After implications of the 2021 MRE were buried under a positive...

After implications of the 2021 MRE were buried under a positive spin, the 2019 DFS mine plan has it's first run through the the new model. 350m of vertical development (to approx 950mRl) and extending ~750m north to south, it's only low grade Inferred material in the very south deeps that was left out as per below.


By comparison, the Update22 mine plan loses a lot of that southern upper Apron ore, but does take advantage of deeper 2020 drilling to drive ~100m deeper into Inferred Core zone resources. Transposed the yellow 2019 mine plan outline to show changes, though the detail is lacking given the Update22 doesn;t show mine stopes. Net sectional mine development area looks approx the same, but 2.3Mt lower ore production demonstrates the problem of shrinking tonnage per vertical meter. Inexplicably, more likely outrageously, average tonnes per vertical metre fell from 46,600t in 2019 to 40,000t in 2022 according to company releases, though my maths says it dropped to 31,000t/vertical m. I'll dive into the details later but there's plenty of reported numbers make me go mmmm.


As an ex-mine geo, going deeper into a VMS to report lower tonnage MRE and Mine Reserves is a def red flag. Not just lower tonnes/m, but you're chewing through the deposit 'upside potential' quicker while going backwards. Not such an issue with Archean greenstone shear hosted lodes that go on for ever, but Abra is a VMS demonstrably shrinking into it's roots. Where the 2019 MRE and Mine Plan had Open stamped in all directions, another 25,00m drilling extending the mine plan to depth and that downwards upside is not so open anymore. This 2019 Abra deposit wireframe well shows the flower shape of what is almost certainly an isolated single deposit (could be others nearby).


The Update22 release only compared the old and new Mine Reserves, but didn;t mention 100m of extra depth was required to still fall 2.3Mt short of 2019DFS. There is some copper-gold upside in the root of this VMS, but reality is 100m of depth upside touted in 2019 just disappeared and it looks to be pinching out quickly. You should see why I was aghast with the company flicking out the Update22 with a one page table brief like it was no big deal, the company analyst chiming in "no change".

Changes not just in deposit morphology but mining assumptions. Room and Pillar (RAP) for shallow dipping Apron ore was replaced with Long Hole Open Stoping (LHOS) only (LHOS cheaper and higher recoveries but not necessarily for shallow dipping ore bodies). Dilution grade outside planned stopes 2.75% Pb for Apron and 3.5% Core Updste22, vs 4% and 5%. 56.3km development vs 51.5km DFS2019. I mentioned tonnes /vertical m earlier, well riddle me these numbers.

2019DFS... 16.3Mt Reserve, 350m vertical Stope development; 16.3M div by 350 = 46,571t/m... spot with DSF screen shot below.

Update22... 14.0Mt Reserve, 450m vertical Stope development; 14M div by 450 = 31,100t/m... verses Update22 screen shot below


OK, most of the Update22 mine plan sits within 400m vert depth (35,000t/ vert m) so they must be talking about only the very thickest part of the upper mine plan right. No, it's simply misrepresentation... 14Mt div by 350m (as per 2019 mine plan depth) = 40,000t/vertical m, except the Update mine plan is ~100m deeper than 2019DFS. I know the game, call it an 'honest mistake' or 'a simple comparison' but fact is this is one of many examples through the Update with 'mistakes' or non-credible numbers. That these errors flatter the new mine plan and minimise the apparent downgrade from DFS2019 may all just be coincidence.

When was this new mine plan and it's material changes to the DSF2019 known? IMO it was mostly done by mid June'21 for Taurus so sign off on FID. MRE21 model was so different that new stopes and development design to mine was required to make sense and end up with a credible cash model. Sure there were tweaks and maybe even substantial improvements since, but the guts should have been done by June and to Taurus satisfaction. Factually, the decline design is radically different in Update22, and by end of Nov'21 the decline made it's first switch back where it would have continued straight under the 2019DFS plan. Also, Byrnecut was given the u/g mine development contract for first 4 years Sep'21 and I cannot imagine that process starting either without the development plan locked down. Market told July 2022... just saying again.

Good place to stop tonight before moving onto the nitty gritty of financial analysis.