Columbus Gold Corp CGTFF

RE:RE:RE:Columbus Gold Announces Positive Bankable Feasibility Study

[eebler]

And the nice thing about this board is that it seems we can agree and disagree without some of the stuff that is seen on other boards.

I am not disputing that it is a good project.  In fact I think it is a fantastic project and one of the better development opportunities to be in play.  I see M D'Or as anywhere from 7m-10m ozs once all is said and done, so it would have had the potential to be a true "company-maker" if not for the JV deal.  I have been in CGT for 3 years and plan to be here until it is bought out or goes into JV production.  

My comments were focused on the financial aspect, which is where game-playing can happen.

I recognize that a BFS has a higher degree of accuracy than a PFS, but when you go back to the PFS the differences are:

- NPV of 5% for BFS vs 8% for PFS 
- After-tax IRR of 23% has now dropped to 18.7%
- no real change in Capital Costs - kudos
- LOM has gone from 3m down to 2.57m and shortened from 13 to 12 years
- average 10-year head grade has dropped from 2.0 g/t to 1.73 g/t
- AISC over the LOM has gone up by approx 10% from $711 to $779 

In essence, in light of the important operational metrics getting "worse", they were able to use a lower Discount rate to achieve a better NPV.

In quoting the Cdn equivalent, that also assumes the ratio of US/Cdn will stay consistent.  We have yet to see whether the US is going to generate economic growth (recent prediction by their own govt was modest growth of 1.5%, which is not much to speak of), or whether they are going to turn around and head into recession (seen as the more likely potential given the long-term ongoing dysfunctional state of their govt and ongoing increases in debt ).  The stock values of the US market are very stretched and still playing to "hope", and while the market can be irrational for long periods of time, sooner or later there comes a reckoning.  If that were to happen, gold would eventually be a haven, but not before first being sold off along with everything else.  An exchange ratio of 1.35 is probably at the ends of respective pendulum swings and will rationalize somewhere below that during the LOM.

Like I said, I am not disputing the quality of the project.  I am challenging primarily the Discount Rate assumptions they used for the financial calculations, because without that a decrease in overall ozs and increase in AISC would have made for an even lower IRR.  

They still have a lot of good things to accomplish and I am looking forward to seeing what happens as they continue to drill out extensions and further depths.