Thanks for that Rinky. I enjoyed it and it brought up a thought I had a few months ago. When doing research, I see over and over again, low grade projects going onstream. Some of them have a massive amount of dirt to move for the low grades, but they do it anyway. I guess this is where the mine life must be considered. Also, when a project is schedueled to come on line, its evaluated at the present mineral price/s. The longer the mine life,the greater the chance the mineral will become more valuable. I beleive that may have been part of the case with your experience.
So, in theory, you could take a mine with an average grade of 8 g/t gold and a mine life of 10 years, producing 100k ounces per year. That would equal 1 million ounces total mined in 10 years.
Say the POG at day 1 was $1000 per ounce, and at the end of 10 years, the POG was $5000. So, the average POG over 10 years was $3000, multiply by 1 million ounces, equals, 3 billion dollars worth of gold mined.
Take a mine with the average grade of 2 g/t over 40 years producing 25k ounces per year. That would also equal 1 million ounces mined, but in 40 years.
Say the POG at day 1 was $1000 per ounce, and at the end of 40 years, the POG was $20000. So, the average POG over 40 years was $10000, multiply by 1 million ounces, equals, 10 billion dollars worth of gold mined.
This is just a scenario and I know there are many variables that could come into play here. But the main point I was trying to show, was that over time, a low grade mine, may become more valuable than a high grade mine, if most expenses remain constant on appreciation and the POG outpaces the constant.
BOW, please check my math, thank-you.
I beleive the Tesoro will have a really long mine life, and it already did so far from the informales.