Hello Don
Thanks for the post.
As DJ says, he is discounting any M-1 % of the profits and does not seem to take the cash flow from Angola's aluvial and fluvial deposits into account.
He also seems to take all of SUF's mine development costs to date into account when extrapolating future development costs. Preliminary costs of course included exploration, plant development, adit development, infrastructure, personnel and security. Its difficult to tell if he has somehow removed these one time costs to arrive at the figure he is using to suggest Leopard fissure mine plan development costs, but it doesn't appear that he has. If that is the case, his development cost projections would be quite high. Only KF or CJ will be able to confirm this.
One last thought, unless I missed it, it seems as if DJ is suggesting that SUF will attempt to build the infrastructure to increase production to 700,000 tpy in 18 months. That is not what is in the AR and not what KF and CJ said in their conference call. They indicated that there would be staged development over four years as I indicated yesterday in the posted transcript. (100c in 98, 210c in 99, 360c in 00, and 480c in 01), 150,000 tpy in 98. This implies to me that SUF is not building everything at once therefore their need for the money DJ implies is far lower and can be met at least in part by cash flow from operations.
(100,000carrats @ net $95/carrat = $9,500,00 in 98 and 210,000carrats = $19,950,000 in 99. It seems to me that this covers development fairly well. I can't recall, but Randgold carried to production or must they contribute their share? If so that reduces costs further.
I may be completely off base here but it almost seems that DJ has made some pretty serious errors here. Perhaps somebody can call LB or KF and get some actual data to respond to what appears to be misinformation.
Regards |
