American Bonanza Gold Corp ABGFF

RE: RE: RE: RE: Goldman Sachs

[Combo9]

What troubled me was that their NI 43-101 estimated cash costs were $415/oz based on average grades of 10.3 g/t (0.33 oz/t) in the measured and indicated categories.

This latest update suggested the average grades for the 3 months ending June were 3.7g/t (0.12 oz/t).  If they need to extract and process 2.8x more ore to obtain one ounce, then cash costs will generally be 2.8x higher also at $1155 / oz.  Still profitable but a far cry from their expected margins.

At this stage all we can hope for is that this decrease in grade is temporary and doesn't reflect problems with their resource model.