$BCEKF : Bear Creek Mining — Independent Economic Analysis

Updated, 9 January 2020

Long-term Price Case$24/oz. Ag | $1.10/lb. Zn | $0.95/lb. Pb
Flagship ProjectCorani
Mineral Reserves414,814,619 ozs. AgEq
Shares Outstanding103,157,064
Market Cap$212,503,552
Average Annual Production13,901,084 ozs. AgEq
Payable Product250,219,515 ozs. AgEq
LoM18 years
True All-in Costs (TAIC)$16.69/oz.
Gross Revenue$6,005,268,360
Treatment & Refining Charges($540,866,000)
Total Operating Costs ($2,630,922,000)
Operating Income$2,833,480,360
Total Capital Costs ($601,772,000)
Net Income$1,801,776,360
Net Profit Margin30%
Absolute Cost Structure (ACS)70%
True Value$17.47/sh.
Cash Flow Multiple10x
Average Net Annual Cash Flow$101,616,925
Future Market Cap$1,016,169,250
Future Market Cap Growth378%

Notes: All Values in U.S. Dollars

$NORZF : NorZinc — Independent Economic Analysis

Long-Term Price Case$24/oz. Ag, $1.10/lb. Zn, $1.00/lb. Pb
ProjectPrairie Creek
Mineral Reserves159,766,517 AgEq ozs.
Shares Outstanding372,540,000
Market Cap$23,470,010
Average Annual Production10,064,587 AgEq ozs.
Recovery87% Ag, 88% Pb, 83%, Zn
LoM15 Years
Payable Product150,968,809 AgEq ozs.
True All-in Cost (TAIC) $18.59/oz.
Gross Revenue$3,623,251,416
Smelter Deductions($350,261,000)
TCRC + Penalties($333,905,200)
Gross Income$2,939,085,216
Total Operating Cost($1,386,771,250)
Operating Profit$1,552,313,966
Income Taxes($411,363,201)
Total Capital Costs ($305,436,850)
Net Income$816,886,147
Net Profit Margin23%
Absolute Cost Structure (ACS)77%
MTQ Score0.3
True Value$2.19/sh.
True Value Discount (TVD)97%
Cash Flow Multiple5x
Annual Cash Flow$54,449,416
Future Market Cap$272,247,080
Future Market Cap Growth1,060%

Notes: All Values in U.S. Dollars

NorZinc Newfoundland NI-43-101 Compliant Indicated Resources

DEPOSITZinc (lbs.)Lead (lbs.)Copper (lbs.)Silver (ozs.)Gold (ozs.)Zinc Equivalent (lbs.)
LONG LAKE70,167,40614,177,0468,703,630581,6716,766124,637,849

Like substantially de-risked Prairie Creek, NorZinc’s 1.3B lbs. of ZnEq in Newfoundland is not currently reflected in the company’s market cap, further deepening the special value proposition open to patient, risk-tolerant speculators.

NuChem International Catalyst Fund Annual Rebalance


Q4 Silver Analysis

The long-term silver cycle is now up and we think the 16.60s are an ideal point at which to initiate a long position or add to a preexisting one. In fact, we have received our first hard buy signal since May. Consequently, we have increased our exposure to silver by taking stakes in Aurcana and Fortuna, while doubling our stakes in Avino and Endeavour Silver. Meanwhile, the size of our First Majestic, Bear Creek, and Hecla positions remain unchanged.


Silver is likely to open 2020 in price-neutral territory with a bullish bias. Silver should find substantial support at current levels and buying up to 17.97. A move through 17.97 opens the door to 19.41, 21.76, 23.10, and perhaps higher. A failure at current levels opens the door to 15.36, 13.91 and lower.

$TGB : Taseko Mines — New Prosperity… What if?

