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Castle Mountain Mining Co. Ltd.


Castle Mountain Mining Co. Ltd. is a development-stage gold company in the initial stages of reopening the past-producing, open-pit, heap-leach Castle Mountain gold mine in San Bernardino County, California. With an experienced and respected management team and board of directors, existing land-use (mining) permits, historical resource, ease of access and proximity to infrastructure, the company is truly on a short path to production.

The information provided below is from analysts, newsletters and other contributors. Please contact the company and visit its website before making an investment decision.

Expert Comments:

The Mining Report Interview with Derek Macpherson (10/7/14) "One company with permitted projects that we like is Castle Mountain Mining Co. Ltd. It has a heap-leach project. . .Castle Mountain is currently optimizing its mine plan so it can complete a feasibility study. . .we are expecting the feasibility early in 2015 and there are a couple of key pieces to that feasibility study. The first is the metallurgy, which will have an impact on the mine's capex and operating expenditures, as the company is examining the trade-off of increasing the crush size. Increased crush size, potentially allows for lower initial capex by installing less crushing capacity and lower ongoing operating costs; however, the trade-off is the potential for reduced recoveries. Second, and probably most important, we expect to see additional drilling get rolled into the resource. Infill drilling is ongoing and with some success, the strip ratio could be reduced, likely benefitting the near-term economics." More >

The Gold Report Interview with Joe Mazumdar (10/1/14) "Castle Mountain Mining Co. Ltd. is working on an open-pit, heap-leach project in California. . .this is not a new permit. The project was grandfathered, as Castle Mountain Mining was a former producer under Viceroy Resource Corp., which produced in the 1990s for about 10 years. In terms of derisking, there is a lot of data there. It is similar to having a gold bulk tonnage sample produced over 10 years. Investors have a good idea of about 50% of the ore that the company could extract and process based on how it performed previously.

Another issue is water, because the throughput rate at the old mine was much lower than envisioned today. The company is doing hydrological work to resolve that issue. The strip ratio is relatively high for its planned scenarios. If the company can increase the interpit slope angle, that could reduce the strip ratio, as well as the drilling program, and could convert more ounces to Indicated in the pit shells. We anticipate a feasibility study by Q1/15. That will be the next big catalyst. Like Golden Queen Mining Co. Ltd., what Castle Mountain would like to do is eventually extend the permit boundary and extract more ore. Increasing the throughput is another upside opportunity. . .companies like Castle Mountain we consider more as takeout candidates once their projects are derisked, so we have modeled additional funding to arrive at steady-state production level, which is when we believe the project would be more attractive as a takeover candidate." More >

Derek Macpherson, M Partners (9/4/14) "We are initiating coverage of Castle Mountain Mining Co. Ltd. with a Buy rating. . .the company has reduced risk relative to most other development companies in North America as it is a past producer and has mining permits. . .the management team and board consist of an experienced group of mine and company builders. . .once in production, the project's longevity and cash generation are likely to make it a quality asset to build a mining company around or an attractive target for a midtier or junior gold producer looking to add growth through acquisition."

Joe Mazumdar, Canaccord Genuity (8/22/14) "Castle Mountain Mining Co. Ltd.'s phase 2, 30-hole, 10,000Km drill program will inform the upcoming feasibility study due in Q1/15 and include metallurgical samples that will incorporate new previously unexploited ore domains. We maintain our Speculative Buy rating and a CA$1.30/share price target. Results from three holes of phase 2 targeting areas of known mineralization for the metallurgical test program were released including 102.1m grading 7.46 g/t Au. . .we model the company as a takeover option that is fully financed to begin production at a 6.4 Mt/yearpa at the open-pit, heap-leach Castle Mountain gold project."

