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MCO - Morning Star Gold

Discussion in 'Stocks I-P' started by moses, Dec 3, 2006.

sentifi.com

Aussie Stock Forum Sentifi Top themes and market attention on:

  1. saltyjones

    saltyjones saltyjones

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    martha

    this stock is consolidating now around 25c with the silly sellers having dumped their options too low also. i reckon we have some big announcements in the coming weeks to look forward to. reading between the lines in the quarterly, & checking out the website on the employment section (u/g mining personal required!!!!!!!!), then i would say we are mining shortly, if not already.

    also, the july Jorc will include 1. present u/g drilling results
    2. 2006/7 channel sampling
    3. 1995 - 7 + 2002 & 2005 drilling results
    4. 70% of the 45,000 pages of the old WMC archival records have been digitised & entered into the computer resource model. to get an idea of some of that work just check out the website EXPLORATION POTENTIAL & look at the V-line deposit on level 20/21. heaps of gold there averaging 118g/t Au.
    5. the rejigging of the 1998 resource report by morrie goodz that came to 430,000 ounces for the surface & level2 - 10.
    6. the 1993 resource report from level 11 - 25 of 50,000 ounces.
    7. grade factoring which historically came in at 2fold - 5 fold.

    so, MCO is about to move beautifully back into the 30's - 40's - 50's in my mind. cheers
     
  2. saltyjones

    saltyjones saltyjones

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    This research paper describes my expectations and confidence in Morning Star's upcoming JORC resource statement, due in July, which only includes the morning star dyke located at woods point in victoria. I would also like to point out that the top 20 holders hold 54% of the issued shares as of May 2008 demonstrating that there are many strong holders who have confidence in the company. Furthermore, on the morning star gold MCO website under the page EXPLORATION POTENTIAL you can verify most of what I have written. If the company holds to the range of the initial JORC as stated on the website, which I assume they will in order to strengthen the share price, the JORC would include:


    1. The 2007-2008 underground drilling campaign results from the 7 sub-level and the level 9 south area

    Many of the drill cores contain visible gold with one assay measuring 1392 g/t Au over 0.38 metres. Up until 7/5/08 (the day the website was updated with fresh info) a total of 43 underground drillholes have been completed in the renewed drilling campaign using company owned diamond drill rigs.

    2. The 2006-2007 channel sampling of burns reef, whitelaws reef, campbells reef, tills reef and other reefs from levels 4 - 9 & more recently to level 10. channel sampling usually involves 2 - >5kg individual rock samples.

    The average grade was 68 g/t from more than 200 samples to date

    3. The 1995-1997 and the 2002-2005 surface trenching and drilling campaigns by MCO

    The announcement of 29/7/1999 regarding the AAA-S2 vein system says "... 140,000t @ 5g/t to 11g/t gold inferred resource ...from recent company drilling". I believe that the AAA-S2 reef is close to level 1. This is just one example of known mineralisation in the upper levels of the morning star dyke from the drilling campaigns of the 1990's. However, while this particular reef may not fit the JORC model due to insufficient drillholes perhaps (?), it never-the-less does indicate the potential in the upper levels above level 4. furthermore, the AAA -2 reef was not included in the 1998 resource report.

    4. WMC archival records which include over 40 years of meticulous weekly production records and drilling results

    About 70% of the 45,000 pages of archival records have now been digitised into a computer resource model. Most weeks the company has 2 people working full time digitising records into a Gemcom model. The archival records include over 600 drillholes that were drilled pre-1961 by the previous owner GME (WMC). The stopes and drillhole assays range from nil to 17608 g/t. In the case of the 17608 g/t sample over a 1.5cm quartz vein (kenny's reef), the diluted grade was approximately 130 g/t over a 2 metre mining width. The archival records would include production and assay results etc. from surface to level 25. WMC drilled to level 32 (equivalent) where drilling finished at a depth of about 1100 metres, still within the mineralised dyke.

    5. The original Morrie Goodz report from the surface to level 10

    MCO has a 1998 non-JORC resource that measures 430,000 ounces. This report, written by Morrie Goodz, utilized data from the WMC archival records for the underground part, and for the surface assessment Morrie Goodz called on the substantial trenching program of 1995 to 1997. The underground part of the report only included the 13 lodes of the Main Shaft workings from level 2 to level 10 (announcement of 22 july 1998). In other words any lodes NOT associated with the Main Shaft workings were left out of the report.

    I have no idea how many more lodes are outlined in the archival records from levels 2 to 10. The company concluded the 1998 (non-JORC) report on the resource of 430,000 ounces with the added note that due to grade factoring "it is not unreasonable that the potential recovered grades may be twice those outlined in the reports" (page 10).

