Bruce,
Good job on picking up on the "good news" from Alta tucked into their annual earnings report. I talked to Margo and determined that the 80,000 ozs. of production projected for next year breaks out this way:
16,900 ozs. from Kinsley
38,900 ozs. from Griffon
22,500 ozs. from Olinghouse
78,300 ozs. Total (close enough)
They have puts on total production at $335/oz. (if gold goes higher Alta enjoys the benefits!) That translates to $26.8 million in revenue compared to $12.2 reported for 1997 or 118% increase. If we use the cost of production from 1997 balance sheet of $237 /oz ($9.5 million divided by an estimated 40,000 ozs.) we get a projected cost of production for 1998 of $19 million. Add $2 million for admin and exploration and "income from operations" should be around $5.8 million or a 540% increase! Could be even higher if production costs go down based on increased volume or the price of gold goes up! Past news statements projected production at Olinghouse alone at 100,000 ozs. per year, so 1999 should see a similar increase in revenues if Alta chooses to keep production at that level. Margo said that they may decide not to operate at such a high level if gold price stays low.
With all of this good news, how come the stock price isn't going through the roof? Also, Margo mentioned that they will be looking at bringing other properties into production, like Copper Flats. I have heard from mining sources that Copper Flats is a premier copper, gold and silver property. Any of you have some additional information on this topic?
I have another question for anyone that follows the numbers, Alta keeps saying that their "cash" cost of production is "less than $200 per oz." although I have a hard time getting that number out of their financials. As you see, the best I can do is $237 an oz. Any explanations?
Let's keep the "good news" flowing on this junior producer that appears to have a great business plan to make money in a very down gold market! |
