Lachlan Star Ord Shs T.LSA

RE:Q2 Prelims........Very Good Progress

[TheRock07]

Lets see how well they did in Q2 versus Q1 when gold production was just over 10,500 oz at an all in cash cost of $1239 per oz.
 
Production
 
Production increased by about 50 % to  16150  oz  in Q2 along with just over 11,000  oz of silver.
Average POG received was about $1400 per oz  which produced gross sales of about $22.75 million USD  vs $17,200 in Q1
 
Grades
 
Mined grades increased from 0.49 gm/ton to $0.58  gm  per ton, as mining becomes concentrated in their two highest grade pits
 
Tonnage Moved
 
Tonnage moved dropped 19 % to 3.98 m tons from 4.94 tons


Estimated all in cash costs for Q2
 
Tonnage moved dropped by 0.96 million tons which @ $2.20 per ton moved will have reduced mining costs by $2.1 million in Q2.
Strip ratio is declining on sched and is forecast to reach 1 to 1 ratio which will save an additional $4 million

Grades
 
Grades increased by nearly 19 %. As cash costs are inversely proportional to grade ( the same ton of ore mined now yields 19 % more gold ), all in cash costs per oz would have decreased by 19 % to about $1050 per oz
 
Owned Mining fleet
 
The stated decrease in cash cost was expected to be about $150 per oz. The fleet was in ramp up in Q2, so some savings would have been expected.
 
Forex Impact
 
The Chilean peso has weaked by about 5 % since Q1. This will also reduce cash costs per oz mined.
 
Estimated total all in cash costs for Q2

Reductions in ore moved saved $2.1 million or about $130 per oz.

Higher grades saved $240 per oz

Weaker peso and full use of owner mining fleet will add to these savings.
 
Using only the two main factors ( waste ore, grade ) I estimate that the all in cash cost for Q2 will be less than $1000 per oz.

This would result in a gross margin of about $5 million in Q2  vs  a near zero margin in Q1


Looking forward

Forecast is for waste to ore ratio of 1 to 1.............this will save another $250 per oz

Grades are forecast to rise to .65  gms  per ton. This will boost annual production to in excess of 80,000 oz per year and a further savings of a bout $100 per oz.

That is, if LSA can remain on its forecast schedule of production gains and declines in all in cash costs, by late 2013 or early 2014, production should be close to 80,000 oz per year along with about 75,000 oz of silver, and  all in cash costs should be less than $800 per oz.