Dio settled the purchase of Soujth Kal in early December. The quarterly report issued before Xmas relates to the September-November 3 months, so obviously there is no production attributable to DIO for this period. We will get production for the current quarter. South Kal was high cost - I'm guessing that Dioro will rejig the operation to reduce costs say down to $AUD600 oz, or probably less by mid year. At around 70,000 oz a year, that's cashflow (ignoring an capital expenditure) at current gold prices of $28 million a year.
However, I would expect from mid 2008 they will start blending Frog's Leg ore. Ore will start coming from Frog's Leg in the current quarter, but I presume they'll wait until say a stockpile of 100,000 tonnes is on surface and predictable production is reasonably assured before chucking it into the Mill. According to the La Mancha figures, 600-700 kt pa of Frog's Leg should be available in the first few years. That's slightly over 100,000 oz a year, depending on grade. However, I expect that production profiles will change over time as various resource upgrades are done.
In the short-term, we should hopefully see those deep drilling results. The stock needs some newsflow - having 100% of Frog's Leg would help in having a more agressive profile I think.
angus
DIO Price at posting:
0.0¢ Sentiment: None Disclosure: Held
