The December quarterly saw 1.278mt at 0.8g/t processed for 26,000oz. That is 5.1mtpa annualized since the plant was only upgraded for 2 out of 3 of those months.
While the plant was meant to be upgraded to 5mtpa, the December quarterly stated it as performing at 6mtpa and in the audio presentation Gavin stated 6.2mtpa.
C-North now has permissions granted and there is no flooding to restrict mining, so the grade could be something like 1.1g/t.
Assuming 6mtpa and 1.1g/t, the March quarterly will see 1.5mt at 1.1g/t for 53,000oz (assuming we use troy ounces, 31.103g/oz). Plant costs and mining costs would presumably remain stable since we're mining the same amount and the only difference in processing is an extra month with upgraded capacity. So any increase in revenue would flow directly to profit.
Gold averaged ~$1700Aud/oz in the December quarter and ~$1600Aud/oz in the March quarter so the revenue should be:
Q2: 26000 * 1700 = $44,200,000
Q3: 53000 * 1600 = $84,800,000
So we could see an additional $40,000,000 profit in this quarterly from Chatree.
It sounds unreasonably large, but Gavin himself has said the plant is operating at 6.2mtpa and that the grade will improve. One because the flooding is gone, and two because of th C-North permission.
So with an ADDITIONAL $40m profit per quarter, what will the SP look like early next month after the quarterly is released? I'm trying to decide whether to increase my already disproportionately large position in KCN (it's like 21% now, with dividend re-investment).
Commsec are expecting $200m profit in 2013 for a PE of 4.2, and all indications show that we are on track to achieve it (mainly the plant operating at 6.2mtpa.
While I was writing this I decided to go ahead with the top-up since AUD gold jumped 0.3% while the SP was down to $5.97, enough of an added bonus to push me over the edge. I'm guessing there will be people wanting to enter AFTER they see the profit upgrade rather than before. So I expect a jump at/after the end of the month (2 weeks).
Will Neuva Esperanza be a low cost operation? I see good grades, 1.81Moz at 2g/t gold equivalent. Is Chile similar in cost of electricity/labor to Thailand or not? I like the idea of low cost operations so we would still be profitable if gold/silver were to fall.
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