Pine Cove ProductionI thought I would pass a few comments on Anaconda's latest announcement.
As someone has commented approximately 82 days gone in the quater and 805 ounces of gold produced. ANX don't state that this is net production to them so I will assume it is gross production.
Now I know some have already indicated that they had problems with the mill that lasted 2 weeks or more and I will be making allowances for this in my calculations. I also read that someone thought the current recovery rate was about 85%, so I'll try and use that figure as a guide as well.
So best to start at the end and work backwards as that's when we have the most available information.
They have been using low grade ore and the cut off point for the feasibility study was 0.95g/t, so I am going to assume a head grade of 1.2g/t 14 days at an average of 800TPD.
That works out at 1.2 (grade) x 0.85 (recovery rate) x 800 (throughput) x 14 (days) divided by 31.2 (grams per ounces) or 25.6 ounces of gold per day for 359 ounces of gold in total.
Now lets look at the cost side of things, I am sure it will cost slightly over $40 per T to mine and process, however for easy of calculation lets use $40 per T. So 31 T required to produce each ounce of gold therefore cash cost is approximately $1240 for each ounce produced. Add in the 3% NSR effect and you will be looking at $1300 an ounce.
So in fact the company will be doing little better than breaking even at the moment.
Looking back past the last 14 days, means approximately 68 days to account for. Lets be generous and say it took them 30 days to fix the facility, so production has only be ramping up gradually over the other 38 days to get to the 800TPD that they achieved in the last 14 days.
So they produced 446 ounces in those 38 days that works out at an average of 11.75 ounces a day. (production would be lower than that at the start and higher near the finish) .
With there running costs etc there is no way they will have been remotely near break even for this period and it is quite obvious to me that they will have actually lost money during the quarter.
It will be interesting to see just how much more gold they actually managed to produce in the remaing days of the quater, when we finally get to see the figures.
As far as I'm concerned the jury is still very much out on whether ANX can actually get this facility working to an acceptable level, the next quarter should reveal most of the answer's when they start to process ore in the 2.5g/t+ range, so we can see the recovery rate, throughput rate and how much it is actually costing them to produce each ounce of gold. See if they can get near the 70 ounces of gold production a day and 6250+ ounces of gold for the quarter.
Personally until they can actually show that this is achieveable I dont see any reason for the share price to make considerable gains
full ANX announcement is below for reference.
Last of the Mohicans
MILL AVAILABILITY AVERAGING 96% THROUGHPUT AT 800 TPD
Anaconda Mining Inc. ("Anaconda") - (TSX: ANX); is pleased to provide an operational update for its Pine Cove Gold Mine ("Pine Cove"). While the second quarter of fiscal 2011 is not yet complete, Anaconda has produced approximately 805 ounces of gold to this point in the quarter. Second quarter production to date exceeds the first quarter production of 381 ounces by 111%. Over the last two weeks, mill availability has been 96% and average throughput has been approximately 800 dry tonnes per day ("tpd"). While the mill has been in the optimization phase, management has made the decision to process lower grade ore in stockpile and reserve available higher grade ore for processing once all circuits of the plant have been optimized. It is important to note that the expanded unit operations have met and exceeded design criteria, since the beginning of the commissioning stage. During this time period however, consistent recoveries in the processing circuit have been hampered by a combination of operator inexperience with the higher tonnage operation and mill down time associated with the replacement of the primary ball mill starter. Operations staff has overcome the larger issues and continue to focus on circuit optimization. The changes that have been implemented have manifested themselves in greater consistency in the mill operation and thusly higher gold production as evidenced by the improvement quarter to quarter.
Anaconda President and CEO, Dustin Angelo, stated, "We appreciate how the management, employees and suppliers of Pine Cove as well as our shareholders have persevered over the last several months. The fruits of their efforts and patience are finally starting to be realized. We are beginning to experience consistency in the operations which will allow us to steadily ramp up our throughput toward 1,000 tonnes per day and introduce higher grade material. With record gold prices, we are anxious to keep pushing production as high as possible."
Anaconda has also made some significant human resource additions to bolster its operating staff and provide dedicated support to the milling and mining operations at Pine Cove. On November 9, 2010, Anaconda engaged a new, full-time Mill Operations Superintendent who has 30 years of experience, particularly with operating a Merrill Crowe circuit similar to what is currently run at Pine Cove. In addition, Anaconda filled a new position called Environmental and Analytical Superintendent, established primarily to manage the on-site assay lab, which will ensure timely, reliable assay results of mill circuit and blast hole samples as well as quality control of optimization test work. Anaconda has also contracted a mining engineering firm to provide support to its in-house mining staff for general mining operations and grade control.
Anaconda President and CEO, Dustin Angelo, further stated, "Augmenting the overall talent level of our staff at Pine Cove has been a high priority. I believe we have made significant strides in adding experienced personnel at key areas of the project to optimize our operation and lower execution risk."