OGC needs to keep the cash cost of mining below $NZ800 or $US440...

OGC needs to keep the cash cost of mining below $NZ800 or $US440 to eliminate the cash drain from the hedged gold.

For me OGC has been more of a mining cost issue than the day to day gold price athough higher prices are always better and Q1 with a gold price of around $NZ1800 for the unhedged gold would have generated significant free cash.

On the cost side input costs such as power,diesel and reagents have fallen. The next way to produce lower cash mining costs if higher grades - the same amount of rock gives more gold = lower costs.

Importantly, the best cost results from higher grade will come from the underground mine where costs per tonne are the highest. In the latest drilling results the new area "Panel 2 Deeps" is accessible from the drift so both development costs and time to mine are mininimal.

Also the average true height is about 7 metres giving lower mining costs + the grade looks up to 100% better than the current operation.

OGC has a difficult peroiod of 18 months ahead with the hedge delivery so OGC needs some good luck which seems to have arrived.

However, as the fog of doubt begins to clear OGC should be rerated.