Bill, the deposit is a low grade copper / gold deposit. Based on their annual report PDG has planned a $600 million mine on the LC site. The mine is expected to yield 450,000 ounces of gold a year at a cash cost of around $200. The mine life is expected to be 15 to 20 years depending on exploration success. They have completed a feasibility study. KRY has not. They have the government agency, CVG as their partner. They have passed all the environmental hurdles. They are ready TODAY to create 3,000 jobs. KRY, if they were successful, any that is a big if, would need to complete a feasibility study, which would involve drilling out the deposit. They would need to spend at least 2 years to prove up the deposit for purposes of building a mine as well as generating a bankable feasibility study. Now PDG could sell them the information, however how likely is this?
KRY does not have the experience to build, run or finance a mine of this size. They are having tremendous problems with Albino. How much gold did Albino produce in 1997 and what were Albino's recent cash and total production costs?
In a low gold price environment such as today, it is debatable whether any major would build LC. Therefore I don't know how a junior would be able to do it. As for selling the deposit or KRY being taken out by a major, how likely is this. A major who pays, let's pick a number, $300 million, for LC would need to finance the feasability study and the mine construction. That's one billion dollars. At $300 gold it is not going to happen.
If Venezuela wants a mine at LC and the resulting jobs that go with construction and operation of a "highly automated mine" they are going to dance with PDG, not crawl with KRY.
Greg |
