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dr_dazmo

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continium

 

Just to add my two pence worth. I am in the wonderful position of knowing very little about most things so I am easily tickled with most things I read - :) - so bear with me if the following adds little to the conversation.

 

On hc the other week a few fairly cluey contributors were trying to separate the signals from the noise regarding AAM, and whether it had been able to get its new mine and plant working (jury seems to be still out on that one). One poster who claimed to have relevant experience said that there are three key factors to focus on with a new mine and plant: throughput, grade and recovery.

 

Throughput goes to whether the miners are providing enough rock and to whether the plant is able to handle its nameplate capacity ie if it was designed to handle 1.2m tonnes per year is the mine and plant able to process that amount of rock. Obviously if the plant is managing to process only 80% of what was projected, then all the calculations are shot.

 

Grade goes to whether the drilling carried out to come up with resources and reserves gave an accurate representation of how much gold is in the rock that is being dug up. Also it goes to whether the miners are digging up the rock where the gold is, whether the techos (metallurgists) are reading the ore body correctly (my impression is that this is what blew up at least one operation at Bendigo - they couldn't work out where the narrow viens of high grade ore were heading and so they kept digging up low grade stuff), or whether the miners are chucking the bath water in with the baby (one suggestion is that the mining contractors that AAM are using are getting paid by the amount they deliver at the plant so they are not discriminating too much as to whether what they deliver is high grade or low grade [but that sounds too simplistic to me fwiw]).

 

Recovery goes to whether they have understood the type of gold they have. Some stuff - like apparently MCO's gold in Victoria and CRC's in southern NSW - will separate from the surrounding rock if you merely physically pound the stuff. Gold that is in an oxide state (up near the surface) also comes out fairly easily. Gold sulphides and / or refractory gold is mongrel stuff to extract. But if the plant is properly designed and built to handle the type of gold that is being mined then the recovery rates should be as expected. But if the plant is set up to only physically process the ore, or is set up for oxides, and the miners are delivering refractory gold then the recovery rates will be lower than what was modelled for. What happened with AAM was that it was reporting a recovery rate of about 95% but then when it started to process a different type of rock with higher claimed grades the recovery rate dropped to 85% and the suggestion was that it had run into some suphide material. One more reason for the horses to remain spooked in AAM's case. In which case all the economics of the project are stuffed.

 

So hopefully the only figure we will need to worry about with Integra's maiden mine is how much gold is being produced there per week (being 90,000 oz per year divided by 52 weeks). But if needs be the detail worth following will be how much is being put through the plant per week, the grade of the rock being put through, and what the percentage recovery is being achieved, and how those actual figures align with projected figures.

 

To see what can happen when a new mine and plant have troubles getting up to expected speed I reckon AAM is a good case study. They were supposed to start kicking goals last December but they seemed to have trouble firstly with the throughput, then in March and April it seemed that although they were pushing through enough rock the grades were not as high as expected though the recovery rates were up above 90%, then in July when they finally got into higher grade ores the recovery rates dropped. I am still not sure whether AAM is a going concern. AAM was trying to do this on the cheap and IGR is much better financed than AAM was but I can assure you if IGR take 6 months or so to get their shit together like AAM appears to have done, then our mild mannered Clark Kent (aka Chris Cairns) will be feeling like he is mining kryptonite not gold (not that I expect that - but then I didn't expect it with AAM either).

 

Anyone who actually has a clue feel free to jump in and point out what I've got wrong here.

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Triage,

 

I don't think anyone will "jump in". You make good sense.

 

I was in and out of AAM a few times. If I had not got annoyed at the MD not answering my emails, I might have got caught at the end too - he made me sell, bless him !

 

There will be a lot of nervous IGR people and investors watching the results of the first few months of the plant operation. As you said though, the difference is that IGR have the money to fix problems if or when they arise.

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I have been "in" IGR for 5 years. Plan to hold all indefinitely. My comment re 5 - 10mOz wasn't just a flippant comment. IGR have numerous undrilled targets still to be drilled. Some of these targets show great potential.

 

The three to five u/g mines still need considerable drilling to depth and along strike. With many drill results still to come before resource upgrade at year end, we should get closeish to 5 mOz RESOURCE. The Aldiss project offers enormous upside potential.

 

I have spent a fair amount of time looking closely at Eastern Goldfields mines. I have met and talked to directors of most players south of Kalgoorlie.

