burnakura feaso out, page-26

Agree DHC.
Nothing changes from this for me.
Still by far the best value, highest reward vs risk stock I know of with good diversification. Fully funded on the first project and near enough to fully funded on the second larger project.

A slightly higher cash cost than I was expecting will be blitzed by the rise in POG that I expect. It could also easily be offset by cash costs from later-more important stages coming in slightly lower than what I allow for.
In the overall package of assets, this is insignificant so does not justify an 8% drop. Andash alone is worth three times the current price based on its definitive FS. Just another trading opportunity, nothing more.
For those worried about the 3.5 years initial mine life (which raised my eyebrow when I first read it), remember most of our resources are inferred so can not be included in a mine plan in a FS. They will be mined regardless so nothing has changed there either. The report was badly worded IMO when it said mine life extension depends on exploration drilling. It only requires infill drilling to convert inferred to indicated or measured. Similar to the wrongly worded qutrly that said this FS was not going to be completed till April.
Hopefully they put out a clarifying statement over this as well. I have pointed this out to management.
If anyone else wants to question them over it they may be more likely to clarify.
With regard to the cash costs being higher that is not a concern to me either based on what I posted earlier.
“The main reason appears to be because the grade on the starter mine is averaging 3g/t while I thought it might be a higher grade in the early years.
It turns out they have planned the initial mine life on the part of the resource with the highest drilling density rather than only targeting higher grades so I don't change my overall valuation. The grade in the early years is the average grade available for LOM using the higher grade cut-off.
For now I assume they mine at least 70-80% of current resources (that should be conservative) resulting in 12-14 years at the start up rate or 6-7 years on current resources at the 500,000tpa higher rate. Current resources should grow especially at Gab. So extending mine life.
Cash costs should drop with all 3 stages of expansion- heap leach through naturally lower cash costs, expanded CIL through economies of scale and addition of flotation circuit through copper credits.
This project is much more valuable than the initial findings suggest.”

Keep in mind those mine life estimates are based on the higher grade resources only of 2.9g/t.
Most mines target the higher grades in early years. We are starting at our average grade so grades will stay relatively constant on average after the initial few years.