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

To: d:oug who wrote (89895)	9/23/2002 8:29:19 AM
From: E. Charters	Read Replies (1) \| Respond to of 116789

Reply from Yellowfork, Canada, home of better gold mines. Yes, Virginia, gold mining is not in trouble as much as it used to be in this fair country, but it s still a dirty secret to be a gold miner. Perhaps it is the dank air of the mines, the dark subterannean aspect of its gloomy, stagnant tunnels. Perhaps it is the ever present danger of extinction from gravitational roulette of overhanging mass, not weight. Perhaps mining's bad image is aggravated by the persistent rasping cough of the miner from too many nervous cigarettes, anesthetizing whiskey sours, and fine irritating particles of corrosive silica dust. Nobody thinks miner need be too smart to merely break rock. A mining engineer is a mechanic who can count ore cars on an abacus. A mine geologist can tell white rock from black rock when he isn't drunk, 50% of the time or better. A mine manager is the miner who is the best fighter on the mine hockey team. But once you kalkewlate the number of ounces that will come out of your dirty little hole in the ground, by extracting miles of round rock from the hopeful ground, and you crunch the myriad numbers of protracted costs and projected outlays minus the interest rate and the price of gold on graphs theoretical, the inexorable cash flows of your project are patently the most undeniable surety in the world of economics. No marketing, no economic downturns, no sales force, no publicity, no consumer habits or tastes or transportation/distribution costs to worry about. The product sells. If you got enough of it, cheap enough, you can make money no matter what. It is purely a matter of costs of engineering versus projected sale price of product. In this way it is just about unique in the business world. In fact gold mining needs no business plan. An engineering feasibility study is all it needs. And that cannot be write until the exploration according to a bankable standard is done. What can "get" you in gold mining? Only a combination of circumstances. Having to reinvest at too high an interest rate is one crunch. If interest soars by ten percent or more, it could crunch your capital reinvestment needs or running costs severely if you operate by loan capital. This is what killed Scotty Gold Mines in BC in the early 80's despite their high grade of 1/2 ounce per ton. But interest had gone to a 150 year high. Fixing of the price of gold in a marginal return situations, or excess labour demands in a similar cost structure situation are two factors that may reduce profitabily markedly. Both of these situations are problematic chiefly where the mine is planned for too high a gold price. If sufficient margins are allowed for of price-cost differences, then, while maximum profit may not be not reached, maximum safety is allowed the investment. Both goals cannot be aimed for at once. The only thing that can kill a well-planned gold mine is catastrophic circumstance. EC<:-}