Harte Gold – The good and the bad news with this great potential high-grade gold producer

Investors patience has definitely been tested with the slow ramp and high AISCs of gold production from January 2019 until now, and again recently with the COVID-19 mine closure since the end of March 2020.

Harte Gold Corp. (TSX: HRT) is a relatively new gold producer with its primary focus on its 100% owned Sugar Zone property 24 km north of White River, Ontario, Canada. Exploration on the Sugar Zone property includes 83,850 hectares encompassing a significant greenstone belt with a 35 kilometre strike length.

The property has huge exploration upside with ~90% yet to be explored. The 10% explored has already found 1.67 million gold ounces in the Indicated and Inferred categories. Harte Gold’s Sugar Zone property has a M&I Resource estimate of 1.1 Moz contained Au @ 8.1 g/t, and Inferred Resource of 558 koz contained Au @ 5.8 g/t.

Gold production began in January 2019 but there has been some ramp up problems resulting in lower production and higher costs, which helps explain the current low stock price.

The Good news

The good news for Harte Gold right now is the high gold prices, especially when converted to CAD. In fact gold is currently trading at USD 1,728, which equates to CAD 2,410. The CAD gold price is up 41.09% over the past one year.

USD gold price (now US$1,728) and CAD gold price (now $2,410) 1 year price chart

The other good news is that Harte’s gold production (prior to the COVID-19 stoppage) was trending higher. Gold production for the three months ended March 31, 2020 (“Q1”) totaled 8,597 ounces, the highest quarterly production result to-date. Q1 production was 7% higher than Q4, 2019, and 42% higher than Q3 2019. Once back into full production the mine should be on track for a minimum run rate of 35,000 ounces pa, which should ramp steadily towards a 60,000 ounces pa run rate in 2021.

Combine rising gold production, reducing AISC’s and we should start to see some profits later in 2020 or early 2021, assuming gold prices hold, and the mine reopens soon. As economies of scale kick in 2021 should be a significantly better year for Harte Gold.

Other good news was the December 2019 discovery of high grade gold that showed initial sampling returned grades of up to 247 g/t. This potential new high grade gold zone (the TT8 Discovery) is approximately 17 km southeast of the Sugar Zone Mine in an area previously mapped by OGS geologists as granite and not known to host gold mineralization. The TT8 Discovery is believed to be an extension of an existing known greenstone belt to the east. The Company reported that “17 chip samples across a 40 metre strike extent have returned gold values from 11.1 g/t to 247.0 g/t Au.”

Q1 2020 performance – Increased gold production, reduced costs, improved grades

The bad news

The bad news for investors is that the stock price has fallen over the past year as the company has struggled to yet meet previous Feasibility Study targets for production and costs. AISCs in Q1 were still too high at USD 1,951/oz, despite falling 20% YoY (and 4% QoQ). Production whilst improving is well below the previous 60,000 ounces pa target.

The other bad news is the mine had to close due to COVID-19 at the end of March 2020. This will mean Q2 production will be negatively impacted. Harte Gold has stated:

“The Company is in constant review of the situation and will make a decision on restart in due course. Detailed planning is underway that will allow the Company to mobilize and resume operations in an efficient manner once the decision to restart is made. Higher grade stope material expected later this year should have a positive impact on gold production. Further guidance will be provided once detailed planning is complete.”

Wrap up

Investors patience has definitely been tested with the slow ramp and high AISCs of gold production from January 2019 until now, and again recently with the COVID-19 mine closure since the end of March 2020. The May 2020 announcement that BNP Paribas has agreed to defer debt payments removes any short-term liquidity concerns.

Despite a very testing start the fact remains the Sugar Mine and property has enormous potential. Grades are improving and get higher as they go deeper, with the average grade of the M&I Resource at 8.1 g/t, compared to the Q1 2020 mined grades of 5.5 g/t. Put another way, grades should steadily improve another 47% only to reach the average 8.1 g/t level. Combine this increased grade over the next few years with growing production to meet the mill’s capacity of 60,000 ounces pa, then AISCs should have dropped very significantly towards the forecast AISC of US$845 in the April 2019 Feasibility Study. The December 2019 new high-grade gold discovery reminds investors again of the huge exploration potential across the vast 83,850 hectares Sugar Zone Property.

