Discovery Watch is a weekly 15-30 minute audio show produced by HoweStreet.com where Jim Goddard interviews John Kaiser about resource juniors with projects that have caught John's attention. The projects will not be limited to companies he has covered through the Spec Value Rating System. Jim and John will periodically circle back to review the projects and if necessary close them out as no longer worth watching. Check out the catalog of KRO Free Stuff. KRO offers a USD $450 Annual Individual Membership. This Discovery Watch session is available via YouTube or Podcast.
Midas Gold Corp has been a regular Discovery Watch feature since January 2017, not because there was any new mineralization to be discovered at the Stibnite gold-antimony project in Idaho, but rather because we were curious to discover if CEO Stephen Quin with John Paulson's financial backing in early 2016 could overcome the market's glum view that Idaho would never permit an open pit mine in an area that was turned into an environmental disaster zone by mining for antimony to support the World War II effort, and later by gold miners who were no longer around when Nixon invented the EPA in the 1970's. And boy oh boy, has it ever been a journey of discovery with regard to regulatory incompetence led by the Forest Service as the timeline for a draft Environmental Impact Statement kept slipping into the future like that Steve Miller song. Midas as of the end of 2019 has spent USD $53 million on permitting out of $210 million overall, and CEO Stephen Quin has suggested to me the total will be $70 million when a mining permit is finally granted. The last economic study was a PFS in December 2014 which was lousier than the 2012 PEA because certain parts of the deposits lacked the drill density needed to support a PFS calibre ore schedule, so half the antimony output disappeared, as did a good part of the high grade front loading of the ore mining schedule. The outcome of the PFS was not impressive because it used a $1,350 gold price as a base case to support an after tax NPV of US $832 million and 23.4% IRR using a 5% discount rate. The IRR was fine, but the NPV not so good because CapEX was $970 million thanks to a pressure oxidation unit needed to deal with the refractory sulphide ore. But even worse, gold was below $1,300 most of the time until mid 2019 when it finally began to rise as the world became uncertain about America's leadership role in a world where China under emperor for life Xi Jinping had since 2012 embarked on a course that clearly dashed any hope that China's prosperity would eventually make it "just like us", even as the US under its own leadership was setting America on a path to become just like "them". One reason the timeline for a draft EIS kept being extended was that the Forest Service simply lacked the processing infrastructure to permit a mine that would produce 350,000 ounces gold annually and involved reclamation of a Superfund site, turning this into a learning how to properly approve a mine on the fly experience. The draft EIS, which includes 5 scenarios (the first was submitted by Midas in 2016, the second in 2019 by Midas after adapting to feedback to the first scenario, and 3 alternatives the USFS had to invent by law and are really straw men which illustrate the desirability of scenario 2) was finally filed by the USFS on August 14, 2024, kicking off a 60 day public comment period that ends October 13, 2020. Once the USFS has compiled the comments and provided responses to them, if there are no serious issues Midas hopes to publish a feasibility study before the end of 2020. The USFS will work on the Final EIS based on the chosen scenario which is expected to be filed in Q2 of 2021 along with a Draft Record of Decision, followed by a 30 day objection period open only to submitters in the draft EIS comment period who feel their concerns were not addressed by the USFS. This should lead to a Final Record of Decision in Q3 of 2021 which will allow the final permits to be secured by the end of 2021 so that construction could begin by 2022. At $1,900 plus gold Stibnite will be very much in the money, even if CapEx expands 30%, and if you dare to dream $3,000 gold, you are looking at a $10-$15 future price target. (Aug 28, 2020)