resource upgrade, page-78

""Plants could also be bought second hand, partly second hand or fully new. ""

IGO4IT,

Just back home from Sydney. Hence why I reply to your post now.

I agree with the part about buying a fully new plant, but I disagree with the second hand part mate.

Because, not so long ago WM of CDU bought a heap of second hand dump trucks while the GFC was on and companies were sent to the wall, along with Excavators and other machinery, but he didn't buy the processing plant. WHY...?????

The same applied with ADY with the Vallenar IO mines in Sout America. The contractor there was terminated due to poor performance and litigation but, when he originally thought he was not going to leave the processing plant there, he later changed his mind because of the prohibitive costs associated with removal of the same. And that was in South America where the Labour Costs are only a fraction of what we pay here.

If you care to go back through those CDU posts at the time, you'd find that someone even made a mention of one full processing plant that was for sale on E-Bay and it was for the huge amount of $1.00. Yes you read it correctly $1dollar. BUT...NO BIDS. WHY..???

The catch of course was, that the plant had to be removed from the site, and the site had to be cleared. One would have thought that at that price even the scrap metal value would be worth more than that. And Why wouldn't they..??? WRONG..!!!

And that was simply because the costs of removal/disassembly and transport it to a new site, and then reassemble it and modify it to suit the new operations, plus replacing worn out parts, was far superior that it was all worth to build a totally new one, which would of course come with a new warranty arrangement as well. And, most importantly, you would still end up with a second hand plant without any warranty either, lol.
IGO4IT, do you have any idea of how much an escort would cost with pilots etc. to escort these dismantled parts from God knows where, to where we will have a mine???

On top of that, take in consideration that not all processing plants are the same. They are purposely built for the operations that they will have to handle. Hence why it would be extremely rare and far to expensive to do what you suggested.

IGO4IT, I don't know how long you have been investing in the sharemarket, but as for me, I can honestly say that I have been in it for umpteen years, and never heard of such ridiculous suggestion that you just made. Please do a little more research on that, then let me know. If you can prove me wrong I will gladly apologise. If you can't I would expect the same in return from you. Bear in mind that any Company you may suggest they did that, I will contact them and ask the question.

If that was the case, why didn't GGY chose that road instead of selling the tenements out, and why didn't CDU did the same when they bought all the dump trucks and excavators, but left the processing plant behind??

I think that it is better to wait for the full BFS study to come out before arriving at conclusions. You will find out that whoever will prepare that report, will not suggest a second hand plant either.

Finally, Wages and Admin costs they will form part of operational costs, but dump trucks etc, are part of plants. Hence why you will claim depreciation/amortisation for the dump trucks, excavators, processing plant, etc., but you will only claim a straight deduction costs for the Admin costs.

All in all, all of these expenses/costs, are costs that will have to be taken in consideration before determining if a mine is profitable or not. There are fixed and variable costs that will have to be taken in consideration.

If the news was all so good, IMHO the sp wouldn't be at where it is at now.

Cheers,

Buddy