RE: Further drilling results outThe NR is good news for sure, but not something that is unexpected or surprising as I think we all know they will beef up their Gold Reserves & Resources quite a bit before they are done. So I don't expect this NR to raise too many eyebrows from the big guys for the time being, although they will take notice.
I think they all know we have enough gold there and are more interested now on how we will arrange our financing for this mine, or if we can reduce our cash cost using alternate energy supplies. That's my guess anyway.
They reported 11 drill hole results on this NR, so our total now is 28 holes so far. It also appears they won't complete there full 44 Drill Hole Program, perhaps now because they deem this unnecessary from the results they do have.
They originally planned 30 holes at the Valehaichichi pit, but say now it is completed after only 25 holes. They planned for 10 holes at Namachamata, but will only drill 8. They planned for 4 holes in the Charivunga Gorge, and this is what they should get. So their 44 Drill Hole Program should end at 7 short or 37 holes.
So since they drilled 28 holes so far, and plan 9 more, with 6 at Namachamata and 3 at the Charivunga Gorge, they should end with a total of 37 holes, which should be fully completed within the next 2 months.
On this subject and what I look forward to the most, is the exploratory drilling at the Charivunga Gorge. The other drilling we are doing now is infill drilling, which is necessary to beef up total resources and also to increase Inferred Resources to Measure & Indicated, or Measure & Indicated Resources to Proven & Probable Reserves. But exploratory drilling is a whole new ball game.
So far they have 3 drill results from the Charivunga Gorge, of which 1 is from 2006, and 2 are from 2005. They plan 3 more deep holes there, up to 400m, which should give us a good indication if we should continue, as so far it looks this way. Remember this is where they think the Mother Load is hiding, so if they do find it this stock could get very interesting very soon.
After the drill program is completed, the next NR will be more exciting as these new resources will be added onto the "National Instrument 43-101". This should increase the mine life significantly or maybe even reduce the costs if the grades are higher and more plentiful at Namachamata or Valehaichichi. If they do find something big in the Charivunga Gorge, besides snakes, then what can I say?
I wouldn't put too much effaces on further drilling after this though, as even though it may improve share prices, it is not required for further development. The Australians are used to working on a tight budgets and their philosophy is to prove up enough resources to get a decent bank loan, to build the mine, and then wait until you have the cash from the mine to drill more and increase resources.
Remember, and even using only our present known minimum mine life, we still have 7 years after production starts before we need to worry about finding more gold there. The payback period is only 3 to 4 years, or less, so doesn't it make more sense to pay off all your debts, and only do moderate infill and exploration drilling, until you get closer to needing more resources?
As I said from the start, the NR is good news but not exactly what I would stay up all night to view. The next two big PR's are the Feasibility Study using alternate energy sources, and the Bank Financing, with which both should be out this quarter.
If they can reduce the cash cost per ounce in this feasibility study, that only adds to the profitability of this mine, which may also attract private investors, although $380/ oz is not that terribly bad. Especially when gold is $680. If they can arrange financing, without to much share dilution, and too much forward gold sales contracts, then again more power to them.
I think the point that will attract a lot of attention in SGA, and will give us a big share price jump, is when financing is secured and construction contracts are being handed out. From there on, it should continue to climb to production, and if all goes well, continue in this fashion even after that.
JMVOHO
GB