After almost 12 months of covering Golden Dawn Minerals Inc. with a total of 14 reports, and being a shareholder and believer of its exceptional upside potential, I took the chance in late May to visit Golden Dawn Minerals Inc.´s Greenwood Projects near Grand Forks in British Columbia, Canada. Before the Site Visit Report begins, I would like to raise some attention to the most recent press-releases from the company.
On Tuesday, June 19, Golden Dawn filed an updated PEA ("Preliminary Economic Assessment") Report for its Greenwood Projects. The previous PEA dates back to April 2016 and the updated PEA now includes the recent acquisition of the Kettle River Resources´ land position and its numerous exploration targets along with 31 historic mines. Highlights include:
-- IRR (base case pre-tax): 118.4%
-- NPV (6% discount rate): $27.4 million CAD
-- Pre-production capital requirements: $3.4 million CAD (pre-production period of 6 months)
-- Life of mine ("LOM") cash cost: $604 USD/oz gold
-- All-in sustaining costs: $786 USD/oz gold (2016 PEA: $825 USD/oz gold)
Click here view the updated PEA (90 MB)
(The PEA is preliminary in nature and it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Mineral resources that are not Mineral Reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized. Rockstone sourced most of the information and figures provided herein from this updated PEA)
Today, Golden Dawn announced material news of having received, from the BC Ministry of Energy & Mines, the eagerly-awaited permit of operating the Lexington-Grenoble Mine. The company received a dewatering permit for the underground mine on March 31. Dewatering the mine only makes sense if the company holds an operating mine permit as once it is dewatered, mining should take place shortly thereafter. Now, with Golden Dawn holding both permits in hand, the company can actually start dewatering the mine (takes about 2 months) in anticipation of extracting mill feed. This is pivotal for Golden Dawn as this permit now enables the company to become a producer. On top of that, Golden Dawn received an operating permit for its Greenwood Mill so that the mined material from Lexington-Grenoble can be processed through its own facility to produce potentially saleable precious and base metal concentrates. As per today´s press-release:
"These permits put Golden Dawn in the driver's seat towards production."
(The Company would like to clarify that its decision to proceed to extract mineralized material from the Lexington, Golden Crown and May Mac mines for processing at its facility located at the Greenwood Precious Metals Project is not based on a feasibility study. The Company cautions that, in such cases, there is increased uncertainty and higher economic and technical risks of failure.)Site Visit Report
The 5 hour drive started in Vancouver and about halfway through we passed the city of Princeton and saw the Copper Mountain Mine, operated by Copper Mountain Corp. In late 2011, a few months after the Copper Mountain Mine re-started production, I looked into porphyry copper deposits on a global scale (see here) and was impressed of what Jim O´Rouke, President of Copper Mountain Corp., was up to.
The 3 historic Copper Mountain pits were thought to be mined out, until Jim O´Rouke came along as he thought differently. He drilled a few holes into the old pits and, by the surprise of basically everyone, he discovered more mineable copper resources. He saw the potential to merge all 3 pits into 1 giant superpit up to 7 km long. He delineated a remaining resource of about 5 billion pounds ("lbs") of copper averaging "only" 0.3%, yet sufficient to allow for the production of some 100 million lbs of copper per year for at least 17 years. Mitsubishi took a stake and financed the mine to production.
Full version: The schematic cross-section model from Copper Mountain Corp. (2011) showed exemplary how extensively large-scaled porphyry deposits typically are distributed next to each other. The occurrence of numerous mineable ore bodies next to each other is not uncommon but typical for large porphyry copper systems near surface - same applies to other large porphyry systems on a worldwide scale such as the Bingham Canyon deposits in Utah/USA or the Chuquicamata mines in Chile. The porphyry deposits in the Copper Mountain area typically occur within extrusive/volcanic rocks (so-called "Nicola Group Volcanics") close to large faults (especially near the so-called "Copper Mountain Stock" intrusive rocks).
Full version: Driving by the Copper Mountain Mine near Princeton, BC
The reason for this introduction on Copper Mountain is twofold.
