Ann: Trading Halt, page-41

Hi Ebor and other disappointed long term holders,

Whilst I have empathy with your disappointment it's important to remember that Lachlan hasn't made any misleading statements about Cu and Au production that I recall.

He did tells us the mine had been developed on time and in line with costs which would be supported by the fact that they got there without having to raise more capital.

We are now revisiting the 2016 experience when the copper price dropped to $1.90 which was HGO's breakeven point. Unfortunately it occurred at a point where the pit wasn't deep enough to be past the average strip ratio and the free cash flow from operations at the lower price wasn't insufficient to fund the ongoing capital cost of stripping.

It's important to realise that:
* the UG mine development cost continue to burn cash flow at about $4.5m /m during the ramp up from processing 550 t /month to 1,400 t /mth.
* the drop in copper price rips $7.6m pa out of the free cash flow operating at 40% capacity.
* a five % increase in costs will rip out another $6m pa.

We shouldn't blame Lachlan for the $1000/ t fall in the copper price. Blame Hamas, the Houthis and Putin and his comrades for that.

We shouldn't blame Lachlan for the circa 5% increase in costs that isprobably coming this year. The blame for that lies with the Government.
*Our absentee Prime Minister claims his greatest achievement as Prime Minister was buying an engagement ring without anyone knowing. Thats one thing I agree with him on.
*Our Energy Minister has handed the cost control over energy prices to the Greens and Teals.
* Our Treasurer has destroyed incentive and all the good work Paul Keating put into reducing incentive busting taxes.
* Our Industrial Relations Minister has destroyed all the good work Bob Hawke did in getting strikes and inflation out of the headlines and trading wage increases for productivity increases. Collective bargaining and forced union membership along with the thuggery is back in town.

Inflation and giving up hope and incentive to achieve a better life is the name of the game under the Albosleezy government.

P.S.

Lachlan did tell us the discovery of fault 1066 had ripped tonnage out of the mine plan. Those who attended the Perth conference may have gained a better impression of what that meant in terms of short term cash flow. At a macro level it was, stand alone, not considered to be price sensitive.

Given the current copper price and likely increases in costs that are coming should he have flagged a Capital Raising was being considered and smashed the price down due to uncertainty in the lead up. Certainly not, it may have been obvious to some but announcing a CR in the absence of a trading halt before there is a decision to do it is a very price destroying event.



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