Trust in Mr. Demes' Gold Mining Project

by Tim Schutte
(Virginia, USA)

I have dealt with Mr. Demes in other aspects and trust him and everything he says.

I have downloaded the information sheets and am a little confused by the spreadsheets and your information above.

You say Let’s say your operating expenses work out to 30% of your gross production. The spreadsheet show PRODUCTION COST AND GENERAL OVERHEAD AND ADMINISTRATIVE at $1,000 per day (comes out to ruffly 30%). Is the operating expenses and Production and General overhead the same?

It seems when I look at the spreadsheet that you are charging 30% Production Cost off the top (GROSS) which I agree with. Then when the spreadsheet shows NET PROFIT DISTRIBUTION:
it only accounts for 70% of the Profit shown, so it seems 30% is again being taking out for Operating Expenses. So really we are looking at 60% in Production and Operating Expenses.

Am I reading something wrong?

Just trying to make sure I understand everything I am seeing (or not seeing). It seems to me that the NET PROFIT DISTRIBUTION: should equal 100% so there should be another line showing where that 30% is going.

Your Spreadsheet shows 15% taxes. Is that to Ecuador government? What is the expected taxes when I send the earnings back to the states? Thanks,

Stan's response: Thanks for your interest Tim. The spreadsheet is now a bit outdated and was created before I became involved with the project. I am working on a new spreadsheet now. Here is a very brief breakdown of the financial structure:

***************

20% to concession owner
25% to Robert's support services
55% to mine owner

***************

Total operating expenses = approximately $800 to $1,000 per day (1 excavator, 1 wash plant, crew, etc.) and are paid from the 55%.

Gross profit = production - total operating expenses

Ecuador taxes = approximately 15% of gross profit

Net profit = gross profit - Ecuador taxes

***************

Here is a *possible* scenario of monthly numbers:

Production = 250 cubic meters / day x 25 days = 6,250 cubic meters / month

Gold grade value = 1 gram / cubic meter

Gross Production = 6.25 kilos of gold / month

Gold = $35,000 / kilo = $218,000 / month

Miner keeps 55% = $120,000

Operating expenses = $30,000

Gross profit = $90,000

Taxes 15% = $13,500

Net Profit / month = $76,500


Your U.S. tax obligation is between you and your accountant.

I hope this helps. Please let me know if you have any further questions... Stan