Ann: Vares Project Production Guidance & Update, page-10

Yes the ramp up profile is much slower than the DFS especially in the first year. It seems they have smoothed production out from year 2 so that production in the first 6 years is lower than the DFS but then increases significantly above the DFS from year 7 and continues at a high level to 2040. Production is over 17 years. The increase in metal produced matches the ore reserve increase quite closely.

I am intrigued why they decided to use the low grade stockpiles in the first year. This is quite unusual as most mines use the low grade later on (ie towards end of mine life). Are they waiting for metal prices to increase later in 2024 into 2025? These are the quotes with the second quote perhaps suggesting they are deferring mining the high grade ore and reducing ore processing in 2024 in order to maximise revenue at higher metal prices from 2025. While the market may not have reacted well to this strategy it is a good strategy IMO at least for longer term holders.

"The guidance is based on the additional drilling, mineral resource estimation and advancing higher grade development at Rupice and Rupice Northwest, but down blending of ore is planned during the initial months of plant feed from lower grade stockpiles to facilitate plant performance optimisation."

"Upon sustaining nameplate parameters, the Company's strategy will be to maximise high NSR material in accordance with future metal price expectations."

The real big difference in year 1 between the DFS and the update is the amount of ore processed being 638Kt in the DFS and only 270Kt in the update a reduction of 58% in processed ore. That is a very big difference. Are they being conservative?

I also note they are looking at years 3 and later to produce above 800kt nameplate capacity.