CONFERENCE CALL HIGHLIGHTS - Exciting conference call, the following items are highlights: starting production at 100,000 tonnes per day with likelihood of increase to 200,000 tonnes per day (my numbers show production level will eventually exceed 6 million ounces), John Felderhof (the man who found deposit and who I spent time at Busang with ) estimates 100 million ounces proven up by spring, with a conservative estimate of 200 million ( it is my belief this is no different than his conservative 30 million +++ number), cash costs of production sub $100 per ounce (probably $75U.S. and maybe much lower if the grade continues to increase), no serious issues to deal with in mine development, Felderhof will work with Freeport initially to keep exploration plan going, Bre-X is free to sell their interest to any mining company they wish but will notify the government of the transfer as a courtesy, production should begin at approximately 100,000 tonnes per day beginning the year 2000, CoW that has been approved by all parties will be signed by end of March at the latest (special decree for BXM's two CoW's), BXM working to dismiss the Merukh lawsuit based on jurisdictional issues (I am hopeful the case will get thrown out, but if it doesn't Merukh needs cash, so an out of court settlement is highly probable if case not thrown out, we will know answer in April), Capx in my opinion is way overstated at $1.6 billion, sure it will take this much to build the mine, but the original 100,000 tonne per day mill will be kicking off so much cash that it should pay for much of the subsequent capacity increases.
Clearly, the mine will be hugely profitable and will make us a lot of money. Sure I am pissed that the Indos ripped us off for an additional 30%, but this project is so huge and profitable and important to the Indonesians, they are unable to ignore it. In Canada, we have people called aboriginals, environmentalists, and politicians that rip off owners of mineral properties. Look at what is going on in Labrador and the costs Inco will have to incur to meet the various agendas (do you think they actually wanted to build a smelter in Newfoundland?)
We must take heart that this deposit is so forgiving that we will continue to make money on our investment going forward. Our share of a 6 million+ annual production will be almost 3 million ounces, which compares well to companies that trade today at market caps multiples of BXM's market capitalization. Look for a takeover from a large mining company that wished to add to production following the granting of the CoW, subject to BXM dealing with Merukh the Crook. And lets pray for a tax free rollover. Amen...... |