    6. LEVELS 11 to 25

    While there is not much archival data for levels 11 to 14, the zone below, from levels 15 to 25, has very precise archival records; as WMC were looking at production there in the early 1960's before abandoning the mine due to a low gold price.

    In the 4th quarter report of 1999 (29/7/1999) the company mentions that "from level 11 to 25 there has been no change to the 1993 estimate of about 300,000 tonnes at between 3.6 g/t and 14.2g/t Au ... although significant alterations would be likely if computer modelling were to extend to these depths".

    In 2008 we now know that computer modelling encompasses the dyke from surface to level 25 (approx.). On the MCO website under "V-floor" you can see some of the progress being made on digitising the archival records data. Alas, that 1993 figure suggests a 50,000 to 60,000 ounce resource from levels 11 to 25, on top of the 1998 non-JORC resource of 430,000 ounces from surface to level 10.

    7. Grade Factoring

    MCO is a nuggety quartz reef system which means when core is assayed, if the drill missed a nugget by centimetres, then the average grade might be for argument sake 6 g/t Au, but when in production the same reef may average 28 g/t. This discrepancy between the average grade from the drill assays versus the average grade of gold poured at the mill is called "grade factoring". Historically, based on 5 years of production reports against assay reports, this leads to expectations of grade factors of 2 fold to 5 fold. the mention of Grade Factoring can be found on page 9 in the 1998 resource report by morrie goodz.

    Note: the JORC due in July will encompass only the morning star dyke. Presently the company is about to begin drilling waverly dyke about 1 km away, which the company regards as having excellent potential for future mining.
     
  3. dorevans

    dorevans

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    salty,

    excellent material you have produced for further study

    so the JORC compliance document due in July looks like being something like 1 million ounces of reserves and resources from what you have written - any other readers here like to make some other estimate?

    and from the average of all the channel sampling it looks like the milling grade will be something like 68 g/t - that's a rather spectacular grade to be milling and I cannot judge how much of that material there is but since these channel samples were taken fron numerous places I guess there's plenty of it

    and looking at the material you describe in the "upper levels" I assume grade factoring will be applied to them leading to a very substantial resource there as well

    "Many of the drill cores contain visible gold" which adds further to the belief that there's plenty of high grade ore around

    and grade factoring will lead to 2 to 5 fold increases from drilling results converted to actually produced gold

    so the JORC looks like it will be something special and part of some sort of grand strategy:

    1. JORC in July

    2. feasibility study about October

    3. cash raised via the MCOOA options expiring in December

    4. full scale mining begins early 2009

    what do you reckon?
     
  4. saltyjones

    saltyjones saltyjones

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    dorevans

    the surface resource of about 130,000 ounces @ 2+g/t Au would be an open cut operation that would attract an environmental hurdle i suspect. hopefully they still include the morning star hill resource in the jorc in-any-case.
    the levels 1 - 4 i may not be as rich in grade as all the levels from level 4 & below. just a hunch. that area would be more economically viable if the price of gold went to A$1500 no doubt. just that the halo effect around the old mine workings would become payable dirt then. so the upper levels above level 4 may be the last areas mined possibly. not that i know. just a hypothetical thought.
    levels 5 - 6 would be a whopper of a grade no doubt. burns reef channel sampling, from the northern aspect, came in at an average grade of 356g/t Au (announcement of 27/2/2007). a pretty good average grade when compared to some of the w.a. mines that average 2 - 4 g/t Au.

    all in all it is looking swell to say the least. must have some more assay results coming thru soon too from the u/g/ drilling.

    how would you compare MCO against some of the w.a. gold miners?
     
  5. dorevans

    dorevans

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    salty

    comparing MCO with the West Aust miners

    most of the WA miners are extracting and processing at less than $80 per tonne

    some of the WA miners are able to extract and process at about $30 per tonne

    this lower number would be when the ore is friable, the open cut not very deep (minimal transportation), the processing plant virtually next door, and the mill totally automated and very efficient

    for an underground quartz mine such as Morning Star the extra cost of extraction is the drilling and blasting

    so what is the cost of drilling and blasting one tonne of typical Morning Star ore?

    my DCF software says less than $20 per tonne (that's a cube measuring about 750mm by 750 by 750)

    so even allowing for the most adverse situation it appears that Morning Star could extract and process at less than $100 per tonne ($80 for the WA miners plus $20)

    now for the calculations:

    here's the basic formula: - the cash costs per ounce equals dollars/tonne divided by the grade in ounces/tonne

    so for a bulk grade of 1 oz/tonne the cash costs equal $100 per ounce

    for a bulk grade of 2 oz/tonne the cash costs equal $50 per ounce

    and for a low bulk grade of 0.5 oz/tonne the cash costs equal $200 per ounce

    proof IMO that Morning Star is going to be a very low cost producer compared with the WA miners
     
  6. So_Cynical

    So_Cynical The Contrarian Averager

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    dorevans...perhaps im missing something or don't quite understand what your saying...but theres
    no miners with Aussie operations, mining at $200 per ounce, in fact i know of no producer with
    Aussie operations with per ounce costs under $500 or so (Quessestimate)

    So i doubt very very much MCO will be able to produce at under $500 per ounce.
     
