announcement out on asx , page-89

Hi Simon-h

Good post.. 'however',... I'm not sure it's sufficient to compare our grades with those of others in the region: it doesn't really mean much. Also, the grades under discussion haven't had mining dilution factored in. Model grades of 1.5% Cu invariably dilute to 1.2% or (usually) worse during mining.

'Faulted Hydrothermal structures'.. generally mean smallish stopes and require a lot of manpower, machinery and development metres (all the drives/rises/ore-passes etc). In order to achieve significant output there needs to be lots of stopes active on lots of levels simultaneously; scheduling problems.. ventilation problems.. not the nice efficient large scale block caving methods that you'd find in a typical porphry deposit.

It could be very hard to put an underground mine into this kind of deposit larger than 120tph.. Most are of the order of 55-75tph due to physical restrictions imposed by the geometry of the orebody or orbodies. Open pits are generally favoured in Australia because land is cheap and, for the most part, arid and largely deserted. In the Carajas, there is monsoonal rainfall and the EPA to contend with. Tails and waste rock have to be disposed of: the greater the strip ratio and the lower the grade then the more waste and tails there will be to deal with.. expensive headaches!

UG mining has a far smaller surface footprint (due to backfill possibilities) and so, if the mining method is to be as I've described, then I'd want to see average mining grades averaging over 4% before I open the champagne..

As for the gold.. that's only going to be payable if it reports to the Cu concentrate.. no guarantees it's all associated with the chalcopyrite directly.. some will be in pyrite and some will be in silicate gangue.. recovery of Au may therefore be as low as 40%. Also.. it isn't all payable. A smelter will, at best, credit you 90% of the contained gold; even then, it may not be payable at all if it doesn't meet a designated grade within the Cu con.. that could be 15g/t, could be 30g/t.. (where I am it's 50g/t!).

All of these factors chip away at the bottom line and add to the overall risk..

And yes, you're right, I might have missed something here.. admittedly, I don't keep up with all the announcements as perhaps I should and could indeed be confused as to how many potential deposits they may have on the go and the distances between them. from my perspective though, whilst they might be able to get something happening with the HG DSO, I don't yet see a long term project that is going to set the sky on fire... (wish I could tho).

BT


BT