YUKON-NEVADA GOLD CORP YNG
May 24, 2011 - 6:22pm EST by
ronmexico
2011 2012
Price: 0.43 EPS $0.00 $0.00
Shares Out. (in M): 1,040 P/E 0.0x 0.0x
Market Cap (in $M): 453 P/FCF 0.0x 0.0x
Net Debt (in $M): -48 EBIT 0 0
TEV ($): 405 TEV/EBIT 0.0x 0.0x

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Description

 

Yukon-Nevada Gold (YNG)

 

Price

C$0.425

FD Shares Outstanding

1,040,454

Market Cap

C$442,193

Debt

C$25,000

Cash

C$71,818

EV

C$395,375

 

Recommendation

I recommend buying shares of Yukon-Nevada Gold today as the company's recently completed recapitalization funds the company's significant production growth over the next four years. Yukon-Nevada is one of the cheapest producing junior gold miners creating an extremely attractive risk/reward.

 

Yukon-Nevada trades at $104/oz for the 3.8 million ounces at Jerritt Canyon and Ketza, significantly below comparable peers. New drilling could add as much as 3 million ounces to measured and indicated gold reserves by year end. YNG is ramping production over the next four years to 160k oz, 290k oz, 430k oz, 840k oz from 2011 to 2014, respectively vs. 2010 production of 65k oz. Cash cost per ounce of gold will be cut in half to approximately $500/oz in the next 12-18 months ultimately doubling cash flows on existing production. At current gold prices, YNG will have EBITDA in excess of $275 million in 2012. Moreover, YNG's Jarrett Canyon roasting facility (one of only 3 in the state of Nevada) has a replacement value in excess of $1bln.

 

The early exercise of 199 million of the company's warrants (especially the 140mm Orifer warrants) removes a significant overhang on the stock. The company's recent $59 million equity capital raise (through the early exercise of the Orifer warrants and the private placement with Deustche Bank) and the new $120 million gold forward sale facility with Deutsche Bank take all of the financing risk involved with the company's up-grade of the Jerritt Canyon Gold Project in Nevada.

 

With its financing issues fully resolved, the company's massive production ramp, increasing reserves, and significant cash flows could push the share price north of C$2.75/share within the next two years.

 

Description

YNG is a North American gold company focusing on exploration and developing assets located in Nevada, Yukon Territory and British Columbia. YNG's principal asset is the Jarrett Canyon mine located in Nevada.

 

Recapitalization

In March 2011, the company lowered the strike prices on its outstanding warrants in order to induce conversion and raise capital for the company's Jerritt Canyon up-grade project. Through mid-April 59 million warrant holders exercised their warrants raising $12.5 million. However, Orifer - the company's largest warrant holder - elected not to exercise its warrants due to liquidity issues on its part. YNG negociated an agreement with Orifer that allowed it to sell Orifer's 140.4 million warrants to third parties for nominal consideration contingent on the third party immediately exercizing the warrant. On May 24th, the company announced that it had successfully placed all of those warrants with institutional shareholders (Deutsche Bank purchased 80 million warrants) raising $44.9 million. In addition, YNG announced a new $14.4 million private placement with Deutsche Bank (at C$0.43/unit consisting of one share and a C$0.55/share strike price warrant) and a letter of intent with Deutsche Bank for a $120 million Gold Forward sale facility. The ~$72 million in proceeds raised in the equity transactions fully funds the company's production ramp and removes any liquidity risk at the company.  

