re: Ann: Craiggiemore and West Laverton Drill... Hello Ricm,The...

re: Ann: Craiggiemore and West Laverton Drill... Hello Ricm,

The statement on page 5 in the quarterly DOES NOT shed any light but gives more confusion. My few observations and comments below:

* IMHO, forget referring to the same period with cash outflow in 2009. it is relevant only for accounting perspective. In actual fact in 2009 March quarter, OPA has not started OPA and they have stopped production using its own loss making Barnicoat mill and reviewing/re estimating resources for all its deposits in Laverton gold project (LGP).

* 2010 March quarter is the 2nd campaign of using OPA. It is more relevant to compare the March 2010 quarterly to the 2009 December quarterly (first campaign using OPA).

* In appendix 5b, March 2010 quarterly, it clearly stated the production cost is A$31,655,000 and there is no footnote to indicate the cash costs associated with the mining, hauling and stockpiling of ore during March that will be processed in April/May when revenue will be received from these stockpiles.

* In December 2009 quarterly, CRE did not carry forward the cash costs associated with the mining, hauling and stockpiling of ore during the quarter to the next quarter.

* In December 2009 quarterly CRE In 2009 it mentioned the highlight:
[a] started the ore processing at Barrick Granny Smith Mill (BGSM) in 11th October 2009.
[b] The first campaign equivalent cash cost (c1 un-audited) of A$841/oz came in slightly below the long term forecast of A$850/oz.
[c]Production resulted in positive cashflow for the quarter.

*In March 2010 quarterly in the highlight section No mention of production / C1 cost and negative cash flow and about 5000 oz less gold produced compared to the gold produced in December 2009 quarter. it mentioned the completion of A$5.3 million of LEJV (Laverton Extended Joint Venture(LEJV), payment of A5 million Convertible note.

* If the company want to have cash costs associated with the mining, hauling and stockpiling of ore during June quarter that will be processed in July/August when revenue will be received from these stockpiles. It will be very INTERESTING and confusing indeed.

* The 50 day campaign takes place at the beginning of the quarter. IMHO, there is NO reason, CRE cannot process cash costs associated with the mining, hauling and stockpiling of ore during the quarter by the end of the quarter. They have done in in the December 2009 quarter (1st campaign) with Christmas break and new year festive mood in the quarter.

* IMHO, One of the main reasons of high cash cost is the low grade of ore in the open cut mining pit being process and total tonnes of ore milled is below 700kt per quarter. There could be other reasons eg high strip ratio of waste to ore, etc that company have not/may not disclose (it is just like that no one will know CRE need capital urgently till you read the half yearly auditor's Going concern comment". Auditor need to protect themselves from being sued if not disclosing it and if the company goes under.

* In the medium term when the LEJV deposits with its high grade(read the asx announcement on 30 November 2009 " Crescent Gold doubles key WA gold resource inventory") being mined, the cash/c1 + C2 cost and cash flow should improve significantly.


As always, DYOR