Went to an interesting presentation given by Jon Parker a couple of weeks ago...basically admitted that along with other things, NGF had stuffed up with their costs side of things in the second half of '08, but had turned that around with an agressive focus on cost control, which in a weird twist, has been aided by the downturn affecting the rest of the resources sector in general...how you may ask????...Well, with the mining project halts and lay-offs of late,no longer are Geologists,Metalurgists, and Mine Managers rare as hen's teeth, and NGF have been picking up good cattle in this regard, improving overall mining efficiency and outlook.
NGF also have been involved in, from memory, what they referred to as "push strip mining"...Basically, instead of big open pits or tunnels with trucks going in and out, they have a number of proven shallow gold seams where they can simply bull-dozer off the seam, then dump this straight into the mill....makes it a fraction of the cost compared to the alternative....
Also from memory, Paddington can currently process 200 tonnes of ore an hour...and ore is averaging 1.6 grams of gold per tonne...I think that's the right figure....
Parker also mentioned that NGF have developed technology to get the gold out of shale ore...Apparently, this shale ore normally rests above the gold seam, and is simply removed and dumped in a pile, hence exposing the gold seam to allow mining. Now this shale ore stuff still has gold residue attached to it, but it's always been too difficult and cost prohibitive to warrant trying to separate the gold....so it just sits in an ever expanding pile doing nothing...until now. NGF have developed the chemical technology to now get the gold out of this shale ore stuff, at a cost effective price...Just think about it...they got hundreds of millions of tonnes of this up- until-now useless shale ore sitting there doing nothing...and now they can get the gold out of it, with absolutely NO cost of mining...just scoop it up out of the pile, and dump it in for processing...that's pretty amazing stuff!
There's also potential upside for NGF to sell this intellectual property they've developed to other gold miners.
Paddington looks like it's going from strength to strength, and in relation to Mt Morgan, Parker stated that NGF are close to finalizing the financing terms of its operation.
And in a sign of the times, and how one man's gloom can be another's boom, Parker mentioned that NGF had just picked up some near-new second-hand mining equipment, which was priced 12 months ago at 8.5 million....NGF bought it in 2009 for just 1 million, and plans to buy more of such equipment at bargain prices, to "moth-ball" for future use.
I'm not a big believer of random comments about NGF being "20 cents by the end of the week", or "1 dollar by June"...but I do think that this baby has an absolute truckload of upside, and that's even with the hedge, which is increasingly looking like being resolved.
I'm a long-term holder of this one.....
NGF Price at posting:
15.0¢ Sentiment: LT Buy Disclosure: Held
