RE:About Tony the snake..
bossu wrote: What a deal !
AISC number before the almagation : $ 800 /oz or so and on the last AEM FR results after the transaction:
''AISC per ounce expected to be between $1,000 and $1,050.''
I thought I read a few things in November into January that a few mines that Kirkland had were facing rising AISC estimations due to new safety requirements, workers wages and needed equipment upgrades for increased volumes.
I could be wrong or confusing companies as I have been looking at several gold miners the past few months.
An estimation made a year or so ago (some mines they are estimated 3+ years in advance), could theoretically and logically face increased costs as inflation or alterations in mine planning happens. We are here discussing a 20% difference which is significant in a few months of statements, but I think we would need to know when the original estimate number was calculated, not just used recently. Kirkland may have made that estimation 3 years ago, pre-covid, new regulations, ect and just carried forward that number as 'we calculated that this body had an AISG of 800/oz' and now with the merger new figures and calculations have been made to update us post merger for going forward guidance.
I also don't exactly follow where we are getting at here with these numbers, so may I get a little more context in this flag you have raised? Is this a specific mine, Kirkland's whole portfolio purchased or or is this a prediction of the KL/AEM post-merger expectation that was made pre-merger?
When I bought in a few weeks ago and was doing my reading and research for months preceding the official closing of the transaction, I was working off post merger expectations from several sources that were saying that the AISG of the whole entity were expected in the 950-1000/oz area, 1000-1050/oz in an official company statement doesn't really move my needle to much on expectations, especially when this is a looking forward number for the year and next couple in advance.
Every 50oz is close to 5% depending which side of 1000 your working from. Wages usually rise 3-4% a year, energy costs increase yearly if we are talking hydro or somewhat unpredictability if we are talking fuel costs, safety equipment/regulation costs can rise significantly very quickly in construction/mining industries (we kinda seen major effects with that with the commercial world during Covid for basically minor consumables that were then/now required) and of course a big conversation for awhile: borrowing/funding costs, lending costs are expected to be
2-3 times larger depending on how quickly your expecting rates to rise in the next 2-3 years. All this is covered by the idea of 'inflation'.
I digress... depending on when the first AISG number you have at 800 was calculated to the new 1000-1050 it might not be that drastic if we look at it from a realistic standpoint, tho on the surface it does seem steep.
I've spent a bunch of time looking on junior miners the past few years in many different areas, some of the estimations on feisability studies or just general project estimations are made 3-10 years before approved or ground is broken, or when ground is broken to in production, then they find and the actual costs are usually much larger than the estimations. So seeing this difference is not overly surprising to me, I'm more surprised when actual costs or estimations trend lower than predictions.