Calibre expects Q2 output drop after pit wall slide, maintains full-year guidance

Calibre Mining‘s (TSX: CXB; OTCQX: CXBMF) shares closed unchanged on Wednesday after falling 4% the day before when it said second-quarter gold production will decline following a partial wall collapse at the Limon Norte open-pit mine in Nicaragua.

The shares gently see-sawed before resting at $1.93 apiece after the company reported strong drill results from its Valentine project in Newfoundland and Labrador. The shares have traded in a 52-week range of $1.16 to $2.34 and the company has a market value of $1.5 billion.

Second-quarter output should be between 55,000 and 60,000 oz. from Calibre’s Limon complex about 120 km north of the capital, Managua, the company said on Tuesday. With higher-grade ore prioritized in the second half of 2024, it is maintaining its full-year guidance at 275,000-300,000 ounces. The mine produced 55,000 oz. in this year’s first three months. 

Leprechaun’s pot o’ gold

On Wednesday, the company reported high-grade drill results at Valentine, on the southwest edge of the Leprechaun pit. Calibre plans to start producing at the central Newfoundland site early next year. It recently signed a commissioning contract. 

Highlights include 2.25 grams gold per tonne over 15.3 metres, including 24.68 grams gold over 0.85 metre from 7 metres depth in hole LS-24-002; 1.87 grams gold over 11.6 metres, including 9.26 grams gold over 0.9 metre from 4 metres downhole in hole LS-24-007; and 36.83 grams gold over 0.91 metre from 187 metres depth in hole LS-24-10. 

The results are encouraging as Calibre has moved to budget US$5 million to US$10 million towards exploring the area after acquiring the property in its merger with Marathon Gold almost seven months ago, Canaccord Genuity analyst Peter Bell wrote in a note on Wednesday. 

“We view the company’s strategy on emphasizing exploration across its portfolio of assets as a main driver of its value,” Bell said. “Today’s results serve to (1) underscore the exploration and expansion potential at Leprechaun and (2) substantiate the Leprechaun mineral reserve, further de-risking the project.”

No injuries

The open-pit incident in Nicaragua occurred on the west wall of Limon Norte. While the pit wall movement did not impact personnel or equipment, it’s caused a change in the mine’s sequencing, which Calibre said will affect its output.

All other operations at Limon are unaffected including the Limon Central open pit and the Santa Pancha, Panteon and Veta Nueva underground mines, it added.

Ores from the Limon mines are processed at the El Limón mill, which has an annual throughput of about 500,000 tonnes and a historical recovery rate of around 95%.