assumes full control at hellyer, page-13

Yes, but the point is that at todays metal prices and the grade of tailings to be put throught the HZCP it might not be good business sense for Polymetal to continue in the JV. However, with INL now owning 100% of the JV, INL is now free to try other options to increase the profitability of the mill.

This could include using higher grade througput into the mill. For example, if you increase the grade of the tailings from 3% to 5%, the volume of recoveries increases 100%. This would translate into a 100% increase in revenue from the HZCP.

By coincidence, I posted the following on another site 30 minutes before the announcement this mourning:

HZCP

Looking at the HZCP and INL's/Polymetals Presentation dated 160508:

Slide 21:

Gives Zinc Recoveries rates for Head Grade:

At Head Grade Zn 3% - Recovery 66% ( ie. 2.00% of the 3% Zn recovered);

At Head Grade Zn 4% - Recovery 75% (ie. 3.00% of the 4% recovered);

At the margin:

Increased Grade 1% (from 3% to 4%) - Results in additional 1% Zn Recovered (ie. 3.00% - 2.00%);


Consequently, if the above analysis is appropriate, by increasing the grade of the feed by just 2%, from 3% to say 5%, INL could double the amount of Zinc recovered and therefore double the Zinc revenue component from the HZCP.

Slide 16 shows that the tailings have been reduced in size to "p80 of 45 microns";

Question: Are there any other higher grade imputs that INL/Polymetals could feed into the HZCP that would increase the Zn Revenue by more than the additional costs of obtaining it (i.e more than the additional costs of mining?, transport? and grinding to 45 microns"?


Of course, in times of low metal prices, increasing the grade of throughput through the mill is just one of many options for increasing the profitability of the Hellyer mill. INL have mentioned making a lead concentrate for the HRP. There is also the possibility of toll treating third party ores. It has been said on Internet sites that the Hellyer Mill has a replacement cost of $100M? (don't know how accurate that is). However, there is suppose to be a mining boom on in Western Tasmania and because of the general mining boom mills are suppose to have 2 24 month delivery time lag between order and delivery. Perhaps some of the other proposed mines in the area could make more profitable use of the Mill than INL via toll treatment.

Regards

SP