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Plus, let's not forget that the Shandong people have experience...

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35 Posts.

33

07/07/16

20:02

Post #: 18219845
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Originally posted by stumpytrunks ↑

Sounds good in theory but in practice you would be running an operation with fixed costs (employees, mill etc) that are surprisingly close to that of a larger scale operation. A larger operation can rely on economies of scale to push down the per ounce cost of production, whereas a smaller scale operation would struggle to break even - even with the current gold price.

A lot of people felt that FML was a super high cost producer, but it was making a solid margin up until the last couple of quarters. This was the point where they wound back operations, with limited ounces going through the mill, but with all operational costs coming out as normal. As a result you had all in sustaining costs around $2000 an ounce - up from $1200-1400 (from memory).

The same would happen in the reverse scenario of restarting operations with minimal ounces going through the mill.

On the plus side increasing head grade from around g/t to 3g/t+ would have the opposite effect - no additional costs, but per ounce profit increasing markedly.

Quite a few of us have been waiting a long while for this to come good. I for one would rather that they took a little more time and nailed it straight up. I think people will be surprised at how hard this runs if they do get it right.

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Plus, let's not forget that the Shandong people have experience of running a gold mining company in China.

FML Price at posting: 54.0¢ Sentiment: Hold Disclosure: Held
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Plus, let's not forget that the Shandong people have experience...

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Plus, let's not forget that the Shandong people have experience...

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