Hi Ram. Good post.
Regarding your RANGY comment "Maybe they are having problems with their Syama mine upgrade..."
While this is certainly possible and they did have a bit of trouble this spring, I'm not sure why people are thinking so pessimistically on this. They've said all along that it was a planned 3 year upgrade. It seems many expect it to happen over night, or simply don't understand the metallurgical differences between mining OXIDES and mining SULPHIDES. A recent news article quotes Kebble as saying they were down to $277 some by June. May I point out that assuming this is a fairly accurate number, this nearly $20 dollars BELOW Durban's cost of $296!
And if the dollar continues to weaken the rand strengthens some, then these lower S.A. costs may rise again while rangy is not affected by the rand. RANGY has more than enough money to see the heap leach into production. Given a production cost of $130 and say a gold price of $300, this in itself, even ignoring Syamas other profit on 270,000 ounces, generates $34 Million bucks, and the capital cost of this project is estimated at only $11 Million...thus $23 Million PROFIT at a gold price of only $300, and they are still expanding the oxide reserves! The price of gold could drop to $200 an ounce and the heap leach project would still be in the black. ( I come up with a break even point at $185). And while I'm on the subject of low costs, Morila @ $118 will be a major cash generator. Present Net Value on this is already $100 Million, with an Internal Rate of Return of 41%, and the 4th phase of drilling starts next month. |
