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Roca Mines: Moly-mining and Gold exploration

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Roca Mines: Moly-mining and Gold exploration

Max Mine & Foremore - Can they both be winners?

================================================

 

Roca has enjoyed some historical success when it started production on the Max Mine - but then suffered, when the mine had to be shut down

 

Here's the Weekly chart for ROK.v / Roca Mines ... update

ROK-lt.gif.jpg

 

(Note that the ROK.v price rose from $0.20 in mid-July 2005 to a high of $3.98 on Nov. 2, 2007)

 

ROK.v : 12 months chart ... update

ROK-12m.gif.jpg

ROK has :

+ A Molybdenum deposit in British Columbia with a small high grade core, surrounded by a larger lower grade deposit. With money raised in 2005-6, they put the deposit in production, and rode upwards a nice increase in Moly prices

 

+ Certain gold deposits (Foremore and 50% of Seagold) in British Columbia, that management have been contemplating to spinoff into a separate quoted company.

 

MolyPrice4505.gif

 

After a long period of low prices, Moly prices shot up and became a big investor favorite in 2004-7. For example, a specialised fund was even set up by Sprott asset management to invest in Molybdenum-related companies. Roca was one of the very few companies moving into production, so it was a big beneficiary of the Moly mania. There was an initial peak in Moly prices at $47 in 2005, which had helped to trigger the Mania.

 

MolyPrice2007.gif.jpg

 

Prices began a second rally in 2006-7, along with many other commodities. The second wave of price appreciation was reaching is end as ROK was going into full commercial production. By the time the company announced commercial production in April 2008, the Moly price had already made a second lower peak.

 

Like many manias in the mining market, this one faded when the price of Mb began sliding. In fact Moly Oxide prices rose to a peak of $35 in 2007, and stayed in a narrow range of $32 to $35 through the first quarter of 2008. Copper peaked in June 2009, and Oil and most other commodities peaked a few weeks later. The financial crisis destroyed demand, and brought a rapid price slide in all commodities. My the end of 2008, Moly prices had fallen all the way back to under $10 - which was a level where Roca would struggle to breakeven.

 

Roca achieved about 80% of its target production in 2008, and produced just over 1 million pounds of the metal, and revenues close to $19 million. Cash flow for the year was reported at $7.x million, but no profits were reported. The loss for the year 2008 was $xxx, or 3 cents a share.

 

Moly-5yrs.jpg : Moly2008.png.jpg : Updated chart#1 : #2 : thread

 

Here's Thomson Creek Molybdenum (TC) ... update : 6mos / TC generally tracks the Moly price

TC-5yrs.gif.jpg

(TC has outperformed ROK.v by maintaining consistent production, and profits / TC MKtCap $1.98 Bn)

 

Since the beginning of 2009, Moly prices have begun to make a jagged recovery. They have recently pushed back up over $16, and may be building a base now for a possible breakout over $20.

 

As the chart at the top of the page shows, Roca's share price has been on a roller coaster ride since 2005. First, there was a period of remarkable prices rises, as Roca rode the Moly Mania for a 20-fold price increase from $0.20 to $3.98, peaking in Nov. 2007 - coinciding more-or-less with the $35 peak in Moly prices. But that big rally has been followed by a round-trip back to near $0.20, thanks to the big slide in Moly prices.

 

The collapse in Moly prices brought a dive in all Moly related stocks. But Roca has failed to benefit from the subsequent recovery in Molybdenum Oxide prices. In theory, Roca has a cash cost of about $6 per pound, but it has been plagued with production problems.

 

Press reports over the last three years mention: xxx, xxx, and xxx. And the latest situation is that Roca is now ready to restart production, and it may have enough cash on hand to do so, but there is very little margin for error.

