ounces of gold and billion and a half pounds of copper. You get exposure to both the metals because we recover both quite significantly in processing.” States Scott Moore, President and CEO of Euro Sun Mining Inc. (TSX: ESM), in an interview with InvestorIntel’s Tracy Weslosky.

Scott went on to explain that Euro Sun Mining’s environmentally responsible Rovina project is the second largest gold deposit in Europe and 14th largest undeveloped gold deposit in the world. Scott also talked on the progress on its Rovina Project towards production. Scott said that they have full authorization to do mining subject to getting the construction permit.

To access the complete interview, click here

Disclaimer: Euro Sun Mining Inc. is an advertorial member of InvestorIntel Corp.