Ann: Investor Presentation , page-15

I think we should not lose sight of the fact that US$1363 and AUD$1344 is not a great price for gold.

It's the mainstream media that keeps hammering to us how high gold is and how gold is in a bubble.

The simple facts of the matter are that very few gold companies can make serious money at this price.

To bring a 100,000 ounces per annum new mine into production here, a company will have most likely spent tens of millions of dollars on exploration. Then throw in
about $100 million, maybe more for mine construction and getting everything to work right.

Even with "low" cash costs of $600 or so an ounce there are additional expenses which are not included in cash costs and add another $100 to $200 an ounce, then of course there's exploration expenses and the list goes on.

Is it any wonder that in Australia one new gold miner after another ran into difficulties in recent years?

Now have a look at AVO which has been an Australian success story over quite a few years.

AVO produced over 70,000 ounces in the December quarter at a cash cost of $508 - ($628 including royalties.) IGR is currently looking at producing about 90,000 ounces in a year.

Yet at 31st. December AVO was still $47 million in debt which was covered by $83.5 million in cash and $13.8 million in gold bullion.

So AVO only had a cash surplus of $50 million - and that is after years of profitable gold mining.

Go back to the early 90s when cash costs were around US$100 an ounce and gold was US$400 an ounce. Gold today is nowhere near 4 times cash costs. Most gold miners are operating on very skinny margins once ALL EXPENSES are taken into account.

It's unrealistic to expect IGR to be rolling in cash at current prices.

I'm basically wagering that the gold bull will get a decent kick along, including a substantial rise in Australian dollars as gold significantly outperforms all currencies so that a company like IGR will be able to make seriously decent profits after ALL EXPENSES are taken into account.

At present, taking into account all the risks undertaken by IGR via exploration expenditure and other costs such as mine construction and maintenance, this is not really the case.

We really need another $500 to $700 being received by gold miners with minimal increases in costs before they start to make decent money.