Sewells, I guess the point is they hit one sample dead on and missed one sample.
The question is how do they define the mine to be sure they are getting the high end product. Only way to be certain I think is more in ground drilling. That cost time and money. Are there other ways to define whats in the ground. What will that kind of in mine deliniation drilling cost
Very nice bit of information.
This sentence below is in many ways key to the concerns with this mine. Being certain that they are on the deposit plus the non continuous nature of the deposit will mean added costs. Clearly they were were not on the deposit in the original bulk sample.
"The current mining plan envisions a complex deposit that is relatively discontinuous, somewhat disseminated in nature, has weak visual indicators, and a strong nugget factor."
Its not so much the grade but as an non miner will put it the distribution. If the grade in a bulk run is low you tighten up what is taken. If the grade is high you add in some lower grade ore on the edges.
What I guess I am looking for, if this is reasonable, is how much gold can reasonably be extracted profitably from the mine. That is where SRK enters the picture I believe. That number resets the ultimate value of the mine. Likely way too early to expect that kind of number but we just got some detail on how much ore they expect to take out of mine and how long that area being produced will last. 6 months or 6 years
If you only mine the cream the grade is at its best possible number. If you mine everything that you gain access to by mining the cream the grade is another number. Can you be profitable only mining the cream? what happens when you throw lower grade ore in because it is accessible.
Isn't part of SRK's task to determine what exactly Rubicon will be producing from their operations and does this decision on what to produce then not effect the grade. The real out come then becomes not what the grade is that is being mined but how much ore is actually going to be sent to the surface for processing, i.e what is the true value of the produce-able ore in the ground not just what is the grade of the cream
Granted that is why all the drilling was done but the final determination comes when bulk ore is delivered to the plant
A quick question that I am sure you know. If they are reporting income in Canadian dollars then I would assume they are also reporting well costs in Canadian dollars? If so that is making these well costs appear higher to those of us thinking in US dollars
A small positive
Worth noting that Madalena is reporting in Canadian Dollars and the exchange rate is favorable to Madalena.
" Realized Q2-2015 crude oil and NGL price in Argentina of $96.33/bbl and $6.28/mcf for natural gas. The Government of Argentina sets the benchmark price for crude oil, which averaged averaged US$76.33/bbl in Q2-2015 and has been set at US$76.00/bbl for Q3-2015;"
I note the below of particular interest.
Puesto Morales Block (100% WI) – Horizontal Drilling of Loma Montosa Light Oil Resource Play
As disclosed in a news release dated April 8, 2015, Madalena successfully drilled and completed a Loma Montosa horizontal well (PMS-1135(h)) with a 12-stage frac. The well flowed the first 30 days of production averaging 302 bopd of oil and 1600 mcf/d of gas for a total of 570 boe/d at a 42% water cut.
The well continues to perform ahead of management's expectations, with an average 90-day rate (IP90) of 412 Boe/d consisting of 200 bopd and 1,280 Mcf/d at a 44% water cut.
The well continues to flow naturally, however the Company is proceeding with plans to install a pumping unit to enhance the flow.
Madalena has eight proved and probable undeveloped horizontal locations in its independent reserve report as at December 31, 2014. Based on internal mapping and pending the continuing performance of the PMS-1135 well, management estimates there may be up to 40 additional un-booked horizontal locations.
Just a reminder API reporting is voluntary while EIA is mandatory
"Both industry-surveys are conducted in a similar manner, but the EIA survey is government mandated while the API survey is voluntary. The EIA report will be the most useful for non-institutional investors looking for a full breakdown report as it is free to access. While the EIA report is often considered the main market mover, the API report still moves the market as it gives an early indication of what the EIA numbers are likely to be. However the surveys do often come up with different numbers"
Let's see if government numbers show the same tomorrow
I would simply say, there would be no possible cover for management if the grade is below expectations
8 gram per ton comes from the PEA. 90 tons by year end is inferred from the press release and is likely on the low side
They are I assume by the new release providing an outside opinion on the grade in the first stope and the 20,000 tons of ore. Ruby is reaching out to hire an outside firm to confirm the ore grade. That indicates confidence to me.
" ("SRK") has been hired to audit current operational procedures and to assess the reconciliation of gold ounces from in-situ mineral resource estimation through to process plant recovered gold, once adequate material has been processed."
Respectfully disagree. They are mining now although granted not at full production. The release indicates 90,000 tons of ore mined by year end. At the indicated 8 grams per ton that is over 28,000 oz. Our favorite poster indicates a higher rate and if correct this oz produced total goes way up. This does not count the low grade ore which was stock piled and has proven to be productive.
Will they burn money on the start up, yes but cash is beginning to come in, perhaps 30 million in production by year end.