Hi Wimp073
I have some questions on your post and for all OGX followers:
- You say OGX management used tailings to commission HM3 at one shift a day at half rates; why is it that management in Feb announced to all holders it would use high grade ore? In addition they announced to market they would run a second shift, and when they did they would use the second shift just for the tailings? Then they also announced that a second shift on HM3 had started (this all indicated to anyone reading their announcements they were running 25 tonne an hour for first shift, had ironed out the bugs, then had commenced the second shift for tailings.
This company also said it would process at least 1500 tonnes.
Then cam the HM3 update: there wasn't a second HM3 shift. In fact only 1 shift and that was only running at 50% 12.5 t/hour. Why only weeks prior did they say they commenced a second HM3 shift?
Why did they change their story from processing high grade to tailings and low grade. Why with no ann of any delays or breakdowns they went from going to process 1500 tonnes to 600 tonnes of low grade ore.
As shareholders we haven't made the management make up these announcements then deliver something else. They have. Why do you hold them in such high regard? At the end of the day they are failing to deliver on their own expectations- their own forward looking announcements.
Granted the gold is there- lets hope it is. Lets hope they can find something that WMC and TRY gave up on. Rock samples are great, the 1 tonne samples show great promise of 20-30 g/tonnes.. but we haven't seen any results like this yet. In fact, their tailing sampling was showing 9-10 g/ tonne, and with 600 tonne processed of low and medium and tailings they are only getting 6g/tonne. So again their results are falling well short of their forecasts.
You mentioned a 700 AUD AISC, where did you get this figure? I looked through the OGX announcements and there is nothing showing 700 AUD AISC.
Lets look at the last quarter spend, at the end of the day you can get the total quarter spend and divide that by oz mined. In q4 2017, their spend was about 2.9 million a quarter.They have said they have continued to reduce costs by approx 30%, so lets say Q1 2018 spend is 30% less or say 2 million a quarter. They have mined 130 oz to date. So based on that, we are looking at a 2 million cost to produce 130 oz, or a AISC of $15,384/oz- these are based on 130 oz mined and a 30% reduction in quarterly costs from q4 2017.
Lets say OGX mine 2000 oz for April, May and June- this would be a great result and they would realise the bonus shares for this. Maintaining a 2 million costs/ quarter (no change from q1 2018- they cannot keep decreasing costs at 30% qoQ) then for Q2, processing 6000 oz- with 2 million costs- AISC is $333 dollars!
At 1000oz/ month- or 3000 oz Q2, with 2 million costs- AISC would be $666 dollars/ oz.
So it looks like your 700 AUD / oz AISC only holds true if OGX can achieve a 1000/oz a month while achieving a 30% reduction in costs over Q42017. But note they are also spending more, example the 250 K on drilling- this increases quarterly spend by roughly 12 %.
Note i also haven't considered the 20% effective tax OGX need to pay in OZ mined to royalties. It doesn't seem you have factored in the 20% effective tax on your AISC of 700 either.
If this company could get to 2000 oz a month, then I think it will be looking very good indeed, so long as they can keep a cap on costs. But lets look at current and future production of ore to get to that figure....
Note they are currently only running 12.5 tonne/ hour and 1 shift. At 5 hours a shift thats 62.5 tonnes a day or if it ran 25 days a month thats 1562 tonnes a month. OGX management said in their latest HM3 announcement they would process 6000 tonnes by April- how are they going to do this??? Have they got 3 other HM3 hammer mills running in hiding they haven't told us about? Or are they simply not telling shareholders the truth about what they can actually crush in a given month given they are running 1 shift and 50% capacity? HM1 and HM2 only processed about 20 tonnes in March (the whole month)
Lets put some realistic numbers on paper since OGX management don't seem to be good at telling shareholders what is happening or good at math (no offence to anyone, but OGX management have been very consistent in under delivering);
At 50% Capacity and 1 shift (5 hours), running 25 days a month- maximum ore processed is 1562 tonnes.
At 100% Capacity and 1 shift, running 25days/month- max ore processed is 3124 tonnes for any given month.
At 100 % capacity and 2 x 5 hour shifts, running 25 days/month- max ore processed is 6248 tonnes.
Now we saw since Feb and their "commissioning" an ann to process high grade ore, that a second HM3 shift had started and they would process 1500 tonnes. But in reality they processed low grade ore and only 600 tonnes due to delays/ breakages etc. i.e. they met 40% of their target in March.
at 6 g/tonne, if process 1562 tonnes- we get 302 ounces for April.
At 20 g/tonne, if process 1562 tonnes- we get 1007 ounces for April.
Personally, given OGX management have not been able to meet ANY of their own announcements expectations, how can they possibly process 6000 tonnes in April- this is just nonsense. Realistically if they are able to keep outages to ZERO, and run HM3 at 50% production for 25 days out of a full month in April they will get between 300 and 1000 ounces based on the grades mentioned above.
I think if I can work these calculations out, I ask myself, and any of you, and especially OGX management, what are they thinking when they put ink to paper and say they can process 6000 tonnes of ore in April- this should be an immediate report and red card from ASIC in my opinion. Happy to hear comments otherwise
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