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Gold/Mining/Energy : Crystallex (KRY) -- Ignore unavailable to you. Want to Upgrade?

To: Greg Ford who wrote (8477)	5/1/1998 11:16:00 AM
From: Lee Bush	Respond to of 10836

The costs at Albino escalated because of the expansion of the mill. This cost will be spread out over the life of the mine. I remember that we went through this before. MO stated at that time that the costs were around $200/oz, up from the $168 because of mill expansion. Also, we have a change from open pit to underground mining which may not have been included in that estimate. At 45 degrees, I assume they would use a stope design, utilizing gravity to feed the ore into the hoppers. This is a relatively cheap method of underground extractions, but will be higher that open pit. So, my guess is that we are around $250/oz. now. Still a low-cost producer. Lee

To: Greg Ford who wrote (8477)	5/1/1998 1:30:00 PM
From: E. Charters	Read Replies (1) \| Respond to of 10836

Well now we are getting bitter aren't we? Pity my clients all you want. Pity yourself more for wilful blindness if that misses you good investments. The mill was down for much of the time you describe. That might explain why they did not achieve the 100,000 tons production. If they had been producing full tilt they would have about 800,000 grams gold from the mine in that period. Admittedly it is a small mill. Venezuela has to be approached by degrees and the rights to deep mine and the security to increase the investment in Albino has only recently been granted. A good size mill for Albino would be about 3500 tons a day. It would cost about 45 million with the underground and open pit equipment. It would net them about 22 million profit before taxes per year. But you don't start putting these things into place until all your ducks are in a row. I really think the production costs at Albino, as murky as they seem to be are irrelevant at this stage. Clearly in 1995 they were a low cost producer. Lately they have been screwing about with the mill while waiting for the VZ gov't to get its act together concerning their investment. I don't see any warning signs really. You can take all sorts of company expenses in any start up operation and claim the mining costs are spiralling out of control, but are they? What is the source of the costs? Is it fixing collapsing stopes? Tunneling to hard to get at lower grade zones? Rising development costs that were not anticipated? (a la Kemess) When you see what the source of the included costs are, upgrades and expansions, exploration, new pit zones, delays in procurement etc., you see it is not related to the orebody at all OR its inherent costs to mine, which is the stinking red herring you were trying to plant on the trail wasn't it? EC<:-}