22 Dec 2012, 05:44
The bulk sample is a rolling start. It is more to confirm our drill data and refine our mining methods.
I do not at this time see a decrease in the price of gold for the next 10 years,
which is the term of life of the mine for this evaluation. That being said we see that from this first PEA where and what we should be doing going forward with the Granada Property. We are cash flow positive per million ounce of resource using real time cost per ounce figures. What I mean by saying that is if you compare our costs in the PEA to OSK and SAS present costs per ounce prorate for the grade we are inline with them, hence real time. We can change the economics by changing the grade of the in pit and underground. We can do this for this deposit.
For example if we increase the grade to 2 grams per tonne in pit our cash cost may be lowered to $500 per ounce. The same can be done for the underground. This will also decrease the ounces in the resource and decreases the capex. We have to test these models. We have room to move around.
The economics of the project are affected by many things. On this deposit we can control the costs by grade, mining methods and life of mine. This PEA is a starting point.
IRR was calculated for two mining methods being done at the same time but independently.
One more thing is pay back. I yet to see a project pay back within the time lines of any PEA or PFS. Mining companies raise the money, spend it, and go into production. Who do they pay the money back too?
The thing to remember is that this first PEA is cash flow positive for both open pit and underground per poured million ounces of gold using real time costs. The NPV per poured million ounces is in line with present operational mines
that are cash flow positive also in real time.
Frank