RE: ORIGINAL BRAILA.............Hi,
Exactly that is what I wanted to write about. Or rather what could it to for WLF cashflow with "production_now" (1q 2007)
Fact 1: "With the acquisition of the Lupin Gold Mine, and assuming positive results from the Ulu underground program, Wolfden intends to complete a feasibility study to determine if the Ulu ore can be economically processed at the Lupin Mine, possibly as early as the first quarter of 2007."
Fact 2: "Wolfden has commenced a geological assessment of the Lupin Mine that was closed in February 2005, when gold was in the US$400-$450 range. As part of this assessment, the corporation intends to update the ore reserve/resource estimate for the Lupin gold deposit using current gold prices and will review options to re-open the mine. Between 1982 and 2005, the Lupin Mine produced more than 3 million ounces of gold at an average grade of +9.0 g/t gold."
Fact 3: About ULU goldmine where tesproduction is starting this summer "The 720,000 tonnes of indicated mineral resource at 11.7 g/t Au (270,838 oz) and 410,000 tonnes of inferred mineral resource at 10.73 g/t Au (141,441 oz)" This is the other feedsource of gold ore coming to the fully permitted mill at Lupin.
Fact 4: Extremely low capital costs for the Lupin mill: "Kinross will reimburse Wolfden $1.7 Million for fuel during the next trucking season; Kinross will deliver to Wolfden at Closing a standby letter of credit in the amount of $3,000,000 to be draw upon at the commencement of the demolition of the Lupin Mill - in the event that the Purchaser places the Lupin Mill back into operation, the Letter of Credit shall be returned to Kinross; Kinross will pay for up to $4 Million for reclamation of the site in the event that the Lupin Mill is moved, or will pay to Wolfden $1 Million at the time of reclamation in the event that the Lupin Mill is put back into production"
Fact 5: The Lupin mill has a capacity of 7000 tpd. 4000 tpd of this is said by management to be used later for Izok ore.
Conclusion and assumptions:
If one assume that the Lupin Mill starts 1q 2007 with 2000 tpd average 9g gold ore from Lupin & and Ulu together with a production cost of 250 usd/ounce due to quite high grade ore and extremely low capital costs, a calculation could look like this for cashflow on a yearly basis:
2000 tpd x 330 days is 660.000 tpy. 90% extraction of gold from 0,3 ounce/ton gives 0,27 ounce/ton x 660 000 = 178 000 ounce / year
My estimation would provide a 375 usd in cashflow at 625 usd (I expect a higher price than that in 1q 2007, actually I think the timing could be quite perfect).
375 x 178 000 ounce = 66,5 million usd in cashflow.
Current marketcap of the company is something like 150 million usd or maybe 120 million usd after spinning out Premier Gold. Observe, what I am talking about is not a part of the spin out.
I think one could easily make a case, 6 months from now, that you get the basemetals for free and more importantly that the financing question will be resolved quite comfortably.
Regards Original_Braila (sorry for any abuses of the english language.. & personally I own about 23000 WLF which I quite recently bought at about 2,75 or something like that.)