 

Valuation

At the moment, YNG trades at a significant discount to its peer group on the two principal evaluation tools used in the metal space. YNG trades at 1.4x my estimate of 2012 EBITDA vs. the gold company average of 10.2x. If YNG were to trade in line with their comp group, its share price would sextuple to roughly $2.75/share.   Moreover, on an enterprise value to ounce in the ground basis, YNG trades at C$104/oz a 50% discount to the comp group average. Note the acquisition of Fronteer by Newmont (latest Nevada gold transaction) transacted at over 5x where Yukon-Nevada Gold trades today. However, what isn't caught by the traditional $/oz of Au or cash flow models with gold companies is the $1bln roaster facility that YNG wholly owns. There are only 3 that exist within the region and due to new environmental laws, the probability of one being permitted and built today is slim to none. Large miners like Newmont and Barrick ship their low grade tonnage to YNG's roaster today due to the significant constraints on roasting capacity in the region. YNG's roaster makes it an attractive takeover target for the various different gold miners in Nevada.

 

Valuation

 

YNG

Avg Comp Group

Newmont Acq Fronteer

 

 

 

 

 

 

EV/Jerritt Ounces

$124

$250

$548

 

 

EV/Jerritt Ketza Ounces

$104

$250

$548

 

 

EV/3.8mm oz + 3mmoz underground addition

$58

$250

$548

 

 

 

 

 

   

 

EV/Cash Flow 2011

5.5x

11.6x

   

 

EV/Cash Flow 2012

1.4x

10.2x

   

 

EV/Cash Flow 2013

0.9x

 

   

 

EV/Cash Flow 2014

0.4x

 

 

 

 

 

Production

In 2010, Jerritt Canyon processed approximately 65k ounces from stockpiles, purchased ore, and mining operations. This year, the company plans to hit 160k ounces which is divided between 40k ounces of additional tons acquired from Newmont and increasing production on the underground portion of Jerritt Canyon.  However, 2012 is the turning point for Yukon-Nevada. They're ramping production to 290k ounces/yr (81% YoY increase) while increasing cash flows to north of C$275MM/yr at the current forward gold curve.  Put another way, the operating leverage on the business will decrease the cash cost by $500/oz on all production.

 

 

 

 

  2011 2012 2013 2014
Production ozs in 000s        
   Jarrett Canyon 160 290 360 770
   Ketza River 0 0 70 70
Total Production ozs in 000s 160 290 430 840
Price of Gold/Ounce $1,500 $1,500 $1,550 $1,600
Cash Cost/Ounce $1,053 $545 $488 $376
Margin/Ounce $447 $955 $1,062 $1,224
Cash Flow in 000s $71,520 $276,950 $456,660 $1,028,160

 

 

Ketza River production is forecasted to come on line in 2013.  YNG will spend exploration capital to grow the open-ended resource to north of 1mm ounces.

Resource and Reserves

Today the company has approximately 3.2mm oz of Reserves & Resources at Jerritt Canyon and Ketza River has a Resources estimate of approximately .7mm oz. Reserves estimates were calculated off of a $580 gold price by Messrs and the NI 43-101 Technical Report was prepared by SRK Consulting on April 16, 2008. Today Jerritt Canyon Reserves and Resources of 3.2mm only account for the gold that will be mined through the current mining operation.  By year end, Management has indicated that they plan on compiling the historic drilling data in addition to infill drilling  today's uncalculated resource for an additional mine. They potentially have a resource similar in size if not larger than the 3.2mm sitting at the underground operation today. Remodeling historical data with new infill drill results should double the size of the Jerritt Canyon gold deposit by year end. 

 Roasting Facility

YNG owns one of three (Newmont and Barrick own the other two) roasting facilities in Nevada which is the only economic method of processing refractory sulfide ore in the region.  Due to environmental concerns, a new roaster has not been permitted in 12 years.  However, YNG has the only permitted and operational roaster with spare capacity and they have used this asset as an additional revenue stream for the company. The quantity of low cost refractory sulfide ore in Nevada coupled with only three roasters that can process the ore, make for grand opportunities in acquiring accretive assets ready for production or a natural takeover candidate for Newmont or Barrick. 