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TIMELINE -

EXCERPTS / here are some historical headlines, as relate to Roca's Max Mine & its Gold projects

 

(2007)

Mar. 06, 2007 : Roca Closes $10 million Financing (at $1.40 per share)

July 18, 2007 : ROCA - MAX Molybdenum Exploration Drill Program Commences

Aug. 07, 2007 : Roca Closes Bought Deal Financing (at $3.18 per share)

Oct. 29, 2007 : ROCA - Production Commences at MAX Molybdenum Mine

Dec. 11, 2007 : ROCA -- Molybdenite Concentrate Shipments Commence

 

 

(2008)

Feb. 07, 2008 : ROCA - MAX Molybdenum Drilling - Initial Results Confirm Deep Potential and Extend High Grade Zones

Apr. 16, 2008 : ROCA - MAX Molybdenum Mine Achieves Commercial Production

June 11, 2008 : ROCA - MAX Molybdenum Mine Production Update

- - - - - - - - - - : (production below goals, due to genset power problems)

Aug. 12, 2008 : ROCA - Drilling Intersects New Molybdenum Zone at MAX and Drilling Commences at Foremore VMS-Gold Project

Aug. 14, 2008 : Romios Announces Joint Venture with Roca Mines Inc on ("Seagold") Galore Creek Property

Nov. 18, 2008 : ROCA - MAX Molybdenum Mine Production Review and Outlook

- - - - - - - - - - : (Q3 moly price was over $25/lb.- fell to $10, production running near 80% of target)

Dec. 03, 2008 : ROCA - MAX Mill & Concentrator Christmas Shutdown (maintenance, as price fell to $9)

Dec. 10, 2008 : ROCA - MAX Mine Rockfall Extends Maintenance Break (rocks fell w/ mine empty)

Dec. 24, 2008 : ROCA Reports Annual Results (Revs. of $18.8mn on 1.03mn lbs. Mo, w/ 3cent loss)

- - - - - - - - - - : (CF of $7.8mn in FY ended 8/2008 : botback 1.46 mn shs at near $1.00/sh.)

 

(2009)

Jan. 08, 2009 : ROCA - MAX Mine Restarts Ahead of Schedule

Jan. 15, 2009 : Roca to Complete Working Capital Financing (at $0.25 /sh.)

Feb. 16, 2009 : Roca Closes $2.435 Million Financing

Nov. 25, 2009 : ROCA Targets Increased Production and New Exploration at MAX

Dec. 08, 2009 : ROCA Reports Annual Results (Revs. of $26mn on 2.37mn lbs. Mo, w/ 21cent loss)

- - - - - - - - - - : (OCF of $8.7mn in FY ended 8/2009.)

 

(2010)

Mar. 04, 2010 : ROCA - MAX Molybdenum Mine Production Update

Apr. 28, 2010 : ROCA - MAX Molybdenum Mine Receives 1,000 tonnes/day Permit

June 10, 2010 : ROCA - MAX Molybdenum Mine Production Update

Aug. 26, 2010 : ROCA Reports Temporary Shutdown at MAX Mine

Sep. 03, 2010 : ROCA MAX Mine Production Restarts

Sep. 21, 2010 : ROCA Reports Stope Stability Event at MAX Mine

Oct. 04, 2010 : ROCA Announces Financing to Re-Start Operations at MAX Mine

Nov. 24, 2010 : ROCA Commences Rehabilitation Work at MAX Mine

Dec. 20, 2010 : ROCA Completes Rehabilitation Work at MAX Mine

Dec. 21, 2010 : ROCA Reports Annual Results (Revs. of $17.6mn on 1.38mn lbs. Mo, w/ 15cent loss)

- - - - - - - - - - : (OCF of $2.66mn in FY ended 8/2010- Big drop in depr./depl. Expense.)

 

(2011)

Feb. 01, 2011 : ROCA - MAX Molybdenum Mine Update

Apr. 04, 2011 : ROCA - MAX Molybdenum Mine Production Schedule

 

/ Roca News: http://www.rocamines.com/s/NewsReleases.asp?DateRange=2007/01/01...2007/12/31

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QUARTERLY RESOURCE, PRODUCTION & Grades ...

