Mako Mining (MKO) - Gold Producer Now Needs to Show Scale

Mako Mining Corp. is a gold mining, development, and exploration firm listed on the Toronto Stock Exchange (TSX-V: MKO) and the OTC Markets (OTCQX: MAKOF). The company was founded in 2004 and is based out of Vancouver, Canada. The company's flagship property is the high-grade San Albino Gold Project in Nueva Segovia, Nicaragua.

We met with Akiba Leisman, CEO and Director, Mako Mining. He has previously worked as an Executive Chairman and Interim CEO at Marlin Gold Mining Ltd. He also serves as a consultant at Wexford Capital LP. His educational credentials include an MBA from New York University and a B.S in Chemical Engineering from Carnegie Mellon University.

Company Overview

Mako Mining is a publicly listed company focused on gold mining, development, and exploration. The company's premier asset, the San Albino Gold Project is based in Nicaragua. The company is focused on bringing this project into production while continuing to explore the prospective targets in Nicaragua.

The company has officially entered the production phase with a daily supply of 500t at their open-pit mine. It's important to note that this is the highest grade open-pit mine in the world. The company has been processing up to 0.5oz material on a daily basis since production began in May.

Mako Mining has an ongoing cash flow and plans to utilize the capital towards the exploration of near-mine deposits. By mid-2022, the company has a delineation program planned where it will work towards developing a resource at the Las Conchitas satellite project. The company plans to double its daily supply to 1000t by utilizing both the San Albino and Las Conchitas mines by the end of 2022.

The company has found prospective veins with multi-ounce grades located up to 21km away from the main mine. The combined land package for the San Albino and Las Conchitas area is 188 square kilometers.  

Operational Challenges

Mako Mining faced operational challenges at the mine due to the covid-related restrictions and two hurricanes at the site. However, they were still successful in constructing a commercial mine and arranging the materials for the processing plants and mining equipment by March 2021. Although the production commenced in May, the company made an official announcement in July. 

To reduce the environmental impact of the operation, the company utilized a dry stack tailing storage facility where a filter press is used to remove moisture from the material before stacking. The company faced a 5-6 week delay due to the unavailability of filter cloths for the filter press.

The company also faced challenges with the cyanidation reactor refinery, where the reactor was unable to reach the desired 20,000 ppm concentration to process the gold. The company was able to remedy both these operational issues by May 2021 and is currently in production along with stockpiling on-site. The average range of material is between 0.5g - 15g. 

Current Stockpile and Historic Supply

Mako Mining's stockpile features up to 16,000t high-grade material on-site graded at 15g, resulting in an effective 8,000oz high-grade stockpile. The stockpile is the cumulative result of 500t/day mining since the start of 2021. The company also has access to 100,000t of historic dump material from a past commercial operation at the mine in the 1920s. The grade of this material is estimated at 2.5g/t - 3g/t, effectively adding 8,000oz - 9,000oz historic dump material to the supply. 

The company states that drilling out low-grade to process the historical dump as decades of weather exposure is causing the material to become saprophytic. Blending the new supply with the historical dump allows a steady feed for processing. 

The company recently started exploring the Porcelana zone which features a similar grade to the previous mining operations. The average vein in this area is about 2m and triple in thickness. The company plans to turn this site into an additional 500t/day operation. The company is looking for grades to reach 9.5g based on the delineated indications. 

Mako Mining is working towards optimizing the plant so that it functions at full capacity of 600 t/day dry material. Currently, the average processing capacity stands at 500t/day, while the commercial declaration is rated at 375t/day. 

Capital Raised 

Mako Mining raised $40M through 2 tranches. The first round was a rights offering in 2019, and a second-round was in June 2020 where the company was able to raise $20M. The company has $21.5M principal debt on their balance sheet which consists of $15M towards Wexford, the controlling shareholder, and $6M towards Nebari, a third party.

Backed by the $8.5M approved funds, the company has been able to drill 16,000m out of the 50,000m target. The company is working towards closing the gap caused by the 5-week delay. 

Doubling The Production Output

Mako Mining intends to double its production capacity to 1000t/day followed by a regional exploration drilling. Additionally, the company is looking to authenticate the orogenic nature of the mine. 

The Las Conchitas is the company's most advanced property and they are working towards implementing the same 3-dimensional model at the San Albino site. The company plans to carry out aggressive infilling in the first half of the year to match the mining resource output to the San Albino Gold Mine.

To reach the 1000t/day production capacity, the company is looking to expand the CIL operation through the installation of additional 5 tanks. The company is also planning to add more generators at the site. The company already has 2 parallel mills in place where each mill can handle up to 600t/day. They also plan to build an additional tailings press for the increased supply. The funding for these infrastructure improvements is planned through the existing cash flow. The plant is scheduled to start operations by Q4 2022.

The company's production strategy is based on the 2015 economic assessment carried out on the site by the previous owner. A resource update on Las Conchitas will be published by mid-2022. 

The company has an average monthly output of 300,000t with a mining contractor price (processing costs) at $2.60/t. The life of the mining ratio stands at 19:1 and since January 2021, it's been revised at 14:1. The company needs to spend $800,000 to move the monthly supply which also takes into account the wasted material. The company has managed to create a profitable operation where over 90% of the recoveries are going into the mill. 

Mako Mining currently has 2 drill rigs on site and is working on medium-risk step-outs at the San Albino site. The drilling is being performed with a spacing of 15m. The company has placed orders to increase the number of drill rigs to 5. The company has directed its production rig for shallow drilling targets at the San Albino satellite deposits. The company has a second production drill-ready at the Las Conchitas site. The company is looking towards a pit that is 100m deep. This will be followed up by diamond drilling. 

Nicaragua's Orogenic Deposits

The majority of the world's gold supply comes from mesothermal systems. Nicaragua is historically known for volcanic epithermal deposits, a sedimentary-hosted orogenic system. The veins identified feature complicated geometries with varying swells and boutons impacted by the rock quality.

The company has scoped the continuity of these veins that span up to 6km, indicating that the structure feeds back into the mine. This site has the potential for a series of deposits. The company has identified 200 drilling targets where the grade is in excess of 10g. The company plans to systematically explore this area by way of a drill program post the rainy season. The company plans to cover the entire land package through a geochemical soil survey. Exploration is planned to continue on the property for years to come. 

The company picked up an additional prospect in February 2020, La Segoviana. This concession is located 21km away from the main site, bordering the government-owned land in the north.

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To find out more, go to the Mako Mining Website