At this point in time, mgt must be thinking/ dreaming of nothing else but grade (& the POG).
The cash costs per ounce of Red October's production are around approx. $750 per ounce - due to the higher-grade ore. It stands to reason that SAR should switch its focus to mining this ore - even if it has to cut back production. No point in ramping up production to lose its value by a lower POG. RO at 8+ g/t & Deep South at 3+ g/t (Karari 1.8 g/t & Whirling Dervish is 1.2 g/t).
The Karari current pit will be depleted by June 2013. Postpone any thoughts of evaluating this low-grade mine for future UG or OP cutback. The Whirling Dervish cutback in well progressed - ore to be accessed by June 2013.
2013 was always planned as a year of consolidation - with costs trending downwards in FY14 & FY15.
Leasing vs a capital outlay to buy equipment - tricky one - need someone with more knowledge of the industry to advise on that one - although it's an excellent suggestion.
No value for the prospectivity of their current tenements?
My biggest concern has been the lack of mgt communication. Other players announce production reviews, letters to shareholders, etc, but this mob remain silent. I honestly believe they lack the understanding that regular communication is what calms the market.
A little bit of balance sheet protection - re: the hedge and their current cash position.
Tough times ahead, but if mgt can reign in costs, should see a serious rerate.
GLTA,
Deme
p.s. - thx Doc - had a great trip with the family.
SAR Price at posting:
14.6¢ Sentiment: LT Buy Disclosure: Held
