Royal Gold Inc. (RGLD) said that the operators of the Mount Milligan and Penasquito properties have released preliminary operating results for 2014 along with production forecasts for 2015.
Royal Gold announced that its fully-owned subsidiary, RGLD Gold AG, purchased about 13,000 ounces of gold, in the quarter ended Dec 31, 2014, from the Mount Milligan mine as part of its purchase and sale deal with Thompson Creek Metals Company, Inc. These consists of roughly 6,300 ounces of gold upon final settlement of Thompson Creek’s sixth and seventh shipments from the Mt. Milligan mine and about 6,700 ounces upon provisional payment associated with Thompson Creek’s tenth, eleventh and twelfth shipments.
Thompson Creek registered production for Mt. Milligan of around 41,000 ounces of payable gold and sales of roughly 38,900 ounces of payable gold in the quarter ended Dec 31, 2014. For the quarter, Royal Gold sold roughly 14,300 ounces of gold from Thompson Creek and had around 4,800 ounces remaining in inventory.
For 2015, Thompson Creek expects annual payable gold production to be in the range of 220,000 to 240,000 ounces, an increase of about 25% to 35% over 2014 production of around 178,000 ounces.
Thompson Creek further announced that it expects to submit an updated technical report for the Mount Milligan mine that will reflect 6.2 million ounces of estimated proven and probable gold reserves at $1,250 per ounce gold, an increase from 6 million ounces in the earlier technical report. The updated estimate will include expected average annual gold production of around 285,800 ounces in years 2015 through 2019, a 9% rise over the earlier technical report annual estimates for the first six years of gold production.
In addition to this, Royal Gold announced that Goldcorp (GG) reported about 567,800 ounces of gold production at Penasquito for the year ended Dec 31, 2014. Goldcorp estimates gold production in the range of 700,000 to 750,000 ounces at Penasquito for 2015, representing an increase of about 20% to 30% over 2014 gold production. On a gold equivalent basis, Goldcorp expects production to be in the range of 1.5 million to 1.6 million ounces.
Goldcorp also reported that pre-feasibility studies for the Concentrate Enrichment Process (CEP) and Pyrite Leach Process at Penasquito were effectively complete at the end of 2014 and are currently in internal review. Goldcorp stated that results continue to show the strong economics of these projects and their potential to considerably increase the mine life at Penasquito. The two projects will be integrated as they enter the feasibility study phase, which Goldcorp expects to start by the end of the first-quarter 2015 and be completed in early 2016.
Royal Gold’s shares rose 1.3% to close at $74.77 yesterday. The stock currently carries a Zacks Rank #3 (Hold).
Other companies in the mining space worth considering include Golden Star Resources, Ltd. (GSS) and Pretium Resources Inc. (PVG). Both of these stocks hold a Zacks Rank #2 (Buy).
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