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The above Company was one that severely burnt my and many other's fingers recently.
They not long ago announced a deal with Newmont to dispose of their Mt Leyshon assets (Australia), which included between 12-15 million tonnes of highly mineralised ball mill scats, which previous studies reveal to contain between 100-170,000 ozs of gold.
The study completed in 2007, when gold was $780 oz, showed a operating surplus of $25 million, based upon 100,000 ozs recovered.
This was before capital costs, which were deemed to be considerable, thus reportedly showing only a small return.
Gold is now $1240 oz and given the hard times experienced in the industry I would hazard a guess that processing costs will be about the same.
So one could argue that the extra $460 oz for gold goes straight to the bottom line and on the 100,000 oz figure that's an additional $46,000,000 return. 170,000 oz would show a correspondingly higher return.
The mine is currently in long term rehabilitation, which is costly and the deal is essentially for Newmont to take it off Leyshon Resource's hands. Newmont is a shareholder in Leyshon, which delisted from AIM last year and is currently suspended from ASX.
In announcing the deal (subject to regulatory approval) the Company states that it would pave the way for a re listing.
In the last set of audited accounts (2015) the Mt Leyshon holding costs were presented as being around $300,000 for each of 2014 and 2015.
On the surface (sic) Newmont appear to be getting the deal of the century.
I would be interested in hearing the views of "Fools" who have experience in the gold mining sector and any suggestions of possible action to take will be most welcome.
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