Ann: June 2017 Quarterly Report, page-33

BD

They only mined 615k tonnes during the quarter, but milled 896k tonnes of ore, which means that they had to access the ore from the lower grade stockpiles to make up the tonnage put through the mill. Hence the blended milling ore grade of only 0.93 g/t.

Looks like my concern about the MACA deal is turning out to be right - they are a dud operator in Brazil and high cost (no doubt this is within what is allowed under the deal that Bower signed that goes to end October 2019). Notice how they never split up the costing between mining and processing like almost all other goldies reporting their operations (its probably a requirement under the TSX rules). Well only another 27 months left in the MACA contract before they get replaced for lower cost and better performing local company. I can not believe MACA is failing to maintain the fleet properly, but is what BDR has claimed - I think its been an ongoing issue.

Lots of problems here still getting approvals, funding the plant upgrade, meeting all debt to be paid to MACA (need to check how much is left there - did not get mentioned in the report).

Notice that this is the first quarterly they have not given us any information about movements in their stockpile, and what the grade is left. That way we can not ring them and ask question about their accounting of costs and why the stockpile contains the same or less gold then previously reported but its "value" has gone up.

Looking forward to seeing the financial report as at 30 June 2017 to see if accounts payable has gone up or down, what they are valuing the stockpiles at, and their debt levels. It would be difficult to make decision to buy shares otherwise except for a short term gamble.

Perhaps another capital raising is needed , say issue 200m shares at 15 cents to raise $30m to get the company to the point that they have finalised the $27USDm plant upgrade by mid 2018.

I do not believe that they will reach their annual target of 140-150k ounces in 2017. The lower limit of the target would mean they produce 88k ounces in the next six months. I reckon they will do around 38k ounces in September quarter and maybe (if the grade is high enough) possibly 45k ounces in December if they can get the milling grade up to 1.77g/t, which is a big ask given their past history (without a Duckhead ore supply). The mining operations during the first month of the September quarter is often still rain affected. At least the mill seems to be running OK.

A higher gold price would help.

GLA.

loki (waiting for the half year financials to give me more guidance - I think it may get released in August).