Agree and disagree with you on some points. 40-50 million pa...

Agree and disagree with you on some points. 40-50 million pa looks about right for now, but I agree with you that costs are only likely to go up in the medium to long term, and the only really reversible factor in terms of current operating cashflow is the temporarily low headgrade. A lot will depend on the price of Gold regarding the actual cashflows.

I disagree wholeheartedly however, with your assessment of potentially insufficient cashflow to fund Dipidio. In 'the worst quarter to date'- they managed to sink 11 million into Dipidio without dipping into funds on hand. Realistically, with ounces/grade control about 13 million could be sunk without an issue at spot gold and current exchange. The convertible debt, assuming the price stays low, can be re-financed, and with a project with as good an IRR as Dipidio, I doubt this would be a problem. I highly doubt that they would need to go to the capital markets for more equity.

The final point to make is that the trend to rising costs significantly increases the RISK in OGC. It really moves from low-risk low operating cost producer, to highly dependent on Dipidio for future growth (ie the current price is probably too much for the NZ operations alone). This will carry operational risk, capital costs blowout risks (which has already occurred by some 40mill USD), sovereign risks + others that I am sure I haven't thought of. Falling USD POG won't mean much as that would likely be counteracted by falling NZD/USD. Falling POG in NZD would be another matter.

The whole bunch of goldies released poor quarterlies, with cost inflation all around:
MML- steady opex but only 7mill cash in bank (and not a cent has yet been spent on plant upgrade) because they do not expense the very necessary development work & exploration required to continue their underground mine.
SAR- decreased cash in hand, increasing costs
TGZ- 30million down in 1 quarter, increasing costs with as yet no explanation, need to wait for managements D&A
SLR- cash down, but actually have pretty transparent allocation of capital (looks ok)
CGX- costs slightly up, but increasing cash in hand plus pay down of debt, but operational issues this quarter
SBM- decreasing costs but no change in cash balance
RSG- very high cash costs, still no obvious
TRY- looks ok but probably more to do with the silver than the gold
RRL- close to the pick of the bunch, but again relatively expensive

Haven't had a chance to look at the others. It is an absolute effort to look through the random numbers these companies put out to work out exactly what is going on, but overall the sector is not generating free cash despite record high gold prices, which is something to ponder.