a) Good to get a confirmation that the the issue you were highlighting is isolated to Open cut duration. Here is a breakdown of Open cut Vs Underground Ounces - 86% of ounces are from the U/G feed - So if there are any overruns in per BCM costs it would have a minor impact on the project NPV. Still good to know all risk factors so thank you for that mate.
b) I am myself Keen to know if there are any folks who have the expertise to glance over the underground cost assumptions and provide a critique?
c) I am not from a technical background but more investment banking/commercial - I agree with your observation that most miners dont make profits. I am happy to see that Meeka has cut the reserves at $2200 gold and put down an AIC of $2000 in the DFS - That is a good number. Could over run by $200 easily. I see 3 possible reasons to invest here
i) Bet on a potential consolidation in region (WGX, RMS) - They can change the economics by using existing capacity/infra. ii) Further studies into expanding milling capacity be bringing more feed into the mine plan iii) Lastly, just as a low risk option on gold prices going beserk in response to geopolitical factors
The risk obviously is that 6 months down the line they will need a cap raise to support ramp up and working capital. All things considered I personally am happy to risk 33c for odds of making 50c of probability weighted exit plan.
Many thanks and Hotcopper is richer because of people with real skills like you. I appreciate your insights and feel free to share more.
MEK Price at posting:
3.4¢ Sentiment: Buy Disclosure: Held
