1/17 As a diversion from all the gold price talk, some thoughts on working capital & heap leach operations based on our experience of getting the @FioreGold Pan Mine up & running, & considering the recent/imminent start-up of other heap leach operations in Nevada & beyond.

2/17 My observation - almost everyone underestimates the amount of working capital required to get a new heap leach operation to the point where it starts generating real operating cash flow. Here's why.

3/17 You've done your capitalized pre-stripping, built your leach pad & plant, & you're ready to start mining & stacking ore. You're spending money but have no revenue, so using your working capital to pay the bills. And there are a lot of bills to pay at a mine.

4/17 It's going to take you a couple of weeks to fill the first cell on the pad, lay out & connect your drip lines & start applying leach solution. And all the while the bills are coming in.

5/17 Depending on the leach kinetics of your ore, it's probably going to be at a another couple of weeks before any of that solution works its way through the cell, onto the liner, into your pregnant solution pond & then into your plant.

6/17 The solution grades & volumes will be pretty low at this point, so wait another couple of weeks until you've loaded enough gold on your ADR plant carbon or generated enough precipitate from your Merrill Crowe plant to do a gold pour. Still paying those bills though.

7/17 Note whether a press release announcing a mine’s first gold pour mentions the number of ounces. If not, you can bet the CEO promised they'd pour first gold by some arbitrary date & by god they're going to deliver even if the pour wouldn't cover their lunch bill at Hy's.

8/17 By now I guarantee that something has gone wrong during the startup of your mine. It's probably something to do with the crusher because IMO no crushing circuit in the history of mining has ever worked properly out of the box - I'll rant about crushers another time.

9/17 Whatever the problem, it will have slowed ore stacking on the leach pad, again delaying your revenues & probably incurring extra unplanned costs to fix. Yet more working capital required.

10/17 Even once things are running smoothly, the nature of leach curves means that a significant portion of your recoverable gold won't be extracted in the first weeks, or even the first couple of months.

11/17 Some of that recoverable gold may take a year or more to come out, but you've still incurred almost all the upfront costs to mine & process those tons & ounces. This just adds to the lag between costs & revenues & increases the need for working capital to fill the gap.

12/17 What's happening to all that recoverable gold that's hanging around for weeks & months in your leach pad? It's going into inventory.

13/17 Your actual gold recovery leach curve is likely not as fast as your economic model predicts. Have a look at the financial model where it shows gold inventory building in the leach pad. Can't find it? Or all the inventory comes back out in Year 2? Oh dear.

14/17 All that working capital must come from somewhere. Project capital is expensive, your investors want minimal dilution, thus the temptation to minimize the working capital requirements in PEA/PFS/FS financial models to 'improve' the project economics.

15/17 Just looking at Nevada it’s easy to find recent heap leach startups that have had to go back to the market (sometimes more than once!) to raise more working capital when their new heap leach didn't reach +ve operating cash flow as quickly as their models predicted.

16/17 @FioreGold avoided this by starting with no debt, a strong balance sheet, a top-notch operating team & in all fairness a bit of good luck & timing.

17/17 Something to consider the next time you're evaluating a heap leach project, whether for investment or acquisition. I'm a geologist not an accountant, engineer, or metallurgist so if you're any of those types feel free to point out all my mistakes.

And I managed to get our company Twitter handle wrong. Sorry @Fiore_Gold