I have done the maths and it is obvious to me that the higher than expected cash cost of production can be attributed to the grade of ore that they have been processing up until now. If you look at the amount of tonnes put through each month and then the amount of ounces produced you can work out the rough grade of the ore processed. I believe that Novembers head grade was about 2.7gpt and Decembers was about 2.85 gpt. This would go along with the company saying they have been taking ore mostly from the lower grade ore body up until Jan. They have said that from Jan until June they will be taking approximately 50/50 from the lower and higher grade ore bodys. In doing this it should bring the head grade up to approx 3.6gpt without any additional costs. By doing this the cash cost drops significantly from between 650-800 (Au) per ounce to around 450-500 (AU) per ounce meaning we will realise a much greater margin and therefore profit. From June onwards most of the ore processed will be coming from the higher grade Galeria ore body which from all accounts is between 5-6gpt. By my maths 20000 tonnes of ore per month at 5.5gpt = approx 3500 ounces per month with a cash cost at or below $400 (Au) month. That would make for a operating profit of around $1000 per ounce at the current gold price. I think that all areas of this project are heading in the right direction and I was a little surprised that there has been a sell off since the announcement. If anyone wants to go over my figures feel free to do so I just woke up at 3.30am from a dream about Mundos cash flow sheet thinking all of a sudden that it all makes sense so I thought that I had better come and write it down to get everyones opinion? Anyway best of luck to everyone I know I will be holding what I have and buying more when the chance arises. QSS . My posts should never be considered finacial advice.
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