The US debt ceiling scare, rising recession risks and Federal Reserve hawks are just a handful of reasons why JPMorgan Chase is trimming exposure to US equities, increasing its cash holdings by 2% and moving full steam ahead towards gold. JPMorgan’s chief global markets strategist Marko Kolanovic said that the risk-reward for equities is poor due to elevated recession risk, overextended valuations, heightened interest rates and tightening liquidity, pointing to gold’s ability to act as a hedge against these risks. JPMorgan isn’t the only bank that’s bullish on gold. According to a survey from the World Gold Council, up to 24% of central banks plan to raise gold holdings this year. In 2022, net gold purchases by central banks totaled 1,135 tonnes, sending gold buying levels to the highest level in 55 years. Since the beginning of 2023, the big banks are following the same trend, accumulating gold at the fastest pace on record. Higher gold prices will help gold miners such as Luca Mining (TSXV:LUCA) (OTCQX:LUCMF), Alamos Gold Inc (TSX:AGI) (NYSE:AGI), Agnico Eagle Mines (TSX:AEM) (NYSE:AEM), Equinox Gold (TSX:EQX) (NYSE American:EQX), and Coeur Mining Inc (NYSE:CDE).
Luca Mining (TSXV:LUCA) (OTCQX:LUCMF) is a Canadian mining company with 100% ownership of two gold, silver, and base metal mines in Mexico. The Tahuehueto Gold Mine Project, which is on track to deliver initial production by June 30, 2023, and the polymetallic underground Campo Morado mine, with a 16.6 million tonne Measured & Indicated (M&I) resource grading 4.01% zinc, 0.80% copper, 0.93% lead, 123 g/t silver, and 1.70 g/t gold.
On June 15, Luca Mining announced that pilot-scale testing of Jameson Cell technology at Campo Morado has demonstrated the ability to significantly improve recoveries and concentrate grades in copper and lead streams, as well as moderately improve the zinc stream and reduce operating costs. Meanwhile, historical testing demonstrated the ability of the Jameson Cell to achieve final concentrate grades of between 13% – 28% copper, at excellent unit recoveries of between 70-90% compared to current copper recovery, which is approximately 51%, with a concentrate grade of 13-16% copper.
A major advantage of Jameson Cell technology is that the cells are smaller than conventional flotation cells and have no moving parts, meaning they can be easily maintained online without shutdowns.
Luca Mining has also been making significant progress at its Tahuehueto gold mine. Last month, the company shared a thorough two-step strategy for achieving 1,000 tonnes per day (tpd) of commercial production at Tahuehueto, with the first stage’s 500 tpd target expected to be reached by the end of June. The installation of the final components of the comminution circuit is critical, as is the building of the first stage of the tailings dam, the installation of a second tailings filter press, and the completion of the definitive plant water supply. The final stage of 1,000 tpd production is scheduled by the end of 2023.
“I’m very pleased with our progress towards this important goal of achieving 500 tpd at Tahuehueto” said Luca Mining CEO Mike Struthers. “Our team, and our contractors and consultants, are all performing very well. And while our focus is firmly on achieving the 500 tpd goal, we are also in parallel taking some key steps towards our ultimate goal of 1,000 tpd by the end of the year. We have located an alternative second mill in Mexico with a larger capacity of 750 tpd, which will provide a valuable buffer for sustaining 1,000 tpd production.”
Pre-production at Tahuehueto is also ongoing alongside construction to help site staff continue fine-tuning systems, plant performance, and so on ahead of full-scale production. The average lead recovery to concentrate is 79.8% including 29% lead, 50.5 g/t gold, and 584 g/t silver on average, while the average zinc recovery in May is 59.7%, with 47% zinc, 12.6 g/t gold, and 144 g/t silver. Total gold and silver recoveries are approximately 86% (average for April 2023), in accordance with predictions from the 2022 PFS.
Luca Mining also recently bolstered its board of directors with the addition of Dr. Neil O’Brien and Phil Brumit Sr. Dr O’Brien is a consulting economic geologist and former mining executive with three decades of industry service including Board of Director roles in public and private mineral exploration companies. He has international experience on five continents in all stages of mineral exploration and development for mineral resource projects, mining project evaluation and strategic corporate development activities. He also previously served as SVP exploration and new business development for Lundin Mining.
Brumit is a mining executive with over 40 years of experience in property evaluation, engineering, project management, construction, start-up and operations within the industry. He recently served as executive VP projects & operations at Josemaria Resources, president and managing director at Minera Candelaria, a subsidiary of Lundin Mining, president of Freeport-McMoRan’s African division and senior advisor, focused on the Tenke Fungurume Mine in the DRC; North American manager of operations for Newmont Corporation; and general manager of operations for PT Newmont Nusa Tenggara’s Batu Hijau mine in Indonesia.
Gold Miners Report Drilling Results and Earnings
On May 15, Alamos Gold Inc. (TSX:AGI) (NYSE:AGI) announced additional surface exploratory drilling results from the Mulatos District. This included extending high-grade gold mineralization beyond the boundaries of Mineral Reserves and Resources at Puerto Del Aire (PDA), a higher-grade underground discovery adjacent to the Mulatos pit. Additionally, the Capulin target, which is two kilometers east of the former San Carlos open pit, was found to contain gold mineralization across a wide area. Beyond Mineral Reserves and Resources, high-grade gold mineralization at PDA increases the deposit’s potential for future diversification. This follows a 71% growth in combined Mineral Reserves and Resources to 1.0 million ounces in 2022 At the Capulin Target, a significant area of oxide and sulphide gold mineralization was discovered in a breccia.
In Q1 2023, Agnico Eagle Mines (TSX:AEM) (NYSE:AEM) reported strong quarterly production and cost performance, as well as record safety performance. Payable gold production in Q1 was 812,813 ounces at $804 per ounce in production costs, $832 in total cash expenses, and $1,125 in all-in sustaining costs (AISC) per ounce. These figures only include the company’s 50% share of output from the Canadian Malartic mine through March 30, 2023, and 100% thereafter.In the first quarter of 2023, the company reported quarterly net income of $3.87 per share, with adjusted net income of $0.58 per share. The operating cash flow per share was $1.30.
Equinox Gold (TSX:EQX) (NYSE American:EQX) has released its Environmental, Social, and Governance (ESG) Report for 2022. The 2022 ESG Report and data tables outlining the Company’s performance against important GRI and SASB measures are available for viewing and download on Equinox Gold‘s website. Greg Smith, President and CEO of Equinox Gold, said that over the last five years, they have strived to ensure that responsible mining concepts are built into the cornerstone of their company strategy. He added that they are seeing great outcomes from such efforts, having met all of their ESG objectives in 2022, and will continue to improve in the future.
On May 10, Coeur Mining Inc (NYSE:CDE) disclosed first-quarter 2023 financial results, including $187 million in sales and $(35) million in cash flow from operating activities. The GAAP net loss from continuing operations was $25 million, or $0.08 per share. Coeur Mining reported cash flow from operating activities before changes in working capital of $6 million, EBITDA of $25 million and a net loss from continuing operations of $33 million.
Luca Mining has completed the 2nd tranche of its non-brokered private placement, selling a total of 59,301,527 units at a price of C$0.35 per unit for aggregate gross proceeds of $20.75 million.
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