abu or current producer if you are a gold bull, page-33

I have been curious as to how many ounces we might add to our resource and open pit based only on what we have found to date since the scoping study and based on what I think is most likely to be defined by drilling below surface on those veins. I am only including for now veins which have had assays returned.

Eastern vein including today’s results (but still excluding hundreds of meters of extension to the north (where we have no results yet);

343ms with 0.9m average width at 15.42g/t.
Roughly 245ms of that is outside the previous resource.

No drilling to date so any estimate on ounces has to make an assumption on depth.
I expect this vein will extend to at least 250ms deep similar to other veins.
That seems most likely but even if this is wrong, there is a good enough chance there will be other deeper veins to be discovered through drilling to make up any difference.
I think, more likely we get both the Eastern vein continuing to at least 250ms and more parallel veins to be discovered by drilling.
I recently posted that I was hoping they would find other veins between the jorc resource and the eastern vein through drilling and today they announced they found two veins on surface in this region so more below surface now seems more likely. Ignoring that potential for now though;

Two sections of the Eastern vein outside the jorc resource are 185ms by 0.42ms ave width by assumed 250ms and 2.65t/m3 specific gravity at 30.96g/t equates to around 50,000oz;
And from today’s release, 63ms by 1.9ms width by 250ms assumed depth and 2.65 SG at 15.42g/t equates to around 38,000oz.
Total east vein outside of the jorc with assays to date and assuming 250ms depth and width below surface averages same as surface, should contain around 88,000oz.

For those that think 250ms is too much of an assumption, it doesn’t matter too much because I will only be looking at open pit potential to 125ms.
If the pit is deepened as suggested again in today’s announcement, say to 125ms, then that means we have the potential to add around 44,000oz to the mining inventory (and 88,000oz to the resource) through the part of the east vein so far reported on.
Keeping in mind this ignores the 250ms cumulative extensions to the north of the east vein yet to be reported.
The 44,000oz is only dependent on the east vein averaging 125ms in depth and I doubt very much a 343m long vein will not go much deeper.
I know that’s yet to be proven, but I am going with the more likely scenario for this exercise.

The other two veins between the jorc and the east vein add up to 110ms by .66ms average width by 15.83g/t.
Using 125ms depth on these veins, adds a further 12,000oz.
I use the same assumption that if these veins don’t continue to at least 125ms, there are likely more undercover that will make up the difference.
In fact it seems most likely to me that further veins will be discovered undercover by drilling to add to the ounces I have estimated.
If the pit is extended a further 25ms at depth from the scoping study 100ms max assumed depth I think that has the potential to add at least another 46,000oz of jorc resources to the 308,000oz contained in the scoping study modeled open pit.
I assumed 15% addition to the 308,000oz from a 25% deepening of the pit. I think this will be conservative.

Adding the estimated 46,000 from the jorc resource from a deepening of the pit to 44,000oz and 12,000oz of new veins assayed suggests to me we are probably going to add at least 102,000oz to the 308,000oz in the scoping study modeled pit (a 33% increase).
I should allow 10% mining losses but expect further veins below surface to be found through drilling will more than compensate so I will stay with 33%.
If they don’t I’m pretty sure northern extensions to the eastern vein will.
Recovered ounces should move up from 261,000oz to around 347,000oz from an initial open pit including additions from assayed veins only and a 15-25% deeper pit.
I see a very high chance the new prospect, Golden Hind, with 40ms of continuous visible gold will add further open pit ounces.
347,000oz total recovered from an open pit seems a reasonable target to me for now, ignoring northern extensions of the east vein, ignoring the 400ms from the Golden Hind prospect, ignoring a further 2kms plus of sampled outcropping veins and ignoring underground mining potential or potential to extend the pit below 125ms.
That’s a lot of exclusions.
Another important point is that the limited drilling to date has left a lot of gaps in the jorc resource below surface. It seems reasonably likely that those gaps will be filled with more drilling so boosting the contained ounces further even within the jorc resource area.
Chances seem very high that the open pit mining inventory/gravity plant recoverable gold will easily increase by at least 33% just on what has been reported on to date and assuming a depth of 125ms on these veins.
With much more sampled than reported on (over 2kms waiting compared to under half a km of assays reported, a 33% increase is likely to be just the start.
Grades in the veins reported since the scoping study are averaging well above the scoping study grade of 11.5g/t.
Scoping study estimated cash flow was 257mill after capex of 27mill (or 284 total). If that is increased by 33%, that would be $377mill or $350mill after capex.
In my opinion that is where we are likely to be after drilling confirms depth extensions on the new veins to 125ms but ignoring the northern extensions of the east vein and ignoring all of the potential of Golden Hind and most of the 2kms plus of other outcropping veins.
$350mill equates to around 10c.
That ignores corporate tax but also ignores a great deal of further upside potential at OP, Buccaneers 2.6mill oz deposit, Hyperion and the rest of our tenement potential.
10c seems a reasonable near term target to me.
It also seems reasonable to add at least another 1-2c to arrive at 11-12c allowing something for the exploration potential at Golden Hind and the other 2kms plus of veins awaiting assays.
What should we add for Buccaneer, Hyperion etc?
I have little doubt further assay results and drilling will boost the ounces much further before we see the 10-12c so even if the market wants to apply a reasonable discount I think we should have no trouble reaching 10-12c allowing for more success and eventually probably much more, and the best part- no higher gold prices required.
Looking forward to more results. I said that last time re the east vein and they came up with Golden Hind with the best length of visible gold to date.
What’s next!
So far we have had one positive surprise after another.