Barkerville Gold Mns Ltd BGMZF

RE:RE:RE:RE:Fourth quarter unpeeled

[halcro]

pigbruinmcveid wrote:

Total sales for the three months ended February 28, 2015 were 6,896 ounces of gold at an average price of $1,491 per ounce. The Company mined 20,844 metric tonnes of waste and overburden and milled 27,122 dry metric tonnes of Bonanza ledge ore at an average head grade of 12.37 grams per metric tonne at 95% recovery at an average net operating cost of production at $545 per ounce and all in cost of $847per ounce; 

The Company decided to place the Bonanza Ledge Mine under care and maintenance and as a result recorded total impairment cost of $10,802,324. 

IMO, a very expressive, no-nonsense report by professionals. Bravo again.

While I do agree that the reports are excellent quality, IMO and perhaps my lack of depth in mining financials reporting, I see a disconnect.

Specifically, given that gold was approximately $1400C, and if the all in costs were $847 per ounce, then why would anyone put that kind of operation on care and maintenance.

I expect we will see that $847 touted in years to come.  Yet, that number was only possible because of the stripping work that started back in March 2014 (or earliers). I would argue that the allocation of costs to quarters misrepresents the true all in cost at BL.

Otherwise, at $847, which is in top 85% percentile of low cost mining operation around the world (my swag, could actually be higher), why would you shutter such a profitable operation?

Of course the original PFS has the answer - a costly pit exansion effort was going to be required part way through the life cycle. So, I take issue with $847 and will continue to do so in future if that number is touted by management.

Just the way I see it....

My bad, Boris. A quick peek at the financials and (EEK!!!), there's the answer.

13...Impairment write off of $10,802,324 relating to the QR mill and Bonanza Ledge, of which $7,851,114 million is for mine development costs.

Add that $7.8 million into the 6,896-ounce mix and the all-in costs climb by $1,138 to a much less-impressive $1,985 per ounce.

As Boris would say, ouchie bouchie, indeed!!