"2 NGF built a plant that was overkill for the resource they had meaning they needed bulk tonnes to get the cost down which hasnt happened"
the following is the "factual info" about paddington
the paddington mill has been operating at 3m tonnes per annum for donkey years - and indeed, is a very efficient mill. the mill was acquired by ngf, in 2007 , and operations have continued, in the same, very efficient manner. cash costs of production are inversely proportional to grade. for example, in 2006, the cash cost of production was $500 per oz (at a grade of 2.9g/t). if the grade halves, then expect the cash cost to double, and using the same criteria for cash costs, then the following is relevant for the latest quarter.
ore processed .......750,000 tonne (ie 3m tonnes per annum) grade..................1.5g/t cash cost.............$900 per oz.
the problem, is that after adding on the extra costs (depreciation, admin, royalties, director fees), then a grade of 1.5gm/t is very marginal. developing a mine at 1.5g/t, simply will not make the grade (at present gold prices), which was the thrust of watso's original post. the original post, was in response to a post by rabbitoh, who posts on the igr thread. by way of comparison, igr are now building a mine, and their expected cash costs are $574 per oz - but the grade is 3.1g/t. if the grade is halved then the cash cost would be $1150 per oz - and the project would not be worth developing (the upfront development cost is about $65m - which would treat about 750,000 tonnes per annum)
the above is factual info, and simply point to the fact that 1.5gm/t, is very marginal
hello, what is this???
"6. All Kal Gold mines operate at 1-2gt that I know of"
well, using the above criteria, then the only gold mines in kal, must be the paddington operations, and the superpit. the superpit, operates at about 1.5g/t, and they certainly have economies of scale.. anyway, spreading the net a bit further (ie more than just Kal), the following might be of some help
Active Gold Mines in Western Australia Goldfields-Esperance
Agnew, BrightStar, Burbanks, Carosue Dam , Coolgardie, Daisy Milano , Darlot-Centenary, Frog's Leg, Granny Smith, Gwalia, Higginsville , Kalgoorlie Super Pit, Kanowna Belle, Laverton, Lawlers, Mount Morgans, Norseman , Paddington , South Kalgoorlie , St Ives , Sunrise Dam, Wattle Dam, White Foil.
it would be interesting to know how many of the above mines "operate at 1-2gt"
the "factual info" is simply that not ALL mines in the Kal area, "operate at 1-2gt".
oh - and how about
"1 NGF had a hedge book that killed them, AXY do not"
lol of course axy do not have a hedge book - but they also do not have a mine. the "factual info", is that the hedge book has not remotely killed ngf. the hedge book is very modest, and was part of the financing to acquire the mine.
ok - it is one thing to claim that
"3 There are other Toll treating options close by other than NGF.".
ngf obviously have their own ore to treat (100m tonnes of the stuff at 1.9gm - in various categories). maybe there is an underutilized mill somewhere - but any toll treatment, would be based on full cost recovery (ie including depreciation), plus a profit margin. . anyway, that is all dreamtime stuff, because at a grade of 1.5gm, it is not worth mining (at present gold prices)..
ok gg4092 - how is that for a fair effort?????
axy is probably just a bit of a punt, as it does still have some dollars, and just might be lucky. in the end, what could happen, is that axy flog the ore to ngf, for a royalty of a couple of dollars per tonne.
AXY Price at posting:
6.9¢ Sentiment: None Disclosure: Not Held
