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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: goldsheet who wrote (68391)	4/28/2001 3:02:19 PM
From: E. Charters	Respond to of 116759

I would not say that underground capital costs are that low. In fact your UG capital cost or as they say the mill money is quite high. In some cases not as high as some large open pits as trucks are quite expensive and the mills are usually larger if it is full milling. On the other hand heap leaching capital costs are dirt cheap as you don't need tanks and slurry pumps and grinding mills. Some heap leach mines can start with as little as 200 thousand ounces of grades as low as 0.03 - 0.05 ounces per ton. 10 million dollars of equipment and development and you have a mine. Although your stripping ratio is lower in the UG mine, the development cost is not small on the throughput side. But again, it depends on methods and scale. Today mechanized methods on stopes as narrow as 6 feet can bring costs down very low. Sometimes costs per ounce in UG mines are comparable to open pit. There was one underground copper mine in the 30's that ran at 80,000 tons per day in Butte. 0.50% copper and it made money too. Lowest capital cost mine I know of to get going is one situation I figured out in gold. 3 million CDN to develop, mine and close. 6.0 ounces per ton. But despite profitability there are no takers as risk and price seem to loom over bottom line in most peoples minds. I know of another one of 25,000 tons of 3.0 ounce per ton and that one cannot get investors either. High, high return and people just won't bite. It isn't too hard in these circumstance to operate at less than 100 dollars CDN per ounce cost! Hard to lose money, but as soon as you say gold and mining in the same breath people's stares turn to cold horror like they just noticed you were an alien predator. Then they run for the hills foaming at the mouth. ************************************************************ I actually had more than one conversation with prospective investors like this ---> "It ain't a dot com rip off? We won't see stock at 100 dollars in two weeks? ..." ans: "Er, no ma'm we intend to make money mining gold." "Well nobody does that do they?" ans: "Well m'am American Barrick and Dome mines still make billions per year, in fact year 2000 was American Barrick's best year ever since 1980." "Well they have billions so they can make billions. It's easy when you are a big guy.." ans: "Well m'am, Dome mines started with a tiny little 50 ton a day gold mine in Timmins 91 years ago and they made money every year since. Now they can write check for a billion dollars just like you and I would tip the paper boy. It's all done with costs/returns .. profit per ounce. If you can engineer it, you can mine it and make it." But yer talkin' to the wind. (Note: When Peter Munk went the rounds in New York looking for money to restart a mine in Nevada, he said he was looking to start the biggest open pit mine in the world. He was almost physically thrown out of one famous office I heard. Then he found the money in some places and started the mine at Goldstrike. At 0.30 ounce per ton average grade, it was the richest, lowest cost, high volume open pit gold mine in the world. Just like he said.) Moral: Next time an engineer that makes car stereos comes into your office saying he wants to start a gold mine, invite him in and put the coffee on. At least it's worth a listen. EC<:-}