I'm not expecting the 1500 tpd mill costs to be much higher than 30-40 million with some of the mine expansion costs already being covered with the new ramp development and increased stopage development/planning. This is going to be a baseline economic study and this is the hardest and most time consuming of any study that will be done in the future as all others will flow from this one. The question is will this be sufficient to make a major production expansion decision or will some further work be required.
We should all remember that to date 2 mills have been acquired and made operational without sufficient economic study reports and the options were limited on how to finance these projects because of this so equity was mostly used to fund these projects along with some debt that has been built up over time.
Typically these reports recommend what the next stage of developemnt requires which can lead to a tighter followup economic report or maybe it will recommend immediate production expansion. From my perspective I want to see and read the report before assuming the absolute next step and timing of this. For sure I would expect the company to tell us the production plan after having sufficient time to assess any and all recommendations including further outlining access to required capital of which there are many options with equity not high on the list.
I'm pretty certain this report will not provide enough scope to support expanding to 5000 tpd in the near term but may speak to this in the mid to longer term (2-3 years). I suspect that the 5000 tpd mill would total over $100 million if the company was to jump to this level immediately plus some further mine development cost that probably would include a new shaft sufficiently deep to allow development of deeper ore material.
In the meantime the logical course of action in my view is expansion of the mills we have to 400-450 tpd for the sulphide mill and closer to 1000 tpd for the oxide mill and increasing recoveries leading to more revenue expansion in the near term while pursuing mine development issues required for larger expansion and getting back to a larger exploration agenda. The economic reports in future will only be enhanced and made tighter and more precise/credible by the above actions.
Things are really coming together for ECU after a tough 2 years as with most emerging junior producers. I can sense the excietment in this sector as the HUI gets closer to breakout which has been a long time coming given the robust gold price.
