Ann: Edikan Gold Mine Update , page-24

jman

"The other issue they'll need to consider is if the POG heads further south, then the cut-off grade that their Reserves are based on may need to be re-visited. PRU Reserves last updated in Aug '12.. two of the key assumptions Reserves are based on are the estimated POG and estimated mining/processing unit costs."

Very good point. A few weeks ago I noted on the TGZ thread that their reserve was based on a USD1500 POG, and that with the lower POG their lowish ore grade was a significant problem requiring them to change ore reserve estimates and seek higher grade ore.

I think PRU's ore grade is a bit lower than TGZ and I agree with you that PRU's ore reserve and resource will have to be revised in the light of their actual cost of mining and the new POG assumptions. The net present value of the Edikan mine has fallen substantially and this is reflected in their share price.

This is happening to all the miners and is not specific to PRU. Speculators/investors should familiarise themselves with what the POG of gold assumptions is before investing in a gold miner. This is POG leverage working in reverse for investors.

I keep wondering if this is really the end of gold's bull run and its back to a long term level of around $1000-1200/ounce, with some variations up and down along the way for the next 15 years or so. The same seems to be the case for all other minerals unless China does some massive boosting or India takes of. We never know exactly where we are in the commodity cycle until after the fact.

loki (ouch to all of us goldiebugs)