BDG - Bendigo Mining

The spin has started again, but looks like every one is waiting to believe it when they see it?

BENDIGO Mining is believed to be targeting initial production of as much as 40,000 ounces of gold a year when it resumes production in the September quarter.
Industry sources told BusinessDaily that the miner is initially aiming to process around 150,000 tonnes of ore a year at its plant in Kangaroo Flat on the outskirts of Bendigo.
The company expects the ore to yield eight to 12 grams of gold a tonne, putting annual production at as much 40,000 ounces.

http://www.news.com.au/heraldsun/story/0,21985,23391545-664,00.html?from=public_rss

This is my current worst loss. I bought in way back at $1.60, so Not Happy Jan!

I did the sell and buy to claim a tax loss last year, so I am very keen to see them go back into production. A lot of the big guys got burnt also, so they won't go back in until there is positive cash flow and a proven long term consistant flow of gold producing ore at good grades.

With gold at record highs, and BDG with no hedging, it could turn a nice profit.

There are a lot waiting on the sidelines to see if they start production again.

I've been told on good authority that when BDG announced their overstated
resource, some of their local Bendigo geologists knew that the extraordinary
high figures were not a go, and jumped ship to Greater Bendigo Gold Mines
(GBM). John Cahill is now MD of GBM, having quit BDG early in the piece,
apparently out of protest.

Here is a comparison of the companies using figures from Gold Nerds:

Market Cap: BDG=162 mill GBM=16 mil
Jorc Resource: BDG = 0 GBM = 150,000oz
Ratio of Market Cap to Resource: BDG = A$ n/a GBM = A$107 /oz
Forecast Production: BDG 40,000 oz/yr GBM 20,000 oz per year
Ratio of Market Cap to forecast production: BDG A$4050/oz GBM A$800/oz

sophieyan said:

I've been told on good authority that when BDG announced their overstated
resource, some of their local Bendigo geologists knew that the extraordinary
high figures were not a go, and jumped ship to Greater Bendigo Gold Mines
(GBM). John Cahill is now MD of GBM, having quit BDG early in the piece,
apparently out of protest.

Here is a comparison of the companies using figures from Gold Nerds:

Market Cap: BDG=162 mill GBM=16 mil
Jorc Resource: BDG = 0 GBM = 150,000oz
Ratio of Market Cap to Resource: BDG = A$ n/a GBM = A$107 /oz
Forecast Production: BDG 40,000 oz/yr GBM 20,000 oz per year
Ratio of Market Cap to forecast production: BDG A$4050/oz GBM A$800/oz

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I'm not sure if it's a fair comparison sophie.

Comparing companies with no JORC, to those that do is a difficult task, let alone not comparing grades, infrastructure, underground/open pit, stip ratios, cash in the bank, type of deposit, etc, etc.

I don't think we should be doing a peer comparison with BDG, because no one else has made such an incredible **** up before. Less Croesus perhaps.

I think that's a good comparison SophieYan. I'd like to see more comparisons with other miners in the area. I've been saying for a while that Victorian goldminers are undervalued, and the problems in mining in the area are overstated .... But it looks to me like BDG is still overvalued compared with others who are coming into production.

A glimmer of hope for long suffering shareholders?

Australian-listed Bendigo Mining has begun processing ore at its gold mine in regional Victoria. Production was halted in mid-2007, although the company continued to undertake exploration at the mine in Bendigo, focusing on areas that have yielded better-quality grades in the past. The company's Kangaroo Flat treatment plant has began processing ore on a trial basis, and will shortly begin processing ore from the Gill reef, which is believed to be of high quality.

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Gold company Bendigo Mining is rebuilding its work force, after being forced to shed about 150 jobs last year.
It has employed another 20 people over the past few months to support the resumption of trial processing and more mining.
Processing was put on hold and the work force was reduced from 250 to 80 last year, because of lower than expected yields.
Managing director Rod Hanson says any further expansion will be carefully considered.
"At this stage we've put the number of people on board for what we need for this trial phase," he said.
"Any additional jobs beyond that will depend largely on ongoing exploration success and the opportunities to expand the level of activity."

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Uncle Festivus said:

A glimmer of hope for long suffering shareholders?

