buy buy or sell ??, page-59

A friend spoke to GCY about 10 days ago. Below are the highlights.

Material movement will increase ~10% in the December quarter to 5.5mm BCM mainly because:

• the certification of the Dalgaranga airstrip will eliminate the need to fly into and of Mt Magnet
• GCY plans to use its spare 5th excavator more frequently

Going forward, if NRW does not meet the material movement target, then GCY’s payments to NRW will be reduced. For example, if NRW misses the target by 10%, GCY will pay NRW 10% less. However, the mining contract had a grace period, so GCY didn’t benefit from these payment reductions in the June and September quarters. Since GCY’s processing costs are low relative to its mining costs, I believe the payment reductions may reduce the risk of a large cost overrun due to low material movement.

At the time of the call, 70% of December quarter production had been grade-control drilled and assayed. GCY was still targeting 1.1 g/t inthe December quarter.

In the September quarter, ore releases were less consistent than expected – particularly in August. Thus, GCY had insufficient ore for themill. In October and especially in November, GCY will start building stockpiles. For example, in November GCY expects to process 240 tonnes while stockpiling 120 tonnes. The stockpile should continue to grow for the next several years.

GCY expects to announce commercial production in October(less likely) or November (more likely and perhaps at the AGM).

In the next few days, mining will prevent the RC drill rigs from doing more grade control drilling. The rigs will then move to Tanqueray for a 2-3 days before returning to the pits for more grade control drilling. Drilling at Tanqueray will initially be close-spaced so GCY can understand the geometry and orientation of the mineralization.

Also, on a call in August, GCY had said that it was not having any issues with its banks or loan covenants.

Finally, last week my friend spoke with a few broker analysts, who viewed the board changes favorably because they increase the board’s operating experience.