With this kind of stuff happening next door, and the grades we currently have, it wont belong before the whole gold world joins in and BUY shares in CYL+NML.
Barry FitzGerald
Its market value has increased by some 60% during the year and it's all been due to the Fosterville mine near Bendigo which overnight was confirmed as the best gold mine in the country, the gold-copper operations of Cadia (Newcrest) and Ernest Henry (Evolution) excluded.
To the chagrin of the Australian gold companies, Fosterville's transformation from a clapped out disseminated gold producer to one with the brightest of bright futures based on the more recent discovery of visible gold bearing quartz veins at depth has been nothing short of amazing.
Fosterville could have been picked up for a song 10 years ago. But it was left to the Canadians to spend the exploration dollars to push deeper to the rich veins waiting to be found some 120 years after the goldfield's discovery.
Overnight, Kirkland disclosed that an already upgraded production target of 330,000 ounces from Fosterville for 2018 - up from an earlier estimate of 310,000oz and double the 150,000oz in 2016 - was only the start of the story.
Production at Fosterville is now forecast to increase to as much as 430,000oz in 2019 before taking off to a 500,000-540,000oz range in 2020, and 570,000-610,000oz in 2021.
At that sort of annual rate the mine will be making a pitch to be Australia's third biggest gold mine, currently the Super Pit joint venture in Kalgoorlie between Newmont and Barrick.
The production surge at Fosterville is possible thanks to the growth in the mine's average grade to a spectacular 30gpt as mining of the super high grade Swan Zone ramps up, and an increase in throughput.
More to the point is that the grade makes Fosterville the lowest cost gold-only producer in the country. The operating cash costs of US$200-$220/oz forecast for 2019 (all in sustaining costs for the year to date stand at $498 an oz) puts the mine in a league of its own.
The missing link for Fosterville in the wake of the upgraded production forecasts - previously 400,000oz was targeted by 2020 - is a supporting reserve base to make it a long-lived show.
But that is work-in-progress, with an upgraded resource-reserve position to be released in February. Based on infill and exploration drill results released during the year, something special is expected.
It will need to be to sustain an operation forecast to be producing at around the 600,000 oz a year rate come 2021.
The current mineral reserve estimate stands at 1.7Moz at 23.1gpt of which the Swan Zone alone accounts for 1.16Moz at 61.2gpt.
A stepped up exploration program that ranks as one of the biggest in the country at the Swan Zone-hosting Phoenix system and elsewhere along 9kms of prospective strike has delivered impressive results throughout 2018.
Ahead of the February release of the updated resource-reserve statement, Kirkland president and chief executive officer Tony Makuch gave a strong hint in his commentary on Tuesday around the upgraded production forecasts that mine life will not be an issue at the higher rates.
"As demonstrated from recent drilling and production results, the Swan Zone is a truly unique, high-grade zone that we are continuing to grow. We continue to explore for more zones like Swan at Fosterville and are encouraged by the fact that similar mineralisation has been intersected in multiple locations,'' Makuch said.
The recent drill results Makuch was talking about were released in September and covered 19 holes drilled outside of the December 2017 estimate of the Swan Zone's measured and indicated mineral resource.
The results returned intervals of "exceptionally" high grades with visible gold and demonstrated that high-grade, visible-gold bearing quartz veins extend for at least 200m down-plunge from the current Swan Zone mineral reserve.
Kirkland said at the time that the potential 200m "envelope of exceptionally high-grade mineralisation over substantial widths, with visible gold" would be driving future mineral reserve growth.
As a result, the February 2019 resource-reserve statement "will include a considerable increase in mineral reserves in the Swan Zone and a higher overall average grade and increased mineral reserve base for the Fosterville Mine as a whole.''
It is against that background that there has been chatter that Fosterville is on its way to becoming a 10m oz deposit, if not more. February is just around the corner so there isn't any real need to be hyping the upside.
But the February statement will definitely give a feel for just how big Fosterville will become, with obvious value implications for Kirkland which with its Canadian operations, and a likely restart of the Cosmo operation in the Northern Territory, is well on its way to becoming 1Moz-plus a year producer in the near term.
Macquarie is one of the few to have followed Kirkland since it joined the ASX lists. In its most recent note (December 3), it had a stab at what the longer-term future for Fosterville might be.
It modelled production of 4.9Moz over 12 years at a grade of 19.27gpt.
"However the prospect of still more resource growth from what is already known, along with upside from new discoveries could mean that even our more aggressive estimates, beyond existing reserves of 1.7moz, could prove to be conservative,'' Macquarie said.
Macquarie lifted its target price from C$35 (it is currently $32.57) in the note, saying that Fosterville could just be getting started.
It is great stuff for Kirkland as much as it is for the broader Victorian industry which is enjoying something of an exploration renaissance as others try a repeat performance at the state's other historic mine sites.
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IMO I can see CYL with so little shares available being worth well over $5.00 per share in the not so distant future if our results continue to impress and the worlds investors catch on, and they will!
Lets just hope we do not cave into any possible takeover bid/s...CYL has such a brilliant looking future ahead, especially when you imagine what may lie even deeper beneath at both 4 Eagles and Tandarra!!!
And just look at what we already have close to surface...
+ Thank you Mr Sprott/KLA for having the money to dig deep and prove to everyone the massive potential that the Golden Triangle once again has
Now its our turn to continue to prove up a World Class deposit!!
GLTAH+DYOR!!
CYL Price at posting:
$1.78 Sentiment: Buy Disclosure: Held
(20min delay)