A pit wall slide in May at Calibre’s Limon Norte mine in Nicaragua hurt production, CEO Darren Hall told a conference call after the results. As well, the company found previous artisanal miners had scooped out more than thought. In Nevada, where production is centred on the Pan mine, output also underperformed expectations.
“This setback is on us—management dropped the ball by not following the plan,” Hall said about Limon Norte. “We’ve now corrected course.”
Calibre said the Valentine project’s capital budget climbed by C$91 million to C$744 million in part because contractors underestimated infrastructure material needs. For instance, cement contributed to about 30% of the cost increase. However, it said the project is on track to start output next year.
The company’s shares closed at C$2.61 on Monday, down 6.5% from Thursday’s close of C$2.79 before the operating update. The stock has dropped about 10% from its 12-month high of C$2.90 earlier this month but is 76% stronger year-over-year.
Analyst perspectives
Analysts remain cautiously optimistic. Both BMO Capital Markets and Cormark Securities acknowledged the company’s recent stumbles but pointed to long-term potential.
Cormark mining analyst Nicolas Dion sees the company as an “excellent operator” with ample exploration targets. “Even with the cost overrun at Valentine, Calibre remains well funded to see the project through,” Dion said Monday in a note to clients. “We will continue to monitor construction progress, especially as winter nears in Newfoundland.”
Dion noted the firm’s track record and its strong management. He sees a chance for a share price increase once Valentine starts producing.
BMO’s mining analyst Brian Quast maintains an outperform rating on the stock due to the company’s long-term growth plans. He has a target price at C$4.40 per share.
Gold sales
The company reported total gold sales during the quarter of 46,076 oz., well below earlier estimates of 74,000-76,000 ounces. Cash costs rose to $1,580 per oz., driving the company to revise its 2024 all-in sustaining cost guidance to $1,550-$1,600 per oz., up from $1,275-$1,375 forecast earlier.
Calibre plans to boost ore haulage to Nicaragua’s Libertad mill by 30% in the current quarter, targeting production of 70,000-80,000 oz. and a stockpile of 30,000 oz. for 2025. With C$300 million in cash and credit, the company confirmed it is fully funded to complete Valentine’s construction.
The project, which it acquired last year through a buyout of Marathon Gold, may produce 195,000 oz. annually for the first 12 years of a 14.3-year mine life, according to a 2022 feasibility study.
