Ann: Quarterly Activities Report, page-86

Hi Mudguts

For the quarter, the All in costs were AUD 11,840/tonne and realised price was AUD 7,676/tonne so they lost AUD 4,164/tonne. Based on annual production of 16,000 tonnes this equates to an annual loss of AUD 66 million. Having said this, this calculation is flawed since the All in cost includes capital cost to improve the project - in the quarter MLX spent AUD 11.1 million on improvements ($8.8 million on Mine capital development, $1.9 million on equip rebuilds/vehicle replacement and $0.4 million on infrastructure upgrades) - these costs don't occur each quarter. A fairer measure is All In sustaining cost (AISC) - this was AUD 9,569/tonne so against the realised price of AUD 7,676/tonne they lost AUD 1,893 per tonne or AUD 30 million per annum based on 16,000 tonne production. The cash cost was AUD 8,104/tonne (AUD 428/tonne more than realised price).

Whilst these number are not good, costs/tonne can drop quite dramatically if MLX can significantly increase production.

I would summarise the current scenario as follows:

- MLX strengths - excellent Tin project generating strong cashflows AUD 7 million plus per quarter, no debt (huge plus as significantly reduces risk), Nifty and Renison have significant reserves and resources.

- MLX weakness - Nifty is performing poorly, potentially requires capital investment so a capital raise would not surprise

Personally I think that at current price of $0.27 MLX is a very, very good buy. It may go a bit lower with a capital raise but I see limited downside and the price could rally strongly if they can continue to improve Nifty's performance and ultimately make it profitable. To me the issues with Nifty are not unsolvable, the metal is there, the mine is a proven performer historically, it just needs some TLC, capital investment and good management. IMO and DYOR