While 3rd quarter results were negatively affected by poor...

While 3rd quarter results were negatively affected by poor production levels and a high N.Z. dollar, the N.Z. mines still generated significant cash flows. Just looking at the $30m decrease in cash is misleading. The company keeps most of it's cash in Aus dollars, but reports in U.S. dollars. Assuming all cash is in Aus dollars, then cash would only have decreased by $11m Aus during the quarter ($180m Aus at 1.07 vs $169m Aus at .966). In addition, the company used $6m to pay down tradepayables and employee , benifits, and used $7m to increase trade recievables and prepaid expenses. Stripping out FX losses, and making adjustments for changes in other components of current assets and liabilities, the N.Z. mines generated sufficient cash flow to pay $20m capex in N.Z., $17M IN Philipines, and still increase working capital by $2m.

Looking forward, capex in the Philipines is projected to increase to $30m per quarter, which would indicate a draw down of $11m per quarter in working capital. However, a slight increase in production combined with a $.75 N.Z. dollar would add substantial cash flow, allowing the company to essentially continue to build Didipio from the cash flow generated from the N.Z. mines.

This brings us closer to when Didipio is in production. When this occurs, instead of Didipio being a cash drain of $10m per month, it should generate a cash surplus of $12m per month, or an annual change of $264m. A superficial analysis of the change in the cash position last quarter may cloud a proper analysis of the actual cash flows generated in N.Z., and obscure the economic potential of OGC when Didipio is in production