LONDON, April, 2019 – Forget about peak oil. The real crisis hitting the commodity markets is peak gold. The Financial Post reports that “all major deposits have been discovered.” Goldman Sachs forecasts there may be only 20 years of supply left. The world’s gold majors may soon be in a real estate bidding war. Mentioned in today’s commentary includes: Seabridge Gold Inc. (NYSE:SA) (TSX:SEA), Teck Resources (NYSE:TECK) (TSX:TECK), Teck Resources (NYSE:TECK) (TSX:TECK), Great Panther Mining (NYSE:GPR) (TSX:GPR). Endeavor Silver (NYSE:EXK) (TSX:EDR).
Gold Majors are Facing a Real Estate Crisis
For companies like Euro Sun (ESM, CPNFF), this could represent a major windfall. Their Rovina Valley project in Romania is the #1 copper/gold resource in Europe – with reserves totaling 7.5 million ounces of gold and 1.5 billion pounds of copper.
Rovina’s previous owner – Carpathian Gold – spent $51 million sinking 138,000 meters of drill holes to prove up the potential $13.3 billion resource. It’s a similar and, perhaps even better image, than that of the Timok project in neighboring Serbia, and the company that owns Timok was just snapped up for $1.4 billion. And, unlike Nevsun, Euro Sun has its mining permits – the first issued in Romania since 2003. It could be in production within as little as 24 months.
Here are five reasons to pay close attention:
The World Is Facing Peak Gold
Europe’s #1 Copper/Gold Find
Robust, Mine Ready Economics
Their $1.4 Billion Serbian Neighbor
Romania’s First Mining Permit Since 2003
Reason #1 – The World Is Facing Peak Gold Reserves
Simply put, the world is running out of viable gold reserves. In comments to the financial post, Ian Telfer, chairman of Goldcorp, said: “If I could give one sentence about the gold mining business … it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years.”
According to the USGS, indicated and identified reserves are down from 57,000 tons in 2017 to just 54,000 today. That’s a precipitous drop in two years. Meanwhile, demand is skyrocketing on the back of the highest central bank buying in 50 years. It’s now at 4,345.1 tons, up 4% from just a year earlier. Goldman Sachs is already forecasting $1,425 per ounce.
For Euro Sun (ESM, CPNFF), which has millions of ounces of 43-101 proven gold reserves, this represents a huge opportunity.
Reason #2 – Europe’s #1 Copper/Gold Find
Amidst this active gold market, Euro Sun (ESM, CPNFF) might be perfectly positioned with their Rovina Valley project in Romania. Cantor Fitzgerald reports that “Rovina Valley, when up and running, will be Europe’s largest gold and copper mine in terms of resources.”
According to their 43-101, the Rovina Valley property has reserves totaling 7.5 million ounces of gold and 1.5 billion pounds of copper. At today’s prices, that’s approximately $13.3 billion in resources.
Their key project is located in the famed Golden Quadrilateral, where mining has taken place since the Roman period, over 2,000 years ago. The region has produced greater than 55 million ounces of gold, worth roughly $71 billion at today’s prices.
The Golden Quadrilateral Mining district has established power, transportation (road and rail)
and all needed infrastructure for commercial-scale mining. Prior to being acquired by Euro Sun, Carpathian Gold spent approximately $51 million exploring, drill defining, and completing a PEA (2010) on Rovina Valley.
The current 43-101 compliant resource (2012) was based on 138,000m of drilling completed by Carpathian over a period stretching from 2005 to 2014. Euro Sun acquired and now sits on an immense, proven resource.
Reason #3 – Mine Ready Economics
Euro Sun’s Rovina Valley Project (ESM,CPNFF) has robust economics and upside. This a property that already has a Preliminary Economic Assessment, with 138,000 meters of exploratory drilling and a huge resource. At present, the current 43-101 compliant resource across all categories stands at 432.6 million tons of ore grading 0.54 grams per ton of gold and 0.16% copper.
According to analysts at Cantor Fitzgerald, “If another ounce is never found, Euro Sun already owns a potentially extremely robust project.”
A recent test of the Euro Sun metallurgical plant delivered an average gold recovery of 73.2 to 81.5% and copper recoveries of up to 94.7%, without using cyanide. That’s very favorable compared to industry averages.
Their 2019 PEA estimates Phase 1 mine production of 108,000 ounces of gold and 13.3 million pounds of copper per year, worth $172,054,000 annually.
It also projected all-in sustaining costs (“AISC”), on a gold-equivalent basis, at $742/oz. Current gold prices are around $1,300 an ounce. This gives Euro Sun roughly $558 of cash flow per gold-equivalent ounce.
Reason #4 – Their $1.4 Serbian Billion Neighbor
Another project, the Timok, developed by Nevsun Resources, is just a few hours away, in the same geological belt. It’s one of the most promising copper-gold porphyry deposits in the world. And it could tell prospectors a lot about what
Euro Sun (ESM, CPNFF)