I submit to you that even if the grades stay in the 1.5-2g/t, we have here the receipe for a potentially very large discovery with extremely low costs if they have that kind of stuff to those depths.
I was hoping you had more on the subsurface geology than I knew at present. They did put in some adits, and trenches I thought.
I guess the problem I have with gold is the price. Given much of the supply is in the hands of politicians and appointees(political hacks) the chances of the price dropping further is high. At $250 US it is at the average cost of production worldwide, and that means gold has now joined all the rest of the commodity metals in that regard. There is no gold premium now.
I don't know anything of the metallurgy of this deposit, or its proximity to power, water, roads etc., but it would amaze me if 1 g per tonne gold could be processed and marketed profitably in many places in the world today. Of course I can be wrong, and would love to be proven wrong.
Further to the gold price. I dug the following up from http://www.hoovers.com/features/compoday.html it seems funny but somehow human, that we give with one hand, but screw up with the other.
The IMF may be offering the highly indebted poor nations of Africa forgiveness of their loans, but the leaders of Africa also know that the IMF plans to fund that gift by selling 311 tons of its gold reserves. It's a gold-plated catch-22 that some fear could force the continent's gold industry into bankruptcy. Depressed gold prices have already pushed one of South Africa's gold mines -- East Rand Proprietary Mines -- into bankruptcy and put its 5,000 workers on the unemployment line. Mines in South Africa such as those operated by Anglogold and Harmony Gold Mining Company Ltd. have already aggressively cut production costs to try to keep up with the downward spiral of gold prices. But with gold at $260 an ounce, only half of South Africa's gold mines are profitable. And with 40% of its adult population unemployed, South Africa can ill afford the central bank gold sales that the IMF's debt-forgiveness plan has spawned.
Even desperately poor Mozambique -- a prime candidate for IMF debt forgiveness -- fears the IMF's gold sale. It depends on gold-mining companies such as Echo Bay Mines Ltd. for what little wealth it does produce. In fact, of the 41 nations on the IMF's debt-forgiveness list, 30 have economies that depend to some extent on the gold industry.
The World Gold Council estimates that the IMF would raise $108 million a year under its plan to sell gold and retire some of the debt owed by poor countries. But in the past three months alone, the drop in the price of gold caused by the planned IMF sale has robbed the same countries of $244 million in lost revenues. President Thabo Mbeki, South Africa's new chief-of-state, said of the IMF's plan: “It can't be right to address one problem by creating another." That's a sentiment shared throughout the gold industry, if not in the wood-paneled offices of the IMF. Anglo American's stock closed at $47.38 per share Wednesday, down $0.125.
David Crosby is a writer on the Hoover's Manufacturing and Industry team. |
