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Gold/Mining/Energy : PolyMet Mining Corp POM.V (was Fleck Resources) -- Ignore unavailable to you. Want to Upgrade?

To: Elizabeth Andrews who wrote (545)	10/15/1998 1:47:00 PM
From: Shaun M. Dykes	Read Replies (1) \| Respond to of 708

Just read this. Some more facts. When US steel owned the property and Amax owned the property next door. They couldn't afford to put the property into production as the rate of return at that time was about 3% to 7% (mining industry likes 15% or better before putting a mine into production) plus the huge capital cost of building the large fancy metallurgical plant (>700 million for the concentrate plant alone. In addition US steel and Amax were both looking at these properties as underground producing mines not open pit. This is way more expensive. One other comment, in the last decade open pit mining operations have become extremely efficient. We can curently mine bulk tonnage projects for U.S.$4/ton and up. Mines are making profit onU.S.$7.00 rock even at todays metal prices. So the key to a lot of these style operations is the value of the rock and what can be recovered. Back when US Steel and Amax were working on the projects they were looking at $25 to $40.00/tonne underground costs and therefore looking at only the higher grade portions of the deposits (>$50.00/ton), which tend to be patchy. Thats why they couldn't get the mine into production. So in away you're right US Steel didn't put the deposit into production through lack of funds, but because the deposit was not an economically viable underground mine. What has changed since then is metallurgy, low cost open pit methods and efficiencies of scale. These have all changed the economic characteristics of the deposit making it viable project. Some of the large medium grade porphyry copper projects were known and explored for years before they were put into production and usually by a different group than orginally found the deposit.