McEwen Mining Message Board

To: JW@KSC who wrote (341)	4/17/2012 10:15:29 AM
From: huntforvalue	of 3855

JW, I did included a cash-flow estimate of $7m for Phase 1 El Gallo in my figures and I think that figure is more than generous for start-up phase. If anything it is overly optimistic. Here are the reasons: During start-up, the operating expense will likely be near 100% of nominal which at a cash-cost of $800/oz you get a $12m op-exp ($800 * 0.015m) Although costs will be near 100% of nominal, during the start-up phase production will be far short of steady-state. Once the crushing circuit is installed, the ore needs to be ground up, and only once there is enough crushed-ore on the leach-pad will the leaching phase begin. Furthermore, lets assume that the leach-curve for gold is about 1 month. In other words, for 2H2012, production will at best be 7koz - 10koz. Taking the optimistic end of the range you get a revenue of $16m on 10koz of production which equates to a profit of $4m during start-up. As you can see this is less than my overly optimistic number of $7m and much less than your figure of "north of $10m. Regardless, the conclusion is the same. McEwen Mining has a one or two year cash flow problem.