JACK! JACK! WHAT'S GOING ON!!Using Bluestone PEA's from 2017 - estimating an Underground operation,
And from 2021, estimating an Open Pit operation,
I'll try to unlock some of the confusion surrounding this company and this property.
SAME OREBODY...
2 different mining methods, 2 different gold prices, and 2 different publication dates.
BESIDES the orebody, we all know that OTHER point of commonality - MONEY.
Whether we run a restaurant or a mine.....
EVERYBODY is in the SAME Business -
THE MONEY BUSINESS.
When you read below....
Focus on the return OF your money and the return ON your money.
The deposit lies under a hill.
It consists of high value veins surrounded by ore containing
Much lower values of gold disseminated within it.
1) U/G Project 2017 ($1250 / oz gold price)
Plan was to SELECTIVELY mine the orebody using adits, drifts, and raises for ventilation, etc.
Cutoff grade was 3.75 grams per tonne of ore mined.
Where miners encountered fractures,
the drifts might be supported by back-filling the cavity with waste rock.
Capital Cost was estimated at $93 million.
At $1250/oz the PAYBACK was about 15 months.
Experienced miners furloughed from Goldcorp's Marlin Mine (about 250 km away)
Could have been relocated.
One perceived shortcoming is that IF gold prices remained @ $1250/oz
This mine method would leave that lower valued ore behind.
We ALL KNOW the rejoinder to THAT LINE OF THINKING!!
Gold prices ROSE allowing lower values to be mined AT A PROFIT!!!
2) Open Pit project 2021 ($1550/ oz gold price)
Plan is to BULK mine the orebody using excavators, loaders and trucks.
Over the mine life, 2.4 tonnes of waste would be removed with each tonne of ore.
Cutoff grade would be 2.2 grams per tonne of ore mined.
Capital cost is estimated to be $548 million.
At $1550 per oz gold, price, the PAYBACK period is about 34 months.
OBSERVATIONS
1) If I were a banker in 2017, I would have LOANED $93 million,
Recognising that mine plans evolve with time and knowledge of the orebody.
BUT WE ARE MAKING MONEY ALL THE WHILE!!!!
THAT DIDN'T HAPPEN!
What happened was NO MONEY was being made while Bluestone used public funds
To drill more of the orebody.
And we all find out......
That 48% of rhe mineable ore lies
ABOVE the 2017 mine plan.
well that happens..
BUT there was No Adjustment!!
Money-making mine plans were TOSSED OUT
To start again.
If I were a banker, I would compare the outlays and payback periods
Of both mine plans.
Mining is risky business;
$90 million for 15 months is
MUCH LESS RISKY
Than $550 million for 34 months.
JMHO
DYODD