Dear Alphastox Subscribers,
I know the gold market isn’t as sexy as the way cannabis companies are trading, however, we need to recognize value when the opportunity arises and these sorts of occasions typically only happen in a tough market. This is why I look at myself and our team here at Alphastox.com as contrarian thinkers…we want to take positions in companies that are deeply undervalued and sell them when the market recognizes their true value…I am not sure how long it’ll take the overall market to realize it but it’s surely to come one day and when it does, that’s how we reap our rewards.
We approached the cannabis space the same way- taking positions in companies 4 years ago when the market didn’t see their true potential but we did. Today, we’re reaping those rewards and I think there are a few names in the mining sector that are definitely worth keeping an eye on while others focus elsewhere. One name in particular is Velocity Minerals (TSXV:VLC).
Now I know we’ve already mentioned them before, but given their latest announcement on their PEA for their Rozino Gold Project in Bulgaria, I think the time is now to be looking at VLC.V again…especially as the company currently sits at a $10M market cap.
In their PEA (attached below), VLC announced that they have an after tax NPV5 of $129M and an after-tax IRR of 33.3%. Now I know the market didn’t react to it given the stock didn’t really move on the news, but I can tell you one thing…larger mining companies will. This is a real project with a real value attached to it, howerver, since the mining market is down, majors are triping over themselves to acquire assets but sooner or later sentiment will change and the tables will turn and that’s when smart long-term investors will reap the biggest rewards.
I am a shareholder and took part in the company’s latest private placement at $0.20/share because I thought it was undervalued and a great opportunity at those levels – today at $0.15/share, my mind hasn’t changed and my interest level in the company has only increased.
This is one name you need to keep on watch as I expect the company to issue more news and updates in the coming months so make sure you stay tuned and keep VLC.C on your screens.
As always, if you have any questions, please don’t hesitate to get in touch with me anytime.
I look forward to hearing from you.
Disclosure: Transcend Capital Inc. is a shareholder and has been paid a fee
VELOCITY ANNOUNCES PRELIMINARY ECONOMIC ASSESSMENT FOR THE ROZINO GOLD PROJECT, SOUTHEAST BULGARIA
Velocity Minerals Ltd. has released the results of an independent preliminary economic assessment on its Rozino gold project located in southeast Bulgaria. The preliminary economic assessment provides a base case assessment of developing the project by open-pit mining and gold recovery by a combination of onsite preconcentration in a flotation plant and further processing in an existing operating carbon-in-leach (CIL) plant located in Kardzhali, 85 kilometres by road from Rozino. Saleable gold dore will be produced at Kardzhali. The preliminary economic assessment financial model returns an after-tax NPV5 (net present value at a 5-per-cent discount) of $129-million and an after-tax internal rate of return (IRR) of 33.1 per cent.
Rozino is located within the Tintyava prospecting licence, an exploration property in which Velocity Minerals has an exclusive right to acquire a 70-per-cent interest by delivering the preliminary economic assessment report to the underlying property owner, Gorubso Kardzhali AD, in the coming weeks.
“We have achieved our goal of advancing Rozino from discovery and exploration drilling through to this positive economic assessment in just over one year. On delivery of the preliminary economic assessment, the company will have earned its 70-per-cent interest in the project and will move forward towards a prefeasibility study in joint venture with our partner Gorubso,” commented Keith Henderson, Velocity Minerals’ president and chief executive officer. “We believe that there is significant potential for resource expansion at Rozino and additional exploration drilling is expected to be completed over the coming months in tandem with infill drilling of the existing mineral resource.
“The work completed at Rozino represents an important first step in Velocity’s strategy to explore and develop multiple satellite deposits for processing in the existing centrally located CIL plant. The company is completing due diligence on other advanced properties located within the exploration and mining alliance area, with a view to earning 70-per-cent interests through additional option agreements with Gorubso. The aim is to build a multiasset production profile that maintains annual production of more than 100,000 ounces of gold over a period in excess of 10 years.”
Preliminary economic assessment highlights:
- After-tax financials — after-tax NPV5 of $129-million and after-tax IRR of 33.1 per cent;
- Cash cost — all-in sustaining cost of $543 (U.S.) per ounce;
- Annual gold production — steady-state annual production of 65,000 ounces, peak annual production of 78,000 ounces;
- Capital costs — total estimated capital costs of $97.6-million (includes contingency);
- Sustaining capital — low estimated sustaining capital of $6.3-million;
- Mining — open pit with 0.6 gram per tonne gold cut-off grade (COG), attractive strip ratio of 2.5 and 1.51 grams per tonne life of mine (LOM) gold grade;
- Processing — on-site flotation producing gold-bearing pyrite concentrate assaying 30 grams per tonne gold and transportation to the CIL plant (located 85 kilometres from the project) for processing;
- ROCE — return on capital expenditure of 3.3.
The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economic assessment results will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
The preliminary economic assessment was prepared by CSA Global, an international mining consultancy with experience in Bulgaria, in accordance with National Instrument 43-101 — Standards of Disclosure for Mineral Projects. A technical report prepared pursuant to NI 43-101 on the project will be filed on SEDAR within 45 days of the date of this news release.
Rozino development — mine site to payable gold
The preliminary economic assessment provides a base case assessment of developing Rozino by open-pit mining, on-site crushing, milling and simple flotation to produce a 30 g/t gold concentrate. The concentrate would then be trucked 85 kilometres on existing roads to the currently operating CIL plant, where saleable gold dore would be produced.
In addition to returning positive economic results, this assessment also provides significant benefits, including shortened permitting timelines and capital cost reductions for the following reasons:
- The existing CIL plant and tailing management facility are fully permitted, currently operational and have sufficient capacity to process concentrate from Rozino.
- The use of the existing CIL plant reduces total capital cost requirements.
- On-site development at Rozino only requires permitting for mining, preconcentration and disposal of relatively benign waste products.
The engineering work leading to the preliminary economic assessment results presented here included a range of development scenarios, which will be documented in the upcoming preliminary economic assessment.
Preliminary economic assessment results and sensitivity
The preliminary economic assessment’s financial model returns an after-tax NPV5 of $129-million and an after-tax IRR of 33.1 per cent. Total undiscounted posttax cash flow over the life of the project is estimated to be $182-million, with a robust return on capital expenditure of 3.3.