First of all, Jim O´Rouke saw potential for additional resources in the historic Copper Mountain mines, took a chance when nobody saw any potential, and then, after he was proven right via the drill bit, developed his project into a profitable mining operation, creating vast shareholder value in due course. This re-vived the city of Princeton back into a flourishing mining hub, creating hundreds of jobs. If you don´t know Golden Dawn´s CEO, Wolf Wiese, personally, you better take a shot now. He is one of a kind business man, reminding me on the (friendly) German version of Robert de Niro, however being a true gentleman and team-player that does not like to dictate but believes in the power of synergy.
And what a steal Wolf made with the acquisition of the Lexington and Golden Crown Mines along with the modern 200-400 t/day Greenwood Processing Facility that was in production only for a few (unlucky) months when markets collapsed in 2008. The former owner had substantial debts on its shoulder as the facility was built for tens of millions of dollars. Wolf acquired it all for a few million dollars and soon thereafter consolidated almost the entire historic Greenwood Mining District, including most historic mines and showings. This consolidation is a spectacular feat that may soon turn out legendary. Wolf´s vision is to re-vive Canada´s "smallest city", Greenwood, to the likes of today´s Princeton. Incorporation dating back to 1897 and once a booming mining city, Greenwood nowadays - like Princeton a few years ago - is a mere, but beautiful, remembrance of "the good old times", when the high-grade ores of dozens gold and copper mines in the area where transported to Greenwood´s numerous smelters.
Full version / "Greenwood BC has an rip-roaring past and is home to a huge number of historically significant buildings. Known as Canada's "smallest city" it's a great place for a history buffs to explore... The site [of the remains of the giant BC Copper Company smelter] can be easily seen from the highway and the huge stack and deep slag piles stand out like nothing else." (source)
Full version / On the way to the May Mac Mine, we stopped in the city of Greenwood, where Golden Dawn´s geologist George invited me for "Greenwood´s best coffee", the site where "the good old times" are remembered, and hoped to get re-vived by Golden Dawn Minerals, the only company active in the district. The mining history is quite evident throughout the streets of Greenwood plus the displays located at the Green Museum and Visitor Info Centre.
Full version / Motherlode ice-cream is available in the city of Greenwood, whereas Golden Dawn Minerals aims to find the motherlode of the dozens of historic mines in the area.
Secondly, Golden Dawn plans to do a deep-penetrating VTEM survey over its entire land package. This may not only identify more deposits near surface but also show if, and where, a large porphyry system is located (potentially close to surface, similar to the Copper Mountain system). A massive motherlode-type complex could very well show up in the upcoming maps. This VTEM survey may substantially change "the big picture" of the historic Greenwood Mining District, as until now, the company "only" explores at historic mine sites, respectively the obvious. However, large and high-grade deposits typically occur beneath the overburden.The Big Picture
In 2008 (April to December), Merit Mining Corp. mined 54,237 t from the underground Lexington-Grenoble Mine. This material was processed through the Greenwood gravity-flotation plant (17 km by road) and produced 5,486 oz gold, 3,247 oz silver and 860,259 lbs of copper. In that episode, only a portion of the known deposit was mined (as can be seen in below figure, as well as that substantial investments were made to develop the portal and declines; ramp: 1,183 m, drift: 1,481 m). The remaining measured & indicated resource (03/2016), based on 232 drill holes, stands at 372,000 t @ 6.47 g/t gold, 1.05% copper (8,05 g/t gold equivalent), translating into 96,300 oz gold equivalents.
With an initial capacity of 200 t/day (6,000 t/month or 72,000 t/year), the life of mine of the currently known deposit is projected to be around 5 years. The defined/known Lexington-Grenoble Deposit is 520 m long. The deposit remains open, up an down dip as well as along strike. Merit Mining has identified deposit extension potential. Only limited drilling was done at the southern projection of the deposit with potential of a mineralizing system to continue to the south into the Lone Star Pit, which Golden Dawn recently acquired (see report here). This latest acquisition feat is not included in the latest June-2017-PEA (will be included in the next PEA update).
