Ann: Pantanillo Gold Project - Metallurgical Review and Update, page-2

R U guys (and gals) doing your homework and research?

Have you listened to the materials that tell you what this all means?

It's possible the ASX doesn't value RoM heap leach gold projects the way the North American exchanges do, reminiscent of say hardrock spodumene mining as the "only" way to get lithium (when Brine projects have far better economics and DLE improves that further. Rio Tinto gets it). Australia does have some heap leach projects but not anywhere near as many as the Americas.

I posted lots of comps ... none more important than RIO2 ... but there's quite a few more to review. Everything in italics I've clipped from transcripts of relevant presentations and interviews.

"... when it comes to gold mining economic viability is driven by three key factors: low-cost mining methods; large-scale resources with expansion potential; and access to infrastructure... "

We probably should focus ourselves on low-cost first. This is the narrative that is repeated worldwide IMO - figure out where our project fits into the narrative.

"What attracts us to this whole heap leach game is simplicity. These are oxide deposits and some people ask me what's an oxide? Well, an oxide is simply the near surface expression of a sulfide deposit - these things are at surface and generally they're very amenable to easy open pitting, which is a very well understood.

We know how to drill, blast, load and haul. Then you have a very simple metals extraction process, where you simply lay down an impermeable layer; stack the material on top of - whether it's crushed or run of mine dumped out of trucks - you irrigate it with a solution; the solution dissolves the gold and you simply pull the gold out of the solution; and then recirculate that solution and keep going. At the end of the mine life you simply cover the heap and basically the mine is then complete.

You don't have tailings facilities, no water consumption, no high energy consumption, they are very simple from a technical point of view – yes there is complexity in understanding the detail - but at a high level, these are very simple, very efficient, very cheap operating mines and success typically comes from your ability to mine efficiently at a good cost base, because the overall largest component of the operating cost per ton in a heap leach operation is generally the mining cost.

If you're an efficient miner - good open pit operators who understand how to move dirt cheaply, who understand their fleets, understand the loading efficiencies and as a result of that are able to mine profitably grades that on the face of it, sort of look almost impossible - that is very attractive."

But what does it mean....ROM heap leach simply means you dig it up and put that ore straight onto the leach pads - no crushing required (so no Capex for Crushers). And the Opex??

"the operating cost of these open pit leach operations - our PFS had US$9.11/ton but US$10 is probably a good number and what I like to tell people is a gram of gold is worth about a US$100 (at US$3,200/oz). That means 0.1 of a gram of gold recovered gives you US$10. My operating cost is $10/ton, meaning 0.1 gram recovered pays all my operating costs and that is the definition of a break even cutoff grade!"

I''ll let that sink in for a moment. 0.1 gram of gold recovered pays all the Opex to process a ton of ore that contains say 0.4g/t. So while the grade appears low (and it is low when you look for the big double digit g/t in drill holes in those underground mines) BUT its the economics that matter. Look at Pantanillio. Look at Fenix next door. Look at projects in the USA, Canada and Mexico. I'm quoting a CEO from a project in the USA.

Pantanillo will change FLG - the economics are too good to not go ahead. Do your research