Readers should by now be crystal clear on the position taken by your author as regards Continental Gold (CNL.to) and its PEA announced a couple of days ago, what with the post
“The Continental Gold (CNL.to) PEA: Be afraid, be very afraid” being the most hit upon piece here at this humble corner of cyberspace this week.
To that end, I’d like to share with you the chunk of prose that came in Scotia Daily Mining Scoop daily mailer that reported on the analysis report published by Mike Hocking on CNL.to, a stock he covers.
Continental Gold Limited (CNL): Initial Look at Buriticá PEA; target lowered $0.80 to $4.50 (CNL-CN, SP, C$4.50/sh target, down from $5.30, Mike Hocking)
The PEA has outlined an initial throughput of 2,000 tpd increasing to 3,500 tpd, a fairly large underground gold mine utilizing long-hole stoping methods. Given the narrow width of the veins, Mike had assumed a much more limited 750 tpd, increasing to 2,000 tpd over a 3 year period, largely requiring cut and fill methods. It appears CNL used a subset of their resource at a higher COG before dilution to calculate the resourced used in the PEA (and Mike expects that a significant portion of these tonnes are classified as inferred); thus, the company assumed higher dilution than Mike’s estimates (58% vs. 30%) but diluted processing grade was in-line. Even after the release of the PEA on Monday, Mike’s primary concern remains dilution and throughput. The PEA has outlined a very large mine on mineralization hosted largely in narrow veins.
Ok, that done, a comment or three. I’m aware that IKN lays into brokerage anal ysts with merry glee on occasion, I’m also aware that Ovais Habib of the same Scotia office has no qualms about ripping off this blog and then claiming the work he uses as his own without any sort of hat-tip. But credit where due, people like Hocking don’t have the blog-like luxury of direct unfiltered communication with their client base and need to get reports through compliance and lawyers offices and suchlike. To see that sort of commentary on a stock that gets its target pulled down at the same time should be a clear hint to any Scotia client holding CNL stock to get the anal yst on the phone and talk directly…like yesterday. Hocking’s done well here, has picked up on concrete concerns about this fast’n’loose operation at Buritica, he deserves praise for doing his job right.