abu fundamentals?, page-9

I find a comparison to DRM is useful.
There are differences but the scale of operation and grade are similar. DRM is u/g and we are open pit from surface which should result in lower costs for ABU especially for the first two years as we are mining from surface.

"Doray Minerals Ltd. (DRM:ASX) is our preferred gold exposure on the Australian Securities Exchange (ASX). It has the Andy Well gold project, a new gold mine in a historical province near Meekatharra in Western Australia. Production began in August. This is a small-scale underground mine and is mining ore grades of 15 grams per ton (15 g/t).We expect FY/14 production of 70,000–80,000 oz (70–80 Koz) at cash costs of A$500/oz and an all-in costs of A$730/oz."

http://www.mining.com/web/levi-spry-highlights-quality-australian-projects-that-will-find-funding/

If DRM has all in cash costs of $730, we could easily be well below that with open pit. Below $500-600 might be a reasonable assumption until we get more info.

At $600, margin would be over $700/oz. That is likely to increase with the AUD now breaking support down to 88c tonight (and assuming flat US$POG). Staying with $700 margin, and using a hopefully now conservative 13g/t (know more after gold is recovered from cct) and 91% recovery gives me 57,000oz and an operating profit of $40mill. Take off around $10mill for admin/exploration leaves $30mill profit.
I think that's got upside through;
1. $600 all in cost could be much lower in year 1 with mining from surface and with GH very high grade ore being exploited.
2. grade could be quite a bit higher if the companies estimate of gold in cct is close.
3. I think recovery is likely to be significantly higher than 91% in stage 2 with the modifications being examined.
4. AUD POG may be significantly higher with the AUD now looking like its on its way lower again.
5. Obvious upside if stage 2 progresses to stage 3 at potentially double the throughput.
6. Eventual further upside when POG moves higher in USD terms as well (hopefully sooner rather than later).