coyote plant, page-18

I am a new holder of both ABU and TAM. Apologies in advance for the complex response - I just wanted to rule a line through this "toll treatment" suggestion with my 2 cents worth for those that want a bit more detail on the metallurgy/economic issues.

TAM do have capacity to toll treat but only if the head grade is substantially higher than what they have right now at coyote..... old Pirate is similar geology to Coyote and my understanding is that there has been a long standing offer of "toll treatment" , however this has been resisted by ABU because TAM want to charge a reasonable commercial rate. Coyote is actually run at 100% capacity and to process ABU ore, they must forgo their own production so it stands that this would only be if the head grade is substantially higher than what they have at Coyote. There are also other metallurgical issues.

Coyote and it would seem from recent metallurgical testing on Old Pirate that both have high grades with good gravity recovery rates (70%+) prior to feeding crushed and gravity stripped ore through the ball mill and CIP - that is very good. I suspect that Old Pirate will suffer from the same issues as coyote ore in that it is high in refractory arsenic being that the gold is associated with arsenopyrite which requires a fine grind to expose the gold for recovery with cyanide in the CIP. Any copper in the ore consumes cyanide also, but coyote gets around this by blending with ore from Bald Hill (Sandpiper, Kookaburra etc.) which is lower arsenic and copper. This ore is trucked from about 20km north of Coyote in road trains and would probably need to be blended with old pirate ore if it was toll treated. These are lower gold grades (about 1 g/t) but with substantially lower refractory arsenic than the pure coyote ore. About 20% of the gold remains and it all blends up to have manageable refractory arsenic and copper.

The grades are good at Old Pirate, but the new areas being drilled out at Coyote would be similar so the cut off grade for trucked ore from Old Pirate would have to be north of 20g/t to be economic for toll treatment. That would be a very small proportion of the available resource.

Bottom line in my opinion is that ABU are going to have to tap the market for $70M+ for their own crush and heap leach with CIP or they most likely will need $100M+ for ball mills and CIP. The window for capital is opening for new gold miners. Stand by for a capital raising in the next 6 months.