Ann: New Large High-Grade Satellite Deposits to Feed Warrawoona, page-50

In my view, the 5g/ton you mentioned in your post is way off the mark. An increase in head grade, even if it's only a small one, will make a huge difference to Calidus. To illustrate what I mean, see the calculations below (I used a gold price of $2,800 per ounce and ASIC of $2,000, which I believe to be reasonable base case assumptions):

• ASIC of $2,000 per ounce is approximately $65/gram.
• At a gold price of $2,800 per ounce, that equates to approximately $90/gram.
• Therefore, FCF per gram is approximately $25/gram.

Let's assume we get 100,000 additional tonnes from 3 different sources:

• Historical stockpiles @ head grade of 1.5g/ton = 150,000 grams x $25/gram x 0.6 = $2,250,000
• Joint venture satellite pits @ head grade of 2.5g/ton = 250,000 grams x $25 x 0.6 = $3,750,000
• Additional ore from Klondyke @ head grade of 0.8g/ton = 80,000 grams = $2,000,000

There are a lot of variables here and I know the calculations above do not capture the true complexity, but I think it illustrates the value of the joint venture. In my view, trucking and processing the existing stockpiles will cost significantly less than $2,000 per ounce, and because the satellite pits are relatively high grade, I believe the cost there will also come in below $2,000 per ounce. At a head grade of 5g/ton, we'll be laughing all the way to the bank!