Post by
Goaweigh on Jan 30, 2021 3:08pm
I've come across what I think might be a mini analogue of
what our deposit might look like when we go into production. You'll need to spend 20 minutes to look at Artemis ( ARTG ) Blackwater Gold project and toggle back and forth between it and our own slides to get a handle on what I'm talking about but I think it's worth it.
Firstly Blackwater is a huge deposit @ 300 + Million tons of low grade material at .7 grams with a cutoff of .2 grams and they plan to mine that in 4 stages over 23 years which is probably what may happen at Dixie but Dixie could be on a larger scale. They plan a starter pit to mine the first 50 Million tons of higher grade material @ 1.5 grams. The start up cost for that first phase is
$ 600 Million and it will produce 250,000 Oz. a year for the first 5 years at AISC of US $ 508 with payback in 2 years. So it's highly profitable.
I'm not going to go any further along with their plan which is very well laid out in the " Overview " section, take a look at that and then open a new tab to page 14 of GBR's presentation.
If you look at the area of our highest density of drilling and consider that box is 1000 meters and take half of that or 500 meters and imagine that it's 100 meters wide and 400 meters deep that gets us to 50 Million tons so if we can achieve an average grade of 1.5 grams in that box that's 2.5 Million Oz and is the analogue to Blackwaters starter pit.
I suspect we'll have at least twice that drilled off in due course, all 1000 meters in that box, so that's 5 Million Oz.
But it's not about the resourse so much as it is about how we might start production on our own, how much money we'll need, payback etc. etc. and I thought the overview on Atremis lays that out very well.
The take away from Artemis is how profitable a low grade deposit can be, the key is finding a higher grade section to help pay back the initial capex and get the ball rolling.
The other is that we appear to have at least twice the tonnage and quite possibly similiar or better grade in the area we are currently putting much of our focus on.
So putting the pie in the sky aside for the moment, this indicates to me that even if we don't prove up the worlds larget gold mine and we don't get taken out at $ 100 a share we should be able to put a solid money making mine into production that will have a life span of at least 10 to 15 years and maybe 20 to 25 years and that should be worth condsiderably more than we are trading at now.
Exercises like this help me understand and evaluate the downside risk and it's something to do on a pizzing wet covidy day.
Cheers all.