EVG - Envirogold Limited

[kransky]

Mkt Structure
100M Shares + 36M 31/12/2007 20c options
Fully Diluted mkt Cap
@20c = $27M

Background
Conventional methods have been used in the past to treat Gold Sulphide deposits resulting in large tailings dumps full of "waste" that get slowly oxidised producing sulphuric acid which leak into the ground causing environmental problems.
But this tailings "waste" is often quite rich in Gold!

EVG licenses the Albion Process from XStrata. This produces no sulphur dioxode, remnant metals are left in a safe state, no acids left at the end of the process. This is win win for the economy, environment and governments.

Company strategy
Rapidly build up land bank of low cost projects each with min 15 years life
Grow the business on internally generated cash flows to minimise share dilution.


Projects
Dominican Republic - Las Lagunas
EVG holds 70% interest and management rights for the Las Lagunas Gold Tailings project in a significant mineralisation belt host to +15M ounce Pueblo Viejo deposit.
Las lagunas has a Indicated JORC 5,137,000t @ 3.74g/t Gold 38.62g/t Silver
These are tailings containing 621,000 ounces Gold and 6,380,000 ounces of silver. (worth AUD$620M at current prices)(recovery rates ~70% so value ~AUD $400M)
700 tonnes of Pueblo Viejo ore already tested through the Albion process.
BFS done! Environmental and construction licenses issued. Plant construction to start 3Q 2007!

project life = 6.5 yrs
operating cost = US$237/ounce
estimated AFTER TAX annual profit = AUD $9.7M

POTENTIAL Currently negotiating with 2 Canadian firms who are active in the region who could provide high grade ore to substantially extend the life of the project. There are numerous small concession holders within 20km of the site that may find their deposits uneconomical due to start up barriers.


Peru - Trujilo - MOU with San Manuel Corp
Signed a memorandum of understanding to establish a jointly owned process plant in Trujilo for recovery of Gold and Silver from tailings deposits and high grade suphide concentrates (up to 100g/t) from nearby mines in Peru.

The intent is to create a centralised Albion processing plant surrounded by mines owned or controlled by San Manuel or third parties and historic tailing deposits.

Plant construction will be in 2 stages. Each stage will provide capacity to produce 50,000 ounces per year.
Due to the anticipated high grades, plant size, cost and operating costs are expected to be significantly lower than in the Las Lagunas project.

Preliminary Feasibility Study started to more accurately establish quantities and grades of concentrates and tailings available to the plant.

EVG Expects to finance its estimated total equity contribution of US$10M for the two stages from cashflow generated at Las Lagunas.

With lower costs and larger production, annual profit for EVG after tax could be AUD$15M?

Potential
from 24 May ann:

• Envirogold is also reviewing the prospect of reprocessing other high grade deposits in Peru, where there is possibility of treating refactory ore from existing mining operations.
• The company is negotiating with relevant Government authorities to evaluate a number of toxic gold tailings deposits from old mine workings to establish viability of treatment.
• Peruvian authorities have recorded over 800 toxic sites from historic mining operations.
• Peru produced over 200 tonnes (7M ounces) of gold in 2005 primary from high grade sulphuric ore.

China
from 24 May ann

• EVG hold exclusive rights to the Albion Process on tailings projects identified in the next 2 years in the five main gold producing provinces of China.
• Negotiations have commenced with the appropriate authorities in the Province of Shandong to treat numerous state owned sulphuric tailing deposits together with concentrate from small mine workings.
• China produced 220 tonnes of Gold in 2005 (7.8M ounces)

Shareholders
Very tightly held. Just try to find a seller today!
Top 20 shareholder hold 60%
Executive Chairman holds 8M shares, 40M Dec 2009 options



I have been watching this one for about 6 months now. Been accumulating whenever i have spare cash, hoping it stayed cheap so i could buy more.. but its all started happening recently. Hitting 20c today!
Maybe someone can post a chart?

 

[TheRage]

Interesting analysis. If EVG could fund further projects from internally generated cashflow I would be exceptionally interested in this stock. Too many start-ups and even larger players are issuing stock like it was candy at the fair. Too many people underestimate the eventual importance of stock dilution once the company finally comes to production and EPS wasn't what they thought it would be. You have certainly piqued my curiousity in this stock.