Andrew Kaip, BMO Capital Markets (8/20/14) : "Castle Mountain Mining Co. Ltd. announced initial results from its phase 2 drill campaign. . .hole CMM-014 returned impressive results in a higher-grade area of the mine and points to potential upside from further infill drilling on zones already targeted for production. . .results from holes CMM-012 and CMM-013 demonstrate potential to convert previously classified waste to ore. . .recoveries of 72% to 96% compare to the PEA base case assumption of 83% and suggest potential for efficient leaching of higher-grade ore at larger fragmentations, which could. . .eliminate the required capital outlay for the proposed milling/gravity circuit."

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Ali Khan, Edgecrest Capital (8/20/14) "Castle Mountain Mining Co. Ltd. released assay and metallurgical results from three large diameter 'PQ' holes targeting mineralized material for metallurgical testing. . .the assay and metallurgical recovery results from phase 2 drilling are positive, highlight the upside potential of resource additions and a potential reduction in capital requirements from higher-grade material showing good recoveries at a coarser crush."

Tara Hassan, Haywood Securities (7/11/14) "With approximately $7M in cash, post completion of the recent $5.76M financing, Castle Mountain Mining Co. Ltd. is now fully financed to advance the Castle Mountain project through the feasibility study and complete the 10,000m phase 2 drill program. We expect the drill program could provide positive catalysts for the name and improve the resource included in the feasibility study, which could boost the project economics."

Joe Mazumdar, Canaccord Genuity (7/1/14) "Castle Mountain Mining Co. Ltd. closed its previously announced financing for gross proceeds of CA$5.75 M (~CA$5.5 M net). After incorporating the proceeds and the dilution from the financing, we maintain our Speculative Buy rating and CA$1.40/share target as the funds should, in part, generate further derisking through various technical studies (hydrogeology, geotechnical, metallurgy, infill drilling), leading to a feasibility study prior to year-end 2014."

Philip Ker, PI Financial (6/11/14) "Castle Mountain Mining Co. Ltd. announced a $5M bought-deal financing and increased the company's total working capital to ~$7.5M. This equity offering should support the required capital to further advance the Castle Mountain feasibility study, which is expected for completion later in 2014. . .with a considerably sized oxide and open pittable resource of 3.4 Moz at high grades of 94 g/t gold, we continue to believe the Castle Mountain project is on an adequate path to restarting production and we maintain our Buy rating."

The Gold Report Interview with Joe Foster (6/11/14) "We added Castle Mountain Mining Co. Ltd. to the portfolio this year. Castle Mountain is redeveloping a property in California. It is doing studies, still figuring out the best way to go about it. . .Castle Mountain has a robust property that will enable it to create value as it develops." More >

Andrew Kaip, BMO Capital Markets (6/10/14) "Castle Mountain Mining Co. Ltd. announced that it has entered into a bought-deal equity financing for aggregate gross proceeds of CA$5M (or CA$5.8M if the over-allotment option is exercised in full). . .the offering is expected to close on June 30, 2014. Proceeds from the offering will be used to advance the Phase 2 drill program and for general corporate purposes. . .in BMO Research's view, the phase 2 drill program has potential to reduce the strip ratio at the Castle Mountain mine and add meaningful value by focusing on gaps in the geological resource model and proposed pit shells."

Tara Hassan, Haywood Securities (4/29/14) "Castle Mountain Mining Co. Ltd. achieved a milestone with the release of a PEA, which wrapped formal initial economic parameters around the Castle Mountain project and derisked its commercial viability. . .with an initial capex of US$98M and an expansion capex of US$173M, this scenario returns an after-tax NPV (5%) of US$352M, an internal rate of return of 20.1% and a payback of 6.3 years."

Ali Khan, Edgecrest Capital (4/28/14) "Castle Mountain Mining Co. Ltd.'s namesake flagship asset is a past-producing, open-pit, heap-leach gold mine that operated for a decade and produced on average 115 Koz/year gold at cash cost of approximately $233/oz. The recent resource estimate and PEA presents a derisked asset being advanced towards production. . .the company holds grandfathered mining permits in place, allowing Castle Mountain to restart operations without undergoing an extensive permitting process. We believe that low-capital intensity heap-leach projects such as Castle Mountain are attractive to investors in the current environment of capital creep and financing difficulties faced by juniors."