The Greenwood Mill (a modern processing facility) and the underground access to the Lexington-Grenoble Deposit was completed in 2007, at a time of rising gold prices. In April 2008, production started when the gold price was trending lower due to the 2008 global financial crisis. During the period of production, the gold price dropped sharply from almost $1,000 to $700. In December 2008, when gold just started to trend higher again, Merit Mining ceased operations as the metal prices were too low and costs too high (Golden Dawn´s 2016-PEA calculated all-in sustaining cash costs of $820 USD/oz gold, whereas the updated June-2017-PEA indicated all-in sustaining cash costs of $786/oz gold). Since then, the Lexington-Grenoble Mine and the Greenwood Mill have been kept on care and maintenance.
In February 2016, Golden Dawn signed an LOI to acquire the Greenwood Mill, the Lexington-Grenoble and Golden Crown properties from Huakan International Mining Inc., which company previously acquired Merit Mining Corp. Golden Dawn paid around $4 million CAD in cash payments and 2 million units of equity (each units consists of a share and a warrant exercisable at $0.20 for 2 years, and 600,000 shares of Golden Dawn). Merit Mining invested around $40 million to develop these assets.
What a steal Wolf made, just in time when the gold price ended its 4 year downtrend. Perfect timing, as it may turn out to be the perfect time now to re-start operations with an uptrending gold price well above of the all-in sustaining production costs of $786 USD/oz. And, Golden Dawn is debt-free (in stark contrast to its predecessor, Merit Mining, in 2008).
In March 2017, Golden Dawn received a dewatering permit for the Lexington-Grenoble Mine. This permit is pivotal for the company because it allows the mine to be pumped out in preparation for mining activities, and for water to be discharged during underground test mining activities. Today, the company received permits to operate the Lexington-Grenoble Mine as well as the Greenwood processing plant.
At the Greenwood Mill, some 15 t of oversized Lexington mined material in stockpile exists. These potentially ore-type rocks show extensive veining and mineralization. Over 90% of the mineralization is hosted in dacite, a whitish intrusive rock. Massive sulphide veins, veinlets and disseminations. Veins commonly 1-50 cm wide. Predominately pyrite with subordinate and later chalcopyrite. Copper grades in individual zones commonly 1.5% but can reach up to 9.4%.
Between September 2007 and April 2008, Merit Mining constructed the mill and tailings facility, whereafter the facility was commissioned in May to process material from the Lexington-Grenoble Mine. The crushing/grinding-gravity-flotation facility, with a 212 t/day mill, assay laboratory and tailings are all fully permitted and under care and maintenance since operations ceased in late 2008. The crushing and conveyor belts are outside the mill building and appear in reasonable shape. The equipment inside the mill building includes a ball mill, a regrind ball mill, a centrifugal gravity concentrator system, a series of flotation banks and a filter that all appear in good shape. There is a dry and lunch room also inside the building. There is a fork lift and one portable living trailer also inside the mill building. The assay laboratory is fully equipped for gold and copper assaying inside a Seacan and sits near the mill building. This laboratory was not available to the mining operation until days before the mining ceased. Another small Seacan served as a sample preparation room is fully equipped to crush and pulverize. A sprung structure sits adjacent to the mill building where various spares, electrical panels and cables are stored, as well as a small underground diamond drill. There is a new 3 bedroom Atco living trailer for security personell to remain on property during non-operations. Currently on the mill site is the fleet of underground mining equipment used by Merit during its mining operation. These include 3 load-haul-dump machines, 3 load-haul-dump machines, 2 jumbos, 3 tractors, 2 generators, 2 compressors and 2 mine trucks (13 t). The lined tailings facility remains stable and does not appear to show signs of leakage. Water levels within the impoundment fluctuate annually about 1 m with input from snow melt and evaporation through the summer/fall.
