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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: loantech who wrote (10503)	5/4/2006 10:21:36 AM
From: jackjc	Read Replies (1) \| Respond to of 78426

I would expect that if satisfied with the 3000T bulk sample the production decline would be started.

To: loantech who wrote (10503)	5/5/2006 8:21:22 AM
From: E. Charters	Respond to of 78426

I think production will start with Rox this year. They need 4 million to do the ramp and start mining. Probably the 3000 ton sample, because it is an open pit, side hill sample will get more dilution and probably not return more than 12 to 14 lbs. pure moly metal per ton. That is a median $367 CDN return per short ton. The money in the door will not enable the ramp, but I have a feeling it will make a case for doing the underground. The threshold for underground mining is cost of capex and throughput over tons of course. Worst case scenario after having output 4 million in development (300 foot depth on 1200 feet of vein) is 35 dollars a ton capex, 80 dollars a ton mining, and 30 dollars a ton milling. Breakeven is $145 a ton, or 6.22 lbs moly-metal-in-oxide smelter-return per ton mined. 6.22 moly metal is 12.12 lbs MoS2 /ton or 0.6% MOS2 defined ore head. At one percent MoS2 defined head-grade, the mine is clearly profitable, giving the opportunity to make 8 to 9 million CDN profit per year before taxes, but after payback. This could put a price of at least 40 cents per share under the stock. The easy moly-only metallurgy is a definite plus. The low cost to roast is possible to exploit. That is a matter of finagling a good deal with a smelter. This kind of ore is 10% of the cost of a high-sulfide moly to process at the back end. Whether they can make anything on this aspect remains to be seen. It might even pay for them to put in a small scale roaster, as the vein system they are into here to depth is not small in fact. I have calculated that over 2,000,000 tons of vein material (of unknown grade) may be available over the whole system. (2400 feet in strike and 2000 feet in depth, two veins) How much of this material may be mined at what scale is a hard one to answer. But it would be worth it to find out. If there is much mineralized vein north of 1%, then this system exceeds the Quebec operations in Preissac (Canada's main moly supply in the 1940's) by a good factor. If they can keep their head grade at 1.5% MoS2, which appears possible, and given that they may make Rhenium returns, then their whole profile could improve over that by more than 50% again. It is a matter of keeping on top of the engineering and recovery. This sort of development and production-oriented, problem-solving approach is more often the story of CDN mining than not. As each stage is reached it gives legs under the aggregation that eventually will create a true synergy which should reflect in the stock price. Given that the production of moly will finance the development of two other properties that are high grade gold mines I would think the eventual critical mass growth factor will improve the rather modest PE ratios I have given here of 7-10. EC<:-}