Ann: Maiden resource for Mapawa LSY deposit, page-7

Some quick back of the envelope calcs:

Let's say there is 5Mt at 1.4g/t that an open pit can be wrapped around and made into a reserve with more drilling. Give it 90% recovery and a 5:1 strip ratio.

That is recovered gold of 202,550oz.
If we are generous and say the value is USD1200/oz then there is USD243M in revenue.

For every tonne of ore there is 5 tonnes of waste so 6 tonnes to be mined to present 1t for process. At $5/t there is $30/t of ore mining costs. For 5Mt that is $150M in costs.

Let's say that processing is $8/t (just a guess - I am sure someone who has read these parts of REDs reports could be more accurate) then the cost is $40M.

Transport over 20km and the cost of loading road trucks and then rehandling to a ROM would be at least $4/t so that adds another $20M.

This leaves a profit over mining 5Mt of ore of $33M. Not too bad but I have upgraded the resource to reserve to a grade greater than reported, also used a high recovery, used what I think is a strip ratio on the low side and I have not included admin costs, taxes, royalties etc.

I think it looks marginal at best and without a high grade zone via open pit or UG I cannot see this really looking like it has any potential. Maybe if they heap leached it would be better but the real cost is in the strip ratio; maybe my guess here is wrong and it can be extracted at 2:1 or less???

The idea of having supplemental feed during the UG operations is good as the UG could not fill the mill and you cannot run a mill at partial rate/speed.

Be interesting to see how this develops and hopefully it is good news.