quarterly, page-17

Hi crisstoff

Working back from the average prices they received for the Lead and Zinc and the operating cash flow produced (8.6m) and an average USD/AUD of 0.89, I estimated the cash cost to be around $0.91 per pound. Not bad considering they are still operating at the bottom of the mine with only one decline, mining lower grade, harder ore (which means less zinc/lead and lower recoveries).

I would expect them on current prices (before last nights rally) and the expected increase in production due to 70% being in the middle/higher grade part of the mine, to produce operating cash flow around 15-16m per quarter. I been quite conservative and assumed costs to remain steady though you would expect them to drop a bit due to the operational improvements coming through from now on. The company has forecast steady state costs of $0.70 per pound and they seem to be on track to achieving that. (and if lead stays high exceeding it))

Note: Due to the high price of lead the cash costs per pound of zinc can be very volatile as the credits from lead production can move around quite a bit.

Cheers

J