Ann: Quarterly Activities Report - September 2016-OGX.AX, page-2

This is pretty worrying I would think.

"There is not currently evidence of any fundamental issues with the process circuit or metallurgy of the
ore that would prevent the Company from being able to achieve targeted gold recoveries of 85% or​

higher."

Are they serious???

There is no current evidence because it sounds like they absolutely don't have a clue how much gold went in the first place IMO. How did they arrive at the between 3 and 4g/t grade estimate???

"While the head grade of the processed material is difficult to precisely measure via sampling because of the coarse gold nature of the mineralisation, the average grade of all material processed – which was predominantly mineralised waste – for this period is estimated at between 3 and 4g/t, which should equate to a gold content contained in the concentrate reporting to the gold room of ~25kg."​

They were expecting 25kg of gold out and got 7kg and the reasons given are

"The majority of the gold not reporting to concentrate has reported to tailings with some gold retained in solution following lead removal by acid wash. The tailings are dry stacked and can be reprocessed if necessary when the plant has been optimised and availability allows.
Various factors are viewed as potentially contributing to the poor performance of the plant including the grind size and particle size distribution currently achieved by the comminution circuit, the performance of the gravity circuit arising from possible complications with the industrial lead, operator inefficiency and gold theft also are being considered as potential contributing factors. It is believed that the lead issue has arisen from the use of detonators containing industrial lead in the blasting process, not any intrinsic metallurgical characteristic of the ore."

Well that's a pretty long list of possible reasons.

If they are correct in saying that the majority of the gold not reporting to the concentrate has reported to the tailings and their estimates of garde are correct then 72% of the gold could still be sitting in the tailings. I think I could build a gravity concentrator in my backyard with a better recovery rate than that. Surely the company that supplied the concentrator would be required to have it operating to specifications as part of the commissioning (I suppose its a bit hard to do if you don't have a proper handle on grades going in and you are just guessing at the residual grade of the tailings. Surely measuring the grade of the tailings would also give some indication of recovery, oh.......but we started a mine with no way of getting timely grade control assays back. Unbelievable.

The last two reasons are intriguing "operator inefficiency and gold theft".

One of two operators they employ on the gravity circuit is asleep all of the time and the other is very awake all of the time lol.

This is would be hilarious if I didn't have some money tied up with it.

Esh



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