Near Term Cash Flow Once we get the milling permit the cash flow from Bonanza Ledge should be quite considerable. At least for the first 2 years. IR confirmed to me that they do intend to high-grade the deposit in the first 2 years. This would involve mining 13-14g/ton material.
Open pitting 13-14g/ton material ought to be very cheap. So if the cash cost is, let's say, $450/ounce, then we would have a $1,200/ounce margin based on $1,650 gold as of today.
30,000 ounces in 2012 & 25,000 in 2013 is 55,000 over 2 years.
$1200 x 55,000 = $66 million in EBITDA or "mining cash flow" over 2 years which is slightly more than the company's current market cap. Now the estimate of $450/ounce cash cost may not be right, that is my guess. The company will not commit to a cash cost for producing at Bonanza Ledge yet. They have become much more cautious about everything they say these days and I don't blame them. Also the price of gold will change. But even if we use a significantly worse cash cost we should still get very significant cash flow production over the next 2 years relative to the current market cap.
If anyone has any insights into what the cash costs should be in this situation please post since the analysis depends on that most.
GLTA