Latest Release... As I suspected, the grade and the Underground tonnage was the problem in the last quarter...it was not the lost time due to the power outage due to a nearby forest fire.
First of all. the grade...the Open Pit grade which at this time supplies the bulk of the feed for the Mill namely, about 1,600 tonnes per day, came in at 2.16 g/t.....that is a shortfall from last quarter which came in at 2.29 g/t. It does not look like a lot at first glance....not quite.
2.29 g/t. - 2.16 g/t. = .13 g/t.
1,600 t.p.d. X 90 days (quarter) = 144,000 Tonnes
144,000 X .13 g/t. = 18,720 grams
18,720 g divided by 31 (troy ounce) = 603.87 ounces
As you can see that "minor" miss works out to 600 ounces!
Management believes that the grade of the Open Pit Feed will increase as they get deeper and I believe the figure is closer to 3.00 g/t....the would add ounces nicely!
Underground Tonnage...I was disappointed with the tonnes mined...we are still at 400 tonnes per day...they must increase the production from this source....it will be a game changer as they ramp up. Total underground tonnage for the quarter was 36,604 tonnes...the grade was most excellent coming in at an average of 6.31 g/t. If you look back at the March, 2012 data they were at 400 tonnes per day...no change!
The Monday Conference Call should give us some answers...we must be at 600 tonnes per day from the underground operations for them to hit the target range for the third quarter. In previous guidance their target was 800 t.p.d. from the underground. by the end of the third quarter.
Let us do some Math:
Currently from the Underground....400 tonnes X 90 days (quarter) = 36,000 tonnes
36,000 T X 6 g/t. (grade) = 216,000 grams
216,000 g divided by 31 (troy oz.) = 6,967 ounces
Ramp up to 600 t.p.d..........600 tonnes X 90 = 54,000 tonnes
54,000 T X 6 g/t. + 324,000 grams
324,000 divided by 31 = 10,451 ounces
Increase in Underground Production is the Key to Success!
10,451 - 6967 = 3,484 ounces
There is a problem that needs to be rectified before "they" will let this baby move forward...it might be the reason why we are being held back....we need money!
The cash burn for the quarter was 10 million dollars, which left only 25 million in the bank. The plans moving forward calls for additional capital....we need another Private Placement or establish a credit line or plan C...whatever it is...it has to be done. The last PP was done at $.95...the way the share price has been held in a range points to something similar...this will be taken care of very soon at which time we should move higher...put it behind us and lets go!
There are some very positive developments taken shape...we should move upward from here and reach a more respectable level.
Digger144
P.S. Looking foward to the Conference Call on Monday!
I would love to know what their ounce count is for July 2012!
They did not change their production target for the third quarter in the release.