  7. dorevans

    dorevans

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    SC

    I have checked my numbers and my calculations several times and cannot find any error

    perhaps you can show me where I have made an error in my calculations

    I have been told that in-house costing models demonstrate that $200 per ounce is feasible

    MCO will be selectively extracting and processing very high grade ore
     
  8. So_Cynical

    So_Cynical The Contrarian Averager

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    As u can see from the comprehensive Aust listed Producers chart below...$500 per once
    is the lowest cost at the moment...so MCO would be doing something extraordinary
    to produce for less than that.

    {Quote Link Below}
    The red line is the Total Cost per Ounce (TCO). As was previously explained, this is the
    EV per ounce plus the Cash Cost per ounce plus any development costs that remain in
    order to bring any feasibility study stage projects into production divided by the total
    number of resource ounces.

    http://globalspeculator.com.au/documents/AustralianGoldCompanyComparison.pdf
     

    Attached Files:

  9. dorevans

    dorevans

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    SC

    total cost per ounce is quite different to cash cost of production per ounce

    have a look at Dominion (DOM) to see the truth of this

    my numbers are cash costs of production per ounce
     
  10. saltyjones

    saltyjones saltyjones

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    guys..........these geological terms, that you see in MCO announcements, are described beneath, with input from NG & the geo's at woods point.

    1. The ‘contact’ as we refer to it is purely the surface over which the iron rich gabbro dyke is in contact of the sedimentary rocks surrounding it. The dykes are mostly tabular or sheet-like bodies formed when molten rock (magma) is injected into steeply dipping fractures. Erosion commonly exposes the dykes as surface outcrops . Some are in fact cylindrical like ‘Tubal Cain’ in which case the term stock is more appropriate rather than dyke. There is often good Au grade at the contact as the dykes are generally fault bounded. The faulted contact provides a conduit for upwelling hydrothermal fluids that react with the dyke rock to precipitate gold.. The fluids also pass along low angle ‘reverse faults’ infilling them with quartz, carbonate, sulphides and gold. Much of the gold mineralisation occurs is these so-called ladder veins and associated footwall and hangingwall stockworks.


    2. Dyke extension refers mainly to lateral extension of known dyke occurrences. In some cases, the lateral extent of the dykes may not have been previously recognised.

    3. Fault Displacement results in stepped displacement of the dyke contact due to off-setting resulting from fault movement. These offsets mean that there is the dyke overlying sedimentary rocks or vice versa where offsets occur. This happens at many loci along the dyke/sediment contact . Often the magnitude of lineal/horizontal sense of these ‘displacements’ is a good indicator of the size of reef running through the centre of the dyke. (This statement is not strictly correct. It is possible to have a large offset with a relatively thin reef along the fault). It can shear off and cause offshoots and even other dykes (No! Other dykes can only form through separate intrusions). There are a large number of parallel dykes intruded along faults throughout the Walhalla synclinorium they are not restricted to 3 shear zones.

    4. My small understanding of ‘Cohen’s Shoot’ which was part of the series of reefs I believe that were mined in the famous Long Tunnel Mine is that yes there was a lot of gold along the contact with the sediments but they were in fact mining similar reefs to what you might see around Woods Point. Yes, however, Cohen's reef is associated with a major sub-vertical shear.

    5. The Waverly dyke of which there is very little knowledge of other than it outcrops persistently over around 5km and was worked to a shallow depth for some good grades. The geology is again similar to the Morning Star in our preliminary assessment but drilling will tell us more.
     
  11. saltyjones

    saltyjones saltyjones

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    does anyone have any thoughts on this remark in the 2005 annual report (page 6) :

    "twelve intersections of quartz veins & pug zones within the sedimentary country rocks with significant gold values, suggesting a Cohen's reef - Walhalla style of mineralisation, the presence & proximity of a previously unknown dyke or a new gold-bearing mineralisation".

    my only thought at the moment is that the co., back in 2005, had recognised that something special (as outlined in the previous thread header) was happening at the CONTACT. i can only assume it is to do with the northern 7 sub-level area (east face) as that was the initial zone that u/g drilling focused on.

    just a few bits of info for anyone interested in a comparison between the historically rich Cohens reef & the quote in the previous post about CONTACT/sendimentary hosted "significant gold values" at the Morning star dyke.

