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jimone

1,802 Posts.

583

17/03/18

13:14

Post #: 31827484
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Originally posted by eshmun ↑

Hi ozbucheron,

You I right. Sustaining capital should be included in AISC. I must have been thinking about a number of goldies I've held where new mine development has been capitalised rather than included in AISC figures.

You make a very good point with this comment below but I'd also add recovery into that relationship

"As for the AISC, at the moment it's pick your number because we have no basis on which to do anything else. It's closely related to throughput and grade"

It's not just the grade, it's the sustainable throughput and recovery that also determines the AISC. I've been invested in a very high grade mine for a very long time at the EKJV at Kundana in WA, through TBR and later as a shareholder of NST and that was the reason I was attracted to investing in Cascavel, ask @zongo1 he knows my history. The grades coming from that JV have been declining in recent years but in the past the grades at one of the EKJV's UG mines, Raleigh, were around 19g/t.

One year after NST acquired their share in the Kundana EKJV mines (in Jan 2014) the head grade was running at 11.32g/t with 98% recovery and a quarterly gold production of 29,566 (NST's 51% share that's equal to 19710,oz per month, almost 4 x OGX's current upper target).

The AISC reported by NST for the mine for the quarter relating to those variables was A$632 and this figure was produced by industry regarded top class miners using a cement paste fill system to maximise mine recovered ozs and improve safety with a fully permitted operational and proven mill (ie proven flow sheets) with a much higher production capacity.

https://www.asx.com.au/asxpdf/20150129/pdf/42w72dg72fqlqv.pdf

Frankly I can't see SJB's estimate of AISC of $500-600 being realistic unless Cascavel can sustainably produce at closer to 10,000oz per month at a grade of +15 g/t and a +90% recovery. SJB's opinion is a strongly positively biased opinion in my view given the early stage the mine is still at and its capacity to deliver ore to the surface.

My guess is that we won't see AISC figures out of this company for a long while yet. Better to creep along on promise, keeping investors in the dark. Esh

P.S.

This is the size of the machine that hauls ore out of the Kundana UG mines
View attachment 1015135

and these are the pieces of gear OGX have been using to mine. OGX's mine production is limited by the size of the it's development and ore haulage audits and that's not going to change any time soon. The grade needs to be high!!!!
View attachment 1015141

Expand

I must be missing something ECH

"One year after NST acquired their share in the Kundana EKJV mines (in Jan 2014) the head grade was running at 11.32g/t with 98% recovery and a quarterly gold production of 29,566 (NST's 51% share that's equal to 19710,oz per month, almost 4 x OGX's current upper target)

29,566 per quarter is 9,855 per month and 51% is ~5,000 a month for NST,, right ?

I look at Cascavel as a mine being built in reverse, most mines drill, JORC then finance and build the mine to a set plan, we have to go the other way, mine first to prove, hopefully prove, up the gold and grade. The equipment being used is small for sure but will do what is needed for now. Mining rate and recovery can be sorted later as they are simply a matter of engineering, what can not be sorted is the gold, if it is not there then it never will be.

OGX Price at posting: 12.5¢ Sentiment: Buy Disclosure: Held
15 Upvote

2 Great analysis

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