 

[So_Cynical]

I joined the EVG happy holders club this week

I reckon EVG has some potential as a niece, low cost producer with impeccable environmental credentials.

EVG has been established specifically to extract gold and silver from refractory ores and tailings utilizing
Xstrata Technology’s ALBION PROCESS to remove sulphur in the oxidation process.

http://www.albionprocess.com/

In early 09 EVG will be a Gold and Silver producer with no hedging, low debt,
low risk ore extraction methods and low per Oz costs and sovereign risk.

EVG first Project is at Las Lagunas in the Dominican Republic...the Indicated
JORC Resource is - 5.137mt @ 3.76g/t Au & 38.62g/t Ag for a total of
Gold 435,000 & Silver 3,974,000 Oz recoverable...all at surface Tailings.

EVG is substantially, (possibly fully) funded to production..and all Financial Projections
for the Las Lagunas project are based on POG $650USD & POS $12.70...so big profit
upside already there with current prices.

Market Cap: 26,717,815
Issued Shares: 197,909,742
First listed 25 Nov 1993

DYOR as i did.....

 

[So_Cynical]

EVG - Envirogolds Planned expansion into Peru is going full steam ahead, and today took
an unexpected turn, with the announcement that EVG has optioned 2 tenements, including one
with a closed Gold/silver mine.....EVG is looking to go "underground"

Quote :Todays Ann.
Mr Brian Johnson, Executive Chairman of EnviroGold Limited (ASX Code “EVG”), advises that the
Company’s wholly owned subsidiary, EnviroGold (Peru) SA (“EVGP”), has signed Option Agreements
to purchase three blocks of mining concessions covering a total of 5900 hectares.

The first block covers the 300ha Bumerang concession and includes the Huancay underground gold
and silver mine, the mine, which closed in 1984 due to low precious metal prices and after depletion
of its oxide reserves, has refractory gold-silver sulphide ore exposed on several levels of
the underground workings over a strike length of 1.8 km and continues at depth.

Two adjoining concessions, Bumerang I (100ha) and Bumerang II (200ha) are under application and
cover probable extensions to the mineralisation in the Huancay mine.

EnviroGold envisages reopening the Huancay mine and establishing a centralised milling and flotation facility
to concentrate refractory ore from Huancay and surrounding gold/silver deposits that could be developed.

High grade concentrates would then be trucked to the Company’s proposed Albion process plant near the
Provincial capital, Trujillo.

EnviroGold is also in negotiations to acquire and re-open a second mine within economic trucking distance
for ore to Huancay, together with a series of highly prospective exploration areas.

http://www.envirogold.com/pdf/EnviroGold Options Huancay Mine.pdf

 

[So_Cynical]

EVG got some financing....see its not totally impossible to raise money, just
takes a little time.

http://www.envirogold.com/pdf/2008-10-20 Project Finance approved (2).pdf

EnviroGold Limited has received a credit approved offer from Macquarie Bank to
provide a US$35 million financing facility for its 70% owned Las Lagunas Gold Tailings
Project in the Dominican Republic.

An early start to construction of the Project, which expects to recover approximately
US$400 million of gold and silver at today’s bullion prices, is obviously critical, and every
effort will be made to commence the fifteen month construction program in January 2009.

 

[So_Cynical]

There has been lots going on with EVG over the last few months, all good news of course, and that has been reflected in the share price, up over 7% in the last 2 days and up over 200% since the first week of April.

The highlights of the last few months

• Shareholders and holders of listed Options to be offered New Share Options on a 1 for 2 basis at a cost of $0.001 each, exercisable at $0.15 each on or before 31 December 2011.
• http://www.envirogold.com/pdf/EnviroGold to offer New Options to Share and Option holders.pdf
  
  
• Envirogold to acquire second mining lease and small scale gold mine in the Azuay region of Equador, combined with the neighboring lease its 450ha in total, with a possible 1 million ounces.
• http://www.envirogold.com/pdf/EnviroGold to acquire 2nd Mining lease in Ecuador.pdf
  