    "Cohen’s Reef, historically the most productive gold deposit in the Walhalla-Woods Point Goldfield, is a predominantly sediment-hosted, shear zone-associated, laminated to massive auriferous quartz vein system, in close proximity to a thin (< 1.7 metres) hornblende-diorite dyke. The reef was mined to a depth of over one kilometre, and produced 46 tonnes of gold (Ramsay and Willman 1988).

    Cohen’s Reef is sediment-hosted but dyke-associated...

    The known extent of Cohen’s Reef is approximately 1500 metres long and 1134 metres deep, along the valley of the township of Walhalla. The extensive and continuous reef is predominantly a laminated quartz-carbonate vein with some associated stockwork veins, and in places incorporates sheared dyke and meta-sedimentary rocks.

    The ten highest-yielding gold deposits within the Walhalla-Wood’s Point Goldfield are either dyke-hosted or dyke-associated/ sediment hosted".

    ((material source : Nature of gold mineralisation in the Walhalla Goldfield, eastern Victoria, Australia ))

    also, i have been posting this stuff (for the fun of it) as it is obvious that the morning star dyke has a very interesting CONTACT/sedimentary-hosted mineralisation at the east face (maybe also the west) that is turning up big Au grades; & has been known about by the co. for several years.

    and secondly, Cohen's reef gives us an historic precedent that reflects what the co. is looking for at waverley i.e. looking for predominently sediment-hosted GOLD.
     
  12. martha

    martha

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  13. saltyjones

    saltyjones saltyjones

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    martha

    seems that MCO is starting to awaken from its hibernation. bought my last lot yesterday & just in time it seems.

    cashflow positive this year from the Maxwell project & Waverley dyke drilling just needs visible gold in the drillcore & we will be away. also, i suppose only 4 weeks away from the jorc. i suspect we will be drinking champers in the months of july thru to december, when the 2nd jorc will be released.

    also, did you see the Aegis report on the website under 'press clippings' ? stuff we already know, though thru Aegis more people are becoming savvy of the co's potential.
     
  14. saltyjones

    saltyjones saltyjones

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    the Jorc is out. 910,000 ounces @ 6.12g/t Au................big news. the market will notice MCO now!
     
  15. So_Cynical

    So_Cynical The Contrarian Averager

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    Ann released after market close....good luck to the holders.

    http://www.morningstargold.com.au/images/mornstar---eapui.pdf

    ♦ Underground JORC Resource component of 726,000
    Ounces Gold (2.0 Million Tonnes at 11.2g/t).

    ♦ Large near surface JORC Resource component of
    184,000 Ounces Gold (2.6 Million Tonnes at 2.2g/t).

    lets keep in mind that some of this Gold is very deep.
     
  16. grace

    grace

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    Shares and options on issue 161 mill @ 21.5c = MC $34.6 mill

    910 000 oz (grade 6.12g/t) = $38/oz on todays share price.

    I did own this one for a while last year, and have been following the story for some time. It certainly has been years unfolding, but holders must be more than a little excited to finally have it formally confirmed what they probably already knew for some time.:)

    Should be a good day tomorrow I would think.;)
     
  17. dorevans

    dorevans

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    grace

    or playing with the numbers in another way:

    161 million shares for $874 million worth of gold

    each one share equals $5.43 worth of gold
     
  18. martha

    martha

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    Thought we might have seen a bit more on the upside today? Maybe because of the gold price coming off a bit.......
     
  19. So_Cynical

    So_Cynical The Contrarian Averager

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    Current market sentiment towards juniors and POG, remind me of
    that TV commercial from the Advanced Medical Institute.:D
     
  20. saltyjones

    saltyjones saltyjones

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    martha.........i reckon we will see some sp movement north when the markets stabilise. also, the first gold pour in a couple of months approx. will put the cat amongst the pigeons. after that remarkable Jorc report followed by the quarterly (littered with new info) it is easy to see a MASSIVE high grade gold story brewing here.

    also, the reams of info on the Grade Factoring in the jorc clearly establishes that drillhole assay grades underestimate production grade by up to 11 times (Burns reef on level 4 - 5- 6 in this instance). if the Maxwell project comes in with a grade factor of 2fold on the 12+g/t the co. conservatively estimates for this ore body then we are well in the money.
     
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