Ann: Quarterly Activities Report, page-13

Hold management to account? How? Why?

They’ve slipped a little on the ramp up curve, hardly unforseeable, or unexpected in the current trying circumstances for miners.

And “actual” costs are up a little. Well since the budget was done inflation has really set in, not just the spike they may have expected. And diesel in particular, well it might have been reasonable when doing the budget to have expected the war in Ukraine to be brief, and for other factors to also be transitory and therefore for the diesel price to have subsided. They would hardly have been using the spot price in May, they had to make assumptions (or buy them from market experts).

And very importantly you need to understand how the metal credits (Cobalt and Copper) interplay with production and the unit costs. Unlike for say MCR these credits are very important to PAN’s cost reporting. The Cobalt price guidance is now down a third from budget, and because production is to the low side there may be a volume of credits impact as well.

You need to understand that it is the gross costs (ie before subtracting credits) that get’s inflated. On a unit basis each of these are adversely impacted by lower production as well as having unfavourable changes themselves. In short many things are compounding to drive C1 costs much higher.

But many of the things that are working unfavourably on PAN’s cost structure are also working to keep the nickel price very high. If you follow miners for a while you will find that when commodity prices rise almost inevitably cost pressures rise.

You really need an understanding of payability and of the byproduct credits to understand exactly what you should or should not be holding management to account for.

I did try in July to persuade you to use the DFS to understand these things, but you weren’t interested in anything but wearing your rose tinted glasses, and preferred to listen to (that notorious ramper) Tomboy. You have yourself to blame (not management) for your current disillusionment. Imho it’s more to do you your lack of empathy with pen, paper and calculator than to do with management accountability. Even if management isn’t the best, are you going to find better replacements in today’s mining job market?

EL