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Friday, May 24 2019 @ 12:50 PM UTC

Petaquilla Producing 6,000 Ounces of Gold Per Month

Gold & Mining The business prospects for Petaquilla Gold keep getting brighter, since the government of Ricardo Martinelli approved operating permits that had been pending for more than three years. The company reported that since it began commercial production of gold in January 2010 they have removed an average of 6,000 ounces of gold per month, which they have sold at prices ranging from $945 to $1,145 per ounce. Through June 2010 sales figures totaled more than $36 million dollars - an average of 6,000 ounces of gold sold per month at an average of about $1,000 per ounce - reduced by operating costs of $21 million dollars. According to the company, the cost of producing each ounce of gold is $600. But the mine has not been able to shake off the rejection of environmental groups which have expressed doubts about the manner in which the government quickly approved permits for gold mining. On 18 November 2009, the Ministry of Commerce and Industry (Mici) approved the commercial operating permit for Petaquilla Minerals after a renegotiation of the contract and strange restructuring of the Board of Directors of the company that ended with the withdrawal of Richard Fifer. On that same date the ANAM issued a statement saying Petaquilla Gold had complied with all outstanding payments, and that there were no additional studies pending.

For the National Association for the Conservation of Nature (Ancon) the approval of both institutions is "very suspicious." This is because ANAM Resolution Number 809, issued on 26 January 2008, placed as a provision for the approval of the Environmental Impact Study for this project the submission of five additional studies, as well as a provision requiring a deposit of $10 million dollars as a guarantee against environmental damages, as well as another for $4.3 million dollars. In all there were 49 prerequisites established in resolution 809. However, the company has its own explanation to the doubts that arise and why there is no record of their compliance with the new requirements.

Rodrigo Esquivel, the manager of Petaquilla Gold, said the company notified the Anam that they would "not undertake the other works that required additional studies." Esquivel said the company did present the two new bonds and stressed that as evidence that they have complied with all of the requirements of Resolution 809 is that on 13 May 2010 ANAM certified that the mine is in compliance with all mitigation measures. He added that on 25 May 2010 MICI also certified that they are properly managing cyanide and that water quality is at acceptable levels.

In contrast, business and Anam are in a dispute over two fines applied during the previous administration for damages to the environment. The head of legal department of Anam, Carmen Urriola, said that due to the lack of a final court decision in the case, they have not been able to proceed with the recovery of the two sanctions for $1.9 million dollars. However, Urriola revealed that Anam is opening a new administrative process against the mine for the same causes: breaches of environmental measures. (La Prensa)

Editor's Comment: Even though Petaquilla has been producing gold now for more than six months, the stock price today (ptqmf.ob) is down to 31 cents per share. In early January 2010 when they first started commercial production, the stock price was as high as 94 cents per share. That price per share has steadily declined over the past six months, seemingly flying in the face of all reason and logic. Obviously Petaquilla's goal is to continue to produce at least 6,000 ounces or more per month, while reducing their per ounce production costs down as far as possible, and it's capable of going down to much less than $600 per ounce. Right now gold is at $1,192 per ounce. I still think this company is flying below the radar of everyone except those who actively seek out gold stocks, and that sooner or later the numbers will "flip" in the company's favor. They had to invest a lot of money to build the mine and to get it operational, so their first profits will actually be going to pay off existing debt. They are still about $70 million dollars in debt, a situation that will steadily improve over time now that they are actually producing gold and making money. And, I still feel that this stock is now at a bargain basement price. I expect that sooner or later the stock price will rebound sharply. You can play with the numbers yourself. Balance ounces produced per month, subtract per ounce production cost to get profit per ounce, multiply times the value of gold at any time. For example if Petaquilla can get their monthly production up to 8,000 ounces per month, if they can get their production costs down to $400 per ounce, and if gold prices stay at around $1,200 per ounce, that would mean 8,000 ounces with $800 per ounce profit, or $6.4 million dollars per month. Obviously this number would go up or down with the modification of any of the variables. However, if they can start cranking out $6.4 million per month profit they could pay off their existing $70 in debt in less than one year if they wanted to. Sooner or later this stock goes nuts. I know I've been saying that for years, and I still think it's true and real. I'm just being patient. It's your play money so make your own smart and well informed decisions.

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