Ann: Upgrade of Assay Data - Ammaroo Project , page-2

re: Ann: AAG: Upgrade of Assay Data - Ammaroo... Some thoughts (red wine influenced)...

If they show continuity between the holes highlighted in this ann, then my rough estimate is for about 20mt of DSO phosphate in the area highlighted in this ann. Its worth having a look at MAK's recent study based around a 15mt @ 30% DSO resource at Wonarah:

http://www.minemakers.com.au/downloads/100602PositiveWonarahDSOFeasibilityStudyResults.pdf

Some points for comparison:

Logistics:
Wonarah is about twice the distance from rail as Amaroo (as the crow flies). Inferring from the study, MAK's road haulage is a minimum of $25/tonne opex to get to rail. Lets call it $30 and assume RUM's road haulage costs would be half, then there is a $15/tonne saving.

Strip ratio:
Wonarah's DSO is at greater depth (20-30m). Stripping costs are generally highly dependent on the hardness of the overburden. RUM have soft weathered siltstone under a layer of sand, MAK "mudstone" - I guess this may be roughly similar in hardness. Perhaps the only difference is in the strip ratio - say 5:1 MAK, 1.5:1 RUM. I am guessing a little bit but based on $2/tonne of overburden this might also give a $15/tonne advantage to RUM (some guesswork here).

These amounts don't sound like a lot, but the MAK scoping study was based on revenue of $150 FOB and cash costs of $122, for a gross margin of $28/tonne (18.7%). If RUM was able to show costs of $97/tonne (by beating MAK's costs by $25 all else being equal) then the margin is $53/tonne (35%) and a much safer bet for prospective financiers.

Of course there is a lot of simplification in this, and lots more work needs to be done. MAK has a very large and well defined resource, higher grade (30%+) for their DSO, and are apparently pursuing a different strategy now (based on higher value products with correspondingly high capex, rather than DSO). Still, there is a lot of potential exploration upside in Amaroo, even in the infill between these holes. RUM already has a slight advantage as a low capex DSO play - imo. It will be interesting to see if MAK take an interest, as they seem to have made a claim to be the next phosphate player.