Paste fill is to remove tails storage requirements (tails will...

Paste fill is to remove tails storage requirements (tails will go to FNO tails dam), reduce geotechnical risks (stabilising voids to prevent collapse) and, yes, to allow the removal of more of the ore body via eliminating rib pillars, etc. That's different from dilution, which is from over-mining or over-extracting the wall rocks compared to modelled stopes.

Medallion states, and I would expect, that stability issues are not the reason for paste filling. This is not the case at FNO, which was considerably deeper, in serpentinite, and utilised a different stoping method.

Dilution increases production cost per unit of metal, as more barren rock goes into the draw, and through the mill. The dilution happens during mining; paste fill occurs after the stope is mined. The dilution has done its damage before the paste fill is even used. You can get increased dilution even with paste fill.

We should also not presume paste fill is necessary or will reduce costs or increase recovery. For example, what is medallion going to put down into the stopes, if the ore is trucked to FNO for flotation? The tails will then have to be trucked 110km back to Kundip. This will require a place to store the tails prior to being put back down the hole. This capex is not included. The costs of back-hauling the tails is also not included in the current OPEX estimates.

The current idea is to use the already permitted TSF at Forrestania, albeit this requires a lift to the TSF (in as sustaining capital), because the TSF is likely close to full and FNO was putting its tails down the hole.

Separately, I find MM*'s treatment of capital costs intriguing. They have;

• $37M for the float plant upgrades at FNO
• $34M at KMC for underground infrastructure and ancillary matters

This derives a cheap $73M CAPEX number.

This is achieved by treating the majority of underground development capital as "sustaining capital" which is another way of saying they need $34M to open up the bare minimum number of stopes to begin extracting ore, and will race to 'production' so they can then claim the remainder of the development capital is not pre-production capital.

The mine life is 5.5 years, and sustaining capital is $150M, or twice initial CAPEX. That's $30M p.a.. I think that this would suffer from being moved more into pre-production capital under a PFS, since the production rate is by per open heading/stope, and you need to have as much of this open as possible. I can see why they're keen to keep pre-prod capital low, but I have some concerns.

Finally, the pre-tax NPV's are meaningless. The post-tax NPV is $238M under my shoddy maths, because of the carried-forward losses in MM8 of $28M. Without those, NPV would be lower still. IRR post-tax is less (est 88%). Which is still good.