I think the deposit is solid, but I am not crazy about the grade all the time.
Don't ask me if they will get mill money. Theoretically a lot of CDN narrow vein deposits should work because you can mine for about $210 all up per tonne and right now that is 4.36 grams. Bulk mining you should be able to make it at 3 grams. The Howey Bay Mine in Red lake averaged 0.09 OPT over 50 feet in 1930. (2.98 gms/T) It had a fair bit of stuff at 0.5 oz/short ton or (17.15 gms/T) The Howey was a very profitable mine back then, because of its bulk nature, despite its low grade overall. It mined only 435,000 ounces in its lifetime. To make money back then they had to mine at a cost below $3.04 per short ton, which is $159.08/metric Tonne today by gold price. By inflation it is only $43.55/tonne. In 1977 I mined at a cost of $1.50 per tonne. This included development, drill, blast, load, tram and hoist. In theory by inflation that would be $5.40 today. I think closer to $12.00 per ton in real life mining.
At any rate even all up over a million ounces, or 10 million tons, the capex would only be $8 per ton, so if it were all bulk mining alone, the operating costs mine and mill could be kept under $25.00 per tonne. I estimate a 25 foot wide orebody that was bulk raise-mined with bottom slice breasting would come in under $60 million for initial mill and access. At 5,000 tpd, it would cost $65,000,000 for development. That would be $37.50 all up per tonne. 0.71 grams/tonne break even. Underground. For safety's sake I would peg it at 1.5 grams per tonne underground as cut-off in special bulk mining situations.
Today a drill off of the Howey Bay Mine would not raise a stock over 25 cents and the mine would never be developed. The sub million-tonne nature of the mine and low grade would colour public perceptions and would cripple an otherwise profitable venture. The market for paper does not equate to the real engineering prospect of making money mining in this day and age.
Management team is ok. One of them is former Aquiline. I only say that because they have pictures of me a goat somewhere. It's photoshop, but I am not taking any chances.
EC<:-] |
