Midas Gold (TSX: MAX) CEO Stephen Quin Discusses the Benefits of Improved Gold & Antimony Metallurgy Results at Stibnite
Gerardo: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President and CEO of Midas Gold (TSX: MAX)(OTC: MDRPF) Mr. Stephen Quin. Stephen thank you for joining me this afternoon.
Stephen: Thank you Gerardo. And thanks for inviting me on.
Gerardo: Absolutely! You had some good news this morning that the headline reads "Midas Gold Reports Favorable Metallurgical Test Tesults for its Stibnite Gold Project in Idaho." Can you share the details? I know there were a lot of technical points in the release, but can you go over some of those details and why it's a favorable release for the company?
Stephen: Sure, if we step back to the end of 2014 when we did a pre-feasibility study, there were a number of opportunities identified in that study which could add value to the project. And so once we got the funding in place in the beginning of 2016 we been pursuing the two biggest items and that. One has been the drilling and as we've talked about on a number of occasions, we've put out some drill results which were very supportive and should be adding value to the project. And the second area we've been working on is the metallurgical side. And basically metallurgy is, you know how do you get the metal out most cost effectively. How you're gonna do it for the least money and get the highest recovery, et cetera. And so unlike drill results where you can announce individual holes or a collection of holes where people can see very quickly, you know here's the result. You know, with metallurgical programs you have to spend longer and kind of pull all the different pieces because there's many facets to the metallurgical results that might look encouraging initially but, you know, there's an offset to that and that provides you a net positive.
Stephen: So these tend to come ... the metallurgical results tend to come in more chunky packages where you can look at the whole picture and say "Am I making progress or am I not making progress on an overall basis". So this is a ... this press release .... basically covered a major amount of work that we've conducted over the last six-eight months. And pulling it all together and saying "Now overall there are some positives." So now I can go into the individual items if you'd like and just kind of give my layman's interpretation of those results if you would like.
Gerardo: No, I would love that Stephen. I think just looking it over my layman's understanding of it, there were definitely improvements on both the gold and the antimony which I think are very important to go over. So if you could share the insights here that would be great.
Stephen: Certainly. Well. So essentially what we did was collect a lot of sample material from all over the different deposits to make sure they're very representative of particularly the early production because that's when you're in payback and you want to ensure that you have the best results possible. And so we really kind of saw results on four different areas, which were essentially all positive. So number one was that we used reagents to separate the gold and the antimony from the rocks that have no value. And while we were doing the pre-feasibility study, we saw a higher than expected reagent consumption and so we were looking at, you know, can we optimize that and reduce the amount of reagents without effecting metallurgical performance. And that means, you know, if you lose less reagents you get less efficient separation or potentially even lose gold or antimony. And so we spent quite a bit of time optimizing those reagents and we saw some significant gains or reductions in the amount of reagents. Which translates into an economic benefit of potentially about $20 to $30 million of less reagents purchased during the life of the mine. So obviously that should flow through to the bottom line and give us a better return.
The second area was the grind size. And if you step way back to 2012, we did a preliminary economic assessment and that had a 1oo micron grind, and micron is basically how fine it is. So it was a reasonable grind size. But there was some test work done around that PEA which suggested if we ground finer, we'd get better recovery. But grinding finer costs you money in capital and operating costs. But if you got better recovery that more than pays for it then obviously that would be a positive.
Stephen: So when we did the PFS, we went to a finer grind we did all the PFS which came out in 2014 at a 75 micron grind. So it was finer and that had capital and operating cost implications but the surprise was we didn't see the recovery more than offsetting that. So when you look at our pre-feasibility study announcement there was a what they call a waterfall chart which said okay you know what differences did it make. And essentially the finer grind cost about 75 million dollars in net present value. Well that's about 10% of the project's net present value because the finer grinding cost us money but we didn't see the related bump in recoveries.
Stephen: So obviously the simple answer is well just grind it courser and you'll save that money. But the answer's always more complicated than that. So we did a whole series of tests and different grind sizes to see what really is optimal. And the conclusion we came to was an 85 micron grind. So it's a bit courser. So our PEA highlight that grinding finer was a positive ... would be a positive, was correct, we just went a bit too far. So we backed off a bit and went to an 85 micron grind, and what we're seeing is ... you know the results that we wanted to see. And that should result in both capital and operating cost reductions as compared to what we did in the pre-feasibility study. It's kind of challenging to quantify at this stage because many things change, the cost of equipment, and power costs, and labor costs, and so on. It's more ... it's harder to translate into a dollar amount at this stage but that bottom line is we should see the results increase.
