With the exchange rate no longer at par, this has become relevant.
Earlier in the year a $900 US gold price would only give us $900 Cdn, at par. Although the US gold price has fallen to $718 US, we still have the same Cdn gold price. With the exchange rate now at .79, it means that the $718 US gold price gives us $909 Cdn per oz, which is actually slightly better (believe it or not).
Granted, it's a bit tricky with the cash cost. Yes, the cash cost per oz would have to be adjusted for the difference in US vs Cdn $, however much of that adustment should be offset by the deflationary environment (lower costs of consumables, explosives, fuel, as well as the 8% weaker Peruvian currency vs the US dollar).
Also, some of our Corporate costs are paid in US dollars, due to the head office being in the US. However, a good portion should still be in Canadian dollars.
2 comments:
Century should try to do something with Richmont (one of our Val d'Or neighbours). They just terminated their Colorado joint venture, and they say: "Importantly, we constantly search for other opportunities to grow our reserves and production profile."
Here is their NR:
Richmont Mines to Terminate Joint Venture Option at Golden Wonder Mine
Thursday October 23, 10:08 am ET
MONTREAL, QUEBEC, CANADA and LAKE CITY, COLORADO--(MARKET WIRE)--Oct 23, 2008 -- Richmont Mines Inc. (Toronto:RIC.TO - News)(NYSE-A: RIC) a gold exploration, development and production company with operations in North America, today announced that it has completed diamond drilling activities from drill station # 5 at the past-producing Golden Wonder Mine near Lake City, Colorado. A total of 16 holes were completed by Richmont Mines in 2008 for a total of 2,037 metres of drilling. Most of the drilling was targeted at confirming the depth extension of the previously mined-out area which was Richmont's main exploration target. Only limited exploration was conducted in other areas of the mine. Drilling results are presented in Appendix I below and a longitudinal plan of the drilling is presented as Appendix II.
Results obtained to date have failed to confirm the continuity of an economically viable ore zone below current infrastructures at the sixth level. In light of these results, Richmont Mines has informed LKA International, Inc. that it has completed its "Initial Commitment Period" and that it will not exercise its option to the "Second Commitment Period" by notifying LKA of the termination of its option to proceed with the Joint Venture Agreement. Demobilization of the drilling crew is in progress.
Martin Rivard, President and CEO of Richmont Mines, commented "Unexpectedly failing to confirm the continuity of the zone below the sixth level has changed our approach to this project and we have decided to terminate our option at the Golden Wonder Mine. We will continue our focus on advancing our exploration at the Beaufor Mine, improving production at the Island Gold Mine and continuing exploration on our pipeline of projects. Importantly, we constantly search for other opportunities to grow our reserves and production profile."
Martin Rivard
President and Chief Executive Officer
I forget to mention my key point. They have $25 - 30M in cash, as well as already established gold production, and no debt.
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