GREY:GYPHQ - Post by User
Comment by
red911on Nov 29, 2011 12:16pm
210 Views
Post# 19274866
RE: RE: RE: RE: GDXJ & GGN
RE: RE: RE: RE: GDXJ & GGNProfit never a bad word.
The market clearly did not like the Nov 9th NR. They did specifically identify the production issues and they did clearly outline immediate actions being taken to fix. Other reports from mgmt indicated these production issues put them about 1 month beind in terms of 2011 production. Hence our 2 month estimate of about 8K oz Au got scaled back to just under 4K oz Au. But they did reiterate 2012 production numbers would be unaffected. They must be confident the actions they are taking will work. The next question is how all of this affects cost/oz. The first 2 years of production were estimated to be at cash costs of somewhere around 400 $/oz Au. There is a lot of room here to work through start-up issues. I can't see how the solutions outlined to date will add significantly to these costs. Initially higher but they'll figure it out and still be very profitable ounces. The only other question is why they choose to raise money now. As I have posted previously it would make sense they may have decided to do Phase 2 now given drill results and/or as part of more comprehensive solution to start-up issues (?). I am no expert but I will give them the benefit of the doubt given their performance and direction to date. Maybe I am being overly optimistic but I guess we will see soon. Everything I have read indicates these guys are miners... I am sure they'll figure it out pretty fast. JMHO.
red911