Conference CallPoints IMO:
There should be 5 million ounces of P & P gold left at Kisladag. The current recovery using heap leach has dropped to 40%. By making milling changes and processing the ore thru a plant instead of heap leaching it, ELD estimates the recovery would improve to between 60 - 90%. One of the questioners tried to pin ELD down on the percentage improvement but was told nobody knows at this point but a guess was 75%. Lots of guess work here. If you improve recovery to 75%, over the life of the mine, you get an additional 1.75 million ounces of gold. The cost of the mill would between $300 to $400 million per ELD estimate. Spread over 1.75 million ounces cost increase between $171 and $229 an ounce (ouch). There is some offset of not having to pile the ore on the heap leach pads but I'm not sure what that would be. They could also reprocess the ore from the current and future heap leach through the new mill to bring recoveries up to the 75% range.
If they go the mill route, they will have to come up with $300 to $400 million and the new mill won't open until 2021. Depending on the test results and a decision on which way to go, they might have to significantly reduce or shut down the heap leach operation.
ELD discussed a third option of adding a high pressure crusher to the end of the current crusher circuit to crush the ore to a finer consistancy which could improve recovery percentage of the heap leach pads. ELD didn't seem keen on this option as they have no previous experience with it and were worried that the finer grind would not improve the recovery because of permeation issues. No cost or recovery estimates were given. Guess ELD will look at this option as it seems more cost effective if they can improve recovery percentages significantly.
ELD states that there is no impairment "at this time". ELD is between a rock and a hard place on this one as going the new mill route would push AISC to over $1,000 an ounce and not leave much room for error. At this point, it seems that just using heap leach and living with the reduced recoveries might be the best option. Of course cash costs would increase significantly but no additional cap-ex would be required.
ELD is going to run into a cash shortage as they need an addition $500 million to complete the Skiorus plant. Coupled with the problems as Kisladag they could need $1 billion in cash by 2021. Hope they keep that LOC.
Arbitration panal is not in place yet. Then the 3 month time frame starts. Burns thinks the panal will be in place in the next few weeks. Burns hopes to get permits to keep construction at the Skiorus going forward while awaiting for arbitration to complete. Will have to stop work on Skiorus otherwise.
Not a happy bunch of campers although they're keeping a stiff upper lip.
GLTA