I should add the costs for the open pit at mt magnet are not $400oz they are around $850 thats why put options were purchased at $1200. A price of $1200 give RMS margin of $350oz.
Mt Magnet is low grade and high cost mine at around $850 to $900oz.
Project now (assuming gold price A$1300) - production of 520,000 oz over 6 years with cash flow of $185m after capital (page 13) announcement 3/8/2011
reverse calculation of 185million/520,000 ounces proft $355 per ounce. Assumed gold price of $1300 less profit $355 Operating Cost of $950 ounce
Why would the market be bullish about high cash costs in a crashing market and a crashing gold price.
Gold isnt based on fundamental demand because the price has fallen very quickly. I am of the belief that its short posititions being covered and that has created a dead cat bounce in the market.
RMS Price at posting:
$1.42 Sentiment: Sell Disclosure: Held
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