copper price, page-28

Considering a DFS is the basis for capital appropriation I think its a little late with the majority of the project paid for and due for completion mid next year. At this stage you should of made up your mind to be in or out without the DFS

Now if your in, the next point is to determine if this project will be profitable. We do know that we have a JORC compliant resource and a detailed study would of only used those figures available. We also know Lycopodium produced a Order of Magnitude in 2010 based on a resource of 30.9Mt @ 1.24% Cu Eq resource and a processing plant of 3Mtpa. The results of that was mining costs of $3.48 per tonne and processing costs of $14.07 per tonne.

Using the new resource Cu Eq of 1.7% and taking into account strip ratio's for mining its safe to assume using a little maths that this is where they have arrived at the current estimates of 42.29 cents per pound for mining and 38.92 cents for processing. At C1 costs of 81.21 cents and using the order of magnitude accuracy of within 40 - 50% its reasonably possible these costs could increase to $1.21 which in my view still leaves plenty of meat on the bone.

Order of magnitude

Order of magnitude feasibility studies (sometimes referred to as "scoping studies") are an initial financial appraisal of an indicated mineral resource. Depending on the size of the project an order of magnitude study may be carried out by a single individual. It will involve a preliminary mine plan, and are the basis for determining whether to proceed forward with an exploration program, and more detailed engineering work. Order of magnitude studies are developed copying plans and factoring known costs from existing projects completed elsewhere and are accurate to within 40-50%.

Preliminary feasibility

Preliminary feasibility studies or "pre-feasibility studies" are more detailed than order of magnitude studies. A preliminary feasibility study is used in due diligence work, determining whether to proceed with a detailed feasibility study and as a "reality check" to determine areas within the project that require more attention. Preliminary feasibility studies are done by factoring known unit costs and by estimating gross dimensions or quantities once conceptual or preliminary engineering and mine design has been completed. Preliminary feasibility studies are completed by a small group of multi-disciplined technical individuals and have an accuracy within 20-30%.

Detailed feasibility

Detailed feasibility studies are the most detailed and will determine definitively whether to proceed with the project. A detailed feasibility study will be the basis for capital appropriation, and will provide the budget figures for the project. Detailed feasibility studies require a significant amount of formal engineering work, are accurate to within 10-15% and can cost between ½-1½% of the total estimated project cost.