Processing cost for the gold ore (processing 355,000 tonnes of gold bearing ore, for production of an estimated 50.4K ounces of gold) is borne 100% by HAV.
This 100% processing cost was estimated to be $5.3 million by Peter Strachan in his 2 December 2016 Research Report (see link above, specifically page 2) and will be paid 100% by HAV.
Royalty rates of 3% are payable by HAV and CMC, by each of them, on their 50% share of the gold sales revenue. A 'discounted' royalty rate of 2% is payable to the SA Government (as it is a new mine, the rate is 2% for the first 5 years) and1% to a Pasminco subsidiary (which is now owned by MMG).
For HAV, the royalty payment was estimated to be $1.2 million (for HAV's 25.2K ounces of gold and HAV's estimated gold sales revenue of $38.6 million) by Peter Strachan .
Selling costs are split 50/50 between HAV and CMÇ.
For HAV, selling costs were estimated to be $0.3 million (for HAV's 25.2K ounces of gold) by Peter Strachan.
As calculated above, Havilah's cash cost of production (including royalties and selling costs) should come in at less than $300 per ounce.
Obviously, any increase in gold ounces produced over and above the existing JORC gold ounces will bring down HAV's cash cost of production at the Portia Gold Mine.
IMLTHO, the increase in Porita gold production above the current Portia gold mine JORC resource recovery is expected (I will go out on a limb and say guaranteed!) from all three of the following areas:
1. Two Knelson concentrators are currently installed at Portia. The Knelson concentrators recover gold over a wide size range from 2mm to 50 microns, allowing recovery of appreciable finer gold that was not included in the original Portia gold JORC resource. This has important implications for HAV because the Portia gold resource was calculated on the basis of gold particles that could be easily seen and physically picked out of a panned concentrate with tweezers. A considerable amount of finer gold of 500 micron size or less remained in the sample concentrate and hence was not included in the original Portia gold JORC resource;
2. Southern extension to the Portia open pit; and
3. 'Bonanza' gold in the weathered bedrock. The additional potential from extracting gold from high grade veins below the 'Base of Tertiary' gold zone at Portia.
Cheers
These are only my random thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional expert
HAV Price at posting:
40.0¢ Sentiment: Buy Disclosure: Held
(20min delay)