 

High grade zone : 280,000 tonnes, graded at 1.95% MoS2 = 10.9mn lbs (when mined out?)

+ Low grade zone : Measured tonnes, Ave. (Measured & Indicated)

0.50 cutoff : 1,010,000 t. at 1.01% grade (1,380,000 t at 0.94% = 25.9mn lb x $15= $389mn)

0.20 cutoff : 9,340,000 t. at 0.35% grade (11,350,00 t at 0.36% = 81.7mn lb x $15= $1.23 Bn)

0.10 cutoff: 27,870,000t. at 0.21% grade (42,940,000t at 0.20%= 172.mn lb x $15= $2.58 Bn)

/source : http://www.rocamines.com/s/MaxProperty.asp?ReportID=120611

== ==

Roca's MktCap : $0.25 x 113.6 Mn shs= $28.39mn, or 7.29% of $389mn / 1.10% of $2.58Bn

Roca BookVal : $0.25

/Profile : http://uk.finance.yahoo.com/q/ks?s=ROK.V

 

==========

Original Plan:

The initial phase of mining is expected to produce approximately 1.5 million lbs of contained molybdenum from each production run of 72,000 tonnes. Within the first 6 months of production commencement, Roca intends to complete back-to-back production runs resulting in the production of approximately 3.0 million lbs of contained molybdenum. Annual operating cash costs (mine, mill and overhead) are estimated at US$5.00/lb. of molybdenum produced (approximately $100/tonne). Payback of start-up capital is approximately 4 months from mill startup. Roca plans to recover much of the 260,000 tonnes of 1.95% MoS2 within the first year of production, and to make expansion decisions based on prevailing molybdenum prices during 2008 and beyond.

 

Qtr. : Production /Grade : Cash Cost

yr to 8-31

Q3-08 : 227,558 / 0.7 % : $

Q4-08 : 387,710 / 0.6 % : $

== ==

Q1-09 : 679,697 / 1.0 % : $ 7.07 = :

Q2-09 : 451,130 / 0.7 % : $ 8.23 = :

Q3-09 : 666,301 / 0.7 % : $ 6.02 = :

Q4-09 : 577,227 / 0.6 % : $ 7.67 = :

== ==

Q1-10 : 362,633 / 0.41% : $ X.XX =

Q2-10 : 305,485 / 0.35% : $ X.XX =

Q3-10 : 369,026 / 0.40% : $ X.XX =

Q4-10 : 344,487 / 0.37% : $ X.XX =

== ==

Q1-11 : 054,923 / x.XX% : $16.67 ("not reflective of act. cost")*

Q2-11 : 000,000 /

 

YR : Production / Grade : Cash cost = Amt. :: Revenues : / Prod. vs Price

====

yr'10 : 1,381,631 / X.x% : $11.99= $16.57mn :: $17.65mn /$12.78 : $

yr'09 : 2,374,355 / X.x% : $ 7.30 = $17.33mn :: $25.96mn /$10.94 : $

 

*Production shutdown

==========

In August of 2010, the mine and mill were shut down for nine days as a result of an underground stope wall sloughing event between the 830 and 805 metre levels. Milling operations resumed on September 4, 2010, however on September 21, 2010, the Company announced that production had been suspended due to a collapse of the 830-850mL sill pillar. The stability of this sill pillar had been the focus of ongoing observation. Geotechnical monitoring conducted by mine personnel successfully observed increased activity in this area on September 20th and all mine personnel and mobile equipment were moved as a precaution. The sill pillar apparently failed progressively, initially occurring as raveling and ultimately failing at approximately midnight.

 

The short operating period and inefficiencies relating to start-ups and shut-downs resulted in high cash costs for the production period at $16.67 per lb of molybdenum sold. The cash cost per pound is not reflective of actual unit cost increases nor should it be relied upon to estimate cash costs for future operating periods.

