Post by
Honkeybill on Jan 06, 2010 3:03pm
Production costs climb equally to the rise in pric
HUH? Is this some new economic theory? It cost "X" dollars per ounce to remove a resource from the ground......and the costs flucuate relative to the expenses related to the actual cost of the work involved (labour, price of energy, maintenance.etc..etc).
If it takes $500 an ounce to extract gold from the ground when it's selling for $700 per ounce, it won't cost $1000 an ounce for extraction if gold reaches $1400 per ounce.
My understanding is HRG's extraction costs are relatively stable and have actually improved with Severstaal at the helm. The weakened ruble is also helping.
It looks like Severstaal has changed their strategy and is looking to pump this up and sell it.
I would love to see your calculations..........please post them.
Comment by
factory on Jan 06, 2010 3:27pm
From the company's own web site, go to page 19:https://www.hrg.ca/i/pdf/Presentation.pdfOne of their mines cost $580/oz in 2008. Exponential cost growth. In 2009, projects out to ~$700/oz. In 2010, over $850/ozIt sucks, but that's the reality. The locals know you're making gobs of money and soak you in turn.
Comment by
espressostretto on Jan 07, 2010 2:18am
Also stated on Olma's report: "As the utilization rate at these mines increased, the total cash cost reduced due to overhead cost dilution, thus, improving profitability."https://freepdfhosting.com/8264920e79.pdf