RE: Helpful7 Apr 2024 09:20
Doggie, until the plant(s) have been up and running for a while, any numbers are modelling. I mentioned "ranging": when constructing models one thing you do with them is range to see what effect it has on outcomes.
In modelling the outcomes, we can use a number of different bases at the moment. We could use the spreadsheet in the Faso presentation on the RRR website or we could use what was in the recent RNS or we could use the throughput figure stated by RRR in its tweet where it said that the quantity of kit being mobilised was capable of handling 1,152 tonnes per hour.
Now if you and Boring Boy actually did any reading you would know the above.
So in the speadsheet, RRR is stating 5/6 tonnes per hour per plant but elsewhere it has stated that the throughput is dependent on soil type: more clay, less throughput.
On the spreadsheet, RRR is also modelling 16 wash plants. In the RNS it states processing on four sites. The RNS also states that the first plant is being flown out with the rest to follow. "leading to early alluvial gold production initially at one location but then at up to four locations. The first gold wash plant is expected to arrive by air within a few days and will start operation."
So the first operation will be one plant operating at the illegals former site. Three other sites need to prepped, kit to follow.
So there will be an initial start at the illegals' former site using their kit and one wash plant. So the likely output from that will be 10 hours x 5/6 tph x 2 g/t ish x $1,800 ish. If you take your shoes and socks off, I am sure you can work it out or maybe you can touch base with Boring Boy if you speak Swahili.
Next, why £1,800 net? Well partly because it is an easy number to use. The cost of production will be affected by grade and throughput. A higher grade means a lower production cost as does a higher throughput. So there is variability. Also the grade and recovery will be higher if we use a crusher because some of the gold is "fIxed" rather than "free".
Is $550 too low for the cost of production? No, we are operating in Burkina Faso a low cost jurisdiction but also this is alluvial not hard rock. Secondly, there is no cost of finance here, the kit is owned by Sam the Man. When you look at gold miners AISC that is the wrong metric for us. We are not mining hard rock and we are not applying G&A and we are not looking at replacement costs. In economics you produce till marginal cost equals marginal revenue: so a lot of costs that are in AISC are not relevant here in our decision-making. For instance if you look at SOMA Gold their cost of production is a little over $900/oz but that is not their AISC.
It could be that the grade at Bilbale is lower than thought but Willem has just confirmed the grades or it could be that there is more clay than thought and so the costs could be a bit higher but it is only modelling to get a feel for things. Once the the whole thing is set up, main camp, sate
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