Risk on, page-22

Hi Bayhunter,

Good to see your enthusiasm holding up.

Whilst the study talks about a 6 month theoretical payback the final payback period will likely depend on the Mine Plan at the time of signing. As I understand it the lenders will want to be paid back well before the measured and indicated resources have been exhausted.

Also important to realise that there is no production in the first 6months of the mine plan and the plant ramps up from nothing to forecast production over the next 6 months so in the first year only 25% of forecast annual production occurs.

The original 3 yr mine plan was forecast to process 1.4 mt. of ore per annum for 2.25 yrs. and earn $225m of free cash flow from operations.

The likely revised mine plan could be 4 years processing 1.5 mt. PA over 3.25 yrs. Using the economic study grades and costs, after allowing for a 15% increase and the additional 2.5% royalty, I get the revised plan earning $84m PA ($ 273m over the 3.25 yrs) of free cash flow from operations at todays prices.

It will be interesting to see how much cash needs to be injected to finance the mine development at todays projected costs, keep the exploration drills rolling while thats happening, fund the Corporate and any other non operating costs and provided a decent contingency for all the things that will inevitable go wrong.

We certainly look like being an attractive funding proposition at current prices. Let's hope we don't have to suffer too much dilution. Risk management is of course an important issue that the board will hopefully take seriously without being overly conservative.

Good to see HGO in the top gainers list.