The long and the short of this release is that this is a snapshot of the project viability at this moment without drilling another hole. What this shows is that they have a viable project at current gold prices and the project economics will only improve from here.
There are further underground ounces to be found and haven't yet been converted into reserves and they simply wont waste the money doing deeper drilling at this point. Once you open up Zoarastrian there will be a much better understanding of the Geology and the mine life should improve significantly and costs should come down.
The other point to note is that the said 60,800 ounces per year is in fact closer to 75,000 ounces over the first 4 years. The second 3.5 yrs is when the low grade ore from the excelsior pit is being processed and that is why the average yearly production number is significantly lower. What this doesn't take into account is the fact that due to the soft favourable metallurgical qualities of the excelsior ore the 1 million tonne per anumm plant can actually be run at around 1.3 mt, so those numbers should be around 30% larger. The other thing is that by the time you get to year 5 of mining and Zoroastrian has been opened up it is very likely you will get increased mine life and grade (as they go further underground) and therefore more higher grade feed to put into the mine schedule.
The underground at Zoroastrian is still largely unexplored and they expect this to continue at depth but will not spend the money on drilling this up front when they believe they can prove they have a viable project without spending all of that money.
Overall the company is very confident it has a 10 yr project on hand and these are initial numbers that can be used to explore plant financing, toll treating or join venture options.
EXG Price at posting:
9.0¢ Sentiment: Buy Disclosure: Held