  
• The Las Lagunas Gold Tailings Project in the Dominican Republic is progressing well, with Earthworks, drainage, pad foundations, and the site access road virtually complete, with Construction of the Albion processing plant is due for completion in December 2010 with wet commissioning of the 75,000 oz Au per year plant to occur in the first quarter of 2011.
• http://www.envirogold.com/pdf/Update on progress LLGTP.pdf

 

[So_Cynical]

EVG got a speeding ticket today apparently stocks going up over 30% in 5 days, on no news is suspect. :dunno: anyway EVG also released an investor presentation today that gives a good over view of where they are at, and what can be expected in the near future....hit an intra day high of 11 cents today.

http://www.asx.com.au/asxpdf/20091110/pdf/31lyx2x5m9txpg.pdf

 

[skc]

I joined the EVG happy holders club this week

Have you been holding since this time? That post was from Feb 08 and the stock fell 80% at one stage? Did you fish more at lower prices?

 

[So_Cynical]

Have you been holding since this time? That post was from Feb 08 and the stock fell 80% at one stage? Did you fish more at lower prices?

I brought again at about 7 cents on the way down and then again at near bottom 3.9 cents, and they did a rights issue at about 4.5 cents....all smallish buys, took a while to come good but i was always confident and just kept buying.

Im laughing now i hold 48000

 

[Miner]

ENVIROGOLD LIMITED FPO

Code Bid Offer Last Change* % Change* Open High Low Volume Trades Value News
EVG 0.066 0.069 0.066 +0.003 4.76 0.063 0.070 0.063 4,536,616 32 299,854

Indonesian investor bought heavily at 7 cents

Interesting deal

 

[So_Cynical]

So Cynical
You must not be stopping to laugh considering the directors last bought EVG at 11 cents and EVG sold the same to Indonesian investors at 8 cents

Mate its the stock market, laughing one day crying the next EVG was always a long term proposition for me...i wanted long term exposure to the Gold bull and EVG was one of 5 vehicles i chose to get that exposure.

These guys will be in production early next year and that's when the SP should get significantly re-rated, im in no hurry with this one and have a target above 21 cents.

LOL quoted before the edit.

 

[aberline]

Any thoughts on this. Possibly good buy in this market? Does anyone know when production begins? My ex broker was happy with this.

 

[So_Cynical]

Envirogold has really taken off over the last 3 days, up over 20% again as it did similar about this time last year and got my hopes up. this time i would think the SP rise has been heavily influenced by the Gold & Silver price run to new all time highs.

Have you been holding since this time? That post was from Feb 08 and the stock fell 80% at one stage? Did you fish more at lower prices?

I brought again at about 7 cents on the way down and then again at near bottom 3.9 cents, and they did a rights issue at about 4.5 cents....all smallish buys, took a while to come good but i was always confident and just kept buying.

Im laughing now i hold 48000

When i wrote the above i was just going by memory as to what i actually paid, creating tonight's chart i got a bit of a surprise when looking at my trade confirmation emails to see just how far off i was in my earlier post. anyway its great to have my whole EVG position 9.5% in profit and my EVGO position something like 2000% up from the issue price.

The options have an excise price of 0.15c and expire 31/12/2011 so still 13 months to run...and alot can happen to the price of Silver and Gold in the next 13 months...lots of upside for both EVG and EVGO especially now some of there finance/development issues have been settled thanks to Mac Bank stepping up...3 year chart with all my buys below.
~

 

[exberliner1]

Hi everyone,

I have been acquiring EVGO this week, shortly after concluding my buying I found this post on HC.

So yes of course I want the price to go up ... but I know there are some clued up posters on this site so I thought I would share this with you.

This post is one month old ... can anyone find fault with it especially on the NPV calcs - I can't.

The post is the work of a poster called JID - have I missed something or does this really look pretty good?

Post reads

--

Hi Guys,

Put the coffee on this is long: but if you want to make lots of money I think it is worth 15 min of your time.


ENVIROGOLD 14 BAGGER POTENTIAL

SOME QUICK HOUSEKEEPING

Just so you know before you read this I have a +10% stake in EVG and I am not a licenced investment advisor, instead just a fellow HCer sharing my work...