It appears that investors will still need some more patience in 2020; however with an experienced new management and operations team Q1 2020 has shown they are slowly turning things around. Q2 results will be poor due to the COVID-19 shutdown, but H2 2020, and 2021 should see great improvements.




A gold turnaround worth watching…

Harte Gold started out well in H1 2019 however by H2 2019 they adjusted their 2019 production guidance lower and their AISC’s ballooned. The stock fell 50% as a result, and a new CEO (Sam Coetzer) and Chief Operating Officer (Martin Raffield) were hired in November 2019.

Harte Gold Corp. (TSX: HRT) is a junior gold producer from their massive 79,335 hectares Sugar Zone property in White River Ontario, Canada.

Harte Gold has a NI 43-101 Indicated Mineral Resource of 4,243,000 tonnes grading 8.12 g/t Au with 1,108,000 ounces contained gold, and an Inferred Mineral Resource of 2,954,000 tonnes grading 5.88 g/t Au with 558,000 ounces contained gold.

Harte Gold Company snapshot

Source

How is the Harte Gold turnaround progressing?

To date, the swift management changes of 2019 appear to be working. Three key measures highlight this:

  • Q4, 2019 gold production was 8,017 ounces, the highest quarterly result to-date and a 32% increase over Q3, 2019.
  • Total gold production for 2019 was 27,316 ounces, exceeding the revised guidance range of 24,000 to 26,000 ounces.
  • Grade appears to be trending higher in December relative to previous months.

We will need to wait and see a few more quarter’s results in 2020 before we can definitely call the turnaround a success, but certainly, the new trend is an improvement. Also, investors should keep in mind that the higher grades at depth take some time to reach.

2020 guidance

Harte Gold’s full-year 2020 guidance is:

  • 42,000–48,000 ounces of gold production (an increase of 54% to 76% over 2019 production).
  • US$900–US$1,100 per ounce cash operating costs.
  • US$1,475–US$1,650 per ounce All-In Sustaining Cost (“AISC”).

Given the current gold price of US$1,587 then AISC’s of US$1,475 –US$1,650 still look to be too high. The AISC of US$845 in the April 2019 Feasibility Study is still a way off. Of course, as they mine deeper and grade improves, combined with larger volumes, efficiencies of scale should see Harte Gold in a better position by end 2020, and even better each year thereafter (see chart below). Sugar Zone North looks to be very promising in later 2021, 2022, and 2023.

The Company states: “After 2020, production growth is expected to continue as higher-grade areas of the mine become accessible. While mined tonnages are consistent in 2021 and 2022, the average grade of areas mined in those years is expected to improve.”

Harte Gold model showing mined gold grades will increase in 2021, 2022, and 2023+

Source

Harte Gold is now drilling at their new TT8 discovery

Drilling is underway at the TT8 discovery, approximately 17 Km southeast of the Sugar Zone Mine. The TT8 Discovery is believed to be an extension of an existing known greenstone belt to the east. Drilling will test the down dip potential of the mineralized outcrop. Drill results will be provided as they become available.

Back in December 2019, Harte announced the new discovery stating: “17 chip samples across a 40-metre strike extent have returned gold values from 11.1 g/t to 247.0 g/t Au.”

Sam Coetzer, President and CEO, commented: “We see this as very positive news, confirming the prospective potential of the overall Harte Gold land package. The TT8 Discovery will now form the primary focus of the company’s exploration plan. Our strategy is to find additional feed sources for our processing facility and this target potentially fits this goal. I am very excited and believe our exploration team have the ability to unlock significant further value from our overall property.”

Location of the TT8 discovery

Harte Gold further strengthens management

On January 28 Harte Gold announced the appointment of Dan Gagnon, Mine General Manager, Sugar Zone Mine. The announcement stated: “Mr. Gagnon brings to Harte Gold over 30 years of experience in geology and general management from a wide range of operations across Canada.”

