Having had a good look at this quarterly, there certainly is alot happening at Woods Point and at Corporate level for MCO.
The quarterly had some very interesting information. Highlights for me were the proposed plants 10tons/ hour capacity, the proposed developement of sub level 7 for mining, the planned exploration of the Wallaby mine, but the standout highlight was the proposed building of the humble Grizzly.
The head grades are about the only thing about MCO that has had me concerned, and its been obvious others here have had concerns also. The old timers had the best ore bodies to begin with and the amount of sorting by hand is not exactly common knowledge, so using todays mining methods, the amount of dilution compared to the older methods is not clear.
I think this Grizzly totally changes the outcome. When a mining face is blasted, rock is fractured and broken along the whole height of the stope, so a 500mm quartz reef gets diluted by 1.5m of diorite. The quartz reef is friable compared to the very solid diorite so it shatters into much smaller pieces. After all this debris is moved above ground, I think a front end loader will just dump it onto the Grizzly and the vast majority of the quartz reef and gold will pass through the apurtures while mainly diorite will slide off into another heap.
This gives MCO many new options. It basically ensures that MCO will always have the vast majority of its mined gold in a pile of very high grade ore. This Grizzly can't cost much to produce, and hardly any extra handling is involved. I very much doubt that the old timers could produce ore as good as this.
Thats crucial in the long term for MCO because there will come times when the plant thruput may be down for some reason or the price of gold may change. At these times it may not be cost effective to put the altered diorite component through the circuit, and its best stockpiled for the right time. It also means that they can potentially produce more gold with a smaller plant if the economics dictate that.
The mining method may not be as crucial as it was before as well.Its hard to say anything about this yet because its early days but I doubt that they'll change from air leg mining the individual smaller reefs. When they do eventually develope declines and longer drives, its likely that it will be more cost and time effective to do them mechanically so this grizzly will be even more handy if reefs are mechanically mined as well.
In the short term, it may make toll treating even more profitable. Toll treating is a very obvious exclusion from the quarterly so it may be off the agenda altogether.
Back to the Grizzly, it ensures that MCO can get higher grades than expected and this reduces the risk considerably.
MCO Price at posting:
32.0¢ Sentiment: LT Buy Disclosure: Held
