Santa Fe Gold, which started kicking production into overdrive at their flagship Summit silver-gold project this month, reported contracting of another product end point today, as the announcement is made that LS Nikko will purchase a minimum of 360 metric tons of concentrates from the company this year.
This is a great deal and adds considerable end market footprint to SFEG’s already successful production pipeline. President and CEO of SFEG, Pierce Carson, emphasized the strategic advantages of developing multiple outlets for the company’s high-value gold/silver concentrates and silica flux products. In fact, the output from the mine and their 400 ton/day Lordsburg flotation mill, combined with silica flux sales (comprised of minimally processed ores), could easily find more takers in a hungry global market for precious metals and that’s why the move to ramp up production by adding manpower cycle time at the mine was so important.
The deal is valued at around $12M given current metal prices and plans are to ship the concentrates off to the LS Nikko smelter in Korea, receiving payment according to metal content and with consideration for customary logistical charges/costs. Another awesome buyer and a solid overall result for SFEG, which will continue to sell concentrates to the German smelter they did so much business with last year (as well as other entities), as well as maintaining a consistent silica flux trade with the two Arizona smelters they have been doing business with, well throughout 2013.
So basically, SFEG is able to sell all it can produce and is chomping at the bit to wring more production out of the mine, likely considering expansion upgrades where possible as well. The company has really set itself up well in terms of production and sales, with a sound regional strategy focused around their Lordsburg mill in southwestern New Mexico and the kind of acreage footprint to make it all happen. The company has a substantial amount of breathing room around the mill in addition to satellite projects, like the trucking-distance away Mogollon gold-silver project, or Ortiz gold property ($1M budgeted for the next year or so for this project estimated at 29.1M tons grading, on average 0.035 opt at a 0.01 opt cut-off) in north-central NM. Additionally the company has their Black Canyon mica deposit (estimated at some 4M tons grading 7.48% mica on average with a 2.47% cut-off) over in western Arizona and a particularly interesting little micaceous iron oxide (extremely valuable for use in coatings that protect structural steel) deposit nearby on the Planet property.
Huge moves for SFEG considering Summit only went into commercial production in Q2 of last calendar year, and the success of the merger with International Goldfields Ltd. (Jan 31 update) brings Santa Fe’s strong production (and near-production) footprint in NM together with IGS’ exploration properties in Brazil and West Africa to create a truly compelling story for investors. The thing we like most about SFEG though is how production-focused they are for a junior, something to really take note of in a space dominated by exploration and financing.
For more information on Santa Fe Gold, please visit www.SantaFeGoldCorp.com
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