3 million ounces, page-35

re: * 3 million ounces question to tas Tas,

I understand your comments re cashflow - the cashflow that KCN throws off is huge, but at this stage a large amount is being reinvested into exploration to maximise the ounces prior to disposal and therefore maximise the value of the business. Also large amounts have been spent on acquiring land. Per the announcments basically all land required for Prospect A mining have been acquired.

I agree that the OXR ground next to Chatree is more significant to KCN than OXR - but KCN don't need it at all, there is so much gold at generally better grades than the OXR land. Also, the OXR land is not the big in the scheme of things. Also, I understand that OXR don't own any of the land. KCN could do a deal directly with the landowner, wait for the OXR exploration licence to expire the explore themselves. Without the landowners permission or purchase OXR can't do anything. The OXR ground by itself isn't sufficient to justify building a plant. I understand that if necessary, they can just work around the OXR ground until OXR ultimately give it up. t wouldn't surprise me if KCN will be sitting on 10m ounces of gold within 5 years even after producing over 750k ounces in that time. There is basically gold all over the place there and KCN have exploration licence applications covering over 1,500 sq km.

In relation to the corporate structure - why would they implement a structure resulting in diluting their ownership interest the mine? That is a terrible suggestion. I would assume that KCN are negotiating with the Government in relation to the ownership structure, which I think has been stated in announcments that they will be offering some clarification soon. I agree that they need to do this as soon as possible to remove any uncertainty (warranted or not).

However, why should KCN rush into something if they think they can obtain a much better outcome for shareholders. The current position is quite clear - they needed to sell 51% interest withint 5 years of first gold pour. Let's see if they can improve on that position. If not, they will still receive >$100m from the sale.

In relation to a possible float of the interest ... about 18 months ago, the first local gold float occurred of a company in China. It was over-subscribed 100 times and was initially priced at a decent premium. I'm not saying that a Thai float of Chatree will have the same result, but it will be significant and many people will want to have an interest in the first commercial gold mine listed in Thailand.

I agree that the grade comes off the bottom line - but if you can increase the plant size, without a significant increase in operating costs (which they can) then the impact of the grade drop is not as significant as you would suggest.

To understand that they can truck ore from 100km away at less than 1.9gpt and still make significant money puts it into perspective. Per the last quarterly they have identified 3 anomolies within a 25km radius. Have a look at the infrastructure - it is excellent. The political risk is also low. Thailand is actually a reasonably good place to do business - a lot better than most people reaslise.

A big issue they have is hedging - about 50% of production, so the upside from the gold price has been reduced. But that also means that the downside from a reduction in gold price is also reduced.

Kind regards
Marvin the Mindreader