Joe Mazumdar, Canaccord Genuity (4/28/14) "We have raised our one-year, risk-adjusted target for Castle Mountain Mining Co. Ltd. by CA$0.20 (or 16.7%) to CA$1.40 to reflect the added value derived from the derisking of the Castle Mountain open-pit, predominantly heap-leach project through the delivery of a PEA. . .we anticipate further derisking with a feasibility study (Q4/14, Canaccord Genuity estimate), which will incorporate additional geotechnical studies (pit slope angles which impact strip ratio, infrastructure), hydrogeology (water availability), metallurgical studies (process flow sheet and recoveries) and permitting."

Tyron Breytenbach, Cormark Securities (4/25/14) "Castle Mountain Mining Co. Ltd.'s PEA outlines a staged operation. . .the valuation is compelling. . .we reiterate our Buy rating and increase target to $1.60/share (from $1.50/share). . .its current valuation is unjustified; expect a rerating or takeout. . .with a decade of production data, an existing conditional permit and location in a safe jurisdiction we see little reason for the discount and expect that a deep-pocketed acquirer may act on the discounted ounces."

Michael Siperco, Macquarie Capital Markets (4/25/14) "We continue to like Castle Mountain Mining Co. Ltd. for the clear path to production, fully (pre-operating) permitted status, the history as a past-producing heap-leach mine, and the low initial capex. The PEA released on Thursday broadly confirms our previous production assumptions. . .we maintain our Outperform recommendation and advise investors to buy shares ahead of the feasibility study expected late 2014."

Philip Ker, PI Financial (4/25/14) "Castle Mountain Mining Co. Ltd. delivered positive economics on its flagship project in California through completion of a PEA, which assessed three underlying operating scenarios. Results confirmed our thesis that the envisioned future mine operation can be brought back into production with minimal initial capex as a scalable project that contains quality ore-mined grades of 0.85 g/t gold with a significant recoverable resource of ~3Moz."

Andrew Kaip, BMO Capital Markets (4/24/14) "Castle Mountain Mining Co. Ltd. released the results of a PEA for the Castle Mountain project in California. The PEA base case outlines life-of-mine production of 176 Koz/year gold at all-in sustaining costs of US$949/oz over a projected 17-year mine life. . . although the base case PEA parameters result in a net negative impact to the corporate NPV, the company used conservative assumptions for the open-pit design that BMO Research expects will improve with further drilling."

Philip Ker, PI Financial (4/16/14) "Castle Mountain Mining Co. Ltd.'s asset is conveniently located in California only 80 mi southwest of Las Vegas. A PEA on the project is expected to be available imminently and should identify the untapped potential which exists at Castle Mountain. . .furthermore, the low capital intensity and easy access to initial ore supply should provide for a rapid payback and potential to generate sufficient cash flow to fund an expansion scenario. . .the in-situ resource and approved operating permits in hand make Castle Mountain an attractive takeover candidate."

The Gold Report Interview with Joe Mazumdar (2/4/14) "We favor Castle Mountain Mining Co. Ltd. This is an open-pit, heap-leach development play in California's San Bernardino County. I know that some are wary of California, but this is a permitted project that was a producer in the 1990s (Viceroy). Castle Mountain Mining continues to derisk the potential restart and declared a resource with a significant amount of Indicated resource. We anticipate a scoping study out by February 2014. This is a micro-cap play that may represent an easy bolt-on for an intermediate. We find it quite attractive. . .

We started covering it in October 2013 when it traded at $0.40/share. It has come up 50% since then after it released a resource update in the latter part of 2013. Our current target price of CA$1 is based on its M&A potential and the further derisking to come through the delivery of a scoping study and eventually a feasibility study. Remember the project already has a permit to develop the deposit as it was left on care and maintenance after the previous operation was reclaimed." More >

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