The Golden Crown Property has long history of small-scale underground production. A near-by shaft was part of small-scale production in early 1900s. Total production estimated at >2,488 t @ 15.4 g/t gold + 1.5% copper (mined from Golden Crown Vein in early 1900s). A 2.4 x 2.4 m exploration adit (1,070 m long) was developed in 1985 to access the Golden Crown vein system. Total of 289 drill holes since 1968.
2016 Resource Estimate (3.5 g/t gold equivalent cut-off):
Indicated: 163,000 t @ 11,09 g/t gold + 0.56% copper (11.93 g/t gold equivalent; 62,500 gold equivalent oz)
Inferred: 42,000 t @ 9.04 g/t gold + 0.43% copper (9.68 g/t gold equivalent; 13,100 gold equivalent oz)
(Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues. It is noted that no specific issues have been identified as yet. The Inferred Mineral Resource in this estimate has a lower level of confidence that that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration. The Mineral Resources in this report were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.)
According to the latest PEA: The Golden Crown Mine is envisaged as a narrow vein captive cut and fill mining operation, with ramp accesses to mining stopes developed from an existing portal and access drift. The mine currently has some sublevel development completed, several vent raises and related lateral development. The mining method would employ industry standard captive cut and fill mining practices with hydraulic backfill. The dip of the mineralization is approximately 72 degrees. Mill feed from the mining operation would be hauled to surface using 13 t underground haulage trucks. The maximum Golden Crown forecast mill feed production rate is 200 t/day, which equates to 6,000 t/month or 72,000 t/year. Mineral processing of the Golden Crown Mine product will be performed at the existing Greenwood Mill and concentrator facility.
Golden Crown's mill feed estimates were based on a 3.5 g/t gold equivalent cut-off grade for 23 Golden Crown LOM stopes considered. Initially 90%, or 195,000 t grading 9.76 g/t gold, 0.54% copper and 10.66 g/t gold equivalent of the total Measured, Indicated and Inferred Mineral Resources were considered for the financial evaluation. This material was diluted by15% with 1.5 g/t gold equivalent and extracted 85%, based on the Golden Crown mine plan and mining method. This resulted in 191,000 t grading 8.67 g/t gold, 0.48% copper and 9.46 g/t gold equivalent (diluted and extracted).
A total of 17 sub parallel steeply dipping veins are identified in the resource calculation. Golden Dawn has applied for a drilling program to expand resources. Thereafter, bulk sampling of 10,000 t is planned. It is envisioned that a new mine at Golden Crown would produce 72,000 t of material per year, to be processed at the near-by Greenwood Mill.
The King Vein is the chief resource vein and is the most persistent. The King Vein was exposed in a 2004 + 2008 trench for 190 m. In 2008, Merit Mining conpleted surface trenching along the King Vein, with an average true width along this 120 m long trench: 0.8 m @ 19.98 g/t gold.
Volcanic rocks host numerous gold bearing massive sulphide veins composed of pyrrhotite-pyrite and lesser chalcopyrite. Massive sulphide + quartz-sulphide veins occur in the southeastern part of the property as part of a 4 km long gold/copper system.
In addition, there is approximately 10 tonnes of oversize King Vein material from the Golden Crown Deposit in a stockpile at the Greenwood Mill. The Golden Crown stockpile shows signs of oxidation and oxide water puddling.
As many as 17 discrete veins have been identified in the heart of the system. Veins typically 0.3-1 m true width, with local developments to 5 m true width near the serpentinite contact.
The vein system appears to be the result of 2 separate mineralizing events. Veins range 50-90% in sulphide content of pyrrhotite-pyrite and lesser chalcopyrite with very local arsenopyrite in a quartz gangue and carry high gold tenor.
Metallurgical testing indicated that the bulk of the gold is free and associated with pyrite.
The Monzonite porphyry is commonly strongly altered and pyritic, it weathers recessively compared to the diorites, so it is only seen in core and trenches. Trenching identified a large serpentinite body 100 m south of the main vein system. Former owner drill tested under this unit, and encountered mineralized greenstone. More exploration is warranted. Golden Dawn has applied for a surface drilling permit and plans to start drilling shortly after the receipt of the permit. The goal is to find additional mineralization and expand the resources.