Long-Term Price Cases$3/lb. Cu, $1,700/oz. Au, $24/oz. Ag
ProjectNew Prosperity
M&I Resources12,836,666,667 CuEq lbs.
Average Annual Production247,911,111 lbs. CuEq
CuEq Recovery64%
Payable Copper3,648,000,000 lbs.
Payable Gold7,720,000 ozs.
Payable Silver19,800,000 ozs.
LoM33 Years
True All-in Costs (TAIC)$1.55/lb. CuEq
Gross Revenue$24,543,200,001
Total Operating Costs ($6,664,337,195)
Operating Profit (EBITDA)$17,878,862,806
Income Taxes($4,827,292,957)
Total Capital Costs($1,149,157,800)
Net Income$11,902,412,049
Net Profit Margin48%
Absolute Cost Structure (ACS)52%
MTQ Score (Higher is Better)0.9
Estimated Average Net Annual Cash Flow Contribution at the Long-term Price Cases$359,471,111

Notes: All Values in U.S. Dollars

An encouraging development at Taseko this week:

The Tŝilhqot’in Nation and Taseko have agreed to an outstanding litigation freeze, while the parties engage in what we hope proves a fruitful dialog aimed at the resolution of a decade-long conflict.

Were a resolution to be reached and development of the New Prosperity Project green-lighted, Taseko would be catapulted into the top ranks of North American mid-tiers.

New Prosperity is one of our favorite development-stage Projects and our economic analysis demonstrates why.

It’s time to pray!

Early Q4 Updates

  1. $IMPUY — We exited Impala Platinum Holdings at our target of $7 for a return of 150%.
  2. $FCUUF — We doubled our stake in Fission Uranium on 22 October.
  3. $AAU — We took advantage of the Ixtaca permitting suspension to aggressively purchase shares on sale at $0.50 on 30 October.
  4. $GUYFF — We took advantage of the Halloween guidance scare to double our stake in Guyana Goldfields.
  5. $TGB — We like Taseko’s pipeline, especially the Florence Copper Project. We also like the way copper is behaving generally. We started to build a stake on 12 November.
  6. On 4 December 2019, we exited Auryn, Black Iron, Crystal Peak, Dolly Varden, Great Panther, Minco Silver, and McEwen.
  7. On 4 December 2019, we initiated positions in Premier Gold Mines, Fortuna Silver Mines and Aurcana Corporation.

“[Copper is] more strategic than cobalt, more strategic than lithium. You can’t replace copper on conductivity. It is a modern metal.”

Mark Bristow

Q2 Updates

In Q2, we reduced our exposure to uranium and increased our exposure to gold, silver and agriculture; our allocations to platinum and rare earths remain unchanged.

At Fahy Capital Management, our investment decisions are based upon quantitative data. Analysis of that data enables us to execute in what we perceive to be a timely and prudent manner. When our data suggest the gap between price and value has closed, we sell. This approach ensures that we do not fall in love with a particular idea or stock. We perceive stocks as inventory and we like to see that inventory get worked off.

Over the course of a 12-month time frame, we typically expect inventory to be reduced by as many as 2 or 3 names, and this has proven a rate that allows us to reinvest and grow.

New Directions

We remain committed to the value proposition, but how we arrive at determinations of value is changing. We have developed new formulas and new ratios that we believe better reveal the merits and shortcomings of businesses under investigation, while conferring to us an edge on the hairy margins.

We are looking forward to sharing some of our results here in our blog. Those results, however, don’t constitute a recommendation to buy or sell; it’s just food-for-thought.

$ASM : Avino Silver & Gold Mines — Independent Economic Analysis

Long-Term Price Case$1,700/oz. Au | $24/oz. Ag | $2.72/lb. Cu
ProjectAvino Mine
Mineral Resources50,525,000 AgEq ozs.
Shares Outstanding65,420,000
Market Cap$36,635,200
Average Annual Production2,731,357 AgEq ozs.
Recovery86% (Ag); 67% (Au); 91% (Cu)
LoM15 Years
Payable Product40,970,350 AgEq ozs.
True All-in Cost (TAIC)$12.06/oz.
Gross Revenue$983,288,400
Transportation, Refining & Insurance Costs($15,623,865)
Gross Income$967,664,535
Total Operating Cost($94,068,000)
Operating Profit$873,596,535
Income Taxes($327,598,700)
Total Capital Costs ($56,920,000)
Net Income$489,077,835
Net Profit Margin50%
Absolute Cost Structure (ACS)50%
True Value$7.48/sh.
Cash Flow Multiple10x
Annual Cash Flow$32,612,403
Future Market Cap$326,124,030
Future Market Cap Growth790%

Note: All Values in U.S. Dollars

Investment Case
  • Measured & Indicated Resources have grown by 100% over the last 3 years.
  • Mine Life has effectively doubled.
  • Net Profit Margin and Absolute Cost Structure (ACS) are excellent at $24/oz. Ag.