Ann: Operational Changes - Bullant Gold Project , page-15

re: Ann: Operational Changes - Bullant Gold P... DougM

I am sorry if my post has disturbed you.

You wrote

"loki you are talking nonsense 4g/tonne is feasible if your costs per oz are less than the price you get paid per oz"

That is the type of statement that needs more thought. It is basically a tautology that if revenue exceeds costs then the operation will be profitable. Concerns arise if the cost per ounce is too high or the revenue per ounce is too low to achieve that objective.

Companies have no control over the Australian price of gold. It is set by world markets and translated into Australian dollars at the going exchange rate. Therefore companies must control costs in order to achieve profitability.

I am not an expert on the costs of production of mining companies. However I have invested in several gold mining companies that have or had underground mining operations. MML is a highly successful mining operation because it has a high grade (I think it is 10-12 grams/tonne) and operates in a low cost environment in the Philippines. VRE used to operate a low grade underground mine but went bankrupt in 2007, I think, because the costs were too high. MUN had a small gold mine in Brazil which it closed last year with a grade of around 3.5 grams per tonne. That mine was barely marginally profitable despite owning their own on-site mill and using low cost labour. This mine has been closed for a range of reasons, including that the grade level kept falling. SLR operates a very successful underground mine in WA, but its grade is much higher (from my faulty memory I think it is around 10 grams per tonne).

One thing to be ware of when companies talk about their cash costs is that those costs do not cover all the costs incurred in their operations. The cash operating costs generally do not cover exploration costs, development costs, overheads, royalties, depreciation, interest on borrowings.

I am not going to analyse where KMC has gone wrong. That is something for you and other shareholders to do. I just hope you have an open mind about things and develop enough of a skills base to be able to undertake research that helps you to avoid poor investment decisions. Mandatory stoplosses help ensure that there is some capital preservation for future investments which hopefully recover past losses.

Good luck in your investments.

loki