 

Outlook - at Dec.2010

=====

It remains management's belief that molybdenum prices should remain significantly greater than historic values for the foreseeable future due to i) production problems globally, ii) the reduction of by-product production related to copper mines and iii) the inability of new mines to achieve financing. In real terms, recent global events have seriously eroded the supply of molybdenum and management believes that a realization of supply and demand fundamentals in the medium-term will result in positive changes to pricing. It is therefore management's goal to re-start production at the MAX Molybdenum mine and to accelerate to 1000 tpd to reduce unit costs and to preserve the opportunity to produce concentrates in an appreciating price environment.

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... NEWS Releases, re: proposed Mining Restart in 1H-2011 ...

 

/1 : Feb 1, 2011

ROCA - MAX Molybdenum Mine Update

Vancouver, British Columbia: Roca Mines Inc. (TSX-V: ROK) ("Roca" or "the Company") announces that a review meeting was held on January 31, 2011 with British Columbia's Chief Inspector of Mines and staff/consultants from the mines inspection branch to discuss development and operating plans for the MAX Molybdenum Mine.

 

The meeting reviewed geotechnical information related to the sill pillar failure that occurred in late September 2010. Discussions focused on mine rehabilitation work completed in December 2010 and the Company's plans to restart operations. It was agreed that the Company's proposal to locate a new sill pillar and to continue with production mining below that pillar were appropriate and were approved-in-principal, subject to certain conditions being met.

 

Those conditions include the development of a geotechnical program to survey the existing stope and to map the main ramp and manway.

 

/more: http://www.rocamines.com/s/NewsReleases.asp?ReportID=440677&_Type=News-Releases&_Title=ROCA-MAX-Molybdenum-Mine-Update

== == ==

 

/2 : Apr 4, 2011

ROCA - MAX Molybdenum Mine Production Schedule

Vancouver, British Columbia: Roca Mines Inc. (TSX-V: ROK) ("Roca" or "the Company") announces that it has advanced its geotechnical work and development/operating plans for the MAX Molybdenum Mine and is targeting June 2011 to restart production.

 

In addition to rehabilitation and general maintenance at the site, a geotechnical program to survey the existing stope and mapping of other workings has been completed. The preparation of a monitoring program based on this work is nearing completion and will enhance existing geotechnical monitoring. Data collected to date shows no changes to the stability of the workings or mine access. The monitoring program and amended mine plan will be submitted to BC's Chief Mines Inspector shortly for a final review.

 

In parallel with the activities described above, the Company has been working with its various contractors to establish mobilization dates for critical path work in April. These tasks include stope development and long-hole production drilling prior to restarting production. In addition, various contractors are reorganizing staffing and management for the mill and other operations at site. The mining industry is currently extremely competitive for services and personnel and the Company is pleased that its contractors and staff are able to deliver in a timely fashion.

 

The Company is also currently reviewing its alternatives to fund the current working capital requirement to restart the mine and an update on this plan will be provided shortly.

 

Management's goal to restart production at the MAX molybdenum mine and to advance its permitted 1,000-tonne-per-day expansion plans will reduce unit costs and preserve the opportunity to produce concentrates in an appreciating price environment. Molybdenum oxide currently trades at approximately US$17 per pound.

 

ROCA MINES INC.

"Scott Broughton" CEO

 

/more: http://www.rocamines.com/s/NewsReleases.asp?ReportID=450273&_Type=News-Releases&_Title=ROCA-MAX-Molybdenum-Mine-Production-Schedule

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FOREMORE :

Roca's 100%-owned Foremore project is located in one of the most active mining and exploration areas in British Columbia - the Eskay/Iskut Camp. This camp includes Barrick Gold's legendary Eskay Creek Mine, Cominco's historic Snip Mine and Novagold's Galore Creek project.

 

Foremore was Roca's 'listing property' and has been a focus of the Company's exploration efforts dating back to the summer of 2002. The property was also the focus of exploration by Cominco Limited between 1989 and 1996. Drawn to the area because of its abundance of mineralized boulders, Cominco's work failed to locate a source of several boulder fields containing thousands of well-mineralized boulders.

