RE:RE:Should Read K-K Worth Approximately $6.27 USD ShareExactly. Have you ever seen a mining operation beat its study? I tracked several of them this year and every one had 50-100% upside to opex estimates. Well, if you have a mine with a projected 33% operating margin, and costs come in 50% over budget, guess what's happens to profit. Profit, what's that? I followed a gold mine which put out a PEA in 2011 with a $133 million capex. Three years and several updates later, what was the number? $482 million. Unfortunately, this is not the exception, but the rule.
Analysts, if they are worth their salt, take the study estimates and tweak them, introducing more realistic assumptions for capex and opex. And adjust for economic inputs. Still, they mostly come in too low.
These studies are marketing documents, for attracting investment dollars which would not be available if presented a realistic outlook for the business. The qualified people want their salary, and the engineering firms want future study business and EPCM contracts. So they publish flattering studies. Lipstick on the proverbial pig. NI 43-101 is institutionalised fraud.