There are a couple of macro risks: the price of gold drops significantly, the junior market bumps along the bottom for another year or two. Given that the PEA takes a gold price of USD $1750 I think the price of gold is a relatively small risk. The junior market? It can stay low for years at a time and then explode. Now those two risks are conjoined. If gold goes for a run, the juniors will too.
In terms of the Chimo project itself, recommissioning a mine filled with water is doable but you have to be very careful with costs. Plus, a lot of the economics turn on whether you build a mill on site or transport the rock to one of the nearby mills. If you are transporting, the ore sorting becomes a very important thing to get right. I'd like to see a fair bit of testing.
Final point, as Cloutier acknowledges, Cartier is an exploration company not a mining company. Which means that they need either to have Chimo bought out or to come to a joint venture arrangement. The sweet spot for larger companies seems to be around 3 million ounces. Chimo, as I write, has about 2.3 million ounces. So this season's drilling is pretty critical. Cloutier seems confident he'll find those last 700,000 ounces. But missing those ounces is a real risk.
Balanced against that is a current share price of $0.135 for a market cap of a little over 40 million. The Chimo mine is not going to be sold for $40 million. Cloutier will mine it himself rather than give the asset away.
Very interestig. But could you maybe also point out any potential risks ?
There are a couple of macro risks: the price of gold drops significantly, the junior market bumps along the bottom for another year or two. Given that the PEA takes a gold price of USD $1750 I think the price of gold is a relatively small risk. The junior market? It can stay low for years at a time and then explode. Now those two risks are conjoined. If gold goes for a run, the juniors will too.
In terms of the Chimo project itself, recommissioning a mine filled with water is doable but you have to be very careful with costs. Plus, a lot of the economics turn on whether you build a mill on site or transport the rock to one of the nearby mills. If you are transporting, the ore sorting becomes a very important thing to get right. I'd like to see a fair bit of testing.
Final point, as Cloutier acknowledges, Cartier is an exploration company not a mining company. Which means that they need either to have Chimo bought out or to come to a joint venture arrangement. The sweet spot for larger companies seems to be around 3 million ounces. Chimo, as I write, has about 2.3 million ounces. So this season's drilling is pretty critical. Cloutier seems confident he'll find those last 700,000 ounces. But missing those ounces is a real risk.
Balanced against that is a current share price of $0.135 for a market cap of a little over 40 million. The Chimo mine is not going to be sold for $40 million. Cloutier will mine it himself rather than give the asset away.
Thanks so much for the extensive reply.