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1.3¢ west wits mining limited

imo contractor costs will diminish when they hit ore body as...

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dill

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05/11/16

09:47

Post #: 20391530
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Originally posted by ajostu ↑

One thing I'm trying to work out with how the revenue flows.

According to the model given in the annual report, let's say you extract a tonne of ore and it has 2.5g of gold. They're listing the cost for the contractor as $50. I'm assuming that this is a fixed cost per tonne, independent of current gold price and how many g/t in the ore. Do we know if this is correct?

So from WWI the POG dictates the grade at which they start getting their money. At $1300 they need 1.2g/t to breakeven.

So given the last ann said grades were around 2g/t, at US$1300/oz or $42/g that's $84 per tonne. Contractor takes $50. WWI gets 0.6g worth or $25. There's $9 left but because the next 0.4g (or $16) would go to the contractor, that's what happens.

At $1300 to get a further payment (at 50:50) they'd need $50+42 worth of gold per tonne or about 2.2g/t.

The big mystery is how contractor costs are going so far. With overburden, and not running to full capacity, it might pull back some of the money. That's my main concern for now. But in theory, if they get up to 14000t/m at 2g/t and $1300 gold price, they should be doing very well.

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imo contractor costs will diminish when they hit ore body as strip ratio lessens

WWI Price at posting: 3.0¢ Sentiment: Buy Disclosure: Held
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