That seems unlikely for a long while. Their Q4 cost was >$1800. Of course this cost was probably bloated by low volume as well as poor ore. To make sure there was adequate margin and margin for error I wouldn't start to think about re-opening Bleeping Giant until Au was >$2500. In addition mill capacity cannot handle both SG and Veeza without increasing capacity. IMO COO Struble did not let his ego get in the way of biting the bullet and closing SG.
The $80/oz to truck ore to from Veeza to SG is a real kick in the head. Means committed to all that extra fuel and (contract) labor and truck capex - about $3.2M/year.
Using NAP estimates (yeah, I know that is a dangerous thing to do ) - 40,000oz with $1150 cash cost gives gross profit of about 22M. With mine life of 7 years that is about $150M. If they could find a buyer for the whole gold division (including SG,mill,VZ and the other properties) for $150M would you take it? Buyer essentially gets division for free after 7 years - but NAP transfers all risk to new buyer. And can use the funds to develop additional LDI zones and nearby properties with no additional financing. Just a thought. Opinions?
I'm not as conversant with NAP's history as some others here but my impression was that Mgt's entry into the gold biz was low cost given that gold prices back then were considerably less than now.
so I'm thinking 150 million could well be more than PAL paid for these assets.
At the time it was a low risk way to get exposure to the gold sector and in hindsight, the sector has done better than most would have thought at the time.
Diversification by Mgt into a monetary metal for a small portion of PAL's capex and operations , I have no problem with and what investors need to keep in mind is that higher gold prices (since aquiring these properties) makes the probability of profitability of adding to reserves and mine life a lot more likely.
Veeza mine life could easily be extended and SG not necessarily dead.
I have no idea how much to build a new mill but my guess is it's a lot more than historical costs might have been.
EIS and permitting related expenses alone (for a green field project) probably add a lot to the bill nowadays.
sonya, I think that if there was ANY HOPE of gold getting to a point where that mine could become profitable that they would not have closed it and taken a hit for $50 million dollars. The impression I got was that they would need gold to be at least at $2,500 to $3,000 to breakeven; and they just were not finding that much.