sep q oz's guessing comp, page-18

2nd bite of the cherry perhaps. I think Pinto, although he hasn't had a pick yet, will be putting up a bottle of Krug for the winner. Hope you don't mind me nominating you for that.

I will revise my pick to 28803 Oz. How did i get this, i took a journey.

Note: Grab a cuppa if you are going to read this.

I fired up excel, crunched some numbers and had a look at the head grades for FML since they started production. I overlayed them against ore mined and Oz produced. This chart was the result.

I had originally aimed at 33,000 Oz, which, at the last 12 months head grades, is physically impossible based on mill capacity. Things we looking ugly. We'd by lucky to do 18,000 Oz this quarter at around 2.15g/t.

I looked again at 3 analyst reports and FML presentations and all the historical data i have collected. All analysts, with the exception of Eagle who are predicting 49,000 Oz between Jun-11 and Dec-11 (i.e. 24,500 Oz avg per quarter), still seemingly had Focus pegged close to 100,000 Oz for 2011. That's 63,507 Oz more to come in 2 quarters. I thought, these people must be idiots, because at at head grade average around 2g/t, we would need to double the mill capacity to hit that target.

I then looked at Tindals grades versus head grade. This is the result.

For the past 12 months, Tindals mined grade is approx 33% (1 g/t) higher than the overall head grade. I know there are losses, but this is still an important fact. If we could get an extra 1 g/t head grade at current processing rates, the 30,000 Oz per qtr is starting to look more viable.

I was now feeling more confident about a good quarterly and could soon shut down my spreadsheet and be at peace. Suddenly, reality set in when i digged a little deeper. I wish i hadn't.

FML forecasts that the Open Pits will contribute 65,000 Oz ore at 1.9g/t in the Sep Qtr. Hang on, this is going to make things worse, not better. Add to that, FML processed 88,651 Oz of low grade in the Jun-11 qtr at 1.0 g/t. Far out, i really wanted to shut down the PC and start thinking about how David Copperfield would produce 30,000 Oz from thin air. Surely there must be a way.

Had a break and pushed on. I had re-run some calcs and i had us doing 18,641 Oz this quarter based on the above. I didn't like what i saw. Naturally, i decided that i would need to keep crunching numbers until something palatable arrived in my spreadsheet. Buggered if i was going to let Excel tell me the lay of the land. Bill Gates was up to something, and i didn't like it one iota.

Tindals clearly, was not the problem and the open pits are what they are. The 1.9 g/t is pretty close to current head grade run and will improve with time. Together, these 2 make a nice contribution, and at a weighted average about current head grade averages. Feeling good again now. The Mount was doing next to nothing.

Something was ticking me off. The All Blacks perhaps. It was the low grade ore. The blood sucking leach for the Three Mile Hill Plant. I decided to run a production profile for the last 5 quarters. A nice graph always makes me feel less agitated.

The graph, apart from making my spreadsheet an even more dangerous minefield of information, didn't make for good reading. It wasn't giving me that warm fuzzy feeling i had hoped for.

Ok, there must be lots of spare capacity at its current run rate. That's what will push us to nearer 30,000 Oz per quarter. Ran the report and this is what it looked like.

Good, there seemed to be some light at the end of the tunnel. There is spare capacity, and the mill throughput has some room for more upside. There is hope. I ran the spare capacity data through as mined ore in my September forecast spreadsheet at the average head grade and came out with 21,047 Oz for the quarter. An improvement on the 18,641 Oz above, but far from awesome.

Tindals is fixed, Open Pits are fixed. That leaves low grade, the mount and spare capacity as the only items that can be tweaked. Spare capacity by itself, changed little in the scheme of things.

Hunted through my data and a small, but bright light pierced through the darkness. As i walked deeper through the forest, the light became brighter and brighter until i was blinded. My eyes adjusted and there it was, coming from on top of a hill, The Mount. This had to be the key.

Upon exploring this magnificent beast, i saw ancient hieratic scripts on trees and in caves about The Mount. Average quarterly production to date 1809 Oz / quarter. Average grade milled 5.8g/t. Forecast production around 50,000 Oz per annum and forecast head grade 5.5g/t. I even met an old wise man in there named Hartley who said it may be more like 8.0g/t.

I ran back through the forest, not tripping more than 3 times, to my lappa, popped up the spreadsheet and punched in the ancient scripts that i had read earlier. "Circular Reference Warning" is what it spat back at me... After chasing numerous blue arrows, i found that with the increased production from the open pits 17,000 Oz to 65,000 Oz in Sep quarter, that the mill couldn't really handle much from the Mount.

Everything was locked in.

Except for low grade.

That nemesis that uses about 30% of the mill capacity for a paltry 1.0g/t.

The Mount was oozing gold, it was racing down the slopes and was going to wipe out the low grade on its express path to the mill. Nothing was going to stop it.

This was what the new production profile looked like.

Finally everything looked different. FML now had vastly changed from what it had done in the past. The Production profile looked great and the average head grade through the mill was now well above 3.0g/t for the 1st time since March 2010. The 100,000 Oz - 130,000 Oz looks more than achievable. In fact, even with low side 5.5g/t from the Mount, it looks like Focus really is going to shine.

Any resemblance to any real person / company above is purely fictitious. My data, outputs and forecasts may well be of the same ilk. One will only know if this data becomes reality in due course. Enjoy my musings but please do your own research.

Have a pleasant afternoon.