BACKGROUND

EVG is a small ASX listed company focusing on developing gold projects in Latin America. It currently has two projects (Las Lagunas in the Dominican Republic and Azuay in Ecuador).

EVG has had several hurdles to overcome in developing its first project, Las Lagunas, including engineering consultant design shortcomings, obtaining financing during the GFC, and problems with their minority (6%) JV partner. These problems are now resolved and EVG is progressing from being a developer to a producer of gold and silver within 12 months.

Due to ongoing delays EVGs share price is heavily discounted (current share price 7.8c for a market cap of $33m) to Las Lagunas NPV and the potential of its Azuay Gold Project in Ecuador.

LAS LAGUNAS PROJECT

Las Lagunas is a tailings project involving refactory gold that remains from a previous, Government owned mining project. It has been purposely stored for later extraction.

EVG won an international tender several years ago to develop the LL project. Using new technology developed by Xstrata (Albion) EVG will extract approx 70.1% of the gold from the tailings over a project life of 6.5 years.

The reserve includes recoverable gold of 421,000 oz (65,000 oz p.a.) and 3.8 million oz of silver (600,000 oz p.a.) that can be extracted for an estimated $334 opex per oz.

EVG will spend USD $36m in building the gold plant, of which $34m is spent to-date. Mac Bank is financing a total of USD $45m and the Ban Reservas is providing a USD $5m contingency facility to build a USD $81m gold processing plant including an Albion processing component.

With project delays finally being overcome first production is expecting in September 2011 (11 months time). Go to www.envirogold.links.com.au to see latest project photos.

As part of the Mac Bank financing facility 50% of the first four years production (126,000oz) or 30% of total gold production will be hedged. Silver will remain unhedged at this point. In addition as part of the finance package EVG has sovereign risk insurance against capital losses (e.g. nationalisation of project) although the Dominican Republic has a sound, Americanised political system.

EVG will enjoy 94% of the JV partnership profits from this project and also earn a 2.5% management fee. Part of the project terms is that EVG is also repaid all of its capital contribution (expected to be USD $36m) from project revenues and will own the gold plant at the end of the project (for a $5m payment to the JV, of which EVG is the principal partner).

AZUAY PROJECT

EVG has created a company in conjunction with two landowners in Ecuador that are currently mining vein style gold over 700 ha. EVG will earn a 65% interest in the company by spending $6.5m in mapping, drilling and feasibility studies.

Consultants have recently been on the properties creating 3D maps and taking tunnel samples. This is to understand the gold mineralisation and prepare for extensive drilling.

Historical drill results have led the consultants to agree that there is likely +1m oz of +10g/t over the properties that could support a 75k oz p.a. production operation.

UPCOMING ANNOUNCEMENTS AND MILESTONES CY 2010

1.Accessing of financing and money flow for LL project Announced 14/10/10
2.Hedging of 126,000 oz of LL gold production
3.Construction milestones and timeline and revised NPV for LL
4.Consultants Report for Azuay confirming conceptual potential for +1m oz of gold
5.Scoping Study for Azuay Project outlining financial robustness and projections
6.Commencement of drilling on Azuay for maiden JORC resource

NPV AND CASHFLOW FOR LAS LAGUNAS PROJECT

Page 9 of the latest Annual Report provides an NPV for LL using inputs approved by Macquarie Bank. This base case, and conservative NPV, shows the following:

Variable inputs (USD)

Hedged price of 126,000 oz gold $1250.00
Unhedged price of 295,000 oz of gold $1010.00
Unhedged price of 3.8m oz of silver $15.34
Exchange rate 85c
Discount rate 10%

Project NPV (AUD @ 0.85c)

NPV $0.26 per share ($112m)*
Project profit to EVG $0.368 per share ($158.2m)
Capital returned to EVG $0.098 per share ($42.3m)

* Based on 430m shares on issue

However, these inputs are conservative and out-of-date. For example gold will be hedged in the coming weeks at the spot price, which is currently USD $1,372 which is 9.7% above the NPV input figure. Likewise, silver is currently trading at USD $24.51 which is 59.7% higher than the NPV input. The exchange rate has also moved significantly and the spot price of gold is currently 36% above the unhedged gold input price.

