Twitter and OGX Related Media, page-445

If you know how much you have spent on production you can know the mines revenue if you know the cost of production and the gold sale price.

So as per my previous post the company said in its March cash flow report that it will spend $1.34 million on production.

If you assume a cost for that production of $500/oz then the maximum gold sales from that production is given by the formula below.

((Sale price of gold produced per oz/Cost of production per oz) x (Total cost of production)) - Total cost of production = (($1,650/oz / $500/oz) x ($1.34 million)) - ($1.34 million) = $3.082 million

If you assume a cost of production of $1,000/oz the answer is $0.871 million (sorry my previous post was wrong in this respect, it's worse than I thought).

So given the company reported that it expected to have $1.542 million in non-production expenses (development, exploration, staff costs and admin) it's maximum free cash flow for the quarter at a $500/oz production cost is = $3.082 million - $1.542 million = $1.54 million.

At a $1,000/oz production cost, free cash for the quarter = $0.871 million - $1.542 million = -$0.671 million (ie the company goes backwards $670,000 for the quarter by its own estimates)

If the production costs are higher then they lose even more money.

You see the production cost is related to the sales revenue through the cost of production and the sale price of the gold. You can't sell more gold than the mine has produced.

You can pick whatever production cost suits you but as my calculations show, even in the best case of a $500/oz production cost, the company will only make $1.54 million.

I think $500/oz is not just unlikely, I think its impossible, but my calculation highlights that this quarter just can't produce any serious money if the company's March Appendix 5b estimates can be believed.

Time to wake up and smell the roses @batboy . I'm not making anything up. Do the maths yourself and tell me where I'm wrong. Esh