Junior resource companies have been struggling to adapt their businesses to COVID-19. It is pretty tough to socially distance in a four seat helicopter and “camp” arrangements have to be reconsidered. In Ryan Jackson’s Newlox Gold’s (C.LUX)case, its milling operation in Costa Rica had to be suspended entirely.
Jackson was delighted to finally be able to report on November 13, 2020 that Newlox had re-commenced production. “It’s going really well,” said Jackson. “We took advantage of the shutdown to upgrade and actually move the plant. We got a lot of things done.”
Newlox has a unique business model. Jackson located numerous historical and current tailings piles in Costa Rica. This material is essentially waste rock from artisanal gold mining operations. The artisanal miners chased high grade veins and then processed the mineralized rock in fairly low tech ways. Which means there is a good deal of gold left in the “waste” rock. Newlox designed and built a plant which would reprocess the waste rock and extract the remaining gold using more modern methods while also undertaking environmental remediation of the tailings
The potential gold recovery is significant. Newlox’s first plant is rated to 80 tonnes a day with an average grade of 9 grams per tonne.
“We’re ramping up,” said Jackson. “We are starting at a modest rate of throughput and testing all the systems. Going through commissioning.”
Getting plant #1 up to full production will be staged. “Month over month we’ll increase productivity. We hope to be at full capacity by the second quarter 2021,” said Jackson. Back of the envelope calculations tell me that 80 tonnes at 9 grams is 720 grams of gold per day. At the moment gold is trading at around $60 a gram which would make the value of Newlox’s daily production on the order of $43,000. Of course, Newlox has to pay the artisanal miners for the right to reprocess their material and there is the CAPEX of the machinery and the costs of running it and the labour costs; but at full capacity Plant #1 should be a money-spinner.
“When we hit full production at Plant #1 it’s time for Plant #2,” said Jackson. And Plant #2 is in development. “We are looking at the Boston project. This is a fully permitted situation in an area which has been mined since the 1920’s. The material here is already being mined. We’re looking at the metallurgy and we expect we will actually build Plant #2 over the next six months.”
Plant #3 is in the planning stages. “We will need to make a decision on which project will be plant #3,” said Jackson. “We focus on nice, high margin, projects. The idea is to find small, low CAPEX, fast commissioning situations.”
“Our opportunities are really determined by geology,” said Jackson. “We want to find high-grade vein projects.”
As Newlox progresses Jackson is not ruling out projects in other jurisdictions. “Costa Rica is a great place to work. But there are other deposits in other places.”
Newlox is also looking at the possibility of creating plants with greater throughput. “There are projects available to us that are several orders of magnitude larger than what we are currently working on. So far, we have done economics on projects up to500 tonnes a day max,” said Jackson. “But 250 tonnes a day could be the sweet spot in the near term.”
Jackson points out that the demand for processing capacity tailored to the needs of artisanal miners is enormous. “People usually see the huge, “formal” gold industry,” said Jackson. “Most people don’t know that 20% of the world’s gold production is artisanal. It is a 27 billion dollar a year industry that is operating inefficiently with poor access to capital and modern technology.”
Newlox is addressing the need for remediation of historical and currently generated tailings as well as environmentally and socially responsible efficient milling small scale newly mined material.
We’re looking forward to more Newlox news as it moves up Plant #1’s production curve. The market is beginning to catch on to the Newlox potential with the shares currently trading at $0.15. Once Newlox has achieved full production that price will look insignificant.