17 year in the making peace deal signed, page-16

We got a belting this morning with gold heading lower but the SP has steadied. I still think if you want exposure to gold then MML is one of the better gold stocks to be holding. This is why.

Looking at the 2013 Annual report they say they will have capacity to produce 200k ounces of gold based off processing 750,000 tonnes of ore a year.

“In November 2010, the Board approved a major expansion of the Co-O Mine and the construction of a new Mill with capacity to produce 200,000 ounces of gold per year based on processing up to 750,000 tonnes per year. The approved Capital Expenditure was estimated at approximately US$70M for the mine expansion and new mill.”

Gold produced will obviously rely on grade but they have come to this 200k ounce figure based off grams

So going by capacity per day at 2500 TPD

750000 (tonnes of ore) /2500 = 300 days at full capacity. This makes sense when you account for monthly shutdown/maintenance timeframes.


(300days of production x 2300 TPD) x 5GPT x .90
= 3105000 grams of gold

convert to ounces

3105000 / 31.103
= 99829 ounces

So essentially we are hitting 100k ounces of gold. This could be much better with tonnage running at 2500 TPD and higher grades but lets look at a less than desirable outcome to make sure we dont get ahead of ourselves.

99829 x $1200 gold price average

= 120 million Revenue.

cost applicable to sales in prior years roughly 600-800

I say they can get costs at 700 per ounce.

99829 x 700 = 69880300

That leaves us with NPAT of

120000000 - 69880300

= 50119700

The cost applicable to sales figure above already accounts for administration costs etc which is included in AISC.

The costs I haven't included are certain development/maintenance costs and also exploration costs. Considering the bulk of capital spend is complete you could assume that we will spend similar figures to prior years before the site upgrades began.

Exploration will be roughly 15 million

Capital Sustainment I would estimate at 10 million. Very similar to prior years costs excluding capital upgrade costs which we incurred in 2012 and 2013 when the mine upgrades began.

With Capital sustainment costs and exploration added onto my CAS amount of $700 you looking at a projected AISC of

69880300(this figure already includes administration royalty etc) + 15000000(exploration) + 10000000(capital sustainment) / 99829

= 94880300 / 99829

AISC = $950 an ounce.



Now guys don't be shocked..we should be better than this..Dont forget I didnt use a max capacity of 2500 TPD..I worked my numbers off 2300 TPD and on a yearly average I am expecting better than 5 GPT gold. I also used a $1200 gold price. With underground development I know how it goes though..some months are amazing..some are not..thats underground gold vein mining for you.

I think there is much more room for upside atm. Oh and the figures above I have no idea if they are 100% correct. Just a bit of fun in trying to work out the AISC costs.