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Gold/Mining/Energy : Royal Oak-RYO -- Ignore unavailable to you. Want to Upgrade?

To: Mike G who wrote (1027)	6/27/1998 9:01:00 AM
From: bconard	Respond to of 1706

Mike, Thanks for sharing your thoughts on the AGM with us. Being a long time holder of RYO I am glad that the news is in line with my expectations. We have a son that lives near Lazy, WA and we intended to attend the meeting and drop in to visit him on the way, but Murphy's law got in the way and I could not get off work. Oh well, maybe next year. Regards and Thanks again, Bob

To: Mike G who wrote (1027)	6/27/1998 4:47:00 PM
From: Michael Bidder	Read Replies (1) \| Respond to of 1706

Mike how can you be satisfied? Kemess is operating in the red. Look at the following analysis on Kemess at 42,000 ton/day. (numbers from shareholders meeting via pmoll on yahoo board) Daily Operating cost: At 42,000 tons of ore per day with an all inclusive operational cost of $4.59 US = $192,780 per day. Copper With a grade of 4.5 Lbs per ton at 42,000 tons per day and a recovery of 40 % sold at $0.74 US per Lb = $55,944 per day Gold Grading 0.018 oz per ton at 42,000 tons per day and 50% recovery sold at $295 US per oz = $111,510 per day Total credits for the copper and gold add to 187,110 per day. If you subtract the daily operating cost of $192,780 you get a daily loss of ($5,670). In light of these numbers two very important points arise: 1) The recoveries are worse than even I expected. To be fair they could and should go up as technique is tuned. This is going to be managements shrill cry. 2) I do not believe the operational cost number of $4.59 US per ton is accurate. This is a "soft" number. We will have to wait all the way to the final quarter when the AUDITED financials report comes out to know the truth. For every $1.00 per ton that Royal Oak is out on this figure the loss per day goes up by $42,000. One last point. Is 42,000 tons per day 80% of capacity. Perhaps it is flat out. As the used equipment degrades and money is tight for repair this may be as good as it gets. Further increasing incremental cost. In closing Kemess is what I always said it would be a money pit. This mine should never have been built. Now that the true numbers are filtering out we may not like Mr. Bidder any more but we will know he was right. Michael Bidder.