Canadian Critical is a Producer
Canadian Critical Minerals (CCMI.V) put out a May operations report Press Release May 17.
It sent 360 wet tons of sorted mineralized material to the New Afton mill and received payment of $103,000 USD. Tonnage sent is down a fraction from April, but revenue is up due to significantly higher grades:
3.86% copper as compared to 2.96% in May, .77 gpt gold (.29 in May), 31.7 gpt silver (23.1 in May).
CCMI had an equipment failure in May which reduced its working days by about a week. In May it operated one shift 5 days a week which meant that, with the loss of those days, it only booked around 20 operating days. In the release, the company states that it will be shifting to a 7 day a week day time shifts as of June 15.
“we generated grade improvements of over 265% for all metals using the ore sorter during the month” stated an Berzins, President and CEO.
A couple of months ago I did a back of the envelope calculation as to CCMI’s potential:
Back of the envelope, if CCMI can ship 1000 tons a month of sorted rock the gross value of the rock shipped would be $136,000 (ed. note…wrong, based on current numbers that figure should be $286,000). But I have to bet that CCMI will be more ambitious. The ore sorter can process 40 tons an hour. A 10 hour day sorts 400 tons of rock and if you use the 250% copper upgrade number it implies that around 240 tons of rock are discarded with 160 tons of the sorted rock being shipped. Running the sorter five days a week would produce a shippable 3200 tons a month. Triple the current volume.
A second month of less than 400 tons shipped suggests that CCMI is not coming anywhere close to its potential although its revenues are encouraging. It is one of the constants in mining that, for a few months, rock is processed at rates much lower than nameplate capacity. Not an excuse, just a reality.
Running the sorter 10 hours a day seven days a week will, assuming no breakages, gives CCMI the potential to sort 12,000 tons a month and retain for shipping around 4000. The question is how close to that potential can CCMI get? This month’s report suggested less than 10% which leaves a lot of room for improvement.
However, the key takeaway from this release is that CCMI is producing a significant quantity of payable rock. Almost 14 tons of copper, 277 grams of gold ($20,668 USD at current price), 11,412 grams of silver ($10,841 USD at current price) with very significant potential to scale that production up. Way up.
The share price is hovering around $0.05 on very low volumes. Essentially the 180,000 ton stockpile of mined rock, with 40-50k tons crushed and screened and ready to sort, is priced as if CCMI is a greenfields explorer. The fact is that CCMI is a producer and is making money while it waits for permits to restart the Bull River mine.
Will the market grab a clue? Well, to some extent that is up to management. Here’s the thing, CCMI is not “under the radar”, it is off the radar completely. There is a solid, two part, story here with the sale of 90,000 tons of material over two years as part one. Part two is getting the permits and recommissioning a potentially rich copper mine as copper hits all time highs. But that story needs to be told.
Summer is often considered to be a dead zone in the junior resource business. Everyone is out drilling and waiting for results. But it can be an excellent time to set up meetings with investors, get onto the informal conference call circuit and hit your talking points. A few thousand a month for marketing can pay off in investor interest and, well, share price improvement.
CCMI is a producer. Why keep it a secret?
Update: I sent the link to this article by email to Ian Berzins, President and CEO of Canadian Critical Minerals, and he was kind enough to reply:
Our largest operating cost with the Ore Purchase Agreement is trucking. By crushing and screening the entire 180,000 tonne stockpile we create approximately 45,000 tonnes of fines which can’t go through the sorter and are too low grade to be economically sent to New Afton. We initially planned that approximately 90,000 tonnes or 2/3rds of the 135,000 coarse material would be trucked to New Afton. Based on the sorter setting you can produce a higher grade product with no metal reporting to rejects or a super-high product with some metal reporting to rejects. We are currently experimenting with producing a super-high grade product at over 4% Cu with the rejects still having residual metal values of between 0.4% Cu and 1.0% Cu. The rejects are sufficiently high enough grade to be milled at Bull River once the mill is re-permitted. The rejects can either be re-run using the sorter or co-mingled with fines in future.
In all likelihood we will end up sending less tonnes to New Afton but at higher grades. This has the benefit of increasing our profit margins (because of less trucking) and New Afton will receive a higher-grade product and our tailings will consume less room in their tailings pond. Bull River will still retain a significant portion of the overall metal in the stockpile.
Which explains a lot. Far better to send smaller amounts of high grade rock for more profit and less trucking cost if, and this is critical, you anticipate re-opening the mine and mill at Bull River. Leave the lower grade material to be processed when the mine is permitted and save the cost of shipping.
Smart.
(Disclaimer: I hold shares in CCMI.V. I may purchase or sell shares at any time. This is not investment advice. Do your own due diligence. Call the CEO.)