RE: RE: RE: RE: Quarterly Results Out I don't think they left the mine in shumbles. The resource estimation of March 2012 showed 8 years LOM.
The 2011 was the best year in regard of production and gold price. They achieved 42% margin.
Elgin had plenty of data and time to study the company and decided that optimization is needed as the underground mining required.
Maybe relationship with contractors started deteriorate with the lower head grade or maybe some other reasons we do not know. In any case looks like the management is straight with explanation and working to improve the operation.
Production Costs
Production costs for the four month period ended June 30, 2012 increased by 46% over Q2-2011, from $9.8 million to
$14.2 million due primarily to: (a) the sale of 13,744 gold ounces in the current period, an increase of 27% or 2,937 gold
ounces, from the 10,807 gold ounces sold in Q2-2011; (b) a 9% drop in head grade to the plant from 1.28 gpt in Q2-2011
to 1.16 gpt in the current period; and (c) an increase in underground mining costs per tonne due to higher ground support
and pumping costs coupled with cost escalations from contractor and labour rate increases applicable to the current year.
These cost increases were offset partially by a slightly weaker SEK to CAD exchange rate in the current period.