Ann: Quarterly Activities Report, page-47

Good summary @speculator101. You're a big supporter which is fair enough, Richard has done a great job over many years and very well by holders. I also did well and have huge respect for him, at one stage in 2015 he was working from home out of a PO Box I heard... so close was he to going out backwards. A great story of tenacity, integrity and the critical ingredient of luck.

Having dealt myself in with a more cynical (realistic) read of the Qtrly, woke up deciding it isn;t fair to fly by and seagull without a bit more effort to understand what's going on. The u/g headline figures looked bad, even compared to a revised lower mine plan, and the Qtrly text indicated dilution was an issue being resolved with thicker blast hole rods and RC grade control drilling. It shocked me more than regulars because I had in mind 300,000 Oz Year 1 production @ $497/Oz AISC from the last time I looked, including 200kt of very high grade u/g ore.... nothing like the numbers so far. What gives, surely it's not just about chasing some lower grade ore outside the Reserve?

"We are currently tracking really well against the production plan and guidance that we released in March.... So we are on track to meet the range of 250k-280k produced at an AISC of $720-800." Obviously I missed the Mar21 Reserve downgrade is what happened. Approx $100/Oz of ASIC increase from higher royalties, head office and extra site costs, community etc. A little more extra ASIC increase from sustaining capex, but otherwise lower gold production compared to the Apr19 mine plan explains the rest of the rise. No wonder management and share holders are happy tracking against guidance, a lowered bar is much easier to climb over and hit targets for performance rights etc. If at first you don;t succeed... lower the bar lol.

Directly comparing the Apr19 vs Mar21 mine plans reported on different time scales is too hard (ie mine years vs calendar years) but we know there has to be great grades coming from u/g sooner or later. I doubt Apr19's M1Sth UG Year 1 plan of 243kt @ 20.5g/t has disappeared, I'm sure the good stuff will arrive in time to meet a generously wide guidance range of 250-280k Oz. Still, writing was on the wall in the Mar21 Reserve update as I'm sure this thread was all over. New Reserve flagged the same dilution issues alluded to in yesterday's Qtrly report that I called out, regardless that last quarter chased some lower grade ore outside the Reserve.

Table shows the change in M1Sth UG between Apr19 Reserve to the Mar21 Reserve update (still excluding M1Sth Deeps). After a good 9 months of mining experience the company increased dilution assumptions by 12% in tonnage, correlating with a 11% drop in grade, for approx same contained gold after mining depletion.


This higher stope dilution assumption may or may not prove accurate over 2021. Obviously they have experienced higher dilution against pre-mining assumptions, raising the question whether 10% higher dilution is conservative or aggressive. What are the real dilution problems to date, will the thicker D&B rods and RC grade control drilling meet this higher dilution target?

Some management guide for gravel then deliver diamonds which tends to better run the share price and more easily meet lowered performance targets for rights freebies etc. Some guide for gravel and hope like hell they can reach it instead of delivering sht. In my experience it depends on how bad the news is. eg DCN was in so much trouble they couldn't be honest continually overstated reconciliation and future performance while hoping for a miracle. WAF isn;t in any real trouble, so I think they have lowered expectations enough there is little risk of not meeting new targets.

Regardless, they wouldn;t have increased UG dilution in the new Reserve without good cause... imo they're clearly having dilution trouble aren;t "exactly where they want to be". Where they want to be is 1.88Mt @ 10.2g/t, not 2.1Mt @ 9.1g/t. Many on HC take umbrage to my suspicious approach that all ASX companies report by spinning the very best story out of any situation. In my experience you have to look beyond the positive spin with a critical eye to see how good things really are or what is being swept under the carpet.... even if management are not lying they will not spoon feed you bad news. Mark Twain wasn;t far from the mark when he said "a gold mine is a hole in the ground with a liar on top".

Richard is one of the good guys though and not a liar, not even sweeping dilution issues under the carpet. I haven't read all WAF releases but my guess is neither has he shined a spotlight on issues either. Happy to be corrected, but UG dilution issues looks like one factor in how WAF got from APR19 to MAR21 production and AISC numbers, and something to keep an eye on.

Good luck