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Gold/Mining/Energy : Fortune Minerals Limited (TSE - FT)
FT 8.0000.0%Dec 31 4:00 PM EST
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To: Elizabeth Andrews who wrote (569)6/10/2001 6:00:22 PM
From: Dave R. Webb  Read Replies (1) of 612
 
Good points Elizabeth. We need to see what the cost structure at Nico is going to be like prior to expressing a view (on production costs). Competitors will produce down to, and occassionaly below cash costs, so we need to know cap costs, plus separately, op costs.

Your view that Nico's grade is too low, and that its location means it will be high cost is your view, in comparison to what you understand. I suspect that infrastructure is going to consititute a large part of the cap costs. We have been led to believe that the power costs (a major component of any cap cost) at Nico is going to be lower than that required for Voisey's Bay. We've also been told that the relatively high gold grades at Nico will reduce the over all costs of operations.

Until we see the numbers, we don't know. From what we do know, some assumptions (such as high cap costs at Nico) might not be correct. Plus, we're being led to believe that the shallow, outcroping configuration of the mineralization at Nico will lead to reduced operating costs. I guess we'll have to wait to see the numbers.

Dave
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