Bad day in the markets today .It was all ready for a correction after a great run (general markets NOT the gold market ).The straw that broke the camels back was a slight increase in inflation in the US ,this has raised interest rates ,tanking gold ,the US dollar is strong, the Aussie Peso is weak.
All gold stocks down 10% in the markets .
The Novo exploration results are poor and nvo down .Why DEG is wasting money exploring here is hard to understand .Also wasting money on Ashburton .
It is hard to understand why DEG with a 10 million ounce discovery is seeking further feed for the mill from other places .
I was just doing some research the other day and found Iamgold .It is a producer of about 450,000 ounces per year .
It has almost completed a 450,000 ounce mill at its 10 million ounce Cote find in Quebec.Even with production of 450,000 ounces per year it found a parter (Suimoto of Japan) to help with the cost of the build .Cost for the mill is north of 2.5 billion Canadian .It started building over 2 years ago ,will have its first gold pour in the next few weeks ,it will take 1-1.5 years to get the large mill fine tuned and fully profitable .Slightly lower grade than DEG ,18 year plus project life .Slightly lower grade than DEG ,lower AISC of around 900$ an ounce .Enterprise value of Iamgold is less than DEG despite it having three mills and around 750,000 ounces of production per year .Even with a partner it had to take on significant debt.
The cost of the plant was high and influenced by inflationary pressures.
Just confirms what I have been talking about ,how difficult it is to build a big plant ,costs have escalated a lot .Meantime DEG is just spending money on all kinds of other stuff .
Pretty obvious that DEG remains significantly overvalued ,the cost of the plant is going up ,timelines will be extended .Zero chance they will be able to build it on their own .Most likely partner will be Goldfields (if they have the money)since they already have half the Gold Road Gruyère project ,they brought a 50% interest plus construction costs for 500 million AU.Gruyère is struggling right now.
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