American Bonanza Gold Corp ABGFF

RE: Strong value ..Take Position Soon

[goldpig]

Economics look very good.
One of the  reasons why the mine capex is so low is the fact that this is a former mine (  Copperstone  ) which produced nearly one-half million ounces of gold between 1987 and 1993 through open pit mining.

As a result , there is substantial  infrastructure already in place , including a  69 KV power line and substation and three water wells, all sufficient for the new mine at Copperstone. Additional infrastructure on site includes offices, maintenance shops and a laboratory building. High grade gold mineralization in the D-Zone that is scheduled for Year One mining production has already been accessed in a 600 meter long underground tunnel driven by Bonanza.

Even better , out of a total capex of $17.7 million also includes everything from the $2.7 million needed for pre-production mine development , $2.9 million for working capital and contingencies of $1.3 milion.


Ongoing capital required for further tailings impoundment expansion, bonding, reclamation, and demobilization of the contractor are estimated at just $1.6 million. These costs are budgeted to be derived from operating cash flow after mine operations have commenced.

As a consequence, cash costs will be very low, at $415 per oz which  adds up to about $40 million in annual cash flows of which about $30 million will be free cash that goes straight to the bottom line.

Those new funds ( $7 million )   received later this week  should trigger a flood of development news ,as mine development can then be ramped up.
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