RE: Dissapointed based on the BFSI know how you feel about your first response to this BFS, as my feelings were quite the same as yours, but if you take a closer look, it is not negative at all.
We have to remember that this is the first initial Bankable Feasibility Study this company has done. Updates will follow. A lot of the numbers here are used as minimal numbers as this BFS was started quite awhile ago.
If you just look at gold resources, they only claim a mine life of 7 years as they only claim just over 1M oz of resources. I believe we all can feel pretty confident that these gold resources will be much more then this.
One reason being of course that the previous owners did not do any further exploration on Gold Ridge. They did just enough to justify building this mine, and just what we have done now to, to finish this BFS.
The costs are quite high, but below the average for 2006, I will post that here shortly. The major cost of this mine, being isolated as it is, is that they generated electricity using Diesel Fire Generators.
Under normal circumstances Diesel Fuel is very expensive for this, but more so on the island as it has to be first imported from abroad and than transported to the mine site. So this is by far the greatest cost to production this Gold Ridge Mine has.
The BFS does not take into account that there is a very strong possibly that the company will reduce this cost by finding and alternate method of electricity (i.e. Small Hydo Electric Generators running off of the river stream) or converting their diesel generators into firing half Palm Oil, with is readily available cheaply on the island.
The third alternative, and is rarely known, is the company may form a partnership with the Palm Oil Producers, to build a Palm Oil Fired Generator Station, which will supply power to the Palm Oil Manufactory Plant, Gold Ridge, and surrounding communities. A Win-win for everyone I think.
So maybe if the sirens and whistles didn't start blowing off in your head when you first read this BFS, like it didn't for me, it is because we are looking at a bare bones report. But is this report negative or positive?
The whole idea behind this Bankable Feasibility Study is to prove whether or not the project is financial (Bankable). That they have clearly done with this report, so the answer is yes, it is positive news.
They should now not have a problem financing it through Short and Longer Term Bank Loans, and some share dilution. The company has indicated they would like to keep shareholder dilution to a minimal, keeping in mind SGA is by far more Institutionally owned then privately, so I guess it all depends on what the bankers offer them.
As to the US$72 M Startup, I agree it is high for a Mine Revamp, but all these costs are not just associated to the mine refurbishing. I would venture to say only half of this cost is. But again, the bottom line to all this is that Gold Ridge is Feasible and Bankable. If they were only going to dilute shares they wouldn't have bothered with an expensive BFS. They only would have needed more drilling.
If it makes you feel better, "Paradigm" predicted the cost of construction and project purposed would cost a lot more, at $135M CAD or US$120M. Their report is out also, which I will post soon. Not sure if I can LINK it yet though.
(JMOVOH)
GB