my responce from cc, page-24

$27M after costs for the stockpile is to be achieved over 1 year - currently they are making that in one quarter by processing their high-grade mille feed - no blending is going on.

If IGR mines another 2Mt of this material and stockpiles it in the next 2 years, they will have 3 years of feed for their mill by 2012, producing a $27m pre-tax operating margin per annum thereafter - this is from the MD's mouth people. Nett of tax, this is $18M per annum profit, but don't forget to take out overheads, exploration and development. If you wish to pay a 16x forward PE for this it infers a market cap of $288M for IGR based on the 3 years of processing of the stockpile. That is, of course, if you would pay 16x PER for a company with a proven 3 year earning profile beyond which earnings are unproven.

CC can make legal threats as much as he wishes, and you can all stick your tin-foil hats on your heads as much as you wish regarding my relationship to hedge funds, but I stand by my analysis that IGR's current last quarter results are not indicative of long-term profitability of the company.

The other inference is that the resources are +2g/t and they are processing at 3-4g/t; this means they are stripping the cherries out of the Resources and depleting the metal content of the remainder to leave lower-grade material behind. Commercial sense or not this leaves the lower grade bulk of the Resource to be processed later, for less profit than is being realised at the moment. This is my argument.

This explains why IGR is at 43c today and heading lower over the coming months (my inference being "The Market" has figured this out and this is why IGR is no longer 60c).

Chris Cairns's defence of his plans and potentials means nothing for the fundamentals unless he is suggesting the company will treat Majestic like it does the rest of its Resources; pull the high grade 3g/t material out, stick it through the mill, capitalise its low grade stockpiles and leave the processing of this till later (profitability longer term to be determined by whatever AUD gold price prevails at the time).

But eventually they have to treat the low-grade material, and what will the gold price and operating costs be in 3 or 4 years time? Nobody knows.

He says it gives them the ability to blend with other ore sources - yet one would asume that a multi-pit multi-source mining oepration with a resource base quoted at 2g/t would blend to that grade to achieve an overall average grade over the course of a multi-year mining plan, not try to jam high grade stuff through on year one to score some flashy runs. ie; do they have a plan to run on their average grade or just their high grade?

To do otherwise suggests that you believe that you can only make money high-grading and to treat your low grade stockpile is best left till later for some "commercial reason". If that commercial reason is they believe its better to make 1 year of $27M per quarter profits and 10 years of $27M per annum profits, it is basically saying that you'd better pay forwar IGR shares based on the long term earning trends for the company not on its current quarter results. This is my argument.

Chirs Cairns says "As for the claim that the stockpile is marginally economic - that is rubbish - I am sure that other gold companies (Catalpa, Navigator, Norton, Norseman) would love that grade. We currently calculate that our breakeven grade is about 0.7g/t so the implication is that we have a 100% profit margin on 1.5g/t material."

First point. If it is so cheap to truck it to the Superpit, why don't you do it now and cpaitalise on the notional $45m profit the superpit could deliver you (minus toll treatment)? The NPV of that is probably better for you ($45M it seems, vs the $27M yu claim to be able to make from it0 than holding off and jamming it through your own mill. A furphy of an argument, as it proves my point entirely that it would make sense to turn the last 12 months of digging costs ($13M) into profit now by toll treatment. To do otherwise you have to discount the value of the gold against the time-value of when you intend to treat it - which appears to be 2+ years if your maxwells resource/reseve conversion delivers you more 4g/t dirt to toss in the mill in the interim.

Yes, Chris, Catalpa would love that material. But unless you've got your head in the sand, you'd realise that Catalpa and Nortons have mills which are well north of 1.25Mtpa (indeed, up to 10 Mtpa) and have unit costs well below yours will have running on 1.5g/t dirt. Whats their unit cost for processing 1.5g/t dirt, and why is it so low? Could it indeed be that you are quoting at me cases where companies with multi-million ounce deposits of low grade dirt have matched them to mills with appropriately large throughputs, allowing them to obtain low cost-per-ounce of production and hence make their 1.5g/t dirt quite profitable? Why, yes, i believe you are indeed comparing your tiddler of a mill to the gigantic maws of Nortons' Paddington operation, which is in fact a "distortions of pseudo facts" because your cost per ounce of production as per your last quarterly report is based on a grade nearly 2-3x theirs, not on what you will actually achieve when you run your mill on 1.65g/t dirt.

I mean, really. I am quite flattered that someone believes I am a NY based hedge fund shorting this tock for personal gain (I am not). I am also flattered that the MD is happy to have his views put on HotCopper to expose his logic as being as flawed as mine, except he gets to talk about 'potentials' as a justification for actuals (production) whereas I prefer to analyse based on factuals without the likelihood of nebulous upgrades 9which in any event merely will delay the treatment of the stockpile anyway).

To make this clear: I infer, from Integra's last quarterly production data, that they cannot maintain their current profitability beyond the Maxwells orebody or any source of 4g/t ore, and thereafter they will make less money in the future when they treat their low grade stockpiles, and that this is why the share price is suffering. You may buy, or indeed sell, on whatever interpretation of this you wish.