Unlike you to get bounced by the mods, or did you take a self imposed exile?
Excellent post on where FML might be today without CRE.
The Mount would be flying and we would be dragging good quantities of high grade ore back to 3 MH and maybe even looking at a separate plant dependent on further exploration results which would be well down the track by now.
In terms of Coolgardie, I think we would be looking at bringing on line a much bigger pit than that proposed for Alicia (I( am not knocking Alicia, it is just that I think we would have the capital to bring in a bigger pit elsewhere).
Think we would be a lot further down the track in terms of a real drilling program in the Bayley's North area (I have been going on for a few years about doing some drilling north of the Great Eastern Highway in the Greater Coolgardie area) - they put in 11 holes down to 54 metres over 600 metres (that is pick and shovel stuff) and look at the results they got (tongue in cheek, there is dancing in the streets if you get these sort of results at 100 metres down), plus have a look at how deep the old Lindsays open pit (right next door) went as it was so good.
The other thing is that we would be a lot further down the track in the underground mining progress for Cyanide and Bird in the Hand, and perhaps would be moving underground operations there when Perserverance and Countess shut down for re-evaluation in January.
Unfortunately all pie in the sky thanks to the CRE takeover and that has put the old FML development back by about three years as we have poured a whole heap of money into turning CRE around and setting it up for more sustainable development.
In FY 2010 FML spent $14.819 million on development costs, in FY 2011 $16.843 million and for FY 2012 it looks like $52.466 million.
Out of the FY 2012 development expenditure probably around $26 million has been spent on developing the Apollo pit at Laverton (this figure is from memory as I have not gone through and pulled the actual Apollo figures out).
Think it is fairly clear why things are pretty horrible for FML at the moment with the amount of brass we have spent on development for this FY.
On the plus side in terms of CRE, if Apollo is as good as they say it is, then it should pull CRE out of the mess it was in and make it a profitable company again - the other good thing in CRE terms is that they now have a number of longer term good mining prospects lined up.
Pretty well agree with the your margin and profitability figures based on the gold price, however think we need to remember that FML mines to the price of gold and production costs so they can maintain their long term margin objectives.
If the price of gold falls over a set period they cherry pick to get a better head grade through the mill - you can actually see this in action when they extract ore out of the open pits where the geo's have outlined ore to be taken for milling (current average head grade stuff) and ore to be stored (a bit lower grade available for use if the price of gold goes up).
As a quick asisde, had a look at our forward sales of gold for August and thought initially we had had sold it a bit cheap, but then one look at the AUD makes it look like a brilliant move (just hope the price quoted was AUD).
I am probably disheartened like yourself at the moment because I can see where FML could have been right now and I still have some doubts about whether we have turned the corner with CRE (some of the long term CRE holders reckon we have turned the corner and they have been suffering pain longer than us, so I hope they are right).
Would probably be a bit happier on the CRE front if we extended the BGS milling contract (don't think a refurbished Barnicoat could handle the ore volumes unless it also incorporated a concentrator, and that is even more bucks).
The truth of the matter is that we had a chance to bail when FML made the decision to takeover CRE and those that did are probably happy right now, and those that stayed are hoping that we are in that darkest period just before the dawn light and the sun rises (no puns about it being a rainy day. please).
Think I should add a concluding comment on TI seeing as those that jumped on board for the TI elephant hunt must be more depressed than the long term FML holders.
Would not be too depressed about the two diamond drill hole results, especially as the words significant were used for the hole that came up with the 2.1 g/t result, yet it was the second non significant result hole that came up with the most data.
The big problem for most of us in this salt lake drilling is trying to comprehend why the geo's go into raptures over something that to the rest of us is fairly insignificant - the only thing I can go on is that it is DG making the pronouncements, and as he has been there and done, that so if anyone understands what it all means, it is him.
Seems that we are moving into the slow methodical phase of the exploration that we warned is going to take time.
Just had a quick look at some of the other posts that have surfaced while writing this and note that CW has highlighted for a different reason the painfull development costs for this year.
cheers, kentwang
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3.5¢ Sentiment: Hold Disclosure: Held
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