Ann: Recent Metal Prices Impact on Project Financ, page-3

re: Ann: Recent Metal Prices Impact on Projec... When does the impact of metal prices (mainly gold) impact on the DFS project plan which currently leaves most of the gold in the ground (at Kundip)until 2020 (Year 7 of the mining plan?????????

I am no mining expert for certain, but looking at the recent territory expansion TTR has made for future growth it seems that the Trilogy and the Trilogy style repeat deposits seem to be the longer term focus and could possibly all wait with the priority now logically on gold.

The gold resource seems to be focused in the known historical areas around Kundip. It will be great if there are further shallow extensions and underground opportunities elucidated but I don't think gold is part of the far and wide search suggested by the territory aquisitions. It is probably more about copper and base metals with silver and gold as bonuses.

I like the idea of "making hay while the sun shines" so I would have thought it would pay to get the gold/copper at Kundip going first. I think this was the original plan back in 2005/6 using a first tranche of funding. With the second about 18 months later to fund the expanded plant for base metal production following a period of pit development in parallel with Kundip mining. I think the original plan must be even more viable than it was back then. It was only last year that the "more conservative" plan to start with Trilogy was proposed.

You would think to get Kundip up and running would be a lot cheaper, quicker and more profitable than starting with Trilogy. TTR got a relocated & renovated gold plant operating up at Burnakurra (a logistically difficult area) in about nine months for "small change". OK it did have problems ultimately due to "bottlenecks" that required a bit of extra capital expense to sort out (by another company). Surely though you could get a gold plant up and running near Ravensthorpe and be in production sometime next year (subject to funding and approvals). I know GZ has always been keen on this option.

The problem I see for this plan is that some influential people with close associations with TTR probably have a lot at stake when it comes to the constuction of the Phillips River Plant (if they get the job!!!!). The big dollars for them fit with the current project plan. So revising the plan for a quick grab for the gold would not suit. Initial toll treating (as they did with the old Kundip ore stockpiles) while a simpler gold plant is set up down on the farm property or near Kundip would not sit well. The more I think about this and who have been involved in developing the plans for the processing facility the more paranoid I am getting. Maybe it had even something to do with Steve's reasons to move on (pure speculation).

If you apply commonsense to what may happen in the future to the gold price (which may be fundamentally appropriate based on economic cyclic theories) it probably looks pretty good in the short to medium term (perhaps 3 to 4 years). After that you would know the high prices will encourage a lot of new mine operations (e.g. Africa, Brazil) and supply coming on even though it is getting harder and more expensive to find. On the global financial scene I guess things will take some time to get back to "normal". Inflationary pressures and localised economic uncertainty may last for a while but you would expect confidence will start to returm within a few years. Supply and confidence will dent the gold price of course..........probably just when TTR is planing to crank up production at Kundip in the current scheme of things.

With world wide economic recovery in a few years you would then expect copper and base metal prices to be on the rise - and that would be the best timing for Trilogy you would think to start producing! A recoving US dollar at that time would also assist Foreign exchange implications for Australian miners.

As I said I know very little about the intracacy of mining but logically with the gold price looking good there must be a time when the margin on gold over rides the current project plan and there will be less risk getting Kundip up and running first. It may then even go a long way to funding Trilogy and longer term exploration and mining.

So thats my response to the recent announcement "Recent Metal Prices Impact on Project Financials". Pity it did not also encompas "and project plan".

I would love someone with mining management experience to rebuff the logic of what I have put forward!