Ann: Deepest Drill-Hole Hits Significant High Grade Intercept, page-51

hey Plough,

great post as usual. Appreciate you breaking down the numbers.
I think you are forgetting that when they turn the plant on, it will initially be fed from the Gilbey's North open pit, which will hopefully have a years worth of reserve. There will be some pre-production stripping, but not much, as GN is from surface.
Then douple that with the U/G which, as you say, will likely be front loaded, and we are probably looking at $50m round figure (mainly because I hope they do what BGL are doing, and that is basically... do a lot of pre-production before actually turning the plant on, which will enable them to profitable much more quickly, than a slow commissioning phase). Do you think that is a lot? I don't considering what OBM and PNR/TUL have just invested to try and get their plants into high grade, high profit ounces.

I think SL has made it clear, if they don't have to tap Melville initially, they won't. They have enough base load ore at Gilbey's East and potentially, Plymouth/Sly Fox. Plus Archie Rose is another possible source. Also... I think when the mining was shut down, one of the issues was simply getting enough ore out of the bottom of the main pit, meaning.... there might be a decent amount of ore, but... not accessible in large volumes. If sequenced with accessing other open pits, it might be a valuable addon to the mine plan.

While I understand why you are highlighting that as they go deeper it will cost more, but... that is just U/G mining, and to date, the grades are getting better. Which at the least, will balance out higher costs. As Joel mentions, IF... GCY find another lode, then capex will go up again, but... so will the ounces. Just look at what OBM is going to throw at their operation to try and run it mainly from U/G. They are trying to do it, whilst keeping the plant on and making... well, minimal free cashflow, versus what GCY is doing (interesting to watch both progress to a similar outcome production wise).

In very simplistic terms, if GCY can secure a 5 year mine plan with 120k+ p.a profile, of 100% reserves, then.... the market cap would hopefully be closer to $300m (and raising $50m won't be a challenge, though debt is probably preferable if the share price does not rise), double that if the first few quarters go well, etc. All easy to type on HC of course, a lot of hard work needs to be done to achieve that.

@Joelstar - great reminder, what a shame no-one get a chance to ask SL about that at the recent meeting.
I wonder when SL and the team will share that 600m hole that hit mineralisation in the main pit.... and what they might find if they drill more holes at the base of the pit.