Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: zebra4o1 who wrote (34162)	2/3/2005 3:49:04 PM
From: E. Charters	Read Replies (1) \| Respond to of 39344

6 grams is not high grade. We are looking at a low tonnage undeground op in Ontario that is 330,000 tons of 16.2 grams. We don't figure we will make 20 million a year on that. Maybe 6 million, but not 20. I worked at a 300 ton per day underground ramp-mine in Ontario in 1984. Its capex, at the peak of the 1980's gold craze, was 12 million. It would not be much more than that today. We mined 8.27 grams per tonne, (I was an assayer at the mine) but we had intended to mine 11.72 grams. We mined out 150,000 tons and didn't even break even. Our mining was all contract and cost 100 dollars per ton. Development was 300 dollars to 360 dollars per foot. Recovery was about 85% and we shipped our con to a friendly outfit who milled it by remixing into their ordinary heads. It had arsenic in it and nobody in the world would give us over 300 dollars an ounce for the stuff. It had cost us $2500 in operating cost alone to make the con, so it was not good to sell at 300 when the gold price was 360 at the time -- on a 7.2 ounce per ton con. Capex turned out to be 80 dollars per ton. So total costs to produce were about 180 dollars per short ton on the heads. At .24 OPT grade, at 360 dollars retained per ounce we were losing $93.60 per ton all up. At 6 gram grade, or 0.174 OPT we have a medium grade operation. Three veins sounds good, widths are fair. A medium tonnage per day large total tonnage op is indicated. I would say 1200 tons per day would make money. To scale up the cost we are looking at 4 X 300 or (the cube root of 4 squared) X 12 million. This is 30 million to get going. You could argue it might cost less, but let's look at it. A 2000 foot shaft is 12 million, 8 levels 1500 feet long each is 5 million. Raises are 4 million. Underground equipment and pumps etc.. has to be 8 million and a mill has to be 12 million for sure. 12 + 5 + 4+ 8 +12 = 41 million. They need 6 million tons or 2000' X 6000' X 6' wide to make their capex drop to 20 bucks a ton over the life. Not a bad orebody. Our group has a chance at such a body at much higher grade, but what about the cost to delineate? Not even in our figures herein, and it could be 3 dollars per ounce. If they mine for 60 bucks they have a cost of $80 (CDN) which is .148 OPT cost. They just squeak through. They print 14 dollars per ton or 6 million per year EBIT. Depreciation is paid. Now there are all sorts of situations. There could be higher grade material. Maybe all they need is an adit to get at the ore. Perhaps they can mine cheaply and ship to a nearby mill. Each case is on its own merits. EC<:-}