Note: I'm happy to go into further detail on any of the topics discussed above

 

 

 

 

 

 

 

 

Catalyst

The recapitalization completed on May 24th removes the overhang related to the financing of the company's Jerritt Canyon up-grade project as well as removes the overhang associated with the Orifer warrants. The Jerritt Canyon up-grade project should result in significant production growth in 2012-2014 significantly reducing cash cost per oz, and increasing cash flows.
    sort by    

    Description

     

    Yukon-Nevada Gold (YNG)

     

    Price

    C$0.425

    FD Shares Outstanding

    1,040,454

    Market Cap

    C$442,193

    Debt

    C$25,000

    Cash

    C$71,818

    EV

    C$395,375

     

    Recommendation

    I recommend buying shares of Yukon-Nevada Gold today as the company's recently completed recapitalization funds the company's significant production growth over the next four years. Yukon-Nevada is one of the cheapest producing junior gold miners creating an extremely attractive risk/reward.

     

    Yukon-Nevada trades at $104/oz for the 3.8 million ounces at Jerritt Canyon and Ketza, significantly below comparable peers. New drilling could add as much as 3 million ounces to measured and indicated gold reserves by year end. YNG is ramping production over the next four years to 160k oz, 290k oz, 430k oz, 840k oz from 2011 to 2014, respectively vs. 2010 production of 65k oz. Cash cost per ounce of gold will be cut in half to approximately $500/oz in the next 12-18 months ultimately doubling cash flows on existing production. At current gold prices, YNG will have EBITDA in excess of $275 million in 2012. Moreover, YNG's Jarrett Canyon roasting facility (one of only 3 in the state of Nevada) has a replacement value in excess of $1bln.

     

    The early exercise of 199 million of the company's warrants (especially the 140mm Orifer warrants) removes a significant overhang on the stock. The company's recent $59 million equity capital raise (through the early exercise of the Orifer warrants and the private placement with Deustche Bank) and the new $120 million gold forward sale facility with Deutsche Bank take all of the financing risk involved with the company's up-grade of the Jerritt Canyon Gold Project in Nevada.

     

    With its financing issues fully resolved, the company's massive production ramp, increasing reserves, and significant cash flows could push the share price north of C$2.75/share within the next two years.

     

    Description

    YNG is a North American gold company focusing on exploration and developing assets located in Nevada, Yukon Territory and British Columbia. YNG's principal asset is the Jarrett Canyon mine located in Nevada.

     

    Recapitalization

    In March 2011, the company lowered the strike prices on its outstanding warrants in order to induce conversion and raise capital for the company's Jerritt Canyon up-grade project. Through mid-April 59 million warrant holders exercised their warrants raising $12.5 million. However, Orifer - the company's largest warrant holder - elected not to exercise its warrants due to liquidity issues on its part. YNG negociated an agreement with Orifer that allowed it to sell Orifer's 140.4 million warrants to third parties for nominal consideration contingent on the third party immediately exercizing the warrant. On May 24th, the company announced that it had successfully placed all of those warrants with institutional shareholders (Deutsche Bank purchased 80 million warrants) raising $44.9 million. In addition, YNG announced a new $14.4 million private placement with Deutsche Bank (at C$0.43/unit consisting of one share and a C$0.55/share strike price warrant) and a letter of intent with Deutsche Bank for a $120 million Gold Forward sale facility. The ~$72 million in proceeds raised in the equity transactions fully funds the company's production ramp and removes any liquidity risk at the company.  

     

    Valuation

    At the moment, YNG trades at a significant discount to its peer group on the two principal evaluation tools used in the metal space. YNG trades at 1.4x my estimate of 2012 EBITDA vs. the gold company average of 10.2x. If YNG were to trade in line with their comp group, its share price would sextuple to roughly $2.75/share.   Moreover, on an enterprise value to ounce in the ground basis, YNG trades at C$104/oz a 50% discount to the comp group average. Note the acquisition of Fronteer by Newmont (latest Nevada gold transaction) transacted at over 5x where Yukon-Nevada Gold trades today. However, what isn't caught by the traditional $/oz of Au or cash flow models with gold companies is the $1bln roaster facility that YNG wholly owns. There are only 3 that exist within the region and due to new environmental laws, the probability of one being permitted and built today is slim to none. Large miners like Newmont and Barrick ship their low grade tonnage to YNG's roaster today due to the significant constraints on roasting capacity in the region. YNG's roaster makes it an attractive takeover target for the various different gold miners in Nevada.

