NESNothing has disappointed and like Caliche said if the economics don't work then explain Los Filos' success at production with industry leading cash costs.
Taken from Goldcorp NR circa 2006 - Los Filos Feasability:
The mine reserves and resources total over 5 million ounces with 4.51 million ounces in proven and probable reserves - These Resources are also at an average of 0.65 - 0.75 g/t au.
Production and economic statistics for the Life of Mine are summarized as follows:
LOM Ore Production: 203 million tonnes
Crushing Plant Throughput: 4 million tonnes/year
Run of Mine Leach Rate: 20 million tonnes/year
Mining Strip Ratio: 1.5 to 1
Crush/Leach Ore Grade: 1.50 grams gold/tonne
Run of Mine Leach Ore Grade: 0.55 grams gold/tonne
Total Mine Grade: 0.69 grams gold/ tonne
Average Annual Gold Production: 315,000 ounces/ year
Total Gold Production: 2.84 million ounces
Capital Cost: US$ 187 million
Pre-Production Capital: US$ 45 million
Cash Operating Cost: US$ 250/ounce of gold
Even if we adjust the numbers for some inflation due to this Feasability study being done in 2006, it's still very apparent the incredibly low capital costs to bring Los Filos into development and the extremely low cash costs of $250 / oz for 2006 and closer to $400 / oz currently even with average grades of below 0.7 g/t au.
Ana Paula started out as a low grade bulk tonnage deposit with lots of potential due to the 2 km strike with almost 1 km widths defined in terms of structure. With the addition of a high-grade breccia and over 10 holes confirming it's presence the management has turned good economics and a potential Los Filos 2.0 into amazing economics for AP and a possible Ventana 2.0.
Even just extending the breccia at depth with the initial dimensions we're looking at 5 million ounces on our hands at AP between the low grade bulk tonnage and the breccia. I agree more step-outs and extensions of the breccia will be nice but even at this point AP has been de-risked more than most 90% of exploration plays out there. The fact that we're not in South America nor Africa is an even larger benefit to NES as we don't have to worry about the increasing taxes/risks for projects there as the gold price rises and politicans get greedier.
Both TXG and CAN are inferior to NES' grades with CAN no more developed than us and both have more than double our market cap. NES has a much leaner share structure than TXG and CAN and also has something both of those companies don't which is over 25% ownership by the Lundins. Either CAN and TXG are extremely over-valued or NES' is not being given the credit it deserves. Judging by acquisitions by majors the latter is much more likely to be true. Just look at the acquisition of GYD yesterday by AEM in Mexico. $1.5 million ounces at under 1 g/t au and a buy-out of $275 million or $200 + / oz. I just hope we have the opportunity to start punching holes in Ateplanca before a major or someone decides to make a move.