Would it kill you do put effort into a post instead of one liners intended to try and discredit me and fear-monger? Far out.
"AngloGold said its Mongbwalu project in the DRC was suspended as the economics “just didn’t work,” according to Executive Director Tony O’Neill. “The gold is in deposits that are reasonably small and really make it difficult to get scale, so with current gold prices you haven’t got many options,” he said in Johannesburg. License renewals are due in 2014 and talks with the government will determine what happens next, he said."
I assume this is the part you are referring to? Yes I agree it is a negative comment toward the project, but I put forth the following questions to you (and anybody else who thinks this is a major concern) that I and many others I assume have already considered;
1. This is a comment made by a director and not the resultant figures produced by any feasibility study that which states the mine is not economical, so I take this with a grain of salt straight off the bat (in the same way we take Jason's timelines with a grain of salt!)
2. If you were a company about to part ways with an asset, from a shareholder communication perspective - of course you would not say 'we have to let go of what may well be a golden child', you're likely going to downplay it's significance in order to reaffirm you are making the right decisions, and instill shareholder confidence in the retained projects and in managements decision making.
3. Comments like "just didn't work" and "deposits are reasonably small" are frankly unsubstantiated despite coming from the horses mouth, and refer point 1 and 2 again, but ask the blunt question - how did they know?? They didn't. It was a exploratory and spec land grab. They didn't have the opportunity to progress the asset and complete work on site to reach a decision on commercial viability through a DFS and decision to mine or otherwise, and for that matter have not confirmed the actual size of the project.... so without confirming the deposit, without confirming the economics, and with a need to justify decision making - what else could they really say other than 'probably won't work, too hard basket', that's all they can say because they have no valid reason to drop it other than the need to cut back liabilities in the company in line with their overall portfolio strategy.
4. With licence renewals impending it was also difficult (impossible?) for them to drag the chain and just park the asset, they were forced to either commit to it or move on.
This is my summation and interpretation of the comments their CEO and directors made back then. I personally think it is foolish, given the broader context, to hang your hat on such a shallow statement made 5 years ago by a company when clearly their motives were evident to all, including their own shareholders most likely (I have no doubt some people would have been upset about dropping this project). As is always the case in the spec market, if your tolerance for risk is so low than you require confirmation before taking a position, then the market has already priced the RvR well ahead of you and you're going to be paying a premium - which is absolutely fine, if that's your strategy and risk appetite, but it's not fine to pretend therefore that those same things that make you hesitant need to be magnified to an unreasonable level.
At the end of the day, it all makes for good discussion I guess!
