Good information on costs from Bill Cara and a plug for Western Goldfields. WGI:
« Cara’s Daily Commentary, Tues., June 26, 2007, 8:33 AM | Main
June 26, 2007
Goldminer Report, Tues., June 26, 2007, 10:58 AM
To dispel any notion you might have that total cash cost is anywhere close to break-even costs of the gold miners, I ferreted out the info for you. I was correct in writing that the total cost of the typical gold operation is in the $500-$550/oz range.
In fact, the following report from BMO Research, which was produced yesterday at $654 gold, shows that for (i) senior, (ii) intermediate, and (iii) junior/emerging producers, the total cost to break-even is (i) $521/oz (ii) $464/oz, and (iii) $556/oz.
Total cash costs are estimated to be: (i) $355/oz, (ii) $319/oz, and (iii) $351/oz.
Total Cash Costs:
The Gold Institute definition of Total Cash Costs is cash operating costs plus royalties and production taxes. For averages, total cash costs are weighted to the number of ounces produced in each respective year.
Break-Even Costs:
Total Cash Costs plus depreciation, G&A, exploration, and interest expenses on a per ounce basis. For averages, Break-Even Costs are weighted to the number of ounces produced in each respective year.
That means that Depreciation, G&A, exploration, and interest expenses, averaged over ounces produced in a year, are: (i) $166/oz, (ii) $145/oz, and (iii) $205/oz for the senior, intermediate and junior/emerging producers, respectively.
Why we are so interested in the goldminers that are (a) relatively small, and (b) bringing relatively huge production on-stream, is that break-even costs will fall, and production will rise. That torque effect is what you want to be investing in early. Western Goldfields (USOTC: WGDF (soon to be AMEX-listed, and TSX:WGI) comes to mind.
billcara.com |
