Tonogold Resources Inc (TNGL)

[joeblow110percent]

Surebob,

Thank you for your query. It gives me a chance to point out some real numbers on the Tonogold production costs and iron ore prices.

Look at the Iron Ore Mil-ler mine PDF on the Tonogold web site: http://www.tonogold.com/i/pdf/Presentation_Iron_Ore_2013_10.pdf
May I direct you to page 17 “Indicative cost per tonne savings with additional treatment facilities.” We are currently in the process of upgrading the processing facilities to produce a higher quality product and reduce the penalty on each ton (page 8, 13 & 17 on the PDF). We are basically adding a procedure that will make the iron ore more pure and thereby increase the amount that we are paid per ton. We are also going to switch from transporting our iron ore to the nearby port with trucks to rail transportation. There is a rail line that you can see in a photo in the PDF on page 16. The train in that photo is literally sitting just a few feet from the project. These changes will reduce our cost of production and increase our profits per ton. The changes will put our cost per ton at $51.70 (estimate, page 17).

On June 13, 2014 iron ore with 62 percent iron content being delivered to the port of Tianjin in China was paid $90.90 a dry ton. $90.90 - $51.70 = $39.20 per ton profit (estimate). Iron ore prices have fallen over the last six months or so. I have been told that our production cost are 60% less than all other iron ore producers in the world and 100% less than all of the major iron ore producers in the world. I don’t have a link to prove that but the point is that we are among the lowest producers of iron ore in the world. If prices fall further it will put the higher cost producers out of business. That would reduce supply and prices would then rise or at least stabilize.

“Iron ore is used to produce steel and represents just under 95% of all metals used” (page 24). Even if the world wide economy gets much worse, the need for iron ore is not going to go away. We are one of the world’s lowest cost producers and will be there to supply the world with its iron ore needs. There is also some significant risk that military conflicts will escalate. I hope that does not happen but if it does; we will be there to supply the iron ore that will be needed for that challenge. There is always opportunity in risk.

JoeBlow110percent