Ann: Annual Report to shareholders, page-14

I'm not an accountant either, however a few reasons

I think the AISC for the tailings during the Dec Q was planned just over US$1000. The S in AISC is sustaining, this includes drilling etc to sustain reserves, and in our case a lot of cash was spent on plant maintenance, tailings dams etc. From memory I think the AISC for the March Q was estimated around $1300. This is higher because of all the work that is being done to the plant, reconditioning, generators etc. I presume some of the exploration drilling would be capitalised, certainly drilling around the tailings would be expensed.

Also we're running the plant and only processing tailings with 0.5g/t and only getting 50% recovery. As an example if we were putting thru 1.5g/t @ 90% recovery, our produced gold would go up 6 fold for the same expense (assuming no crushing). So it's not real profitable processing tailings, however it is paying for us to do all the work we're currently doing. 2 months time we'll double production for not much extra expense. At the initial rate their planning, the crushing circuit will be idle for over 50% of the time. IMHO this is a good thing as it gives them wiggle room to sort out any teething problems.