Sorry Robert, I had 7 day operation figures. I've ammended my figures to 5 day operation. Thanks for pointing to the mistake.
MCO are aiming at 50 tons per day. 50 x 250 = 12500 Lets say grade is a good 1/2oz p/t. Cash costs $280/t = $560/oz Lets say they make a healthy $500 per ounce and produce 6250oz pa. Profit = $3.1 million
Now last years expenditure came in at $3.6 million. $2.8m on exploration, $0.61 million on administration. $3.1mil - $3.6mil = $(0.9) million.
So they lost $0.9 million for the year. ------------------------------------------------------- Remember that good man Plough's reply from Nick Garling? Nick was talking about a $5 million processing plant with a capacity of 30kt/pa, so your 37kt/pa figures are a little out. Just need to find a way to get $5million for the plant.
Here's a refresher of the reply. ------------------------------------------------------ Answers From Morningstar executive Nick Garling to me (plough a hot copperite)
Nick thanks for coming through. There’s a bit of info there to reply to. I would like to reply substantively to all questions – some are probably information not in the public domain, some have been stated already in our releases to ASX. Suffice to say anything we’ve said publicly, we believe to be conservative and/or achievable. Here’s the best I can do: (readers I placed my questions above each answer nick gave plough)
plough (me) 1.You mention in the quarterly the company expects to get around 12.5 grams to the ton of Au from the trial mining is that after grade factoring ? If its pre grade factoring and based on drill assay results what do you feel grade produced to be ?
Nicks answer I think we said 12 grams was the average grade of Maxwell Reef. This is not grade factored. I am expecting 12 grams as stated.
me 2.The break even cost of maxwells trial mining of 8 grams a ton seems very low and the type of cost one would expect under full production in UG how is it so low I realise the industry quotes 5grams a ton in costs but have not seen much evidence of that in actual narrow vein quartz mining recently ?
Nick
We don’t think 8 grams is low cost. 7-9 grams is what we’ve budgeted for. We know our staff costs, we know our trucking costs, we know our plant costs. We have very experienced people implementing this plan – miners etc.,
me 3What is preventing mining occurring now is it safety issues or other regulatory approval that’s needed or is it a production issue like getting ventilation or tracks installed ?
nick DPI approval of work plan. Expected shortly but I can’t say exactly when.
me 4.Will the cash in the bank be enough to get the company through to getting cash flow from Maxwells?
nick Yes that is what we have budgeted for.
me 5The JORC came in at 2 million tons of ore I am guessing from that a 150,000 TPA throughput of ore long term is that somewhere around the size of plant you guys are hoping for? If not what size without being to laconic with me ?I guess it’s a matter of high tonnage low grade or higher grade low tonnage processing .what is your best guesstamate on optimal throughput and produced grade
Nick We haven’t made a decision on our final plant yet so I am not prepared to say. I’m also not allowed to without a bankable feasibility study. It’s the question that we get asked a loot though. Given we have multiple potentially large ore sources all local to MS mine, you’d like to put through 150K sure. A small plant option we can implement quickly in Q1 09 would limit us to 30KT/PA. That would have minimal disruption thought to existing infrastructure and given the free milling nature of the ore that we have reported several times of late, would see more than 90% of the gold available in less than 10% of the mass. It’s too early to announce our production strategy just yet. But suffice to say limited pilot production can see us profitable, if that’s what we choose. Me 6Any ideas of the total plant cost from crusher through to centrifuges including bells and whistles? 6B I guess there are other costs like a decline/portal any ideas on that cost?
Nick It all depends on what plant you want. One gravity plant we’ve been quoted, which could be implemented early next year is less than $5mAUD. Declines typically run at $4 - 5,000 per metre. It’s being designed.
Me 7To alleviate the cost of a decline but to increase throughput are you looking at pumping as slurry the aggregate up the existing head-frame shaft rather than putting in a decline ? I know gecko was experimenting with that but cant figure out how they would overcome the high head they would need to pump against due to the depth without a bunch of intermediate pumping stations at different levels
Nick No.
Me 8.How can you go under the theoretical 1.2metre width for UG mining as shown in table 5 of JORC report
Nick We’ll have more to say about that at a narrow vein mining conference shortly. Many of our reef zones are much wider than 1.2m. The background grades are impressive in real terms as the gold is less nuggetty than say Bendigo. Totally different gold system and mineralisation style.
Me 9. Are the recent options that you guys are hoping to bring in added cash, fully underwritten?
Nick Not at this stage. Several parties have approached us and I can’t say more than that. Obviously I own around 30% of them so they are spoken for, so are some others I am aware of.
Me 10. who in the mining industry would you like to emulate as a company ?
Nick No idea, I don’t respect a lot of what I’ve seen so far out there. It’s a low bar of entry the mining game, much like stockbroking and real estate. FMG have delivered on plans against all expectations, I respect that. We have to get the simple steps right first. This is an early stage project with heaps of potential and we are not getting ahead of ourselves. The JORC was outstanding, everyone from Lihir to Castlemaine have told us that. We just need to keep delivering on realistic promises. I have a lot at stake and 8 children to feed, so I am serious about getting it right. Enough said.
Nick I would caution you strongly about buying shares in MCO unless you’ve done plenty of research and have a risk tolerance for tiny stocks. Like all mining stocks and particularly small ones, any investment is highly risky and speculative. MCO is no exception. Good luck and thanks for coming through to us.
Thanks Nick Garling Morning Star
MCO Price at posting:
14.3¢ Sentiment: None Disclosure: Not Held