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Possibly...
I'm a long term sufferer on this one and have not really paid much attention to it since it went down..... I went to take losses on it on the 30th June but stuffed up somewhere in the order process and ended up keeping all of my holding
So this morning I decided to catch up on what has been happening and came across the Ann on the 17th June (and an article by The Age dated the 18th) in regards to production etc.
So although I wanted to sell to take loses (for tax), I will now hold for the moment to see how things pan out over the next few months. I figure I may as well hold as I have taken big loses already and mentally wrote these off a long time ago. If there is anything to be gained out of holding off for the results from the trial production then I may as well hold on, I am also interested in the Eglehawk gold field which they have started to explore for shallow orebodies. They will supposedly have some results for us on this one in the medium future as well.

Here is a copy of the Ann released on the 17th June which myself and Uncle Festivus are referring to;

17 June 2008 ASX Release
Bendigo Mining
Limited
ABN 61 005 674 073

Trial processing commences​

Bendigo Mining Limited (ASX: BDG) is pleased to announce that trial
processing has commenced at its Kangaroo Flat plant in Bendigo, Victoria.
The Kangaroo Flat plant previously operated for eight months before being
placed on care and maintenance in June 2007 due to limited reserves. During
the past year, the Company has conducted underground exploration from the
Kangaroo Flat Mine targeting the more productive parts of the goldfield,
particularly the Garden Gully line, as well as introducing a visual grade range
estimation method. This work has resulted in the discovery of several new
reefs, the most promising being the Gill reef.
The plant is currently treating low-grade ore which was stockpiled during
mining operations in 2006/07. The first ore parcel from Gill reef is planned to
be processed in late June, with trial gold production ramping up during the
September quarter (July to Sept 2008).
Commenting on trial production, Rod Hanson, Managing Director & CEO of
Bendigo Mining said “It’s worth understanding why we are undertaking trial
mining and what it means? The trial is all about quality rather than quantity.
The purpose of the trial is to allow us to interpret in detail the reef shape and
grade by careful mining, sampling, mapping and processing in order to ensure
that we achieve the best possible result. I am very confident that the outcome will confirm the quality of Gill reef and of our new approach to grade estimation at Bendigo.”
Another positive development is the commencement of a regional exploration
program that will be undertaken across the Bendigo Goldfield. Initial drilling
has commenced at the north of the goldfield near Eaglehawk, with the aim of
discovering shallow underground orebodies in areas that were poorly tested by
historic activity. Early results are expected to be available for inclusion in the
June quarterly report, which is planned for release on 23 July 2008.

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Cheers

Credibility Update?

Last price 23.5c

Orbis increases holding from 6.36% to 7.4%

And an interesting hint from the June quarterly -

“Looking outside Bendigo, the weak equity market is increasing the number and
quality of opportunities available to the Company. I am keen to leverage our
mine development and operating skills on other assets, so long as these assets add significant value for our shareholders.”​

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Sorry guys but I personally think your looking for any glimmer of hope you can find from each announcement.Its dead in the water and with punters agreeing by selling it off to all time lows.

Not a nice position to be in.
Company is on the hunt to boost its flailing profits(I dont know what the profits are but hazzard a guess they arent rising!) and doesn't see it getting any better without diversifying---that's the way I read it!

tech/a said:

Sorry guys but I personally think your looking for any glimmer of hope you can find from each announcement.Its dead in the water and with punters agreeing by selling it off to all time lows.

Not a nice position to be in.
Company is on the hunt to boost its flailing profits(I dont know what the profits are but hazzard a guess they arent rising!) and doesn't see it getting any better without diversifying---that's the way I read it!

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They have said that the trial mining is cost neutral. If nothing else it will limit the cash burn, extending the life of the company beyond the 2 years it would have had left if the trial mining was a complete failure. They are "mining" grades between 6 & 15oz. The only thing that needs to be established, as has always been, is the consistantcy of the grades.

If BDG was a new float with $50m in the bank (and a new processing plant already built) and started returning the grades reported it would be viewed differently, as unfortunatly it's got a heap of historical baggage . Cash is 40% of current market cap! I still think the play with SBM is also still on.

Sentiment plays as much a part as anything else. Being a nuggety, shoot by shoot quartz geology, I wouldn't write it off completely just yet as there is gold there.

