snooping around, page-7

Been doing a bit of my own snooping around too. I had a brief conversation with Bill today, posed a few questions:

(Anything in italics are my thoughts)

What price they are getting for the gold produced?


They are getting the current spot price (the day after delivery), for example, if they deliver a 100oz gold dore bar to the refinery then the refinery takes it to 99.99% purity, so if say 85oz is the result after the impurities are removed then they get full spot price for that 85oz amount, the refinery gets a small cut for their services.

So good to know that, obviously they have no debt on their books so no need to run a hedge, so the return over costs should be looking pretty good at the moment.


There has also been more gold poured since the first in June.

So depending on when (before or after June 20) then hopefully the Qtrly will be looking ok. Please don't get all up in arms as to "why" this wasn't announced, the first pour is a milestone so it deserves a good announcement but after then it would probably border on ridiculous to announce every pour. I own other gold stocks and they never make an announcement every time they pour their gold so stock standard procedure there. They are a gold producer so unless they state otherwise, I'm going to assume they're pouring it to produce it.lol

Also, while everything is being tweaked, it would be wrong to provide any guidance on how much is being produced as any type of projection can change easily in the early phase.

Bill gave the example of Adamus, they announced their first gold pour in January but didn't make any declaration about going into full commercial production until 10 May 2011. Have a look at the Adamus Announcement here and you'll get a feel for the timelines/process.


Assay lab delays in Ghana?


Bill mentioned that 2 or 3 years ago there was very little drilling going on, the rapid escalation in exploration has meant delays, it takes around 6 months and over $1m to set up a lab so obviously any new entrants can't just set up overnight so they are happy to wait for the results, rushing them could raise the potential for errors so they want to avoid that scenario and ensure the info released is accurate. The labs they use are internationally accredited so he has a lot of confidence in the results they get back.


While on the subject I asked how the actual drilling was going?


He said that they are drilling but due to the delays in lab results they don't want to overcommit to an area and spend a whole lot of money drilling there until a baseline of results are established.

So seems like they are applying some good methodology there, get the results and then commit more resources to the areas that look to have better grades. I spoke to FMS CEO a couple of years back and the RC drilling rates in Oz were around $100 metre so wise not to overcommit. Bill said they pay a bit less than that but you can see how costs can add up, drilling 300mtrs = $30,000 in Oz.


Expansion Study?


Still ongoing, they are estalishing some good contacts there so when the time comes they will have all the contractors etc ready to go.

That's all folks.

Haveagoodweekend.