production estimates, page-14

BandwagonJumper,

Thank you for taking the time to make quite a lengthy post. I will attempt to respond to some of the many points you make.

In a few weeks time, the company will announce the first pour and the market will respond. (that's us!) We should have some idea of what to expect and that's why I made the calculations. You raise some doubts about these calculations and the formula I have used. I'm confident about the formula but as I tried to make clear, I needed to make assumptions and estimates about the numbers. I tried to be conservative but realistic.

The formula converts ore treatment rate to gold produced. I don't know if this will be of any help but I will break the formula down into parts. As you indicate at the end of your post, your own estimate is similar to mine so that puts us on the same track if not on the same wavelength.

Firstly I estimated grade. It doesn't actually matter where the numbers are placed in a series of multiplications. You end up with the same answer. I started with grade because it is in my area of expertise. The Beta Pit probable reserve is quoted by the company as 348,716 tonnes @ 4.11g/t. (In all probability they may actually mine ten times this amount from Beta pit alone) They are selecting higher grade ore and I used ore variability to estimate they could selectively mine ore averaging 5.7g/t.

Ore treatment rate I dealt with last but its going in here to make things easier to explain. This is in effect the size of the plant and is quoted as the number of tonnes it can treat in a year. 300,000t/y is the number I used although the original specs were a little less. If we multiply average grade in grams per tonne by tonnes treated by the plant we get the number of grams of gold going into the plant. Trouble is the plant isn't going at full capacity and it's not running for a year so we need to calculate how much it will actually churn out.

Next I estimated how frequently the plant would operate during this initial run. The plant is a very complex set of machinery and is not immune to Murphy's Law. It will need to be adjusted and bits will jam and even break. You mentioned the ball mill lifters. These come in a variety of styles and the best way to pick the right one may be after the wrong one hasn't been up to the task. The good thing is that even though the equipment is complex, CIP plants have been around for years, their design is well tested and there is a good skill base in WA, My estimate of 50% availability is supposed to be conservative. I would certainly like to see them do better with the first run but the grinding circuit in particular will need to be stopped and started all too frequently as the plant is adjusted over these first few weeks.

Phew, this is getting tedious but we're getting there.

Next I needed to know how long the plant would operate for its first run. It's been going a few days, we are expecting a pour mid Feb so I guessed 3 weeks. In the scheme of things, a day or two up or down is just another bit of uncertainty. Plant capacity is quoted in tonnes per year so I needed to turn 3 weeks into 3/52years

If we multiply grade times plant capacity times plant availability times years of operation we get the amount of gold going into the plant over this initial period. Anyone not strong on maths may get a headache about now as well. Could be worth taking my formula to someone you know and trust.

The gold coming out of the plant will be a bit less than the gold going in. This is because the CIP operation doesn't get all the gold. The company figure is 97% but I cut that back a bit because initially gold will tend to collect at various places along the treatment stream. As you say, quite some gold will remain loaded onto the carbon particles and this needs to be considered as well. However, this exercise is only supposed to be an estimate not an exact calculation. I estimated 90% recovery rate,

So the formula I used for my estimation is.

Gold Recovered in grams= ore grade in g/t X ore treatment rate in t/year X plant availability as a fraction X years of operation (actually a fraction of a year) X recovery rate as a fraction

By all means please have this independently checked. I am all for DYOR!