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TABLE OF CONTENTS Jan 28 - Feb 3, 2013 Volume 98 Number 50 - 0 comments

Brigus looks to a brighter 2013

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By: Salma Tarikh

Brigus Gold (BRD-T, BRD-X) has hit its 2012 production target and is eyeing more gold production and growth in the new year.  

In 2012, the Halifax-based junior produced 77,374 oz. gold within its 77,000 to 85,000 oz. guidance, and is now aiming to generate 90,000 to 100,000 oz. gold in 2013 at cash costs of US$700 to US$750 per oz. gold.

The company’s chairperson and CEO Wade Dawe says that gold grade and output improved each quarter ­­at Black Fox in Timmins, Ont. — its sole producing mine — as it mined more high-grade underground ore, resulting in higher average grades going through the mill. This trend should continue at least through the first quarter of 2013, until the junior reaches a steady production level.  

In the last quarter of 2012, the combined open-pit and underground operation at Black Fox produced 22,672 oz. gold from 185,727 tonnes of 4.04 grams gold per tonne.

Haywood Securities analyst Kerry Smith says that Brigus had “a nice finish to 2012,” pointing out that gold grades gradually climbed from 3.04 grams in the first quarter to 4.04 grams in the fourth quarter, owing to better underground mining techniques.

Smith forecasts the firm should deliver 102,000 oz. in 2013 at cash costs of US$665 per oz., assuming it recovers 900 tonnes per day from underground mining and 1,100 tonnes per day from the open pit. 

The analyst estimates that most of the underground ore — about 400 to 500 tonnes per day — should come from the long-hole stope in the West zone that Brigus started mining last September.

Brigus is still ramping up production at Black Fox and striving to recover 800 to 1,000 tonnes per day from underground. 
“That’s our target, and that will be steady-state production for the underground portion of the Black Fox mine,” Dawe says.

The gold producer is also drilling underground with two rigs that are extending the ore zones at depth. Preliminary exploration results from the drilling, which began in June, have been “very good,” Dawe says, explaining that the holes have been showing the zones’ continuity at depth, and remain open to further expansion. 

“We believe that Black Fox will be a long-life asset, and our intention moving forward is to add ounces, as we are mining to at least replace the ounces that we mine each year,” Dawe says.

To continue developing Black Fox and its other operations, Brigus has budgeted US$59.5 million for capital costs in 2013. From this, US$16 million will go towards underground development, US$13 million for open-pit stripping, US$20 million for equipment purchases and maintenance and US$10.5 million for underground exploration at Black Fox and Grey Fox. 

The Grey Fox property is part of the 18 sq. km complex that hosts the Black Fox mine and mill. It is 4 km southeast of the operating mine and hosts the Contact, 147 and Grey Fox South zones. Contact and 147 contain more than half of the resource on the Black Fox Complex. 

With so much potential in the ground, Brigus is working to make Grey Fox its next gold mine by 2015.

Brigus has begun permitting activities and environmental studies on the deposit. It is drilling Grey Fox with four rigs, with recent results from the 147 zone showing the orebody extended to a vertical depth of 300 metres below surface. Notable intercepts include 35 metres of 14 grams gold and 29 metres of 4.7 grams gold.

“The total average grade and width of the [47] holes reported is 4.2 grams over 9.5 metres, with grades increasing at depth in general,” BMO Nesbitt Burns analyst Brian Quast writes in a note, pointing out that most of the intercepts are amenable to open-pit mining.

 The results will go towards updating the September 2012 resource estimate for the 147 and Contact zones by mid-2013. The zones contain a combined 480,850 indicated oz. from 7.1 million tonnes at 2.1 grams gold, and 91,061 inferred oz. from 1.7 million tonnes at 1.7 grams gold.  

A feasibility study on the project should be out in the second half of the year, with first production from the open-pit portion of the mine expected in early 2015.

Brigus plans to fund mine construction through internally generated cash flow and externally funded sources in 2014. It is fully funded for 2013.

About two years after the company brings the proposed Grey Fox mine online, Dawe says it will bring its Goldfields project near Uranium City, Sask., into production. 

“Right now we are a gold producer in Canada with only one producing mine. By 2015, we will have two operating mines on Canadian soil. And by 2017, we expect to have three.”

The fully permitted Goldfields project is envisioned as a 5,000-tonne-per-day open-pit operation. 
Brigus recently closed at 95¢, within a 52-week range of 69¢ to $1.34.

Quast rates the stock as “market perform” and has a $1.05 price target, while Smith of Haywood Securities has a “sector outperform” rating and a $2 target.  

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A worker on a piece of mine-development equipment at Brigus Gold's Black Fox gold mine in Timmins, Ontario. Source: Brigus Gold
A worker on a piece of mine-development equipment at Br...

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