I must admit that I'm surprised to see NO trades with such a positive announcement. Admittedly without a costings estimate it makes it a little hard to predict future profit potential, however if we estimated the plant was constructed at $30m, if targets are met (50kozpa @ say $700 profit per ounce) we could easily see this cost paid back within 12 months. That said my personal opinion Gold is going much higher within the next 12-24 months which should make the project even more viable.
It's absolutely crazy that the 7.5c parcel was not snapped up today. At 7.5c the market cap of CVG is still under $5m.
Compared to its peers CVG still looks dirt cheap to me.
CVG could easily trade at double to triple what it is now and still be a very fair value.
Gold recovery program also looking positive, would have been good to have more information about what has been recovered to date though.
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Today's announcement covered at Proactive Investors:
Perth-based Convergent Minerals (ASX: CVG) has completed the first phase of a strategic study to monetise the Bounty Gold Mine in Western Australia it acquired in 2008.
The study, conducted by consultants Optiro Pty Ltd, which focused on the current open pit JORC Resources across a number of deposits, bodes well for a conventional open cut mining delivering to a standalone 1 Mtpa capacity CIL processing plant with capital expenditure of A$30 million to A$60 million expected.
The mine is located 100km SE of Southern Cross, in WAs goldfields. Historically, the historic Bounty Gold Mine produced 1.2 million ounces of gold over a 12 year period between 1989 and 2001.
The most recent resource inventory calculated in April 2010 stood at 872,000 ounces.
The study included ground acquired from St Barbara Ltd (ASX: SBM) as part of a tenement acquisition agreement.
A key finding of the study was the identification of a core of the total resource that could be expected to be mined.
A gold price of US$1200 per ounce was used with an exchange rate of 0.86 USD:AUD.
The strategic study used a preliminary cost of production estimate based on industry standard practices and delivers a favourable return on investment.
The study still needs further input before an NPV can be definitively calculated. Conclusive work on the extent of the Bounty Main resource, and processing facility costs are required.
The costing of the processing facility is based on a top down review of similar types of plant rather than being generated specifically for this project however the directors believe this costing appropriate given the detailed knowledge of past operations at Bounty and easy access to existing mains power.
The next work phase is to include further refining of resource and costing estimates.
Simon Cato, director of Convergent sees this study as an important milestone on the companys path to production and cash flow. The company believes that the commissioning of a processing facility at Bounty would attract smaller gold resources in the region for addition to the production profile.
The next work phase will include further refining of resource and costing estimates.
Convergents aim is to produce 50,000 oz pa from Bounty for a minimum of 6 years.
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