emrpin,
Your post says:"....to me means all things being equal as of today BL is a marginal operation (underlined mine) when all-in costs are considered not the phoney cash costs that most people use."
Other posters have responded with respect to your reference that BL as a "marginal operation". You can certainly explain further what "marginal operation" means. But to me, and probably many others as well, marginal operation means a border-line operation, perhaps just good enough to get by, and producing little profits (for sinking in some $0.5 B Capex and some large amount of money for Opex).
In general term, Borden Lake is quite similar to Osisko Canadian Malartic which can be used to compare the potential for estimating the profit margin for Borden Lake. Some info can be found in the link below:
http://www.northernminer.com/news/quebec-gov-t-greenlights-osisko-s-canadian-malartic/1000339502/
Malartic is a low-grade (~1 gpt) bulk tonnage operation with an additional high-grade zone of 1.6gpt. The Opex is larger, but Malartic was able to raise to required funding. The operation is about 2-3 times larger than what Dave said (10-15,000 tpd for an annual production of about 200,000oz Au) in the Hong Kong Presentation.
- One way to have an estimate of the profit margin would be to consider the values used by Malartic for Capex and Opex of some $465/oz Au and gold price of $775/oz. This represents a 40% margin (certainly not marginal). If the POG of $1600/oz is used then the margin will go ballistic.
- Another way to look at this margin is to consider some $500 M Capex (Presumably the $500M includes some contingency, but I would throw in $100M for addtional contingency just to be conservative). So Capex = $600M. Opex (all in) = $64M/yr, rounded up to $75M/yr. Sale of 200,000oz Au @1500/oz = $300M; Margin 300-75 (use 100 if we are "generous") = 200M/yr...which is certainly not marginal (~3yrs to pay off the $600M debt). If we sharpen the pencil a bit and use some reasonable numbers (POG = $1600/oz, Opex = 64M) the the margin = 320-64 = $256M/yr, which is fabulous (pay off in ~2 years if the Capex is $500M).
My take is that Dave (always) wants to be a producer, but he would start small @ the high grade zone for 200,000 oz/yr to reduce the Capex. The operation can, of course, be scaled up with the profits from operation and perhaps the sale of the BC chromite holding.
Feel free to use other reasonable numbers in this macro-economic exercise. Also, check my math to see if I made any fatal errors.
goldhunter
