Unless I am mistaken, gold producers always pour their gold into gold bar containers. I believe the sizes vary. I know that there are 600 ounce bars, but there are likely 200 ounce bars as well. However, I do believe the typical bar size for gold pours is 400. I think 400 gold bar ounces is what the central banks store in their vaults. As a side note fyi, I think the Lamaque gold gets sold to the Canadian Mint.
As a result, first gold pour does not mean only 1 ounce, with only $1,150 in gross revenue value. First gold pour for Lamaque will likely provide us 400 ounces and gross revenue value of $460,000.
It`s possible that our stockpiled ore could be nearing 10,000 tonnes by now (March plus first 13 days of April). Assuming the target of 94-96% recovery rate and 4.76 g/t grade, those 10,000 tonnes might eventually (once processed) give us around 1,450 ounces or $1.7M in gross revenue.
Once we start processing at a rate of 1,200 tpd, it should only take 2.3 days worth of processed ore to drive out one 400 ounce gold bar. One day of processing 1,200 tonnes of ore can contribute 174 ounces of gold ($200,000 of gross revenue) towards a gold bar.
Again, we should also have the 2,015 ounces of unfinished gold sitting in Lamaque inventory. The Gerald Metals credit line balance was eliminated last December. These ounces should be now free of security obligations. Also, we should now (once the milling circuit is up and running again) be able to move them into finished gold (ready to be sold) - $2.3M in gross revenue for us.
Once ready, if we are able to crank up processing at Lamaque to 1,200 tpd on a very consistent basis (again, successfully hitting 94-96% and 4.76 g/t), I am able to visual the gross revenue from these ounces carrying the operating costs at Lamaque and allowing the financing dollars to be focused heavily on development and exploration.
There will be a lot of different types of costs, but labour should be one of the big ones. There were 115 employees at Lamaque at the beginning of April (per the last NR). Let`s assumed average annual (loaded) compensation of around $60,000 ($5,000 per mth). That likely means that about $575K per month for employee compensation. That will increase as we continue to staff up. However, increased staffing should also increase our gold output and gross revenue.
There are plenty of other high costs also that will widdle down our gross revenue (i.e. power, cost to operate heavy machinery, etc.). Nonetheless, if we can deliver a 400 ounce gold bar ($460,000 gorss revenue) every 2.3 days (once we crank things up) then we will likely be in good shape.
When we crank things further up to 2,000 tpd, we are looking at producing 291 gold ounces per day. That would mean driving out a 400 ounce gold bar (and $460,000 of gross revenue, at current gold price) every 1.4 days (from Lamaque alone).
Now, our prepaid gold sales commitment in 2010 (per the Jan. 14th SEDAR document) is as follows:
*200 ounces per month to DB from January to May = 1,000 ounces
*667 ounces per month to DB from June to December = 4,669 ounces
We should be having no problems delivering the 200 ounces to DB out of San Juan at this time (we currently produce 4,700 ounces at San Juan per quarter). Come June, if we are able to crank tpd up to 1,200 at Lamaque then I see no issues in delivery 667 ounces per month to DB for the balance of 2010. At 1,200 tpd, it should only take us 3.8 days of the month to drive out 667 ounces to DB from Lamaque. That only represents 12.8% of a standard month.
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The presentation pdf at the CMM site says they anticipate pouring the first dore (low purity gold metal) gold bar in April.
Sources on the web say that dore bars sometimes weigh as much as 25 kg, twice the size of a standard London 400 oz Gold Delivery bar (which weigh 12.5 kg). Of course, the dore bars are lesser purity. And it sounds as though the purity will vary, from pour to pour, but from what I've read it sounds like it should top 90%.
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