GWA Group Ltd V.GWA

RE:ECONOMICS FROM THE 43-101

[imerc23]

You're asking good questions, bxju.  GWA's documentation is confusing.  For the project economics, until any PFS comes out, the most relevant document is the Updated Resource Estimate dated Nov 15, 2012:
https://www.gowestgold.com/downloads/Technical Report NI 43-101 Nov 15, 2012.pdf

You want to look at section 22.5 on pages 119-120.  

I think that at this point the UC deal is too tentative to change or clarify any of the financial assumptions that were set out in Nov 2012 -- the reason why the market is excited about the UC MOU is simply that it is a stamp of approval on what was a rather novel concept put forward by GWA.  However, the details of the UC deal still have to be worked out.  If we assume a simple scenario where UC owns 100% of the processing facility and GWA owns 100% of their mine (ie, no co-ownership) then the critical detail will be to determine what price UC will pay GWA for the 90 g/t concentrate that comes out of the Kidd mill.  Clearly the price that UC pays is going to be significantly less than the price of gold (because UC has to get a return on their investment for building and running the refinery in North Cobalt).  And of course, Glencore Xtrata will need to get paid too, in some fashion.  Nevertheless, the Nov 2012 document projected that the gold grade is sufficient that there will be enough money for GWA, Glencore and UC to all make a profit, even at a $1200 gold price.  

PFS?  Yeah, until we hear differently, there's still a requirement there -- for two PFS's, in fact. The mining plan PFS and the the PFS for the engineering changes to the Kidd Mill.

Cash position?  All I'm going on is last month's news releases, which says that they were paid $750K for the sale of the royalty, plus $200K for the PP.  So depending on whatever cash they had prior to December 2013 (not much, I don't think) I'm guessing that they have around a million now.  Which is not very much -- certainly not enough to do 2 PFS's.  I'm hoping that eventually GWA will be exempted for having to complete the 2nd PFS (re the Kidd Mill), because that stipulation is just coming from the bureaucrats at Glencore Xtrata.  But the first PFS (re the mining plan) certainly will be necessary.

The next few months will be interesting!