TSX:LSG.DB - Post by User
Comment by
Allthewaydownon Mar 12, 2015 11:03pm
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Post# 23516746
RE:News
RE:NewsOre is defined as material that can be economically mined. As the cost of production goes down, the cutoff grade can be lower. Thus, cost control and drilling both increase reserves, the first by allowing previously uneconomic tonnage to become economical, and the second by defining new tonnage. That is one of the problems that the industry is having right now... without mining anything, you can still see your reserves dwindle as the price goes down, since you have to re-define lower grade ore as waste. A lot of operations have seen their ore reserves dwindle for this very reason. For LSG to be able to drop the cutoff grade in the midst of a declining price scenario, their costs need to be falling a lot (as they have been). It is 100% a success story.