On 30 Jan,2013, gold production ranging from 1,721 oz to 2,466...

On 30 Jan,2013, gold production ranging from 1,721 oz to 2,466 oz, current announcement they are now estimating (due to running above nameplate and 92 % gold recovery rate), 3,900 oz to 4,100 oz over 60 percent weekly increase.

Pick the mid mark 4,000 oz a week by 52 weeks gives 208,000 oz
Multiplied by current gold price of $1,627 oz is $338,416,000.00 (338 million) p.a.

Playing devils advocate :

If gold went down to $1,000 oz, it’s still 228 million per annum

On the other hand if gold went up to $1,800 it’s $374 million per annum.

Add March onwards, inclusion of Duckhead, current grade goes from about 1.7 g/t to double or more, hence the gold then produced may be worth double or more.

Add May completion of magnetic separation plant and commence payments for iron ore take of further reducing price of gold production

And you then have the probable outcome referenced in their : GMP Securities Latin American Mining Conference November 14-16, 2012 (dated 15/11/12 on their website)
Cash Gold Operating Costs for CY2013 including iron ore reimbursements forecast at between US$375 - 425/oz, one of the lowest cost gold producers in the world.*

Assume cost at $450 oz, and they would still be amongst the cheapest producing gold companies in the world : Results would be around :

Gold current $1,627 oz, costs are $93.6 mil, produced $338.4 mil, profit $244.8 mil

If Gold down $1,000 oz, costs are $93.6 mil, produced $208.0 mil, profit $144.4 mil

But If gold up $1,800 oz, costs are $93.6 mil, produced $374.4 mil, profit $280.8 mil


Hence it is hard to fathum why e.g. ALK goes up 17%, then 9%, on announcement of mining permit, a good company maybe, but please they are not even producing yet, are yet to face the real costs of establishing a mine which are constantly increasing and they already estimate costs over $1,000 oz, and yet BDR only flexes a couple of cents on their announcement. (Admittedly ALK is also working on proving up a possible rare earth mine, but at this early stage, hard to understand how that would make that much difference.).

But we all know the market is controlled, manipulated, bad timing with gold down and profit taking, and awaiting the next world financial news and US $ outcomes etc.,

But we also know where value is in the long run and so do others such major shareholders National Nominees, Citicorp, Suncorp, AMP and JB Morgan who just bought a swag more, just to name a few, so regardless or our day will come.