Ann: Operations Update and FY19 Guidance, page-76

hi Grumps .. I will call your BS on this one

Wiluna OP = ‘free milling oxides” which suggest oxide recoveries until transitional ore reached ... you need to read the recent met study announcement .... strip ratios for cut-backs 10:1 (based on expansion PFS) ... grades c. double Matilda ...

Hence why Wiluna (and to a lesser degree Lake Way) are priority for current drilling (not Matilda extensions so much even tho it sits within a 10km strike-length) ... E-W Wiluna pit looks to be the starter and being fast tracked in Q4 for all the above reasons ... only 1km from processing plant ... plus de-risks the bigger pit for expansion readiness

This will be the ‘sweet spot’!!

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personal comment on today -

v. disappointed with today’s announcement .... hitting MOY’s Q2 AISC with unexpected one-offs (8.8x SR; 79 % recovery; and tailings lift costs) ... like MOY, sold as an investment into future quarters ...

can take solace that despite all this crap in Q2 they can still pocket $2m of free cash flow to repay debt ...

if you think Q2 is ‘your margin for error’, I interpret this as this ‘worst possible spot’, than they still generate $8m pa. on an annualised basis after exploration drilling and tailings dam costs etc. etc. ...

re-reading Q1 mngmt can claim they hit guidance by suggesting A$1,100-1,200 /oz for half ... they didn’t explicitly say Q2 which caught me out .. and with tailings dam lift excluded fall within this range but not nonetheless not great forecasting ..

not consistently hitting operational guidance just downplays all the excellent work they are doing with the drill rig

We now have a technical committee, strengthened board, Richard Boffey etc. so I’m not going to tell them how they should suck eggs but the market is judging their credibility at the moment big time ... (one lesson being an ex-met, not only grade control is important but also learn how those grades are going to perform in the plant - that will help you also to prioritise pit sequencing)

today was a low day for me ... I don’t usually get blindsided like that ... onwards and upwards ... and yep, if BLK was cheap before today than it became a bargain (caveat - mngmt need to demonstrate consistency!!! ... I believe they built in a huge amount of fat into AISC and production range for H1 of FY19 ... but great if they learn the secret of ‘underpromising, over delivering’ and doing it consistently ... it bought MOY an extra +$100m in MC vs BLK)

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