what can we expect?

Hi All,

Back at work due to a long mid year holiday and no leave left. (not that there is much to do ATM) so I thought I would re-read through the last 12 months announcements together with info posted from holders re- AGM and re-iterate the parts I find most exciting considering this year production wise was a fizzer.
It does appear however that Mike has got everything in place now for sustained production (with shaft / winder upgrades etc) which is to be ramped up together with defining resources. Provided we are producing the suggested ounces at the end of January (which from AGM reports we have 700 ounces so far) I think we can all look forward to an exciting 12 months.
One of the points I had originally missed which I found exciting is "Over the past 10 years there has only been 3000 metres of diamond driling conducted. However over the next 2 years over 27000 metres of drilling is to take place." I note that over 2000 metres of this will be in the gap zone from level 9 starting Dec/Jan until May/June. Back in 07/08 NG states that they did some drilling up from level 9 and went two from two finding maxwells and kent (i hope i got that bit right) Hopefully they can have similar successes finding new reef structures in the upcoming campaigns.

As we are probably only 6 weeks away from some production figures I thought I would work up some possible MCO valuations (happy for you all to scrutinise) based on a few assumptions.

According to the AGM MCO are aiming for 1000 ounces per month. I assume this means processing of 30,000t of ore as they have previously targeted a head grade of 12g/t.
So based on the following assumptions;

30,000 tonnes per annum.
Cash costs - $800 (as per AGM figure provded on HC)
Gold Aud $1500 (due to volatility)
Profit per ounce (Gross) - $700 Aud
PE - 20 conservative

12k (12g/t) ounces per annum - $8.4million (-30% tax) x 20 = 41cents
15k (15g/t) ounces per annum - $10.5million (-30% tax) x 20 = 51.8cents
20k (20g/t) ounces per annum - $14 million (-30% tax) x 20 = 69 cents

change the gold price to 1600 per ounce and the price changes as below;

12k - 47.3cents
15k - 59.2cents
20k - 78.9cents

use a gold price of 1600aud and cash costs of 700p/o

12k - 53.2cents
15k - 66.5cents
20k - 88.7cents

We also have 25 million in incurred losses so we shouldnt pay tax for at least 18 months but more than likely 2 years.

I note others have used a higher P/E in the past but due to a combination of market volatility and the fact that management have to prove they can hit targets I used a lower figure just to give an indiction of were the SP COULD go in the following scanerios.

I also havent allowed for any processed ore from ROD as the joint venture would reduce the figures above obviously depending on the volume coming from there.

As always DYOR and I welcome feedback / discussion.