     

    Valuation

     

    YNG

    Avg Comp Group

    Newmont Acq Fronteer

     

     

     

     

     

     

    EV/Jerritt Ounces

    $124

    $250

    $548

     

     

    EV/Jerritt Ketza Ounces

    $104

    $250

    $548

     

     

    EV/3.8mm oz + 3mmoz underground addition

    $58

    $250

    $548

     

     

     

     

     

       

     

    EV/Cash Flow 2011

    5.5x

    11.6x

       

     

    EV/Cash Flow 2012

    1.4x

    10.2x

       

     

    EV/Cash Flow 2013

    0.9x

     

       

     

    EV/Cash Flow 2014

    0.4x

     

     

     

     

     

    Production

    In 2010, Jerritt Canyon processed approximately 65k ounces from stockpiles, purchased ore, and mining operations. This year, the company plans to hit 160k ounces which is divided between 40k ounces of additional tons acquired from Newmont and increasing production on the underground portion of Jerritt Canyon.  However, 2012 is the turning point for Yukon-Nevada. They're ramping production to 290k ounces/yr (81% YoY increase) while increasing cash flows to north of C$275MM/yr at the current forward gold curve.  Put another way, the operating leverage on the business will decrease the cash cost by $500/oz on all production.

     

     

     

     

      2011 2012 2013 2014
    Production ozs in 000s        
       Jarrett Canyon 160 290 360 770
       Ketza River 0 0 70 70
    Total Production ozs in 000s 160 290 430 840
    Price of Gold/Ounce $1,500 $1,500 $1,550 $1,600
    Cash Cost/Ounce $1,053 $545 $488 $376
    Margin/Ounce $447 $955 $1,062 $1,224
    Cash Flow in 000s $71,520 $276,950 $456,660 $1,028,160

     

     

    Ketza River production is forecasted to come on line in 2013.  YNG will spend exploration capital to grow the open-ended resource to north of 1mm ounces.

    Resource and Reserves

    Today the company has approximately 3.2mm oz of Reserves & Resources at Jerritt Canyon and Ketza River has a Resources estimate of approximately .7mm oz. Reserves estimates were calculated off of a $580 gold price by Messrs and the NI 43-101 Technical Report was prepared by SRK Consulting on April 16, 2008. Today Jerritt Canyon Reserves and Resources of 3.2mm only account for the gold that will be mined through the current mining operation.  By year end, Management has indicated that they plan on compiling the historic drilling data in addition to infill drilling  today's uncalculated resource for an additional mine. They potentially have a resource similar in size if not larger than the 3.2mm sitting at the underground operation today. Remodeling historical data with new infill drill results should double the size of the Jerritt Canyon gold deposit by year end. 

     Roasting Facility

    YNG owns one of three (Newmont and Barrick own the other two) roasting facilities in Nevada which is the only economic method of processing refractory sulfide ore in the region.  Due to environmental concerns, a new roaster has not been permitted in 12 years.  However, YNG has the only permitted and operational roaster with spare capacity and they have used this asset as an additional revenue stream for the company. The quantity of low cost refractory sulfide ore in Nevada coupled with only three roasters that can process the ore, make for grand opportunities in acquiring accretive assets ready for production or a natural takeover candidate for Newmont or Barrick. 

    Note: I'm happy to go into further detail on any of the topics discussed above

     

     

     

     

     

     

     

     

    Catalyst

    The recapitalization completed on May 24th removes the overhang related to the financing of the company's Jerritt Canyon up-grade project as well as removes the overhang associated with the Orifer warrants. The Jerritt Canyon up-grade project should result in significant production growth in 2012-2014 significantly reducing cash cost per oz, and increasing cash flows.

