Ann: Change of Director's Interest Notice - M Anderson, page-70

Unfortunately only the Board have all the facts before them to make that informed decision. I think management & most of the Board are 1st class so I'm sure the decision was a sound one.

Speculating, I'd offer the following.

Firstly I was caught by surprise & I consider I follow FFX fairly closely. I thought a debt facility would see us through.

Secondly you don't advertise an equity raising for fairly obvious reasons, they do have some large capex coming up as revealed in the amended reserve statement released Feb 9, I've summarised that below.

Their cashflow is probably fairly lumpy, a big gold miner does not want to be left with not much money in the bank at any stage. I'd even suggest the Ganfeng deal requires us to be at a stated liquidity level, it will be a joint loan they organise (not necessarily guarantee it). The Macquarie process would not have been cheap either.

I'd also suggest their timing was actually fairly good. They waited for the Ganfeng deal to finalise, and the dust to settle with the local politics. With the directors buying shares I'd say the drilling results are further away than I thought.

The loan facility is still going thru, so their cash requirements were above that. They only plan to mine the Satellites for a year before moving to the main pit. An alternative would have been to mine the satellites for say 2 years, then move to the main pit. I know which alternative I'd prefer.


US$5-6m ($1-2m spent already)processing plant and associated infrastructure, tailings storage facilty(TSF), and satellite pit dewatering
US$15-20m for haul rd & prestrip at least 2 or more satellites
US$30-40m Main pit cut back, dewater
US$5m short-medium term TSF - long term being assessed