Yeah absolutely, the toll processing route makes the most sense to me…onsite processing doesn’t even get a look in (imo) unless those ‘target’ zones turn out to be mineralised, and even then, you’d still think toll processing the shallow high-grade zone makes sense given our position. Also, just for clarity I didn’t mean to imply that the distance between SOM and Paulsen’s is a showstopper, its not, only that it does contribute to the slice of cake we will get...but Id rather a slice than nothing, and if the PoG stays at these levels the slice still looks decent.
Yeah, as GB states, my thought is that the MRE will be for a modest ounce-base from the high-grade upper zone (~<100 m Rl). That said, those ‘target’ zones they have identified, presumably means they are planning to drill those before the MRE announcement, so they will always be the curiosity/urge to want to make it bigger and better from the get-go. To which there are both pros and cons; pros in the sense that its testing for potential upside and if it pays off then the game changes, cons in the sense that really the focus right now should be the quantification of the shallow pittable MRE to try and get that shovel ready as soon as possible, and adding tonnage/ounces at depth that’s not part of this doesn’t really add value (at least to the here and now).
Anyway, just for argument’s sake, let’s say its ~25,000 Oz coming from ~97,000t @ 8 g/t
Average sale price? assume (pray) it holds current levels but plug in a slightly more conservative A$3500/Oz, so 8g/t ore equates to ~A$900 gold per tonne of ore…in situ.
The mining – transport – and mill tolls are as much a thumb-suck as back of the envelope resource guestimates, but maybe something in the order of:
Mining costs ~A$15/t (small operation, so lower cost, but somewhat offset by loss of scale optimisation)
Transport ~A$33/t (just using DT’s figure of ~$0.10/t/km)
Milling, ~$40/t (don’t know really, 30-40/t was common in the goldfields a few years back. Anyone have anything definitive?)
Then throw in a bit of mining recovery ~90%, dilution ~10-15%, processing recoveries ~95%,
Put it this way…if they can get SOM ore out through Paulsen’s for ~<500 $/oz production cost then even after the 2.5% state royalty (first 2,500 ounces exempt), 0.5% NSR to vendor, taxes and other costs the margin is still v.good. Now I suspect it might not be quite that good...but then 'grade' does wonderful things to the bottom line.
As an example, the stage-1 of toll treatment mining at Jeffreys Find resulted in 176,000 tonnes processed for 9,741 Oz at average yield of 1.86 g/t (i.e. significantly less than SOM). The gold was sold at average price of $3,006/Oz (last year) resulting in Gross sales of A$29.3M. After costs this netted the JV A$9.4M! This year the average realized sale price is up over A$3,700, so if that sticks then its looking good.
anyway GLAH
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