Ann: Trading Halt, page-33

"It is not the reserves that have been reduced by 15%, but the grade. If you reduce the average grade by 15% then you should expect the reserve to decline by more than 15% as ore on the margins is no longer economically viable."

Can you explain this further?

In an underground situation like at Westralia where the ore is largely contained in one differentiable rock type where grades fall off very sharply between the ore and the host rock at the rock margins, it's unlikely in my opinion that the volume of rock used in the ore reserve estimation is going to change very much. Maybe in areas where the average grade is not deemed to be representative anymore due to nugget effects, as outline in the updates, they might decided to remove the whole area from the ore reserve but given the original plan had AISCs as low as about $1,000-1,150/oz I can't see why they would shave tonnage and hence more ounces than a reduced average grade would dictate, particularly considering the price of gold has also strengthened since the date of the last reserve estimate. The open pit reserves are another matter but indications were that the grade was improving from those and they didn't represent a problem (if you believe them). Also based on current reserve estimates 49% of DCN's reserves are based on open pit resources so if they remain unaffected then any downgrade on the reserve base, if any, will be restricted to only 51% of the current reserves which should limit the amount of reserves lost on any re-estimation. Esh