ARGONAUTGOLD wrote: That’s an insightful question. The company has indicated that a plant expansion to 20,000 tpd could potentially decrease process plus G&A unit costs by 25 to 30%. Based on this, one could infer that a 30% expansion to 13,000 tpd might reduce these costs by approximately 6.25 to 9%.
Regarding the increase in head grade, let’s consider two scenarios using the company’s cost per tonne estimates from their 2023 outlook:
1. With a gold price of US$1.9k/oz, a recovery rate of 92%, a mill rate of 13K tpd, and a head grade of 1.15 g/t, the model predicts an annual production of 161.4K ounces, an AISC of US$1.47K/oz, and net pre-tax free cash flows of US$77.74M.
2. If the head grade is increased to 1.43 g/t while keeping the other parameters constant, the model predicts an annual production of 200K ounces, an AISC of US$1.29K/oz, and net pre-tax free cash flows of US$149.34M.
Now, let’s consider a scenario where there’s an increase in head grade and a decrease in process plus G&A unit costs by 9%. Using the company’s 2023 cost per tonne estimates, but factoring in a 9% reduction in process plus G&A unit costs:
With a gold price of US$1.9k/oz, a recovery rate of 92%, a mill rate of 13K tpd, and a head grade of 1.43 g/t, the model predicts an annual production of 200K ounces, an AISC of US$1.26K/oz, and net pre-tax free cash flows of US$157.28M.
In conclusion, an increase in head grade and a decrease in process plus G&A unit costs by 9%, along with a gold price of US$1.9k/oz, a recovery rate of 92%, a mill rate of 13K tpd, and a head grade of 1.43 g/t, could potentially result in an increase in annual production by 38.6K ounces, a reduction in AISC by .21K/oz, and an increase in net pre-tax cash flows by US$79.54M.