Tonogold Resources Inc (TNGL)

[joeblow110percent]

Iron Ore Quality Low Iron Ore Prices Q&A

Iron Ore Quality:

Improving the quality of the iron ore during the milling production process is accomplished by adding a wet magnetic separation procedure. This would give us a higher grade iron ore taking us from a 58% to a 61% Fe. That would reduce any penalties on our iron ore, giving us an economically profitable iron ore product.

Adding the wet magnetic separation is easily accomplished. Check out these two short U Tube video’s that show this process in action and how it works:

Mark Ashley, with his nearly 30 years of mining experience worked out the numbers on this on page 16 of the TNGL power point “Annual Shareholders Meeting June 23rd 2014”. http://www.tonogold.com/i/pdf/AGM-June-23-2014.pdf.


Lower Iron Ore Prices:

Tonogold can produce a high quality iron ore at estimated costs of between $51.70 and $55.24 per ton. This is among the lowest production cost in the world.

• “At current Fe price ~300 million tonnes of iron ore is being produced at a loss
• Tonogold expects to be less than $60/t providing significant protection from
short-term price weakness.
• Over 50% of global production will be under-water before Tonogold”

That is from page 12 of the TNGL power point “Annual Shareholders Meeting June 23rd 2014”. http://www.tonogold.com/i/pdf/AGM-June-23-2014.pdf

“Rio breaks even at around $US44 per tonne, while BHP comes in at $US55 per tonne. Mount Gibson's cash costs are much higher, at $US84 per tonne and Atlas's sit at $US80 per tonne. Fortescue Metals Group breaks even at around $US70 a tonne.”

“… clearly there's a problem with regards to their margins, especially in an environment where some of these companies are carry heavy debt levels," Mr Lele said.”

More details: http://www.smh.com.au/business/mining-and-resources/miners-in-spotlight-as-iron-ore-drops-below-us100-per-metric-tonne-20140520-38kjx.html#ixzz3NEQv3w9F

Note: Tonogold with the Miller mine are debt free and we can operate with production costs estimates of between $51.70 and $55.24 per ton. We will be profitable when 50% of the iron ore industry is operating at a loss, and many of them will be servicing huge debt obligations.

For more details on Mark Ashlye’s estimates for TNGL production costs see page 17 of the Iron Ore power point: http://www.tonogold.com/i/pdf/Presentation_Iron_Ore_2013_10.pdf
Or look at page 18 & 19 of the TNGL power point “Annual Shareholders Meeting June 23rd 2014”. http://www.tonogold.com/i/pdf/AGM-June-23-2014.pdf

India and Guatemala have significantly increased taxes on mining operators which has contributed to troubles for miners in these countries. India has gone from three years ago being the third-biggest iron-ore exporting nation in the world, to today not selling a single gram overseas. More than three quarters of India’s iron ore mines are lying idle. India is now, looking like it will turn into a net importer of iron ore.

The iron ore industry is consolidating. Only the lower cost producers will survive. This will close down a lot of production, shrinking world supply. The equipment from these closing mines will be sold at fire sale prices which could also benefit Tonogold.

Consider also that the price of everything goes in higher and lower over time more or less in waves. The current low iron ore, gold and silver prices will not stay low forever. By the time prices come back the high cost produces will be gone. The lower cost producers who are still in business will benefit hugely.

The truth is we don’t have to be profitable to have the TNGL stock price go higher. A lot of companies operate at a loss, currently including many iron ore producers. Once we put additional assets into the Tonogold portfolio people will invest based on expected future earnings and asset value. The market cap and stock price will benefit and a profitable income stream will just be the icing on the Tongold cake.

A great example of a company that is steeling shareholder value and is still traded on the NYSE is Comstock Mining Inc (LODE). Back in November of 2009 the LODE stock price was at $4.45. Ever since then the Comstock Mining (LODE) management has run this company into the ground. Last Friday 12/26/14 the stock closed at 69 cents, up from a recent low of 60 cents. I have been adding to my Tonogold position by shorting and buying put options against this loser. I even heard a rumor that the management at Comstock Mining inc. (LODE) is shorting their own stock? This is a great example of a company being run into the ground by horrible management. The opposite is happening with Tonogold which is positioning itself for some significant future moves higher.

Falling IO prices hurting Chinese companies (BLOOMBERG)
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Tonogold Top Ten - October 2014
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Everything U Need to Know on TNGL- October 2014
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This is my humble opinion and speculation. Please look at my past posts to understand where I am coming from. This is not a recommendation to buy or sell. Do your own DD.

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