GREY:ABGFF - Post by User
Post by
Leafs007on Nov 18, 2012 9:20pm
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Post# 20615849
Owner Mining vs Contract Mining
Owner Mining vs Contract Mining The main reason for BZA's delay to achieving commericial production is due to its switch to owner mining from contract mining because the contractor it used underperformed and caused an overrun to the company of about $2.9M more than indicated on the 2011 Feasibility study CAPEX $17M (which is very, very cheap compared to many company's CAPEX) . As a result of switching to owner mining, BZA had to spend more $$$ to acquire mining fleet, equipment, staff, etc; totalling approximately $ 6.6 M over-budget. On top of all of extra expenses- perhaps the most damaging - is a delay to commercial production, hence punishing the share price and investors.
Hindsight being 20-20, I wonder if it not would have been better for Management to get another proven contractor to carry out its mining activities and thereby saving some of the $6.6 M in extra expenses and perhaps commercial production may have been achieved on time - and, ultimately - perhaps the SP would not dropped so much (wishful thinking).
Just throwing it out there - it is too late to change now. The good news is q1 2013 is when we will see real production.