Hi Dyso,Half yearly report to June 30, 2004.The company has been...

Hi Dyso,

Half yearly report to June 30, 2004.

The company has been going for a few years but incurred a loss of $2.2 mill. in the 6 months to June 30, 2004. The cashflow was negative: -$45.4 mill.

Also, their production relative to resources is too low: some 550,000 ounces/year compared with say 40 mill ounces IN SITU resources. It should have been at least 800,000 ounces by now and 1 mill ounces in 2 years time.

I think the reason is that they mine each deposit separately.

I was in the company in the eigthties when they were drilling; they did strike some hot water. It was cleared by the engineers but it could be encountered later once deeper down.

Gross Cash costs at $367 are reasonably high; I would have expected no more than $275. It seems to me they are tackling the richer ores first. Processing costs to increase, I think.

There is a shortfall in hedging to market value of some $166 mill. NTA 35.4 cents.
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Capital: 1264 mill shares. Current price $1.12 Much is firmly held resulting in a higher price than it should be. If a P/E of 15 were allocated, then the E/S should be 7.466 cents based on a profit of $94.38 mill.

It is going to take too long to get that with current production and costs.

Ounces per share: 40 mill/1264 mill: 0.0316. Gold price unhedged: $US415 or say $A545. Market Cap: $1415.68 mill.

1 ounce costs Mark. Cap$A 15.39 This looks good; however to realize that IN SITU value takes too many years at that rate of production.

That is my opinion. Please note, I don't advice.

Gerry
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