American Bonanza Gold Corp ABGFF

RE: RE: news

[agmetalhead]

Owning and operating your own mining fleet is NOT necessarily a good thing vs contract mining. All the overhead expenses for day to day operations are now firmly on our shoulders; breakdowns are costly and inventory of parts can be problematic with regard to scarcity and expense.  Instead of writing one check every month to pay the contractor for moving X amount of tons now we are doing it everyday whether we move a ton or not.

The only up side that I can clearly recognise is we control the day to day mining activities and have the capability  to re-mobilze mining assets to where they are needed without consulting the contractor first and getting screwed price wise on the change later.    

I'm not certain about the tax consequences of one vs the other but I suspect contract mining is more cost effective in the long run.