capten,
The December 3rd press release figure of 19 ounces a day assumes two circuits in operation ( a primary and a secondary). They do not yet have a secondary circuit, and the latest press release indicates the primary circuit has been shut down and they are in the process of replacing it with a more efficient unit.
Since that December 3rd PR, Kilroy and the CFO resigned, and the new management has stated the original circuit has been found to be inadequate. The latest press release information (April 22, 2015) appears to be based upon diligent work by the new management team since it came in, with a plan which appears to offer a reasonable path to success. As I read it, though, it seems to me unlikely that the first quarter of 2015 would have any real gold production at all to report, and certainly nothing near 19 ounces a day.
On the other hand, if the primary circuit has been shut down and is being replaced and will be in operation by June 1, (and the latest press release formula turn out to be accurate), one might expect the first quarter for Dun Glen would go from zero ounces to a June production of 100 yards per minute X 40 hours per week X 80% recovery X 0.02 gold assay value = 64 ounces per WEEK.
(You can read the Skopos 2011 geologist's report on the URHG website to determine for yourself what assay value seems most reasonable to use, your opinion may differ from what I chose).
If they sell gold (rounding it off) for $1000 per ounce, that would be $64,000/week. The Skopos report says that historically the weather there allows milling at the mine for about 10 months a year, so if you assume about 40 weeks of mining @ $64,000/week, the one circuit would gross about two-and-a-half million dollars a year. Cut that number in half and you'd probably have a good estimate for the new primary circuit June-through-December 2015 production.
It seems to me that even if the production from the one circuit were only 45 ounces per week for only 20 weeks of the 2015 production year, that probably would be enough to make 2015 close to a break-even year for URHG after years of losses, with the stock price reacting accordingly.
- TTH