According to the latest PEA (June 2017): The area of the Phoenix Property had an extensive period of exploration, development and production from 29 past producing mines and well over 70 mineral prospects, whereas the Phoenix Mine was the most significant with a production of 27 million t @ 1.12 g/t gold + 0.9% copper (1900-1976). In the early years, Phoenix was primarily an underground high-grade copper operation. In 1956, the property was re-evaluated for its open-pit potential. A flotation mill was built on-site and open pit production began in 1959 at a rate of 900 t/day, increasing to 2,000 and 3,000 t/day in 1961 and 1972, respectively, until 1976 when operation ceased. The mill continued to operate until 1978, but was later dismantled and removed from the site. The elliptical open pit measures 425 x 800 m, which consumed most of the nearby historic underground workings.
Mineralization: massive pods, bands and disseminations of pyrite, chacopyrite and magnetite within skarn. The ores of the Phoenix Mine and area are almost all the result of metasomatic alteration of limestone.
Golden Dawn acquired the Phoenix Property from Kettle River Resources in late 2016, which included the Sylvester K target. Drilling and trenching to date on the Sylvester K has met with limited success to delineate a stand-alone mine and Mineral Resource due to discontinuities from faulting. However, with the Greenwood Mill or the Republic Mill nearby, small scale mining opportunities may be a realistic opportunity for such zones such as Sylvester K, particularly when its tenor is attractive and the zone comes to surface for trenching. Grades of the massive sulphide and the footwall stringer zone from trenching range between 8 and 10 g/t Au, although the 1989 5,090 bulk sample saw an average of 5.1 g/t Au. From limited drilling, grades are in the 5-7 g/t Au range. Based on drill holes that penetrate along the 150 m sulphide zone, trenching that has exposed the zone between 150 m nd 230 m long, a vertical depth of 30 m (from drilling it is interpreted faulting cut-off the zone at this depth) and a bulk density of 3.5 t/m3, the tonnage range for this exploration target is: 150,000 - 250,000 tonnes with a grade range of 6-8 g/t Au.
The Tremblay Tailings are 3 km east of former Phoenix Mine pit. Tailings are derived from milling operation at the Phoenix Mill (1956-1967). Mill records shows 4.19 million t @ 0.38 g/t gold + 3.8 g/t silver + 0.15% copper. Tailings size: approx. 15 hectares. Due to its size, these tailings warrant re-evaluation and resource estimatation, along with metallurgical testing to determine recovery and costs. Power line runs across property.May Mac Mine
According to today´s press-release:
"The May Mac mine is also being prepared to supply feed to the Greenwood Process Plant. A permit application for underground drifting and drilling is currently under review by the BC Ministry of Energy and Mines, and an updated bulk sample permit application is being finalized. A surface diamond drilling program is currently underway. The initial underground drilling program has been successfully completed."
Recently drilled hole BF16-26 intersected a quartz vein containing a well mineralized section of coarse-grained massive sulphides including pyrite, galena, sphalerite and chalcopyrite with assays reported as follows:
Hole BF16-26 (177.47-183.54 m):
6.07 m @ 79.6 g/t silver, 0.57 g/t gold, 1.9% lead, 1.4% zinc
including (177.94-178.9 m):
0.96 m @ 281.6 g/t silver, 1.42 g/t gold, 7.2% lead, 4.9% zinc
and (184.2-184.66 m):
0.47 m @ 49.4 g/t silver, 2.15 g/t gold, 0.7% lead, 2.7% zinc
This intercept is located 13 m below the elevation of the #7 adit, and 100 m northeast of the end of that level.
Significance of May Mac surface drill results to date:
(1) The mineralization that was historically mined from Levels #4, #5 and #6 continues vertically down another 75 m to below the elevation of the #7 adit, and is open to depth (Hole BF15-06 also encountered mineralization at depth 118 m below #7 Level on a new zone, now named "Rose Vein", see news release dated December 16, 2015).
