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Gold/Mining/Energy : Precious and Base Metal Investing

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To: tyc:> who wrote (2486)	3/17/2002 12:41:27 PM
From: Elizabeth Andrews	Read Replies (1) of 39344

I'm not trying to dampen your enthusiasm. You're going to need every ounce whilst speculating in resource stocks. The issue for mines that produce gold in concentrate is this. Let's use Q4-01 NGX as an example. Mill Rate of 4,316,659 tons per Q @ 0.79 gm/ton implies production of 110,065 ounces but they only produced 71,452 ounces due to the fact that the mill only recovers 65% of the contained gold. Further, smelter and other off site charges amount to another deduction amounting to 33% of the metal contained in the concentrate so NGX only got paid for about 48,000 ounces. The leverage here is actually 1.3 oz per $1000 based on the value of the net smelter return to the mine. A CIP mine and mill may have recoveries in the 95% range and the smelter deduction may only be another 5% charge. So a deposit the runs 0.2 oz/ton Au may actually get paid for 0.18 oz of gold. NGX is good long term value. The insiders would not be doing what they are doing if that were not the case.

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