Post by
nozzpack on Sep 26, 2024 8:30am
The importance of cut off grade
The cutoff grade is based on the costs of mining .
It is that grade below which mined ore is of a grade that cannot pay for its mining costs to extract and mill.
In the 2022 FS , the cutoff grade was 0,5 Grams per ton at POG of $1750 US.
I have done the calculation for you and it was $250 cad per ton ....reflecting the ultra high grade of the HD ore.
In other words, ore mined above that grade could pay for all mining and production costs and produce free cash flows to the balance sheet above the AISC.
That AISC was $917 per ounce, so Maritime was " clearing' about $830 per ounce in free cash.
Now, energy prices currently are the same as 2022.
Gold recovery is higher than 2022 with the fully updated Pine Cove mill, Capex is about $45 million less, and trucking distances have been reduced by 90 kn per trip....and they still have the Nuggett Pond mill as backup but needing a comminution circuit.
So, I don't think the cutoff grade will increase when the updated FS is published and the AISC will remain unchanged.
Which means that at $2600 POG, Maritime will be profitably " clearing " about $1700 per ounce ( $2600 less $917 ) which is double that estimated in the 2022 FS.
Free cash flows at 60,000 ounces per year will balloon to about $100 milion per year versus about $45 million in 2022.
Once again, can FFM afford to allow some other company to acquire MAE and deny its expectation that all of those Point Rousse facilitues will be available to consolidate it's Nugget Pond mills to Point Rousse ..and those robust cash flows ?
They arnt dumb..