Ann: Strategic Investment by Alkane Resources, page-21

According to RMS they are currently not mining any deposits at Edna May. They might have low grade ore to feed through the mill currently and possibly some unprocessed stockpiled ore from the stage 2 open pit (the second part is just speculation).

In total they have disclosed reserves of

61koz at EM UG, total tonnes 398kt (mining forecast to commence March quarter 2019)

62koz at Greenfinch, total tonnes 1,652kt (which remains delayed with approvals still pendimg)

That is a total of 2,050kt which if they mine over the next two years (ie through to the 2020FY) is 1,025k of ore per year, about a third of the mill capacity of the Edna May mill.

They also have 2,758kt of low grade stock piles with an estimated grade of 0.6g/t that can probably be blended with the remaining ore to drag the mill ultisitaion up to about 80% of it’s theoretical maximum capacity for those 2 years but the weighted average grade gets pulled down to around 1g/t. It could be a little less, I’ll do the exact calculation later.

There are also timing issues with outstanding approvals and more upfront CapEx plus you are relying on an accurate estimate of the average grade of the low grade stockpiles. If they reconcile lower the grade gets dragged down even lower. EM might stay in operation over the next 2 years but probably not without issues and probably as a high cost operation. Also the market doesn’t place much value on a mine with 2 years of mine life visibility as there will also be C&M costs associated with the mine once it runs out of feed and closure liabilities if the mine closes the gate.

Investors should be looking at projects with at least 5 years mine life IMO. Personally for the future I’m looking at companies in the 7.5 years plus range. Esh