    Messages


    SubjectSkeptical
    Entry05/24/2011 09:35 PM
    Memberjohn771
    I'm skeptical about the company story that this mine that could not stay in business a couple years ago is now on the verge of hugely profitable growth.  The site has been mined above ground since 1981 and underground since 1993.  Of course the price of gold is higher than before, but the cost of mining gold is also higher than before.
     
    What do you think YNG will pay for acquired mill feed?  It looks like your write-up assumes the acquired ounces will cost the same as YNG's own (unlikely to be achieved) cost forecast of $376/oz in 2014, but who would sell at that price?  The recent ore purchase agreement with Newmont worked out to an acquisition cost over $1000 per contained ounce, not all of which are recoverable, before milling costs at a time when gold was $1300-$1400.
     
    Do you know the basis for the company's estimate that the "replacement value" of the roasting facility is $1Bn?  It seems like this $1Bn asset has not attracted much interest from strategic buyers.
     
    I don't think Fronteer is a good valuation comparison for YNG because the price paid by Newmont reflected expectations for discovery of significant additional high grade near surface resources that could be mined and processed at low cost.
     
    This may turn out to be a great investment at the current price, but I doubt it's as good as portrayed the company presentation.

    SubjectRE: Skeptical
    Entry05/25/2011 08:57 AM
    Memberronmexico
    The Jerritt Canyon upgrade project should allow the company to replace the purchased Newmont mill feed in 2012 with the increased underground production and the company's new open pit production. The shift to the internal production is what drives down the company's cash cost per oz in 2012. Management guidance has underground production growing from 120,000 oz in 2011 to 200,000 in 2012 and open pit production of 90,000 oz in 2012.

    SubjectRE: Comments
    Entry05/25/2011 09:05 AM
    Memberronmexico
    For share count I am taking the 699,117 shares outstanding at 3/31 + the 254,894 warrants (199MM of which have been converted to shares since 3/31) + the 52,955 stock options + 33,448 shares issued to Deutsche Bank to arrive at my FD share count.

     

    As for cash, in the MD&A of the company's Q1 financials filed last night it indicated that as of May 20, 2011 the company had cash of $8.3 million (ie this should include the money from the warrant exercises in April.) Adding this to the $59 million raised in the Orifer warrants and Deutsche Bank private placements arrives at a cash number of $67 million.

     

    I am not including the $38 million in restricted cash in my cash calculation as this cash has been set aside for the reclamation and mine closure costs at Jerritt Canyon.

    SubjectRE: RE: Skeptical
    Entry05/25/2011 09:36 AM
    Memberjohn771
    The company presentation forecasts production from acquired concentrates of 250k in 2014 and 510k in 2015. The JC mine itself will only produce 370k in 2014 and 270k in 2015 (if they achieve the forecast).  So what will they pay for these concentrates?
     
    It also shows Wet Mill feed generating 150k in 2014 and 310k in 2015.  I'm not sure whether this is from acquired ore or new project sites.  If it's acquired ore then how much will they pay?  If it's new projects then this production is highly speculative (no resource, no equipment, no mine etc...)

    SubjectRE: RE: RE: Skeptical
    Entry05/25/2011 10:39 AM
    Memberronmexico
    The concentrator is being built so they can run more gold through their existing facilities. Jerritt canyon has an additional +3mm ozs that are in the process of being added to the calculated resource. Thats where the additional ore will come from.  yes they will have to buy some facilities such as a concentrator plant. However, they'll produce 800mm in cash flow before 14. In addition, there are a lot of low cost refractory sulphide gold projects in nevada that are ripe for the picking. Management wouldnt have to pay todays market price because the ability to actually process the ore relies on the 3 facilities in the state. 