The Company has also hired Christopher McCann as Director of Technical Services, a new position within the Company with the primary focus on engineering design, scheduling and planning capabilities.

On February 12 Harte Gold announced further management changes with the appointment of Graham du Preez as Executive Vice President and Chief Financial Officer. The announcement stated: “Mr. du Preez is a senior executive with more than 20 years of finance experience, including leadership roles in a complex, publicly-traded, international mining company as well as junior mining companies.”

Closing remarks

The Harte Gold turnaround has begun but is by no means complete. At the Sugar Zone Mine new management have reduced costs and increased production, but still have some way to go.

When combining the above with the new TT8 discovery and its potential to feed further gold and the additional experienced management, I would say the turnaround looks likely to continue in 2020. Provided the gold price stays strong and Harte can continue to reduce costs and increase production in 2020, then by 2021 Harte should be in a much stronger position. Some nice high-grade drill results from the new TT8 discovery would also be very useful.

Harte Gold has a current market cap of C$98 million, and an analyst’s consensus target price of C$0.25 representing 72% upside.




The Harte of Canada’s newest high-grade gold producer is in the Sugar Zone

2018 was a great year for gold news with a large find in Western Australia’s traditional gold region. Canadian gold mines were also making their own news, especially in Ontario, Canada.

Harte Gold Corp. (TSX: HRT) is Ontario’s newest gold producer that acquires and explores for mineral resource properties in Canada, with primary focus on its 100% owned Sugar Zone property 24 km north of White River, Ontario. Exploration on the Sugar Zone property includes 83,850 hectares encompassing a significant greenstone belt with a 35 kilometre strike length. The property has huge exploration upside with ~95% yet to be explored.

Harte Gold has Canada’s newest producing gold mine

Harte Gold’s Sugar Zone has a resource estimate of 714,200 gold ounces at 8.5 g/t indicated, and 760,800 gold ounces at 6.6 g/t inferred.

Harte Gold Sugar Zone resource estimate

Sugar Zone Mine – First gold pour achieved October 2018

Harte Gold has proven they are a company that can get things done. They did this last year in October 2018 by announcing they had achieved a first gold pour at their Sugar Zone Mine.

Stephen G. Roman, CEO commented: “With this achievement we have advanced from permitting the Project to gold production in under four weeks, a significant accomplishment. Plant start-up continues to run smoothly with no material issues reported.”

Sugar Zone Mine – Commercial production achieved in January 2019

And the great news for Harte keeps on coming as only 3 months later they were achieving commercial production at the Sugar Zone Mine. Following a successful commissioning period, the Sugar Zone Mill is operating consistently at the permitted 575 tonnes per day (TPD). The mill averaged a 90.8% gold recovery rate for December, which is expected to improve during the transition to full commercial operation. A 2019 budget and life of mine plan is underway, which is expected to show improved overall economics. This information will form the basis of a NI 43-101 Feasibility Study targeted for Q1 2019.

Mr. Stephen G. Roman, President and CEO of Harte Gold stated: “Since start-up of the mill, our focus has been on reaching commercial production in an efficient and cost effective manner. I believe our team has done a remarkable job getting to capacity with no significant operational issues. We are now progressing the permit to increase throughput to 800 TPD.” The mill is currently at steady state and the focus will now shift to improving recoveries.

Sugar Zone Mill gold production ramping up

For the month of December, the mill processed 16,400 tonnes over a 29 day period. Mill feed was a combination of material from the surface stockpile, development material and stope production. The Mill feed will be supplied by a higher grade material from the continuing acceleration of the underground mine, leaving the surface stockpiles as an auxiliary supply. Stockpiles were sampled in December and were estimated to contain 19,470 tonnes of material at an average grade of 5.08 g/t.

The Company expects to deliver an updated mineral resource estimate in early 2019.

Harte Gold has been moving ahead very quickly

Harte Gold has been moving ahead very quickly.

