Answers to Youanmi Questions

To give posters some background @Ladytradr posted some questions regarding Youanmi on the VMC thread. Given that RXL is working towards owning the controlling interest in the Youanmi mine, I felt it better to reply on this thread, rather than VMC.

I've been doing some research, asking lots of questions, had a couple of beers with my contacts and here's my best stab at answering @Ladytradr questions:

· The Youanmi mine closed primarily because it hit an aquifer and it would not only take many $millions to rectify by injecting concrete but also years to ‘try’ and dewater? Or had it simply runout of economic ores?

The mine closed in 1997 due to a declining gold price making the mining of the underground sulfide ores uneconomic. I don’t think dewatering was the main issue but there is reportedly quite a lot of water in the Youanmi Shear.

· The current ore resources at Youanmimostly refractory in nature and of a much lower grade than those previouslymined economically? Is that why nobody has tackled it properly in 29 years?I’m not sure what the open pit grades were at Youanmi (maybe someone can help me out there?) but OP mining ceased in late 1992 and then the operation went underground with ores at over 10 gpt Au.

The open-pit resources are probably on the low side for refractory ores, which the main tonnages at Youanmi Main and Four pits are likely to be, given they are below the current pits (although we need metallurgical test work to know), however the Plant Zone looks interesting as an oxide mining target and Commonwealth is shaping up with UG potential.

Several groups have had a go at it in the last 22 years (Goldcrest & Apex) but the current gold price makes it a lot more attractive.

·What other metals are associated with thatgold that may make recoveries more difficult?

There doesn’t seemto be any record of other metals causing problems in production at Youanmi butgiven its location, I wouldn’t be surprised if there was some silver (credit)and copper in the ores. The copper might cause you some grief in the CIL butthese days it’s not a ‘showstopper’.

·What is the honest cost of renovating the Youanmi production facilities to commissioned volumes? Could it be speculated $25 million-plus? How quickly can the old decommissioned operation be up and running again?

Looking at the satellite images, talking to some of the people who’ve worked up there, etc there is certainly a mill up there BUT it seems that parts are missing (eg power plant) and it’s been sitting there unused and uncared for since 1997 – 22 years. The mill was constructed in the mid-1980s to process oxide ores, then converted and added to, to process refractory sulphide ores. It was cobbled together and although there are parts that may be useable the question is whether it is Fit for Purpose.

If you are going to start processing open pit tonnages ( >1-2 million tonnes per annum), which a 10+ million tonne near-surface resource would justify, then you aren’t going to be using the 0.6 million tonnes per annum plant at Youanmi – you’d build a new one!

If you’re going to process smaller tonnages of >10 gpt Au ores from UG at Youanmi and perhaps Penny West (which is probably what the current VMC litigation is about) then it might be okay. But $25 million might simply be a band-aid solution, ultimately I’m told they need a new mill which is a 1-2 year exercise at a considerable cost. There’s also the question of whether they own the rights to the BacTech required to process the refractory ores.

BUT having a mill and a mineable reserve (which RXL is working towards) potentially gives you the option to open a hedge book but that is a separate discussion!

· There a large environmental cleanupliability attached or associated with that old project, as it looks very messy from satellite images?

It does look messy! But I would assume that there are environmental bonds in place with thegovernment but until mining recommenced I would doubt there would be much cleanup liability. Any future mine plan would include rehabilitation as good corporate citizens.

· Do shareholders believe VMC would get amines department approval to build a substantially bigger pit over an aquifer like this one?

It’s a question for RXL but theDMIRS approval for a pit probably isn’t the issue, it’s the environmentalapproval for the dewatering which would involve looking at water quality anddisposal. Previously the water was pumped on to the tailings dams toevaporate.

· Would you get approval to mine anythingunderground if there was a risk of such flooding again?

RXL would need to prove that they caneffectively dewater the UG mine. Most UG mines in WA are wet to some degreeand pumping tech is pretty amazing these days however Apex reportedly had some problems 10 years ago trying to dewater the UG workings.

· I can immediately think of some neighbours who will now be investing time and money lobbying all levels of government for some other environmentally sound development options around that region

Same as the environmental cleanupquestion - any future mine plan would include rehabilitation as good corporate citizens.

Anyway, hope this answers your questions@Ladytradr feel free to comment or ask more questions.