gold for 2012, page-10

Doing the whine district of Millawa to stock the cellar for pre easter celebrations.Noted the following while watching the sun come up from the van this morning on the banks of the Ovens River,,,,,

Interesting extract below on MCO but for the full report go to the following link....http://www.theaureport.com/pub/na/12983?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+theaureport%2FAjgh+%28The+Gold+Report+-+Exclusive+Articles%29

Australian Gold Offers Good Protection: Richard Karn

Source: Brian Sylvester of The Gold Report (4/2/12)

Richard Karn, managing editor of The Emerging Trends Report, has been in Australia investigating precious and specialty metal projects for over two years. He likes what he sees. In this exclusive Gold Report interview, he reveals that in an environment where the U.S. dollar continues to lose its purchasing power, Australia and its gold offer good protection against what he sees as a "global pandemic of corruption."




TGR: Your newsletter has a bias for historic gold producers. Can you give us some names?

RK: I'll give you two with interesting stories. The first is Morning Star Gold NL (MCO:ASX), a narrow vein gold mine at Woods Point in Victoria. Western Mining ran it for 25 years, and took out 25,000 to 28,000 tons of ore each year, grading 27 grams of gold per ton (g/t). Then it stopped production, not because the grade was declining or they were running out of ore but because the fixed price of gold was undermining profitability, and management decided to go chase nickel during the Poseidon Boom in the 1960s—they simply closed all six of their eastern gold mines.

After overcoming a host of obstacles, management has been very good at communicating with shareholders on its website. Morning Star has finally concluded the majority of its capital spend and has brought the mine back into production—albeit more slowly than anticipated. It has a 900,000-ounce (oz) resource with considerable exploration upside.

It's been a "hard slog" for the Morningstar crew, but things are finally coming together. It is building toward production on multiple fronts and drilling on a couple of new reefs. One interesting anomaly Morningstar is experiencing as it resumes production is that it is finding that the final ore grade reconciliations differ from the on-site estimations, often coming in 2–4 times higher, which is consistent with historic production and should be reassuring for shareholders.

While the Morning Star mine itself will be profitable, I think the upside for shareholders will be found in the myriad historic sites spread over its 200 square kilometers of tenements in the Woods Points region. Historically, mining operations throughout the Jamieson-Walhalla Synclinorium lacked the capital to operate below the weathered zone of the countless dykes in the region. Of the hundreds of mines that were sunk in the region, only three raised sufficient capital to go below the water table with mechanization. So Morningstar has all of these targets where gold was found and extracted, but only very superficially, which we think presents a remarkable opportunity.

TGR: What are the cash cost projections?

RK: I think the company is using $750/oz all-in cash costs.

TGR: Do you think that is on the high side?

RK: No. There is a lot of fancy footwork being employed in annual reports in the gold sector. When I say all-in costs, I mean everything, including administration and exploration. I wouldn't be surprised if the all-in cost of gold production industry-wide right now is really in the vicinity of $1,000/oz.

TGR: And the second name?