The more I think about it the more I am getting comfortable with the $1,500.00 per ounce that was used to establish the Updated NI 43-101 Resource Estimate....as long as the current spot gold price remains above this level then we should not be discounted by the market. Going back to March, 2011 when they released the Initial NI 43-101 Resource Estimate at Cote Lake....4.22 Million Inferred Ounces @ 1.00 g/t the spot price of gold at that time was $1,400.00 per ounce....Management at time used $1,200.00 per ounce...the market was okay with that...perhaps a year later they will also be comfortable with this latest assessment.
The Era of the Super Pit is here to stay...Osisko Mining has lead the way and is doing quite well in Northern Quebec....Detour Gold Mine in Northern Ontario is not too far behind with production beginning in early 2013. We are seeing a dynamic shift in the Gold Mining Industry as the above mentioned entities among a list of others will lead the way into the future and will supply the bulk of gold production moving forward. The Trelawney Team is taking notes and will use their successful models to plan our future Mining Complex. Both of the operations mentioned will have a Mill Through-put of about 50,000 tonnes per day...that is just amazing! I believe Trelawney will take on a similar profile at Cote Lake. Mining & Milling at those level does not require high-grade ore such as Underground Operations.
We must adapt accordingly to take advantage of this shift and invest accordingly....our mindset must keep up with the changes in the Gold Mining Industry. By the way, Osisko Mining & Detour Gold had no problems whatsoever to finance their operations...the market has no doubt adapted and is "trail blazing" this movement.
Okay...we trust Management to make the right decisions....let us use their figures to establish value.
The NI 43-101 Resource Estimate:
35 Million Tonnes @ .82 g/t Indicated Resources....930,000 Ounces
204 Million Tonnes @ .91 g/t Inferred Resources....5,940,000 Ounces
Total...239 Million Tonnes @ .85 g/t (estimated) ....6,870,000 Ounces
Let us use factual information from the Mining Community namely, Osisko Mining & Detour Gold which the market was more than eager to back with billions of dollars...Nice! Both operations will be Milling about 50,000 Tonnes per day and are looking to produce gold for about $700.00 per ounce...cash cost once they reach full production. Osisko is gearing up and has now reached 35,000 Tonnes per day with cash costs about $950.00 per ounce. They are in the ramp up phase and once they reach their daily output target they should hit their numbers...Detour Gold is not far behind and should also demonstrate how to achieve success and demonstrate what to do and what not to do....both, great teaching models for our Trelawney Team!
Let us do some math:
50,000 Tonnes per day @ .85 g/t....42,500 grams of gold per day.
42,500 grams divided by 31 grams (Troy Ounce)...1,370 Ounces of gold per day.
1,370 Ounces X 350 days (year)....479,500 Ounces Yearly Production
The math does not lie....Fantastic!
Mine Life...what can the Cote Lake Deposit support?
50,000 Tonnes per day X 350 days (year)....17,500,000 Million Tonnes
Resource Estimate: 239 Million Tonnes divided by 17,500,000 Tonnes per year...
Mine Life....13.65 Years
Well...what do you know...We have a Winner!
Yes...this is speculation..but...guess what?...we are still a speculation venture...just fine with me!
What do we need next?....Preliminary Economic Asssessment...coming right up!
The PEA will give us an idea of the Cash Cost per ounce and the market will react accordingly...should fall in line with Osisko Mining & Detour Gold....$700.00 per ounce will do nicely...thanks very much!
Looking forward to additional news....PEA at the PDAC!
Guess what...this story is not over...more resources to come from Cote Lake....8 Million Ounces is their target...chances are looking very good they will reach it...is Management credible or what?...this target was set early in the campaign!
Take Care All!
Digger144
P.S. Monday...things should begin to turn around for us!