Has anyone else had a close look at the December 2013 quarterly report and got a bit of a surprise to read that the average grade of the reserve at the OJVG deposit has fallen from 2.335m ounces at a grade of 2.59 grams/tonne (as reported in the Oromin takeover presentation) to just 1.54m ounces at an average grade of 1.47 grams/tonne?
Note that one culprit is the Masato deposit which has fallen from 1.223m ounces at 2 grams/t to 0.98 m ounces at an amazing 1.21 g/t!!!!. Yeah, I know they are searching for another 300k ounces there but at what grade will that be, if they find any of that missing gold?
Bottomline is that the OJVG average grade is much the same as what TGZ already had prior to the merger- ie too low for them to be economic in the long term unless the POG goes up or they can increase the size of the mill by perhaps 50% (my wild guess). At the very least TGZ will continue to struggle and once it uses up its higher grade ore it will simply not deliver much to shareholders now that they have the extra burden of the 22.5k ounce pa gold royalty.
I would be interested in hearing other peoples views.
As a precaution I have reduced my TGZ holding today.
The share price has held up well today, but there are few buyers despite the very good headline figures on production costs for 2013 and 2014.
Does Richard Young tell porkies, or am I just stupid in not understanding how they can produce 250k ounces pa with the existing mill size and average grade of ore in reserves?
loki (confused, and befuddled)
TGZ Price at posting:
78.0¢ Sentiment: None Disclosure: Held
