Ann: Operations and Exploration Update, page-8

They are moving 55k BCM per day, which is probably around 137.5k tonnes per day (based on my assumption that the specific gravity is 2.5, but it could be higher or lower). This amount is huge for a mine that is only going to do around 110-120k ounces in its first full year of operation and is due to the fact that the ore grade is lowish and the mine has a high strip ratio of 16:1 that reduces down to 13:1 in year 2, after which both the average grade and strip ratio drop significantly.

It would appear that their current mining rate is consistent with the mining plan for year 1, so if the ore grade is as forecast then they should be able to produce to plan so long as the gold recovery rate also hit its target, which it is now achieving.

GCY needs to get lucky with the drill and find more higher grade ore near its current mill to improve the economics of the project.

One thing to watch out for is if they continue to have unexpected blasting costs (or other costs), currently running at $1m per month. That would equate to an extra $100/ounce cost if it continued this year and next year. With the lower strip ratio in future years this cost would be a lot less, I suppose.

I will keep watching with interest how GCY progresses - it could become highly profitable with drilling success or fade into the sunset due to cost over-runs.

GLA.

loki