agm on friday 28 nov

I went to the AGM on Friday over here in Perth and have the following comments. Most of the issues raised were reiterations of stuff which has been in announcements but there were some additional issues which came up along the way. Please note that this is only my view of what took place and I may well have misinterpreted something and in particular I could not always hear MC and may have interpreted him incorrectly - I would welcome any comment from anyone else at the meeting.

Here goes:

Initially the meeting started by going through all the formal resolutions. I noted that MC was now the Executive chairman - so I don't think we are going to see an MD appointed in the near future. From my viewpoint I am happy to see MC in the leadership role since he has proved himself to be a mover and shaker and with all his shares and options is well motivated to give us all success. All the resulutions passed (I expected something on the award of the Directors options - particularly MC's additional 10m) all went through with a big majority in votes cast from those who did not attend the meeting.

After the formal voting MC gave a presentation on the status to date.

1. reiterated the upgrade to the resources announce a few weeks ago of 611k ozs and stated that that morning they had announced an additional 204kozs - which was nearly all oxide. MC added that this put the life of the project up to 10 years (an additional 2 years). The total gold was now 3.2m ozs (including sulphide). Note the current plant is only for oxides.

2. ALD had got a new Cheif Geologist (P Davies).

3. Company had now moved to Brisbane.

4. The issue of 33,988,551 shares last August was forced on ALD due to bank convenants on their debt. It seems that they are (IMO not surprisingly) disallusioned by nervous bankers who not only forced them to issue shares in a depressed market but also found reasons for not giving them the whole loan (US$25m) and only allowing them to draw down US$19.6m. They appeared to very relieved that the debt was now minimal and that if push came to shove the remaining debt could be easily paid off and was not due until next June. I think they would be very reluctant to get involved with the banks again in the near future. The hedge appears to be seen as a two edged sword. On one side ALD is not getting full value for its gold but they seem to accept that it is possible the PoG could go down temporally (due possibly to the gold carry trade and central bankers) and that were this to happen then the hedge would at least keep them alive to live another day. Long term they appeared to be bullish about the PoG.

5. The claim that they expect to have mined 70kozs Au over the 10 month period from mill commissioning. They appear to be well on course for mining 20kozs this quarter and have already supplied the Au into their hedges for this quarter. So they will get some of the upside for the PoG for the remainder of this quarter.

6. MC claimed that their strategy of being independent and not relying on other suppliers had paid significant dividends. Without their boat (Lady Geraldine) MC claimed that they would be still building the mill. The boat was not bringing in fuel and was still providing very useful. The acquired drilling rig were also proving very useful at upgrading the resources and that if they had to rely upon sub-contractors then they would not have had the nearly 800k oz upgrades of the last few months and they were confident that more upgrades were in the pipeline.

7. They were rationalising the capital structure with a remaining debt of about US$3m and had late dated PUT options to secure this.

8. MC said that investors had asked why the project had cost more that initially expected. He said that this was largely due to his policy of independence of supply and that they had spent $30m on the drill rigs (a lot of benefit downstream and to date) .also paying back the banks.

9. MC stated that the ore was mainly near (or on) the surface (showed a photo of a truck being loaded with near surface ore). The ore was none abrasive (i.e. did not need much - if any - grinding) and was only on a strip ratio of 0.6:1

10. Claimed costs of processing were now $448/oz and had a target of getting down to $350/oz next year (presume US$). Expected mill to be on nameplate capacity (130k 150k Tons/month of ore) next quarter (Q1/2009). Cost saving intiatives were to get a charter aircraft to fly staff (and I presume gold) to/from Brisbane direct to/from Simberi saving about $1m per year. Reducing the the costs of reagents (cyanide). Evidently to date they were using seawater and this meant the acidity of the water (about ph 1.3) meant that reagent use was inefficient. By diluting the seawater with local fresh water that could redice the acidity to ph .8 (they have been doing this for the last 2 weeks) they expect to get the reagent cost down to about $30 $35/oz. Said that no cyanide was currently being reclaimed (all goes down the tailings pipe). Also MC said fuel (diesel) was a big cost and that he hoped to move to heavy fuel oil (much cheaper).

11. 2% royalty was being paid to local land owners (this appeared to be the only royalty being paid) and since it went locally ensured good relations with the local land owners. Said that they had been some local issue but these did not directly involve the mine but due to the fact that ALD were there (and now a major paymaster) they were reluctantly asked to see if they could local settle disputes (to me having worked in the 3rd world this is inevitable). ALD were meeting agreements with local land owners to employ local people at the mine and felt that local relationships were good. Also claimed that the local culture was different to the highland areas of PNG (to me this is well justified, since the islands a Melanisian) It's similar to our Torres Strait islanders who are culturally different to aboriginals.

12. MC claimed the conveyor from Sarowar was working really well and the engineering (Austrian) was excellent> The costs of transporting ore on the conveyor was only 2c/ton.

13. MC stated that the current SP was in his view ridiculously low and that fair value was north of 80c. Got the impression that no further shares issues were expected.

13. MC had been presenting on ALD to the "next tier" of investors (e.g J P Morgan and Casanova) in the UK and hoped this would drive the sp.

Ross Hasting then talked about exploration.

1. Claimed that the Misima mine in PNG was a similar analogy to Simberi snd had started with about the same resources as Simberi and was now up to about 5m ozs.

2. The ALD had only really started exploration in March/April 2008 - nearly all the resources to that date had been from the period prior to the takeover of Nord Pacific. Now had the drilling rigs and he was confident of good results coming through in the future.

3. Claimed that he was pleasantly surprised to find that the area where they had planned to dump waste turned out to be mineralised. Had said the waste dump will now possibly be the next ridge but evidently they could dump down the path of the conveyor if the new site turned out to be mineralised.

4. Said that if the PoG went up to about $1500/oz the cut off graded waste would probably become ore.

5. Claimed that the whole area was gold territory and that a new undersea mining operation (Nautilus) had licenses in the undersea area all around them and were claiming enormous grades (these include other minerals silver, lead etc).

6. RH said that since the resources of Simberi were largely sulphide (about 2m ozs or the current 3.2m ozs) a big effort was going into planning a sulphide project (got the impression that the upgrade of the oxide project was now on the backburner due to the enormous sulphide potential) and that production on a sulphide project now had a traget of 2011 for production and was for a otal production target (no doubt including oxide ores) of 200k ozs per year.

7. Barrick were now drilling at Tapinda and were down about 300m. They said that an expert had been called in to look at core samples (read into that whatever you want). Barrick were only planning to put down one hole at the Tapinda location (evidently there was an existing camp at this site). The Barrick rig was brought in on a helicopter. Barrick were planning to move on to another location for further drilling.

In conclusion I came away from the meeting with a good feeling.