Agree that the first FS disappointed the market. For clarity's...

Agree that the first FS disappointed the market. For clarity's sake, the first FS had:

• LOM - 7.4 years [my view: pretty ordinary]
• AISC (not ASIC (sorry!)) - $1,079 [my view: exceptional (best quartile in the market), if we can deliver to it! see chart below; really can't imagine that the market was expecting any better than this (in fact, if anything, I think the market may be a little sceptical of ability to hit it)]
• Annual production - 151koz p.a. over LOM [my view: good, perhaps the market was expecting better]
• Plant capacity - 750,000 tpa
• LOM EBITDA - $1.6bn [my view: very good]
• LOM Mineral Resource and Ore Reserves of 5.6Mt @ 6.4g/t for 1.1Moz
• Annual pre-tax free cashflow - $190m p.a. (average over LOM) [my view: very good]

This week's news that BGL have extended the cutoff for the second FS is good news. This will allow them to work in the improving open-pit Tribune (see results from 16th June, particularly to the south of Tribune) as well as the step-out at Deacon North and Marceline (some teasers in yesterday's release).

BGL had pretty much already flagged that the second FS was not going to be released in June (see the RRS presos and commentary). I now expect it to be mid- to late-quarter (late August / early September). In terms of contents / revisions:

• BGL keep repeating the discovering 70koz per month mantra, so would expect the total MRE to be very close to 3Moz (was upgraded to 2.7Moz in April, 4 months to August, 280koz addition).
• BGL have signalled the likely increase of plant capacity to 1,000,000 tpa, which is likely to take the annual production up to 200koz p.a. (over LOM) - or there-abouts
• Re. LOM, I spoke to BGL about this at the Sydney RRS. Steve actually said he was less concerned re. this. I got the sense that he felt BGL could point to the geology (see slide below pointing to average of 26 yrs of operation for WA archean UG mines). I'm less convinced. I think the market is expecting a minimum of 10 - 12 years in the FS at this stage. I'm a little worried that they will prioritise annual production over LOM in the 2nd FS. If we are close to 3Moz (total MRE), this would suggest a LOM MR/OR of 1.25Moz (though hopefully will lift with the better grades / definition that are being reported currently). 200 koz p.a. would suggest a LOM of just 6.25 years. 175koz p.a. would give us 7.15 years.

Guess we will have to wait and see.