Ann: Scoping study underway for Ironbark gold deposit, page-9

Apologies in advance for dumbing this down however I want to avoid any confusion. I am also happy to be corrected on any of these assumptions.

Mined gold is obviously worth more than unmined gold due to the cost of getting it to the surface and processing. Last night the AUD gold price hit $5,140oz. But gold-in-ground is not worth that much due to costs involved. Turned into gold bars a million oz is now worth over $5 billion and getting it to that stage can be achieved in several ways including mining and processing it ourselves and toll treating in a third-party plant.

Costs of mining and processing can be expressed in cash costs or AISC. The former is lower because it doesn't capture all the other operational costs in the way that All-In-Sustaining-Cost (AISC) does. Due the current gold price margins in Australia are very strong indeed.

I have provided a few examples below which show cash costs ranging from AUD$800 - $1,000 per oz and an AISC ranging from AUD$1,030 at the low end to AUD$1,515 at the higher end of the scale, either way we are looking at a profit of more than $3,500 per oz if mining ourselves. That's $3.5 billion profit, minus the cost of the plant. I could be wrong, but for less than $50m we should be able to setup a decent plant which could also process any of our new deposits as they come on stream. This should be easy enough to fund via a gold loan.

I can't provide costs for toll treating however given the high price of gold it should be well less than a 50% profit share in my book. At a guess, let's say AISC of no more than $2,000 -$2,100 (including toll costs) for profit of AUD$3,000 per oz or $3 billion.

On the same basis, for Ironbark alone we should be able to turn a profit of $300m (based on 100,000 oz) or $100m per annum if we can complete the work over three years.