Source: Sid Rajeev 08/01/2025
Blue Lagoon Resources Inc. (BLLG:CSE; BLAGF:OTCQB; 7BL:FSE) could generate US$21 million in net cash flow in year one alone from its Dome Mountain gold-silver operation, noted a Fundamental Research Corp. report.Blue Lagoon Resources Inc. (BLLG:CSE; BLAGF:OTCQB; 7BL:FSE) hosted analysts, investors and reporters on July 8 and 9 at its Dome Mountain project in British Columbia (B.C.) for the gold-silver mine’s official reopening, Fundamental Research Corp.’s (FRC’s) Sid Rajeev, who attended the event, reported in a July 22 research note. The head of research shared his impressions.
“Overall, we came away more confident in our recommendation and valuation of the Dome Mountain project,” Rajeev wrote.
73% Uplift Implied
FRC maintained its CA$1.11 fair value target on the Canadian miner, trading at the time of Rajeev’s report at about CA$0.64 per share, the head of research noted.
From this price, the return to fair value is 73%.
Blue Lagoon Resources remains a Buy.
On-the-Ground Due Diligence
Rajeev described travel to Dome Mountain as involving a 75-minute flight to Smithers, B.C. from Vancouver, then a 50-minute drive on a good condition road.
On July 8, the first of the two-day visit, the head of research toured the underground mine and high-capacity water treatment plant. He found the mine site well-maintained and providing good access; guests were able to walk through a large portion of the defined resource area.
Mineralization is hosted in high-grade quartz veins, 15 of which are known to exist at the property and only six of which have been drill tested. Most of the mineralization is hosted in the Boulder vein. It runs about 530 meters (530m) along strike and down 200m in depth. Another known vein is Argillite, visible in the mine.
Rajeev reiterated that the existing resource is 234,000 of gold (234 Koz of Au) and 1,200,000 ounces of silver (1.2 Moz of Ag). This excludes drill results from the 2022 and 2023 infill programs.
Strong Local Support
On July 9, Rajeev attended the official mine reopening ceremony, attended by about 100 people. There, he met with management, local stakeholders, Lake Babine First Nation representatives and key contractors carrying out logistics and operations.
“The event demonstrated strong community engagement and local support, particularly from the Lake Babine First Nation, which we view as a key advantage,” the head of research wrote. “This endorsement greatly enhances the project’s community approval.”
Transport to Mill Feasible
Rajeev spoke to the chief executive officer (CEO) of the contracted company that will transport ore from Dome Mountain to Nicola Mining Inc.’s (NIM:TSX.V; HUSIF:OTCQB; HLIA:FSE) mill near Merritt, B.C., about 900 kilometers away.
While such a distance normally would make toll milling cost prohibitive, Rajeev wrote that Blue Lagoon’s model is feasible. This is due to Dome Mountain’s daily throughput of 100–150 tons per day (100–150 tpd) and its material’s high grade (9 grams per ton).
The CEO indicated that each truck will haul 30–40 tons per trip, equivalent to about 10 ounces (10 oz) of gold. The cost per trip he estimated at about US$3,500, equating to roughly US$350 per ounce (US$350/oz).
“Combined with other operating expenses, we estimate total cash costs at US$1,300/oz, implying a strong margin of over US$2,000/oz at current gold prices,” Rajeev noted.
Solid Partner in Nicola
Rajeev highlighted Nicola Mining’s strong support for and alignment with Blue Lagoon. The two companies have a toll milling and profit sharing agreement pertaining to Dome Mountain. Blue Lagoon may process its ore at Nicola’s mill and share in the profits, for up 200 tpd. Also, Nicola has an equity interest in Blue Lagoon. These ties between the two companies reduces the project’s toll milling risk.
Nicola CEO Peter Espig attended the reopening event, and expressed full support for the partnership, noted Rajeev.
Operational Outlook Favorable
Now that Blue Lagoon has cleared a major milestone in restarting Dome Mountain operations, the company plans to process 55,000 tons (55 Kt) in the first year, targeting 15 Koz of gold. In year two, it intends to ramp up to 75 Kt, or 20 Koz of gold, reported Rajeev. FRC’s model assumes a gradual doubling of throughput from 100 tpd in year one to 200 tpd by year four.
“At current gold prices, we estimate Blue Lagoon could generate US$21 million in net cash flow in the first year alone,” the head of research wrote.
Along with production ramp-up, other key challenges will be execution and cost control, Rajeev pointed out but wrote that after seeing the operation up close and meeting with management and key contractors, FRC is cautiously optimistic Blue Lagoon will deliver.
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Original Article: Gold Co. Could Generate US$21 Million in Net Cash Flow in Year One from The Gold Report – Streetwise Exclusive Articles Full Text
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