Ann: Chairman's Address to Shareholders, page-24

Oz based goldies are lucky that the AUD fell back from 80 cents down to the current 75.25 cents against the USD. At AUD80 cents, the AUD POG would be $100 lower at around $1550 and high cost operators like SLR would be trashed within an inch of their life - it would go under 25 cents in the current market.

That $2m net profit SLR announced in respect of the last FY made the market wake up a bit. However, that includes depreciation and amortisation which would the profit figure a lot less than the net cashflow for the year.

As flaming says, they have a useful cash stash to keep them alive for at least the whole of next year if the POG crashes, plus perhaps operating margins will improve in 2018. However, they will continue to spend a lot of their surplus cash on exploration in order to increase mine life (including converting resources into reserves) plus opening up new mines as existing reserves get depleted.

I do not know why anybody would rank SLR along with RSG. There is no comparison, other than the fact that RSG's share price is currently depressed as it redevelops its two existing long life mining operations. In that regard RSG is facing the same sort of market sentiment faced by other companies in transition such as AQG, whose share price has also halved.

At some point SLR will be worth a punt for ride when the gold price turns. That could be this month or early next month.

The video with Les Davis brought back memories. Les was a very good spruiker and somehow I never trusted him completely even though he made me good money. I kept being worried about the real cost of the Mt Monger underground operation, rather than just the cash cost that they used to reveal. Eventually in the second half of 2012 I got their CFO to admit that one needed to add the mine development costs (about another $350-400/ounce of gold produced) to get at the full cost.

I then felt the fear of God and sold out at $2.80, but the market proved me to be a fool because the share price then went for a second run up over $3.50. Boy did I feel mad, but I knew that it was all a gamble based on the greater fool theory and even though I did trade it few times as it went down below $3.00 somehow my fears enabled me to quickly exit it each time without any financial damage. I traded it in 2015 for a nice profit.

There is a lot of luck in this game, and I hope everybody understands we are gambling and not investing in the spec end of the gold producers. If the AUD POG was at 1250 then SLR would have to close down and go on care and maintenance.

GLA

loki