Low Cost Gold Mine?

A lot of Gold mines and projects equate the costs of the mine to an equivalent cost per ounce of Gold.
This way, the reader can compare it to the price of Gold and see if the company is in trouble or is generating a lot of cash. Sometimes you just see cash cost and sometimes you see all in sustaining costs. If Any of these values are close to $1000 per ounce, there is not much profit generation for those projects....but what if a project had a US$100 per ounce operation. Would this be a good investment?

Since these are all about pricing costs in $ per ounce, here is an assessment of a deposit called CH-6.

There was a price adjustment for the commodity in January, 2015 and that is what has been used in this analysis.

The resulting cost per ounce model for this project is:

 "The average cost per oz is $121. The modelled cost range goes from a maximum of $141 per oz to a low of $111 per oz with a base case modelled cost of $139 per oz."

" It is also important to understand that the low modelled cost per ounce does not represent a minimum cost and that the ultimate cost in a production scenario could be lower than US$111 per ounce."

Thus, one can extrapolate that US$100/oz cash cost equivalent is in the realm of possibilities.

Does the gold investor think that an operation like this would be a good investment?

It gets even better as there is another deposit called CH-7 that has an even higher grade portion of the deposit...and more information on the valuation is forthcoming. That portion may even be lower than US$100/oz cash cost.

Should a Gold investor be investing in projects that have $500, $600 or $700 per ounce cash costs. How about projects that have $1000, $1100 or $1200 per ounce cash costs? Now bring in a $100 per ounce project and should the gold investor ignore it?

Alas, the problem is not in the economics for they do speak the truth. The problem is that this is a diamond project that the math has been converted for the reader into Gold Speak.

Ignorance does not make one rich...so please go ahead and check out the site and the details on this blog. Educate oneself and look at a good investment opportunity here.


For those interested...here is the math on how I got the numbers above:
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"The average price was US$200 per carat. The modelled price ranged from a minimum of US$152 per carat to a high of US$222 per carat with a base case modelled price of US$176 per carat." As of January, 2015 with the 6% adjustment from the 2014 technical report.
@ 2.58 cpt (carat per tonne) convert to tonnage:

"The average price was US$516 per tonne. The modelled price ranged from a minimum of US$433 per tonne to a high of US$573 per carat with a base case modelled price of US$454 per tonne."

Convert to Gold ounces:

"The average oz was 0.47 per tonne. The modelled price ranged from a minimum of oz 0.4 per tonne to a high of 0.51 oz per tonne with a base case modelled price of 0.41 oz per tonne."

Cost per tonne = CAD$75 or US$57 per tonne.

Convert to cost per ounce:

"The average cost per oz was $121. The modelled price ranged from a minimum of $141 per oz to a high of $111 per oz with a base case modelled price of $139 per oz."
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Chidliak and Peregrine Diamonds are trading at approximately 5% enterprise value to Net present value.  Significant discount.