 

In dramatic contrast, Roca's exploration crews have succeeded in discovering numerous showings and mineralized zones in outcrop in a short period of time. Diligent prospecting and hard work have helped to make Foremore one of British Columbia's new base and precious metal-rich discoveries.

 

In 2008, the Company is further investigating the numerous VMS & precious metals targets identified at Foremore. Gridding, geological mapping, Induced Polarization (IP) and Magnetometer (Mag) surveys along with up to 8,000 metres of diamond drilling on various target areas is being conducted

 

( ... from 2008 Annual Report ... ) / Aug.2008 Brochure

 

Foremore VMS-Gold Project ... Area Map

 

The Company holds a 100% interest in the Foremore VMS-Gold project situated in the "Golden Triangle" one of the most active mining and exploration areas in north-western British Columbia. The property comprises 65 contiguous mineral claims totaling 23,609 hectares in the Liard Mining Division. Significant operations in the area include Barrick Gold's legendary Eskay Creek Mine, Cominco's historic Snip Mine and NovaGold and Teck Cominco's Galore Creek Project. Foremore has been the focus of the Company's exploration efforts dating back to the summer of 2002 and was the focus of exploration by Cominco Limited between 1989 and 1996.

 

2008 Work

While relatively inactive at Foremore during the two prior fiscal years, the Company has recently completed an extensive program at Foremore including gridding in four areas totaling 78.0 line km. A total of 52.6 line km of Induced Polarization (IP) surveys and 57.7 line km of Total Field Ground Magnetometer surveys were completed. In addition, 3,299.4 m of core drilling was completed in 13 holes from which 890 samples were submitted for analytical work. During the course of geological mapping a total of 301 rock and 197 soil samples were submitted for chemical analysis. One of the primary objectives of the 2008 work program was to explore for a potential bedrock source for the sulphide-rich boulders and blocks of the South Boulder Field (SBF).

 

The drilling program was significantly smaller in scope than that originally planned, due to a shortage of drill equipment and to the short season remaining once the drill arrived on the property. Consequently there remain a number of excellent untested drill targets on the property, including the Ryder NW, Westmore, H.Valley/SBF, SG VMS Horizon, Antler and Zig Zag Areas.

 

In the Antler area the Company completed 20.6 line km of grid (17 lines). The grid was mapped, a Ground Magnetometer survey and 3.0 km of Induced Polarization completed. Exploration targeted a north trending, locally pyrite-rich felsic intrusion 2.5 km long and 200 m thick where historical rock sampling by the Company yielded extremely anomalous arsenic values. No drilling was completed in the Antler Area during 2008. Massive sulphide boulders have been discovered in adjacent Rumble Cr, as well as west of the Antler Grid.

 

In the SBF/Hanging Valley area 43.2 line km of grid (29 lines) were completed. The grid was mapped, Ground Magnetometer surveys and 35.7 km of Induced Polarization were completed. Exploration targeted an area where historical soil sampling by the Company defined a multi-element soil anomaly, a potential source of, and proximal to the South Boulder Field, comprised of more than 900 polymetallic massive sulphide boulders. Five drill holes, totaling 822.5 m, tested several high chargeability anomalies but intersected mainly pyrite. A number of intermediate anomalies remain to be tested and these may be indicative of less conductive sphalerite/galena mineralization. Further work is planned.

 

In the Westmore area 8.5 line km of grid (13 lines) were completed. The grid was mapped and 8.3 km of Induced Polarization completed. Exploration in this area targeted the prospective, altered rhyolite unit host to the Ryder VMS mineralization located some 3 km to the northeast. Two drill holes, totaling 396.0 m, tested a high chargeability anomaly associated with the altered rhyolite but failed to intersect significant base or precious metal values.

. . .

