Recent Gold M&A in Australia - Big Premiums on Acquisitions, page-44

The analysis/perspective I'm hoping that Telfer/Newcrest study teams are taking for Minyari is that feeding in Minyari ore has a very low incremental cost and protects the long term sustainability of Telfer. Without an alternative ore source, Telfer has a challenging mid term future until Haverion can supply meaningful quantities of ore.

Option 1 for Telfer is to operate at a reduced milling rate, however it has a fixed/variable cost base that is more fixed than most mines. The all in costs will be pretty ugly under this scenario. Examples of this high fixed cost base, their gas pipeline/power station arrangement....

Option 2 could be to reduce the workforce, however in this market it may prove challenging to get the right staff back in several years time. Not to mention that staff who have been there for a long time will be expensive to make redundant.

I like the scenario that Newcrest could buy Minyari for $250/Oz + generating value for current shareholders and Telfer, however am cautious that to Newcrest Minyari is not a silver bullet and would only offer 3-4 years feed based on current indicated resources.

If this was looked at from the perspective of the STI and LTI's for Newcrest's executives, earnings and FCF account for 50% of the weighting which would likely both be helped through the addition of Minyari ore into Telfer.