    SubjectRE: RE: RE: RE: Skeptical
    Entry05/25/2011 11:27 AM
    Memberjohn771
    The base case here may be attractive, but it doesn't sound like there's any concrete support for the value of the roaster, or the source and cost of ore for the roaster.
     
    If they have steady production of 200k at an all-in margin of $700/oz then it's $140mm in cash flow and at a 5X multiple the stock is worth $0.67.

    SubjectRE: RE: RE: RE: RE: Skeptical
    Entry05/25/2011 11:55 AM
    Memberronmexico
    At current gold prices of $1535/oz, the cash margin is more like $990/oz than $700/oz. Internal production in 2012 is more like 290,000 oz than 200,000 oz. You aren't incorporating any produciton from the company's open pit mining. The margin of safety comes from the ~$104/oz in the ground value for the measured and indicated reserves. There is also a very real probability that their reserves increase significantly (like adding 3 million oz) this year from the exploration drilling they are doing. You are also ignoring any production from Ketza which commences production in late 2012/early 2013 and should produce 70,000 oz/year.

    SubjectRE: RE: RE: RE: RE: RE: Skeptical
    Entry05/25/2011 01:06 PM
    Memberjohn771
    The market is not going to put a 10X multiple on open pit production with a very short life.
     
    I believe the real value here, the margin of safety, is the base production level of underground ore at a pretty good grade.  The company forecasts cash costs of $500, but there's no technical report to support that I think it's best to be conservative.  So I picked 200k at a $700 margin.
     
    This story reminded me of Crocodile Gold.  Management claims the mill is extremely valuable.  The plan is to use this valuable mill to process stranded ore from small nearby deposits.  The previous operators were idiots and operational improvements are guaranteed.  Enormous resource increases will be easily defined.  Rapid growth in production will occur at rapidly falling costs.  It's great when things turn out just like management predicted.
     
     

    SubjectRE: RE: RE: RE: RE: RE: RE: Skeptical
    Entry05/25/2011 01:40 PM
    Memberronmexico
    Current results are functionally irrelevant as the company is producing from low grade stockpiles, purchased ores from Newmont, and production from contract mining of the Smith deposit. These are all very high cost forms of production and are not reflective of the go forward cash costs of production of the mine. The capital provided in the May 24th capital raise allows YNG to restart the Jerritt Canyon mine. The SSX/Steer underground deposit is on track for a restart in Q3. In addition, the capital raise will also allow YNG to in house the underground mining at Smith. In house production will have significantly lower costs than the company's currently reported results.

    SRK - a highly reputable third party reserve engineering firm -- performed a 43-101 on the restart of the Jerritt Canyon property in 2008. They determined cash costs of $518/oz for the life of mine. Historical production of the mine (which was first started up in 1981) has had cash costs ranging from $240/oz to $554/oz with production ranging from 125k oz/year to 350k oz/year. Management cost guidance of $545/oz in 2012 appears reasonable in the context of SRK's work as well the fact that initial production at Jerritt Canyon will be higher grade ore. The SRK report can be found here:

     

    http://www.yukon-nevadagold.com/i/pdf/Jerritt-NI430101-Apr08.pdf

     

    Also, I imagine Deutsche Bank did their own third party reserve engineering on the mine prior to making their $40 million investment into the equity of the company as well as signing a letter of intent to provide the company with a $120 million Gold Forward Sale facility.

     

    Current management was put in place by Sprott who owns over 178 million shares of the company. Orifer - a Swiss investment group - sits on the board and own over 135 million shares of the stock.


    SubjectRE: RE: RE: RE: RE: RE: RE: RE: RE: Skeptical
    Entry05/26/2011 04:05 PM
    Memberronmexico

    I am referring to EBITDA margins of $990/oz at current gold pricing. Typically junior gold companies are valued on a resource in the ground or EBITDA multiple basis.

     

    Taxes should not be a significant issue in the near term as YNG has NOL carry forwards of $136.1 million with expirations at various times between now and 2030.