 

10m Oz might be a fair way off and might never be realised. Drill costs themselves will limit much future post production drilling to grade control. However, its still relatively early days in the EG IGR permits, so we might be surprized how quickly the Au in place figure rises.

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Much as I like IGR I can't convince myself to hold them "indefinitely" - or any other gold miner, for that matter.

 

I still expect a "sell the fact" phase once production starts - any blips will surely accentuate this. So I've started to sell down a little - a few parcels showing 60-76% profits - although current intention is to hold the majority and await developments.

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[sorry probably a side-track post, my apologies]

 

Hi Marsupial

 

Looking at the progress of IGR, after OGC, it "seems" --- based on an unscientific sample size of two --- that development stocks get a kick about 3-6 months prior to commissioning. This would imply that a good strategy will be to try and find other gold stocks that are also 6-9 months away from commissioning.

 

Are there any others around?

 

Also, how does IGR acreage rank compared to say AZX Auzex in the west of Kalgoorlie or AAG in central Murchison (I know these are about a year or two away from commissioning)?

 

Cheers

 

Commander

 

 

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Interesting observation Commander and I am intigued that you have singled out AZX.

 

I have recently purchased AZX and they have suddenly gone from 20cents to 26.5cents for no apparent reason.

 

Very little chat about this on this site.

 

I am holding IGR as a longer term hold as I think these will move ahead once production gets underway.

 

Also holding OGC and RMS.

 

Tom

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Triage ....I for some dumb reason cannot access into H/C , & being a part-time snob , I think I prefer it that way....Going to your excellent reply , you reminded me of a note I jotted done a few years back, when IGR bought & shunted the mill to the worksite. I was sceptical about the purchase of a 2nd hand mill , and at the time thought well I just hope the mill was not that canabalised, rusty or a makeshift toy bought to keep the punters happy .

In relation to your point about truck drivers getting performance based contract to deliver tonnages to the mill,I did meet a guy who stated that was going on at his mine , until they it got re evaluated....but this was all prior the Credit Crunch days when there was work. I think today ,operators have smartened up.....

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I'm with you McDuffy. You can't get too attached these companies, it clouds your judgement.

 

I have sold 25% at .44. I plan to unload another 25% around .52. If the price goes up past .60 I will unload another 25% then sit on the last 25% - although I doubt I can hang on long enough for Marsupials 5m oz resource.

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My IGR have now produced 100% gain for me. I still think it is early days in the IGR story. I think it is close to risk free investing. The only serious possible downer is the POG. I'm pretty confident that we will see A$1200 + for some time.

 

In mid 08 I had a brain failure. I had huge profits($250K+ per share) in shares like NWE, but didn't press the sell button until much of the profit was lost. It won't happen again.

 

I am confident that IGR have HUGE resources in the ground. Enough to meet their Phase 1 and Phase 2 targets. Sure IGR might drift downwards after the gold pour, but I'm happy to hold for $1 and more. (sounds like I'm on the NWE path again, but I'm very confident that the Gold story has a long way to run).

 

It is inevitable that IGR will be taken out, probably by Barrick, in due course. These t/o's usually provide a 35%+ premium (can't follow AVO's 9% premium).

 

AZX is a very promising stock. I went to a preso of theirs three wks back. Also spoke to their CEO at some length. I think they have a great bit of ground (bigger than IGR's 2700km2), but SP rocked upwards too quickly for me. I'm interested to buy at 20c but not at 26c+. I'm also looking at stocks with shorter time frames to production or already producing.

 

My investment strategy of investing in juniors that have ASX 200 (or higher) potential has served me well over the last decade. I have had the patience to hold stocks all the way thru the cycle. You only need a few stocks like OXR (now OZL); AOE; BOW; PNA; AGM (bought by ZFX); etc., when held in big quantities, to make a very happy bank manager and be able to enjoy the best things in life.

 

I am confident I've got a few more stocks outside of ASX All ords, that shd get to ASX 200 down the track. As I'm still accumulating bigger positions in these stocks, mums the word.

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With you on this one Mars. I think I mirror you...also had the NWE fiasco tho' not as much as you...lost a bundle! Have held IGR for years and followed C.C. I too am confident of increasing grades and a +$1 story... a ten bagger?? My Super now has a good dollop of IGR!
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