Ann: Quarterly Activities Report , page-31

Ounces Cost/Ounce Total Cost
3MH 16438 970 15,954,768
Greenfields 11356 602 6,836,312
Total 27794 820 22,791,080

(Greenfields $602/ounce taken from Dec quarter)

My rough calculations are that cash costs per ounce from 3MH alone is up around $970 per ounce.

Not pretty but...

Commissioning is expensive. After handover, there are lost of little bits and pieces that still need to be put in place to make the Mill run effectively. Costs to come down when complete.

Low grade - Costs the same per tonne as the high grade but you get less gold from it. Costs will come down as grade improves.

Low recovery - It won't cost much more to improve recovery. It will come with experience and improved process control. Already we have seen an improvement from 83% in Jan to > 90% in March. FML should be able to maintain 90 - 95% recovery from the mill. Hence more gold produced from the same outgoings which means lower cost per ounce.

Some companies include decline work as capital expenditure (AXM) whilst other companies include decline work as part of their ongoing mining costs (SLR). FML completed a significant amount of decline work over the quarter so if this has been included in the mining costs, $820 isn't bad.

Commissioning is risky. I would regard this as very successful considering the improvements we have seen within the quarter.

Looking forward to net quarter when we have more proven ounces in the ground and the cost of pouring those ounces has come down towards long term levels.