In trying to decide how much revenue SFMI can probably count on in 2012, here are some company stated "probable" facts , and some assumptions by me that I want to run by you . I do not presume that my assumptions are correct.
1. Gold goes to $2,000./oz early in 2012.
2. The mill is expanded by mid spring (May, 2012 ?) to mill 150 t/day.
3. Mill recovery of 3 g/t Au continues, even though Bouts and others are saying we are now producing more than 3 g/t.
4. Commentary by Pierre or RS that the mill will be able to up production days to 80-85% of 2012 = 292 production days.
5. The mill is now recovering approximately 85% of Au, and will continue at 85% until addition of the flotation circuit to the mill boosts silver recovery to 90-95% of the 15 g/t Ag. - most of which we are not now recovering. There is no way to tell when the flotation circuit will be installed and producing, so I use 85% of Au/t figure for mill recovery of pm.
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Computation of late spring 2012 revenues from tailings:
1. 150t/d @ 3 g/t = 450 g Au/d in mill feed.
2. 85% of daily mill feed recovered by mill = 382.5 g/d.
3. 382.5 g/d div. by 31.1 g = 12.3 oz. Au/d.
4. 12.3 oz. Au/d X $2,000./oz Au = $24,600./d Au cash sales.
5. Total number of days the mill operates will go to 80%: 1 day $24,600. X 24 d/month = $590,000./month Au cash sales. 292 days (80% of yr.) = $7.085 mil. /yr. Au cash sales
6. If you want real profits, then subtract $5,000./d for mill and co. costs/d, and subtract $3,000./d for daily rents to GHDC, = $24,600. - $8,000./d costs = $16,600./d real profits.
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Conclusions:
IF the above assumptions are correct, we will be making enough off of tailings to pay perhaps half of the needed funds to drill and set up the mining. The jump in cash profits is large when we go from 3 g/t @ 60 t/d now to 150 t/d in the spring, since the additional 90 t/d (7.4 oz. Au /day) will be almost total profit ( $14,700./d ).
The commentary by Bouts and others says we are producing at a larger g/t than 3 g/t. Just in case Bouts is right, I figured what the cash sales would be if all assumptions remain the same except we go to 5 g/t Au mill feed:
At 5 g/t, $41,000. Au cash sales /d.
$984,000. Au cash sales /month.
$11.8 mil. Au cash sales /yr.
(if you want actual profits, subtract $8,000./d from above 5 g/t figures = $33,000. daily profit, $792,000. monthly profit, and $9.5 mil. yearly profit.)
