WAF (ASX) Ann: WAF hits 6.5m at 61.8 g/t gold at M1S

Originally posted by eshmun ↑

2.5 years off high grade ore feed tacked on to the back end of the mine plan is not incrememtally small in terms of a financially modelled value, especially when you are upgrading the feed grade to ~3g/t from ~1.5g/t and adding about 160% more ounces per annum.

If you look the current mine plan, M5 is estimated to produce about ~75,000oz/annum of gold between years 6 to 8 with no contribution from M1 currently. The revised DFS due this month which will incorporate drilling about 100m below current reserves might add about 4,000oz/vm x 100vm (as per Richard's commentary about 100m of strike and 4,000oz/vm), ie 400,000ozs (which is about 400,000oz/120,000ozs = 3.3 years of production from M1 at 120,000oz/annum) although this does not reconcile with Richard's other comment that the infill drilling might add 12 to 18 months which suggests tonnages or grade are declining in this zone or his 100vm is more like 50vm below current reserves, ie much less depth captured (ie explaining the differnce between 12 to 18 months and 3.3 years as I've calculated above, ie explaining the inconsistent statements in that video).

In any respect Richard said the infill drilling down to the deep hole could add 2.5 years of production at M1 to what might be reported this month.

So a difference potentially between years 5.5 and year 8 of upwards of 100,000ozs/annum of production, ie the difference between the current production profile of ~75,000oz/annum at 1.5g/t for 2.5 years and upwards of 175,000oz/annum at 3g/t (blend into the mill).

Run that through a financial model Mr clever geologist. At 2.5Mt/annum mill capacity at 75,000oz/annum and a grade of 1.5g/t (for M5 ore only....probably a mixture of sulphide and oxide so lower recovery say at a guess 87%) only runs the mill at about 22% of maximum mill capacity. What does that do for the operating costs for those two and a half years Mr clever geologist?

Will the independent experts working for B2 Gold or for that matter WAF (if an early TO comes) just going to add 2.5 years of +100,000ozs of high grade production from M1 to the finacial model based on one drill hole? If you say yes to this question you are a geologist's backside and would never retain a job at an independent geological consultancy.

If an early TO comes we will be stripped of this value unless Richard has sharehoder support to fend off an offer or significantly improve it. Currently the back-end of the mine plan is practically worthless when you discount the cash flow for the time involved. It is even questionable if the back-end of the current mine plan produces positive cash flow when you factor in mill utilisation. Another poster some time ago posted a detailed spreadsheet suggesting it wasn't, if my memory serves me correctly.

It seems to me that the company is very focusssed on increasing mill capacity and the extra money raised might be applied to that purpose but not focussed on proving the ounces to show how that mill capacity will be utilised beyond years 5.5-6. This lack of focus will cost shareholders a lot of value if an early offer is lobbed on us IMO. From the outside it still looks like we are working for somebody else IMO. Our priority with any spare money should be to build our finacial model out to 8 years by continuing to drill reserves and/or resources IMO.

I get accused by this bloke of being a whinger that just wants to sell out whenever I get a chance. I hope people that know me don't believe this guy. I'm an investor who wants to maximise my return under all possible scenerios and sitting like lame ducks on a 5.5 to 6 year mine plan is not the way to do it if someone comes after us.

What we have here is a bold faced apologist for the company my friends. Esh

Expand

It’s a good argument Esh to a provocative post - hopefully we can get past the name calling and antagonism between some of the posters.

Was always going to be a big call whether or not to continue drilling deep. The costs are obviously prohibitive (did someone suggest a million bucks for that last deep hole???). In the end, comes down to a Management call and they’ve decided to conserve cash as we move full steam ahead with the mine build. Once again, we will only know if they’ve chosen wisely/correctly (?) when we look back in a couple yrs time.

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(20min delay)
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