Ann: Siana milling operations suspended , page-21

Para 1. - In relation to the current tailings dam

"Equally, any modifications to the design would severely limit the on-going placement capacity and would not represent an economic solution."


Para 4. - In relation to the decommissioned tailings dam

"Whilst technically feasible, the modified engineering parameters now proposed would lead to limited capacity only"


The above statements make me think that GHD significantly underestimated the structural requirements of the tailings dams given that any modifications to account for the subsistence problem (and future risk) would result in a substantial reduction in the tailings storage facility capacity.

The degree of insurance cover and timing of payment (GHD & RED) may become important. Will insurance simply cover the cost of the old tailings dam (i.e. build cost)? or the cost of building a new tailings dam with expanded capacity and structural requirements? If insurance covers the cost of building the new tailings dam, and REDs equipment (and personnel) are utilised in the dams construction, then this may offset REDs 'fixed' costs during the construction period.

Glad an announcement was made, happy with the frankness of the announcement, however would have preferred the content of the announcement to be different =)

GLA