Chala- DNG's New state of the art mill
This brand new state of the art mill will be more profitable, have higher recovery rates and attract more miners ore than any other toll mill in Peru making DNG the #1 in the business & king of toll milling in the country.
it's connected to the electrical power grid (not run on diesel).
it's on the Pan American hwy (better accessibility).
it's built in Chala, which is surrounded by 100's of miners.
brand new facilities for the workers.
good proximity to larger population for work force.
wired for the latest high speed technolgy and computer operating systems.
more secure & security than other more remote mills.
larger property for years of expansion and tailings ponds
brand new equipment.
brand new mill - (will arrive on site for assembly any day).
Economies of Scale.
Simply put: producing 200 tpd is not twice as expensive as producing 100 tpd.
There are overheads and expenses that remain consistent or increase at a rate much lower than 1:1, particularly in a public company. These include:
Cost of paying management
Costs associated with sourcing ore
All the other expenses required to run a public mining company
In addition, it doesn’t take twice as many people to run a 200 tpd operation as a 100 tpd operation. Smaller operations require nearly the same number of technical staff (the highest paid) and support staff (cooks, cleaners, etc). They require less operators – but the costs associated with feeding, housing and transporting them decrease nominally.
For smaller operations, overhead expenses are going to eat up a larger percentage of the profit. At 100 tpd, they may eat up all the profit.
Additionally, since small mills are relatively cheap to build/buy, they’ll be competing with a host of private operators that run on similar economies of scale … but don’t have to worry about all the expenses associated with running a public company.
Since almost every company entering the space references Dynacor as a model, here’s what the CEO of Dynacor says on this subject:
“At 100 tpd, as a public company, we couldn’t break even. To survive we increased the throughput of the operation as much as we could, cut the operations crew to the minimal number of people, and the entire senior management took a 25% pay cut.”
Dynacore stuck with that strategy until they could afford to expand the mill and increase throughput to a profitable scale.
Be wary of companies not planning on processing more than 150 tpd.