Stephen: Number three was antimony concentrates and as you're aware we're going to produce a byproduct of antimony and that material will be shipped overseas somewhere. Where it goes is still to be determined because there's no antimony processing in the United States, which is a whole separate discussion point.
Gerardo: Yes it is.
Stephen: And so, the U.S. isn't dependent antimony for it's military and energy uses. But regardless of that discussion, when you're shipping a concentrate you want that concentrate to be as high grade as possible. Because what isn't antimony is something you're not getting paid for and so you're paying to ship something that's worth nothing. So we did some work to optimize the antimony grade in the concentrate and we saw a nice little increase the antimony grade in the concentrate without impacting recovery. Probably the most important thing is we reduce the amount of gold going into the antimony concentrate at the same time. And that's a positive as well, because antimony concentrates generally you don't get paid for the gold. So any gold going into the antimony concentrate is potentially lost.
Stephen: And so its no help to you. So seeing less gold going into the antimony concentrate is a positive and having higher grade concentrate, you know there's lost cost to ship it but also its a nicer product that you should get a better price from buyers on that concentrate. So all in all a good result.
And number four is really related to that number three but also other test work. And what we've seen is gold recoveries increase overall. And it's partly because less gold was going into the antimony concentrate but also other optimization work; the coarsening up of the grind, the reagent additions, optimizing conditions, et cetera. And you know they should increase to have a significant bottom line to the project. Now that applies to two of the deposits. We're not as far advanced on the west end, but west end has a relatively marginal impact because it's the last deposit to be mined so when you get to present value it has a much less significant impact. And we'll do more test work on that as things go forward.
So the bottom line of these results is we've made very good progress. This is the kind of thing we believed we could achieve when we did the pre-feasibility study and we're bringing that to the table. And we continue to advance the other areas, the next batch of metallurgical tests is to go to a full pilot plant. Which is basically a larger scale series of tests that provide better guidance on scale up to production level. So we'll have those results out probably by the middle of the year.
So bottom line, good results.
Gerardo: Excellent. Well I can tell as a shareholder, I'm a happy camper. Obviously the success of the drilling that was done last year and the results that we got early this year. I'm definitely looking forward to, I believe it's summer time when we get some more drilling. Is that correct, Stephen?
Stephen: Yeah there's still some more results to come, which we're waiting for the final assays on but they're ... and we've got one more hole to finish. We took a break for about 10 days. There's been lots of snow and avalanches on site, so we'll be back drilling later this week. And we'll finish the last hole for the winter program. And then we hope to do more drilling in the summer. That'll be dependent on the results and our analysis of the results when we have all the assays.
Gerardo: Excellent. Excellent. Well as I was saying, I'm a happy shareholder. The drilling has so far been very successful in my eyes. And obviously the news today bodes very well for just kind of refining and optimizing the economics. So I'm looking forward to having you back on. What's next from this point on out as far as enhancing those project economics, Stephen? I know that's a big focus.
Stephen: Sure, the next set of results will have the remainder of the drill results that we have pending. And they'll be coming out in the not to distant future. We'll have the balance of the metallurgical work by the middle of the year. And then of course the other big focus is the permitting regulatory side, where we've applied to build a mine. In December, the project was declared administratively complete which basically means we provided all the information that's required to asses or to commence the assessment of the project under the environmental regulations. And you know so you'll start to see in our presentation and so on, we have a series of boxes or stages that we pass through the permitting process. And throughout the year and into next year you'll start to see those boxes being ticked off and progress being made.
Gerardo: Excellent. Well I encourage everybody to go to midasgoldcorp.com and you can get a very thorough overview of what that process looks like. The history of the project as well as where its at now. Stephen, I want to thank you so much for coming on. Is there anything else that you'd like to add?
Stephen: I appreciate the opportunity to talk about things that I think I'm very happy with the results that we've continued to deliver and look forward to delivering more of them.
Gerardo: Well I look forward to having you back on as soon as we get that next batch of assays published.
Stephen: Great. Thank you, Gerardo.
Gerardo: Thank you again, Stephen.