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Taseko did not make the same mistake at its Florence project. The Florence deposit is conceptually more suited to in-situ leaching than Gunnison with no obvious acid robbing elements and covered “by a thick and intensely fractured oxidized layer”. According to the Florence feasibility study the characteristics of the deposit makes for an “unusual, perhaps even unique (Ed. emphasis by CRUX Investor), geological and hydrological combination” ideally suited for in-situ leaching. However, Taseko management did not fully rely on laboratory testwork, despite the much lesser risk of carbonates consuming acids and the absence of large heterogeneity in permeability as evident at Gunnison. Taseko only made the go-ahead decision for commercial production at Florence subject to extensive pilot testing to establish the efficacy and efficiency of in-situ leaching. Excelsior, in contrast, chose to go straight into production. Goldfinger went on to say that the current pathway to full production is now just a matter of time and money. Maybe we are also absurd to question whether success will come or not? But as a rule we prefer not to celebrate success prematurely. The proof of the pudding is in the eating, or rather in the quarterly results.
The initial capital expenditure of US$47 million as per plan had already been far exceeded when first injection started in December 2019 (US$76 million) with US$6.7 million spent in the nine months thereafter and the clock still ticking until commercial production is achieved. As for suggesting that we embarrassingly did not do our homework, may we respectfully refer readers to the sixth bullet under the EBIT calculation on page 154 of the feasibility study, which specifically includes the drilling cost over the vertical length of the production block over 25 feet, but not the cost of drilling the overburden in the capital expenditure.
Although there are many indications that the Gunnison project is problematic, we would be only too happy to be proven wrong. Being a service for mining industry investors, having successful projects is good for the industry and by extension for CRUX Investor.
Project failures are only bad for the industry and result in many losers. We therefore wish Excelsior success. If management feels the need to clear up any misunderstanding in the public market now, it can publish updates about copper production and what the inputs and costs for the first couple of months of production have been, or it can simply wait until it announces quarterly results. On 21 December Excelsior announced that it would target 2 million pounds of copper per month to be achieved in Q1 2021. If the data from the early production shows that the operation is getting close to the target rate, our concerns will be proven wrong, and all will be well. "