There are some good posts on Stockhouse for anyone wanting to come up to speed on CMM:
stockhouse.ca
Hi BGraham,
In regards to cash cost, if I was to provide an nutshell answer it would be as follows:
1) CMM was a start up company in 2005. The company experienced typical start up issues (i.e. delays in equipment delivery). This also happened during a period of significant shortage of equipment globally.
2) The $290 cast cost was built prior to the explosion in fuel costs, materail (i.e. steel) costs and the negative exchange rate situation due to the strong Canadian dollar. These problems are not specific to CMM. All producing companies (Mining, Manufacturing, etc.) have been impacted.
Even with all of the non-controllable items, it appears as if management was able to get the costs back to a reasonable range. Please note the cash cost for the last 3 quarters:
$572 (Q2), $461 (Q3), $335 (Q4-based on info provided to individual shareholders by IR). That is excellent progress!
I think it's too early to give up on the $290 cash cost, but it will be a challenge to get there in the short term due to the ongoing high fuel and material costs, and continuing impact from the strong Canadian dollar. We will probably settle in at $335-$345 for now, but continuous improvements and starting up the underground mine (mid 2006) should give us a shot at attaining the $290.
Please do realize that we are not counting on the $290 to be successful - it would be a bonus. I am perfectly happy with $335 - $345 cash cost. It means cash flow per ounce of $225 US versus today's gold price, which represents tremendous profits.
In regards to production ounces, our Q4 tpd was around 4,000. This was lower than our capacity level (5,000 tpd) due to start up issues highlighted above. The 100,000 rate is close to being on track for 2006. There is also a possibility to make a small investment to expand up to 6,000 tpd. If this occurs then 120,000 to 140,000 may be possible at Sigma, perhaps sooner than later.
Fyi, lots of informative posts have been made here on the board. I think you might find them helpful for DD purposes, especially the ones from the past couple of weeks.
Good luck with your investments,
Production05 |