Expenditures on the Foremore Project during the fiscal year ended August 31, 2008 were $1,374,824 and at August 31, 2008 totaled $5,548,509 including $452,113 in acquisition, staking costs and advance royalties.

 

/more, incl. Drilling results: http://www.rocamines.com/s/NewsReleases.asp?ReportID=332820&_Type=News-Releases&_Title=ROCA-Reports-Annual-Results

 

Exploration Potential

 

The Foremore Property lies within an extremely rich metallogenic belt that is a direct result of prolonged island arc volcanism. This world-famous belt hosts a number of very significant present and past producers, displaying a wide variety of genetically related mineralization styles, including:

 

+ Porphyry Copper-Gold-Molybdenum - Schaft Creek, Galore Creek, Kerr/Sulpherets;

+ Intrusion related mesothermal veins - SNIP and Johnny Mtn. gold mines, Red Mtn;

+ Epithermal gold-silver veins - Sulpherets, Newhawk, Premier Mine, Golden Bear Mine;

+ Volcanic Hosted Massive Sulphide - Eskay Creek, Tulsequah Chief, Granduc.

 

The SG, SG East and North zones share many mineralogical and grade characteristics with world-class VHMS deposits. Au and Ag enriched stratiform sulphide mineralization is hosted in felsic to intermediate volcanics and associated sedimentary rocks.

 

MORE on Foremore Project : http://www.rocamines.com/s/ForemoreProject.asp?ReportID=54256&_Title=Foremore-Project-Intro

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They do not appear to have ever been cash flow positive. Why restart the mine if it's not making money at today's prices? What am I missing here?

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They do not appear to have ever been cash flow positive.

Why restart the mine if it's not making money at today's prices? What am I missing here?

They were cash flow positive three years in a row:

 

They were cash flow positive three years in a row:

 

=====: Operating CF (Ave OCF b/even Price):

Year Ended

8/2008 : $7.8 million ($10.68 : $18.8mn Revs on 1.03 mn lbs: $18.25 ave sale ),

8/2009 : $8.7 million ($7.30 : $26.0mn on 2.37 mn: $10.97 ),

8/2010 : $2.66million ($10.83 : $17.6mn on 1.38 mn: $12.75 )

 

But NOT PROFITABLE, thanks to writing off heavy start-up costs against early "hi- grade" production,

and because Moly prices have collapsed to below $10 in late 2008.

 

Moly is now back up to $17, which should be handsomely over the cash costs.

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Latest - Mine to come back on line -

 

http://finance.yahoo.com/news/ROCA-MAX-Molybdenum-Mine-cnw-3272352388.html?x=0&.v=1

 

VANCOUVER, June 28, 2011 /CNW/ - Roca Mines Inc. (TSXV: ROK) ("Roca" or "the Company") announces that mine development work at the MAX Molybdenum Mine has advanced positively in June 2011 and crews are nearing re-start of production.

 

The geotechnical monitoring program is nearing completion with the installation this week of new instruments. This will enhance existing geotechnical monitoring, which to date shows no changes to the stability of the workings or mine access. This final step in the mine's rehab program will allow for monitoring of the new 750 sill pillar and of the 830 level rib pillar on a daily basis, these two areas being of primary interest once production recommences.

 

The mine's development contractors were mobilized in May 2011 and have been preparing the underground mobile equipment, developing and sampling new headings, upgrading ventilation components and generally preparing for underground production re-start. The mine's longhole production drilling contractor mobilized last week to commence production drilling; the development of a slot raise (the first phase of stope production) is now complete. In addition, various contractors are reorganizing staffing for the mill and other operations at site. Further updates on production will be provided as various tasks are completed in the near term.

 

Management's goal to restart production at the MAX molybdenum mine and to advance its permitted 1,000-tonne-per-day expansion plans will reduce unit costs and preserve the opportunity to produce concentrates in an appreciating price environment. Molybdenum oxide currently trades at approximately US$15.50 per pound.

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