The original scoping study estimates (way back) was based on 150,000 oz/yr production, then more gold was found, so that was increased to 180,000, then 200,000, then 220,000, and with Duckhead I expect it increased to 250,000 oz/yr.
They keep revising, because they have to, they keep finding more high grade gold.
When will this end? How large can the gold plant(s) become?
And don't forget the Iron Ore sales, small, but still hugely profitable.
At full capacity, and with a cash cost of around $400, this should be a monster. I think they had an inkling of what they had, which is why earlier this year they developed a dividend policy, well ahead of time.
Within 2 years, they might be taken over, or alternatively, with the huge profits they are generating, take someone else over, or merge. For instance, if they were to choose another Brazilian Gold and Iron Ore stock, by 2014 they could merge with CAS, creating a 400,000 to 500,000 oz/yr Brazilian gold producer, with 2+ extremely profitable Iron Ore mines as well, and a cash cost of $400 per ounce, all before the Olympics Games.
It is frightening to think what they could be earning if the gold price rose to somewhere between $2,200 and $2,500 an ounce. At $2,400 per ounce, they would be earning near enough to $2,000 an ounce profit. After merging with CAS, at those prices, they could be "quite conservatively" earning a profit of $800 million a year (before taxes and royalites etc).
It is going to be interesting to see how it all plays out over the next 3 years or so.
Gw
BDR Price at posting:
$1.06 Sentiment: LT Buy Disclosure: Held