Assuming the current spot prices for the inputs (gold $1,372, silver $24.51 and the AUD 0.99c) I believe that there is significant upside for the LL project:

(1)Revenue increases $158m in USD/AUD I assume parity
(2)Marginal costs (royalties, taxes, project share with Dominican Government and JV partner) equate to 48.1%*. This leaves an additional $82m for EVG on the NPAT line.
(3)Assuming that this is spread evenly over the project life and with a 10% discount rate this provides an increased NPV of $57.8m.

* Government royalties 3.2%, Government share of operating profit 13.9%, Dominican income tax 25.0%, JV partner share 6.0%

Project NPV (Gold $1,372, silver $24.51 and AUD @ 0.99c)**

(1)NPV $0.355 per share ($152m)
(2)Project profit to EVG $0.502 per share ($216m)
(3)Capital returned to EVG $0.084 cents per share ($36m)

** Note entire NPV has been recalculated using AUD $0.99 instead of the original AUD $0.85

SHOW ME THE BAGS

This is how I believe EVG will become a 14 bagger (capital growth and dividends) in the coming years:

Bag 1

The return of all its capital from the LL project ($36m). Market capitalisation of EVG currently is $33m.

Bag 2

EVG is spending USD $81m on building its LL gold plant including an Albion processing component. The plant is situated in an area prospective for gold and highly mineralised. Several (predominantly Canadian companies) are developing adjacent and surrounding properties. EVG will own the gold plant after the 6.5 year LL project life. I have assumed that this will either be sold for a minimum of AUD $33m or remain as an income earning asset for EVG either via subsequent JV or toll treatment of ore.

Bags 3 - 8

This is the profit returned to EVG over the LL project life using Macquarie Bank conservative NPV inputs. A total of $158.2m will be returned to EVG in profit or $0.368 per share (current SP $0.078)

Bags 9 - 10

This is the incremental profit returned to EVG from LL using the less conservative spot prices for gold and silver but the more conservative current AUD rate. An additional $58m is returned to EVG.

Bag 11

This is from an assumed +1m oz of +10g/t gold on the Azuay properties valued at a JORC level of confidence. From an early CY 2010 report from PIR the average metric for Australian gold transactions is approximately AUD $34 oz, undeveloped. Thus, with 1m oz a value could be prescribed of $34m for the Azuay Project in its early stages.

Bag 12 - 14+

This is from the assumed development of the Azuay Gold Project into a 75k oz p.a. high grade project of which EVG will hold a 65% interest in.

CONCLUSION

I believe that EVG is well placed in terms of its company life cycle in a very good sector and will enjoy significant profits over the coming years as it ramps up its two existing projects and develops more. I think a multi-bagger is well and truly feasible from here and not blue-sky-dreaming.

FINAL NOTE

In the true spirit of HC this is shared with others to allow an opportunity to at least become aware of this opportunity. Your own research is obviously required. However, if you thought this was useful, please thumb it up and maybe it will appear on the main page, thus allowing other, fellow HC�ers to at least become aware of EVG.

 

[So_Cynical]

OH Snap! EVGO hit a all time high today of 0.034 up 26.9% : ive never been in the ridiculous position of sitting on 3200% profit before. :bananasmi one of those moments where i really wish id brought a few more.

 

[exberliner1]

OH Snap! EVGO hit a all time high today of 0.034 up 26.9% : ive never been in the ridiculous position of sitting on 3200% profit before. :bananasmi one of those moments where i really wish id brought a few more.

Well done if that is the case.

But I thought the new series options were issued at 1c making your profit just a little bit smaller in percentage terms.

Anyway it is the bags to come that interest me hence my request for any educated input from ASF members.

Greetings from Kiev

EB

 

[So_Cynical]

Well done if that is the case.

But I thought the new series options were issued at 1c making your profit just a little bit smaller in percentage terms.

Issue price was 0.001 per option 1 for 2 at the time i thought it was pretty silly but im just a lowly investor..what do i know :dunno: so i just paid up the $30 odd dollars it was....just one of the benefits of being a long term holder with a little vision and belief.

