RE: 3.1 g/ton ????Anything over 0.8 g/tonne Au today is very economic at today’s gold price.
When adding the huge widths that shows that there is substantial oz of economic gold in the ground. Randgold thinks 2.65 mmoz @ 1.01g/tonne, but today’s results illustrated that at 1.66 g/t there are higher grade zones than Randgold’s estimates on widely spaced historical holes.
Drilling 136m at 1.66 g/tonne is the same thing as drilling 25m @ 9.03 g/tonne or 50m at 4.51 g/tonne, when looking at the ounces of gold in the ground.
Add in that all this mineralization begins from surface shows that it has the no-brainer potential to be open-pit, which is always much lower-cost to underground mining.
And then add in that this is in W. Africa where lower grade deposits, especially open-pit mines, are always much-lower cost vs. the exact same deposit in a developed nation. You don’t pay miners in W. Africa anywhere near the same salaries as you would in say N. America or Europe. You pay them a small fraction of the salaries. So your margins on the same type of shallow deposit with the same grades would be greater in W. Africa (assuming same energy costs for both deposits).
There was an analysis report that came out recently, posted on this BB, which showed 173,000 oz production in 2015 from Kiaka (2.2 mm oz) at a total cash cost of US$300/oz.
The same deposit in N. America would have TCC closer to US$450/oz b/c the cost of doing business here is greater. What miner is going to work for US$5,000-10,000/year in the US or Canada? The average per capita salary in Burkina Faso is around US$1,250/year.
The market wasn’t ever paying up for this Kiaka asset. Before today they had a CAD$40mm market cap (fully-diluted), when thy already had 1.3 mm oz of gold and over 700 mm lbs of copper on their balance sheet without Kiaka. Now they see that there is huge potential and that Randgold’s estimates could be correct and possibly on the low side when seeing the higher grades reported vs. the historical estimates grades.
Up to now Kiaka was a free ride.