(2) The mineralization continues along strike to the northeast of the historic mine and is open in that direction. The intercept in Hole 26 provides a target for extending the #7 Level 100 m northeast. Further surface drill testing will continue to determine the extent of the north-easterly trend of the Skomac Vein system.
Golden Dawn´s May Mac Drilling Update:
Golden Dawn Minerals has small camp in Rock Creek, near the city of Greenwood. Total of 21 beds (10 in the main house, 5 in trailers, 4 in the "geo house" and 2 in separate houses for in-house geologists Matt Ball and Mike Caron).
The main house is a completely renovated house with a large living room, 10 bedrooms and a great kitchen, respectively a star chef (Wolf´s son, Michael). The 2 German shepherd dogs, Joey and Tomey, complete the "big picture" of a somewhat German-rooted success story in Canada´s smallest city, re-viving mining responsibly with the world´s highest standards of environmental protection.
The "geo house" hosts 4 sub parallel steeply bedded bedroom zones, all of which are controlled by a strongly faulting bathroom, with an anomalous strong wifi signal in room "#14", where the author had the pleasure to rest overnight and recharge (geo)physically:
Last but not least, the "core shack" (only some of the latest and oldest core is stored here, with bulk of core stored in Grand Forks):
Golden Dawn Minerals Inc.
#318 - 1199 West Pender Street
Vancouver, B.C. V6E 2R1 Canada
Phone: +1 604 221 8936
Shares Issued & Outstanding: 107,486,170
Canadian Symbol (TSX.V): GOM
Current Price: $0.27 CAD (06/20/2017)
Market Capitalization: $29 Million CAD
German Symbol / WKN (Tradegate): 3G8A / A1XBWD
Current Price: €0.192 EUR (06/20/2017)
Market Capitalization: €21 Million EUR
Report #14: "Golden Dawn Minerals getting increasingly attractive with latest acquisition plans" (June 6, 2017)
Report #13: "Golden Dawn in the spotlight of the press " (February 9, 2017)
Report #12: "Gold and Gold Stocks: The Best Hedge Against Trump and Other Uncertainties" (January 31, 2017)
Report #11: "Golden Dawn Discovers New Prospect For A Possible World-Class Deposit" (January 26, 2017)
Report #10: "Golden Dawn discovers 10 g/t gold over 15 m at surface and delivers top results from the underground"
Report #9: "Golden Dawn passed environmental and safety inspection, provides progress report on Greenwood projects"
Report #8: "Coverage on Golden Dawn"
Report #7: "Golden Dawn Minerals: B.C.´s next powerhouse gold miner?"
Report #6: "Golden Dawn acquires several major past producing mines and becomes largest land holder in the Greenwood District next to Kinross"
Report #5: "Golden Dawn moving rapidly toward renewed operation"
Report #4: "Starting Shot for the May Mac Mine"
Report #3: "Ascend from explorer to producer secured: A Just-in-Time success story par excellence "
Report #2: "Golden Dawn secures funding to go into gold production in BC "
Report #1: "Perfect timing to go into gold production in British Columbia"
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author holds a long position in Golden Dawn Minerals Inc. and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in Golden Dawn Minerals Inc. Cautionary Statement: The PEA is preliminary in nature and it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Mineral resources that are not Mineral Reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized. Golden Dawn Minerals Inc. (the "Company") would like to clarify that its decision to proceed to extract mineralized material from the Lexington, Golden Crown and May Mac mines for processing at its facility located at the Greenwood Precious Metals Project was not based on a Feasibility Study. The Company cautions that, in such cases, there is increased uncertainty and higher economic and technical risks of failure. The Company notes that, since the mining and processing infrastructure is in place, it intends to proceed to trial mining and processing on the basis of Mineral Resource Estimates and the Preliminary Economic Assessment.
Disclosure: I am/we are long GDMRF.