The screen shot below is from the second last half yearly (linked) report...page 18.

http://www.asx.com.au/asxpdf/20100315/pdf/31p8dn1m8wvwn7.pdf
~

 

[Sean K]

Had a fantastic run the past couple of months.

If they can start producing as claimed in quick time then they look undervalued.

Still lots of water to run under the bridge before it gets off the ground though.

I question their assumptions on recovery and opex just due to the ore and the technology. Will it really work that well for this particular waste dump? They haven't tested the ore by the looks.

I'm not impressed with managements continued projections about development and financing. Just problem after problem. Maybe that's just the way things go in Latin America.

Not sure if the boss should have been getting paid 400k a year for not getting anywhere. I supposed he got the company out of Venezuela without too much damage.

I'm skeptical as to why the minority shareholder would delay the project financing with Macquarie for so long. If it was clearly in their best interests why fight it?

And what happened to the significant JV partner? Is that the mob who has caused all the problems? Good partners...

The Ecuador project troubles me. How the previous analysts plucked 1m plus potential there is beyond me. They've been returning 10-100 ppm over 1-2m in the veins of the old workings and rock chips. At that rate they'd have to have many kilometres of veins to reach the 1m ounces. Then they have to sludge it to the closest possible sight for a mill which is potentially 20km away. Long way to go for any JORC to pop out of this one.

But, by the pictures it seems they've got some good concrete slabs laid out in the Dominican Republic. With the financing now available they just might get the mill built and starting producing as stated.

Good luck!

 

[So_Cynical]

I question their assumptions on recovery and opex just due to the ore and the technology. Will it really work that well for this particular waste dump? They haven't tested the ore by the looks.

A couple of container loads of tailings were shipped to Brisbane about 3 years ago and run through the Albion demonstration and test mill that was/is? setup up there....the recovery numbers are real, audited and verified.

I'm not impressed with managements continued projections about development and financing. Just problem after problem. Maybe that's just the way things go in Latin America.

I'm not that impressed either...but for company's with no money and no income needing to borrow money over the last 3 years it has been a nightmare, especially when they want to do it in a way that respects there current shareholders and doesn't destroy there value by diluting the crap out of them...say like CTO has done with endless cap raisings.

In the last 3 years EVG has done 1 cap raising (rights issue) and 1 option issue (EVGO) and a couple of small placements...as a longer term holder, in my opinion there have done the best they could while not constantly asking me for money and not overly diluting me.

Not sure if the boss should have been getting paid 400k a year for not getting anywhere. I supposed he got the company out of Venezuela without too much damage.

Agree...its prob twice what a CEO of a prospector should be getting...IMO

I'm skeptical as to why the minority shareholder would delay the project financing with Macquarie for so long. If it was clearly in their best interests why fight it?

What i think was happening here is that there local minority "partner" was planning to pick up the project for a song after EVG fell over due to the constant delays and need of financing to move forward...i reckon they thought the Aussies would run out of money and pack up and go home, and they as the minority holders would get first crack at the project when the Govt put it back on the market.

The Ecuador project troubles me. How the previous analysts plucked 1m plus potential there is beyond me. They've been returning 10-100 ppm over 1-2m in the veins of the old workings and rock chips. At that rate they'd have to have many kilometres of veins to reach the 1m ounces. Then they have to sludge it to the closest possible sight for a mill which is potentially 20km away. Long way to go for any JORC to pop out of this one.

Yep Equador is a side show.

But, by the pictures it seems they've got some good concrete slabs laid out in the Dominican Republic. With the financing now available they just might get the mill built and starting producing as stated.

Good luck!

All the hard yards have been done...as the share price reflects.

 

[tahpot]

I'm not impressed with managements continued projections about development and financing. Just problem after problem. Maybe that's just the way things go in Latin America.

I held EVG & EVGO a couple of years ago, but in the end wasn't impressed by management and the delays so exited for a small profit. Although the project has made some progress since then the share price is about back to where it was, if I remember correctly.

Either way, if you are comfortable with the quality of management and their ability to execute, then jump on for a good ride. Personally I'm not convinced enough that management can do the job so aren't jumping on board the second time, but good luck to those that do and I hope you're rewarded... just be cautious.