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Gold Resource Corp Message Board

  • iii_merlin_iii iii_merlin_iii Jan 22, 2013 2:15 PM Flag

    Gold Grades Mine to Date vs 43-101

    Here's a calculation on what the full La Arista underground mine to date (FY11 - Q3 FY12) grades have been.

    Everyone is so focused on the past two negative quarters, but it is interesting to see that even with the huge dilution problems in Q2 and Q3 the total mine to date grade is 11.82 Gold Equiv grams/Ton. Even with all the issues, this is still above what was estimated on the 20% diluted 43-101.

    Another exercise is to adjust Q2 and Q3 to see what the grade would have been with only a 20% dilution rate (I assumed Q2 was 35% and Q3 (from the earnings call) was 32%. At the lower 20% dilution rate this would have given a 11.34 Gold Equiv grams/Ton in Q2 and 12.44 Gold Equiv grams/Ton in Q3.

    I know changing the dilution is only an exercise in "what ifs" and is dependent on getting accurate disclosure on dilution rates from management, but to me it brings the bad quarters into a different light.

    One other thing to note is that the 43-101 does mention that the mill grade is higher than the mine @20% diluted grades model by 2-20%. Based on my calculations the full mine to date grade is 7% higher than the modeled 43-101 (even with bad last 2 qtrs) and if you adjust the bad 2 quarters to 20% dilution then the adjusted grade is 13% higher than the modeled 43-101. This shows that even the diluted ore processed contains precious metals.

    Not trying to be a pumper, as everyone wants to see management get a handle on the dilution problems, but it is nice to see that the ore grade is still there. Just hopefully a matter of fine tuning the extraction process...

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    • In response to engynear....who I guess has put me on ignore at this point....

      More conjecture from you my friend....

      I ONLY used the ore produced from the underground operations at La Arista. They do have this information broken out in the Q's and K's. So your entire argument about using the open pit ore is completely wrong.

      And your reply about the dilution rate is more conjecture and fear mongering. I clearly state that I "assume 35%"......while getting the 32% from the earnings call. I STATE what I did....get it? I also state that this is "dependent on getting accurate disclosure on dilution rates from management"

      You are clearly a short trying to spread disinformation and you try to disparage any information that is counter to your goals of lowering the stock price.

      Nice try pal, but your arguments hold no weight.

      • 1 Reply to iii_merlin_iii
      • Twelve months ago, GORO management was selling to anyone willing to listen that GRC would be producing 200k ounces in 2013. What's happened since then: (1) Their commissioned 43-101 was published clearly stating that real Au and AG ounces (ounces created after dilution minus base metals) inside their 500m by 500m envelope was in reality 600-700k ounces. (2) Three quarters (2012) of production that closely mirrors the 43-101 estimates. (3) A 2013 projection that mirrors the 43-101 estimates as well.
        So for those that want to ignore the commissioned report, the 3 quarters of light production, and the future year projections showing even lighter projection ,by all means, take the Reids' word and ignore the three realities.
        For those that invest based on the facts at hand, I suggest you incorporate these three given realities when valuing GOROs market cap, and then compare GORO to other similar sized single mine operations. Understand resource size and project longevity are priorities when determining market cap.
        I also believe it is important to project forward the capital structure and dividend. How likely will management be to continue raiding their treasury to pay off the dividend?

    • "I know changing the dilution is only an exercise in "what ifs" and is dependent on getting accurate disclosure on dilution rates from management, but to me it brings the bad quarters into a different light."

      Yes, if only they'd mined higher grades, the grades would be higher. Makes sense. I think I could fashion a scenario where their grades are one kilo/ton, but what's the point. Did you miss the last press release, where they basically say grades continue to be so-so. But just wait til they get to those higher grades to the southeast. . . .I even saw a reference to the elusive "skarn" on the private board. Amazing.

      I'm guessing their Q4 won't be as bad as the last couple quarters, which is why Amadeus hasn't run off to the Hamptons or Patagonia. But long term, there is no reason to question the grades in the 43-101.

      Are you concerned that GORO's market cap is about the same as what Alamos is offering for Aurizon, which has something like 3.6 million ounces in resources?

      • 2 Replies to fdahope
      • Oh and I forgot to add that the $0.5BILLION Aurizon capital needs excludes the $52Million needed for the shaft deepening and lateral drift development at the 1,010 metre level (just to get back to previous production levels)...

        And....Current challenges in drilling the boreholes through the Casa Berardi fault from surface to the underground infrastructure, together with other cost increases, have resulted in projected costs of approximately $20 million.

        Let me guess....u probably won't respond to this thread.

      • I'm not concerned about market cap, as that will take care of itself. The grade of the ore mined has so far exceeded what was modeled in the 43-101. Do they need to drill more and expand the resource...of course. At least they can fund that with $ from production and not with more paper.

        I used the dilution rates given by management to back into undiluted ore grade just to check to see what it would have been. Not pulling numbers out of the air or distorting information as others on the board continue to do....

        You are either misinformed or pushing disinformation with the comparison to Aurizon. Did you factor in the much higher cost of extracting the ore? Over $700 per ounce... Did you forget about the $0.5Billion in capital needed to get the rest of the ounces into production?

        Fear mongerers trying to scare investors. Sad.

    • go back to the private board you pumper. how does it feel to be duped by the Reid's?

      Sentiment: Strong Sell

 
GORO
4.60-0.17(-3.56%)Apr 17 4:00 PMEDT

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