PRECIOUS METALS

Equipment failure causes near-term issue for Calibre

Calibre Mining’s gold sales and costs are under threat of being impacted by an equipment failure at the ADR plant at the Libertad mill in Nicaragua.

 Calibre's Nicaragua operations

Calibre's Nicaragua operations

The company announced the issue late Friday. An investigation into the cause is underway.

"At this time the strip circuit is down for repair and the Company anticipates Q3 gold sales to be impacted by approximately 15,000 ounces," Calibre said.

"Mining and processing operations continue, and gold in-circuit will accumulate until the strip circuit is fully operational. At this time, we do not anticipate adjusting full year production guidance," it said.

Calibre's 2022 consolidated production guidance is 220,000-235,000oz.

Canaccord Genuity Capital Markets analyst Michael Fairbairn said the issue could result in a building of inventory that will push some amount of second half gold sales and production from Libertad into 2023.

CG now forecasts 2022 consolidated production near the low end of guidance, at 222,000oz.

"We note that Libertad contributes roughly ~70% of Calibre's Nicaraguan production and ~60% of its consolidated production," Fairbairn said.

"Given that mining and most processing operations at Libertad are continuing as normal while gold sales are expected to be negatively impacted, we believe H2/22 cash costs and AISC will be challenged," he said.

CG now forecasts Calibre's 2022 cash costs and all-in sustaining costs at US$1,213/oz and $1,345/oz, respectively. That compares to Calibre's guidance of $1,075-$1,150/oz and $1,200-$1,275/oz, respectively.

Fairbairn said that while the issue is negative for the near-term, the fundamental story for the company is unchanged.

Calibre's share price was last quoted as C$0.95 (US$0.72). The company has a market capitalisation of C$426.34 million.

CG has a target price for Calibre of C$2.25.

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