The example you gave does have relevance, but also some stark differences:
- Smaller does not always mean less efficient or less profitable. I agree that economies of scale are a consideration, but larger organisations and operations introduce their own inefficiencies.
- Happy to concede that costs in OGX Brazil operations were out of control, but also happily the new board have, as one of their missions, the goal of reducing costs (and no doubt regaining control).
- Wages in Australia are considerably higher than in Brazil (multiples), and while I was on $140k plus super driving a loader north of Kalgoorlie, a miner in Brazil will receive a much lower amount, despite advances in employment and safety conditions.
- As AISC ("all in sustaining cost") is measured in dollars per ounce of gold produced, and as the major cost involved is mining and processing of ore ...which is a cost mostly relative to the amount of ore mined and processed then if a grade doubles the AISC should go down by the same factor.
- The costs are (almost) the same, but the amount of gold has doubled. OK, you might need a bigger truck to take the gold away, and you might need to spend more time getting the gold off the mats, but this rule applies generally as far as I can tell.
- I don't have it on this computer, but TROY reported some of the lowest costs in the world when they were mining Sertao, especially in the early years (cash cost less than $200 / tonne at one point. It's simple arithmetic.
- I'm not claiming I know exactly what Cascavel's AISC will be, what I am saying is that if the grade is 15 g/t it should result in a reasonable AISC, if it is 30 g/t it should be (of the order of) half that reasonable ASIC figure.
- In other words, instead of banking $5-600 Oz as profit, we may be banking $1,000 - $1,100 Oz as profit. Big difference. I don't know what it will be -but the arithmetic is compelling.
Originally posted by rarebird1971
Just thought I would re post given the talk on AISC and grades etc
I have tried to remain fairly conservative in my estimates and make my calculations allowing very little upside i.e I try not to factor in expecting gold price increases or dollar drops even though I believe they will occur. I have not factored in any ramp up due to HM4 or increased shifts / processing of tailings / development of other mines etc and I still rate these shares higher that the current price factoring in a 20gms / tonne recovery 16 grams less than the AVERAGE thus far from the high grade samples. I have only allowed for a profit of $600 AU per ounce leaving plenty for costs / committmnets / royalty agreements and further development and exploration. Again GLTAH Happy Saturday Cheers Rb
From 5/03/18
Hi Folks
Again apologies for being so quiet on the OGX front. I have been flat out with work and will again be quiet in the coming week due to extra large work commitments. Can I say I believe the time taken to release results is a huge positive as the larger the reported throughput the more reliable the results are.
I want to declare I have a large holding in this stock and am a firm believer in the more than likely substantial re rate that the stock will soon undertake. There has been a few questions on potential stock price likely pending any favorable announcement from HM3 so I thought I would share my conservative workings with others to help them align their emotions with reality when the announcement is made. Can I preface the table below by saying I like to be conservative in my workings and others could easily have higher targets by increasing throughput especially given the order placed for a second HM and also the potential in a second shift running tailings and the forgotten silver. There is also upside should the exchange rate move favorably and the gold price rises.
Based on this table any results above 18 gms / tonne should see Share price rise. I feel that 14 gms / tonne should hold prices especially given the ability to increase output via extra shifts and the added mill.
As mentioned in a previous post the big gains come should we hit the ASX 200 where P/E ratios can be more like 16 which could potentially double SP without any extra earnings.
GLTAH in what is sure to be an exciting week.
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Orinoco sp V's gold recovery rates ***Assumes a 6 hr run of high grade ore at 25 tph x 7days per week |
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Also assumes gold price of US $1325 tonne & exchange rate $1.29 Au to $1 US ie AU $1709 oz |
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I have also assumed a conservative profit of $600 AU per oz with a MC of 8x |
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I have also assume that all options will be converted therefore all equations are on a fully diluted basis |
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Gold Recovery rate |
grams / tonne |
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Share Price |
0.08496869 |
0.09913 |
0.113292 |
0.12745303 |
0.141614 |
0.155776 |
0.169937 |
0.184099 |
0.19826 |
0.212422 |
0.226583 |
0.240745 |
0.254906 |
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Shares on issue |
1190000000 |
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Profit per tonne AU$ |
600 |
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Gold price |
1709 |
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output per week |
1050 |
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Appreciate you post Rarebird,
Nothing wrong with being conservative ...and I don't want to give the impression of being a rampant up...ramper. But a lot will depend on the grade (and the amount we have produced) -and that being applied to the evidence of our mineralisation ...as I have researched and posted plenty. Other areas will be icing on the cake ...as long as we have a cake
Good luck for a great result in the next few weeks everyone.
Please feel free to correct me or make relevant comments.
Cheers,
SJB
