Financials and the Price of Gold

With effective, Mining Alliance believes that the financial position for the first two years of operation in relation to the first joint venture alone will be as follows:

Year 1 Year 2 (10% inc)
Gold produced                  108 kg              118.8 kg
Value     US $4,952,469    US $5,447,715
50%             2,476,234            2,723,857
Set up costs                650,000                     0.00
Direct cost of mining (12%)                594,296               653,725
Indirect costs                400,000               400,000
Profit (before tax) 831,938 1,670,132

These figures assume an extraction rate of 3 grams per tonne.

At the time of preparing this information, gold was trading at about $1,300 per ounce. From the later 1990s until mid-2011, the price of gold increased progressively from $220 per oz. up to over $1,800 per oz. and, although the price of gold has fallen in recent years, since the beginning of 2016 it has been rising again.

There are currently mixed views about whether the price of gold will get back to the highs of $1,800 per oz. and increase to as much as $2,500 per oz. in the next few years as some experts predict. However, for the purposes of this project, it does not matter. Even if gold were to fall as low as $500 per oz. (which no one is predicting) this is still a viable and sustainable profitable business. If, on the other hand, the bullish financial analysts are correct, the profit to be made from the investment becomes even more substantial.