Ann: BSOPP Feasibility Study Complete - New 120ktpa Base Case, page-174

The expansion from 90kpta to 120kpta excluding CAPEX should have actually driven AISC costs for the mine down. Note using the previous AISC cost from the BFS of 263USD, the AISC cost release yesterday was 270USD, a 7 USD increase for a 30kpta expansion. The face value of these numbers is not a pretty site and one must be questioning why expansion has increased AISC.

However it is possible the cost savings from expansion have been offset by higher haulage costs which the company indicated was the main driver. Note in the annoucement the main reasosn for expansion was to realise economies of scale for longer-term benefits whilst offset negative macro-economic factors and operating cost pressures.

That may mean the cost-benefits for expansion are not showing in the numbers which is why some holders are distressed on why expansion is even progressing anyways. The main reason for this is that if they use the base case of 90kpta and factor in these higher operational costs, profitability of the project would decrease whilse these high cost pressures remain. It makes some sense to get the ground work and infrastrucutre laid out for expansion whilst all the resources are already pretty much at site.

So its a double-edged sword, will how will the market react with a project that is not as profitable in its first years of operations due to higher cost pressures v. if we expand in the short-term, we can maintain to same profit level before realising the benefits as cost pressures reduce.

It is reasonable to assume truck driver shortage and price increases for haulage will not stay high into the future. As such, when these operating expenses begin to decrease, the cost-savings from expansion should realise themselves.