The Stoughton-Abitibi Property

Harte also has the Stoughton-Abitibi Property which is located 110 km east of the prolific Timmins area. The property covers a 4 kilometre strike length with an overall length of more than 11 kilometres along the upper portions of the property. It is in close proximity to an existing 2.5 million oz. gold mine. Management is currently in the process of evaluating associated available data in order to assess the scope of a future exploration program.

Gold has conjured up fantasies for century’s now with the promise of getting rich quick. Early investors in Harte Gold will be very pleased with the company’s rapid progress and success. Harte looks to be a sweet investment if you are looking for a high grade low cost producing gold mine, with both production upside and significant exploration upside, all in a safe and prosperous jurisdiction.

Harte Gold Corp. is headquartered in Toronto, Canada. The Company has a market cap of CAD $227.9 million, and an analyst’s consensus price target of CAD $0.93, representing 146% upside.




Harte Gold: A low cost Canadian miner expected to be producing by Q3 2018

Harte Gold Corp. (TSX: HRT) is an Ontario based gold mine developer, focused on advancing its wholly owned Sugar Zone property located in northern Ontario, approximately 68 km east of the Hemlo area gold mines, 30 km north of White River. Of the top 4 major mine camps in Canada, Hemlo is the least explored.

The Sugar Zone Property holds an NI 43-101 compliant Indicated Resource of 1,117,000 tonnes grading 8.41 grams/ton Au, for 302,000 ounces of contained gold; and an Inferred Resource of 417,000 tonnes grading 7.13 grams/ton Au, for 95,000 ounces of contained gold. The project has one of the world’s highest grade gold deposits.

Their second project the Stoughton-Abitibi Property is located on, and adjacent to, the Destor-Porcupine Fault, 110 km east of Timmins (Canada’s Greatest Gold Camp). The property covers a 4 km strike length with an overall length of more than 11 km along the upper portions of the property. Management is currently in the process of evaluating available data associated with the Stoughton-Abitibi property in order to assess the scope of a future exploration program.

Location map

The Sugar Zone Project

The Sugar Zone Property is situated in a well-established mining region, and Harte Gold continues to work with the Ontario Ministries to finalize the remaining permits required to commission the process plant in July 2018 and start commercial production in early Q3 2018.

The Project is road accessible and is accessed from a secondary paved highway (631) extending north from White River that passes 10 km east of the Sugar Zone Property. A Hydro One electrical transmission line and the Canadian Pacific transcontinental main rail line pass through White River.

On May 3, 2018 the Company announced the results of a positive Preliminary Economic Assessment (“PEA”) for the Sugar Zone project. The post tax NPV5% was C$244m, with a post tax IRR of 42%. The PEA is based on 80,700 ounces of average annual gold production, at a C1 cash cost of US$507/oz Au and AISC of US$708/oz Au, over an 11 year mine life from 2019 onwards. As of March 31 2018, C$58 million remains to be spent (in 2018) on process plant completion, underground development and working capital, with process plant construction over 80% complete.

Gold Price Sensitivities

Stephen G. Roman, President and CEO, commented:The PEA demonstrates an economically robust, low cost operation with a scalable mine plan designed to match underground development. With a target of 1,400 tonnes per day producing over 100,000 ounces per year, Harte Gold will have the cash flow to continue property wide exploration and the ability to target high impact acquisition opportunities.”

He also stated: “Harte Gold has had a very productive start to 2018. The Company tripled its mineral resource estimate, arranged a debt financing solution that fully funds the Sugar Zone Project to production, delivered a Preliminary Economic Assessment with significantly improved project economics and signed an Impact Benefits Agreement with Pic Mobert First Nation. The Company’s focus now is on achieving commercial production, targeted for Q3 2018 and continuing aggressive infill and expansion drill programs, expected to improve grade and add resources.”

Historically prized for its beauty and more importantly, having long-term storage value, societies have prized gold as a safe investment to be stored during turbulent times. With a market cap of C$ 212.6 m, Harte Gold is fully funded to first production, and expected to commence production in Q3 2018. Harte Gold has high grade, low costs, experienced management, an 11 year mine life, and an exploration upside.