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Gold/Mining/Energy : Holmer Gold Mines -- Ignore unavailable to you. Want to Upgrade?

To: lorne who wrote (712)	10/10/1999 11:50:00 AM
From: Midas	Read Replies (1) \| Respond to of 739

Lorne: The demise of one gold company should not improve the value of another because there are lots of gold mining companies out there. The only thing that will affect St. Andrews at this time is their own bottom line. One of the fastest ways to improve the bottom line of a producer is to make sure the mill is running at full capacity (365 days/year 24 hours/day). The operating costs of a mill are more or less fixed, so whether you put 800 or 1300 tons through a mill each day, the total cost is about the same. For example, if St. Andrews only has 800 tons rather than 1300 tons to put through their mill each day their cost per ton milled will increase by 65%. Assuming St. Andrews can process ore at $15/ton when running at full capacity, then it will cost them ~$25/ton to put only 800 tons/day through their 1300 ton/day mill. Given the above consideration, St. Andrews will be strongly motivated to explore and develop the Holmer property in Timmins because the Holmer ore will pay for its share of the milling costs which in turn will reduce the processing of St. Andrews ore. The net benefit to St. Andrews in the above example is about $240,000 per month (800 tons of their own ore times $10/ton) or ~ $3 million /year. I hope this helps, Midas