    SubjectRE: 2011 Production
    Entry07/20/2011 08:03 AM
    Memberronmexico
    The 160k oz for 2011 is an exit rate. The discrepancies you're seeing is due to a crusher being down for most of the year and a full plant shut down to winterize/repair their equipment in september. Post september the plant will be running on a normalized basis but at the higher cash cost ($1050ish/oz) until the Newmont contract rolls at the end of the year. Earnings have been consistent with what we have been anticipating. We apologize for not being more clear. 

    SubjectYNG Gets Gold Line with Deutsche Bank
    Entry08/03/2011 08:26 AM
    Memberronmexico
     

    VANCOUVER, Aug. 3, 2011 /PRNewswire/ - Yukon-Nevada Gold Corp. (TSX: YNG)

    (Frankfurt Xetra Exchange: NG6) (the "Company") is pleased to announce that it

    is currently negotiating a Forward Gold Purchase Agreement (the "Agreement")

    with Deutsche Bank AG, London Branch ("Deutsche Bank"), a leading global

    provider of financial solutions. Subject to satisfaction of all closing

    conditions and internal approval requirements (including Deutsche Bank's

    credit committee), Deutsche Bank will fund a US$120 million prepaid gold

    forward facility (the "Gold Facility") to Queenstake Resources USA, Inc.

    ("Queenstake"), a subsidiary of the Company.

     

    The facility is a forward contract currently structured to deliver 173,880

    ounces of gold over a 48 month term (the "Transaction"). The schedule of gold

    payments is set forth as follows: during the first six (6) months of the term,

    1,000 ounces per month; for the next six (6) months of the term, 2,000 ounces

    per month; for the final 36 months of the term, 4,330 ounces per month. The

    173,880 ounces of gold that have been committed under this gold facility

    represent approximately 5.1% of the total gold resources at Queenstake's

    wholly-owned Jerritt Canyon property in Nevada, USA. Subsequent to the receipt

    of the US$120 million prepayment the remainder of the purchase price for the

    gold will be paid to Queenstake upon completion of the monthly gold deliveries

    to Deutsche Bank and will be equal to the amount that the gold price exceeds

    US$850 and up to a maximum gold price of US$1,700.

     

    Certain components within the Agreement, such as gold pricing valuations, will

    be finalized at the time of prepayment, which is anticipated to occur around

    August 12, 2011. As such, a subsequent news release regarding the Agreement

    will be issued upon the date of prepayment with the minimum and maximum gold

    prices per ounce expressed. There is no interest payable to the Deutsche Bank

    during the term of the facility.

     

    Robert Baldock, President and CEO, states,  "We are very pleased to be

    entering into this gold forward facility with Deutsche Bank, one of the

    world's most reputable leaders in the global commodities market. This gold

    loan facility will address all of our capital needs for the Jerritt Canyon

    winterization and other announced cap-ex programs which will enable us to

    achieve our production targets, increase profitability and create lasting

    value for our shareholders."

     

    The repayment of the Gold Facility will be guaranteed by the Company and

    various subsidiaries and will involve the registration of various charges

    against the Company's assets in favour of Deutsche Bank.  To enable the grant

    of the requisite security, approximately $26 million of the proceeds of the

    Loan will be used to repay the senior secured notes issued to note holders led

    by Sprott Asset Management LP in August 2010. The remainder of the proceeds

    are to be used for the capital expenditures at the Jerritt Canyon property,

    including the winterization of the processing facility, construction of the

    tailings storage facility and development of the existing underground and open

    pit mines in addition to further improvements to the gold production processes

    to enhance throughput at the mill.


    SubjectRE: Any Thoughts/Updates?
    Entry10/10/2011 10:11 AM
    Memberronmexico
    The stock has gotten beaten up with all of the other jr gold producers. However, the Steer Mine Complex (SXX), which hosts Jerritt Canyon operations, has been restarted. We anticipate normalized production to come sometime in January 2012 and have modeled accordingly.
     
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