I'm not convinced they've got the geology understood yet. The visual estimating doesn't seem to get confirmed by the drill results. They also seem to be gently downplaying the grade expectations from gill reef as a whole. They haven't got a large resource and they don't seem to be finding new reefs at any great rate of knots either. The trial mining results will be interesting and will give something concrete to work on I guess - but they still need to find much more gold than one new reef to feed the plant they've got and to make a deep and expensive operation profitable.

I got out of this on Friday at .225 after holding on for far too long and averaging down.

Copped a hurtful loss but i'm glad that i am out now as all confidence is gone imo.

Showing some good signs and at the right time..

Extracts from Qrtly:


Ore treated of 32,011 t at 9.8 g/t gold for 9180 oz gold.

• Gill reef head grade averaged 10 g/t, with ore blocks ranging from 3.6 g/t
gold to the bonanza grade block of 28.9 g/t gold.

Revenue generated of A$11.0 million included the sale of 9189 oz of gold at
an average price of A$1189/oz.

• Cash in bank at 31 December 2008 was $44.9 million and in addition $3.5
million of gold ore held at year end was sold in early January (cash as at 30
September 2008 was $42.7 million).


*Mining continues to confirm the reef shape as
interpreted from diamond drilling.

*The narrow vein mining equipment purchased in July
2008 is giving excellent performance in accessing
narrower sections of Gill reef, and is planned to be
integral to the trial mining next quarter of narrow
reefs such as Dale reef on the Deborah line.

A hand-held mining trial, utilising a contractor, is
planned to commence in the March quarter on narrow
portions of Dean reef on the Deborah line.


*The process plant was operated on a four day per
week, 10 effective hours per day basis. In order to
process higher rates of ore production, the plant
operating time is planned to increase to an effective
13 hours per day.

*Drilling intersected a reef associated with the Deborah
fault, now named the Dunlop reef, at a depth of
around 350 metres below surface (see table below).
It is located within 150 metres of the current mine
workings. The quartz reef is up to 15 metres wide, 10
metres high, and defined over a strike length of 30
metres. The reef has potential to host high grade
zones and further drilling will be undertaken next
quarter to test for strike extensions.

*Drilling on the first section intersected a zone of
quartz veining, named the Nankervis reef, on the west
limb of the Nell Gwynne anticline. The reef is
interpreted to range from three to nine metres wide
and is up to 50 metres high. Zones of laminated
quartz with visually estimated high grades have been
observed, confirming that the reef has the potential to
host significant gold mineralisation. Nankervis reef
will be tested next quarter on a section 100 metres to
the north.


*External investment opportunities continue to be
carefully assessed by the Company

anyone following these guys at the moment ? prospects for the future
with cash turning positive, thoughts ?


jc

jonnycage said:

anyone following these guys at the moment ? prospects for the future
with cash turning positive, thoughts ?


jc

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I'm still in and holding for a break above 27c. She is still the ugly duckling and is perhaps finding it difficult to shake off the issues of yesteryear. Although BDG isn't a darling she has great leverage to higher gold prices. In fact Bendigo has far more to offer than some of the speccys who are burning cash but have had great runs. Lots of good stuff happening here and they are slowly proving that they can prove their resource.

Do you think there is still some doubt around Vic goldfields viability?
think hiccups around BDG several years ago and SBM looking a little shaky.

Same as $20shoes said, as the cash is actually going up, production is going up slowly but surely, and their is no doubt a few corporates keeping a close eye on an asset they can buy cheaply with $50M cash thrown in - once the geology is proven and tested? I think it's a 'creeper' now with positive momentum.

some good points, cheers. what price would you enter at present ?
i was thinking if it dipped back under 20 cents
jc

jonnycage said:

some good points, cheers. what price would you enter at present ?
i was thinking if it dipped back under 20 cents
jc

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Without giving financial advice, I would suggest a new trend in spot gold (when it comes) might dictate whether BDG swings below 20c or above 27c.

Without a breakdown in the price of gold, or currency movements that are adverse to Aussie goldies, you may not see .20c

A buy above 27c could be safer?

I'm waiting for a shakeout in general stocks before looking to buy goldies again, on the proviso that gold doesn't take off at the same time?

im thinking along the same lines, keeping a close eye, but maybe a slight correction could be the right time to get into these guys. (have bought
and sold out of these before)

jc