deflector scenarios

Have done some back of envelope calcs to try and draw out an overall picture at Deflector for discussion, Scenario 4 is how I see where management are really at with this ( very profitable) but to obtain the bank finances they must use BFS guidelines and therefore use conservative, known drilling data. Obviously more drilling equals more money spent – so the whole point is to provide only what is required to get the money from the bank. Have assumed a 30% reduction ($315/oz) in operating costs on increase economies of scale based on increased thru put utilising existing infrastructure and minimum staffing level increases, correct me if I am way out on this – just a guess. I have checked the figures in scenario1 against a cash cost of $450/oz and it stacks up against the $138/tonne operating costs as reported in the recent announcement.

1) Scoping study back of envelope calcs using measured, indicated and inferred - 6 yr mine life

1.4mill tonnes @ 6.25g/t gold and 1.32% Cu
Gold: 282,258 oz’s @$780/oz = $220 mill
Cu: 18,480 tonnes @$6600/tonne = $122 mill
Gross Turnover : $342 mill
Operating costs: $ 138 per tonne x 1.4mill tonnes = $194 mill
Capex: $15.3 mill
Gross Profit : $132 mill
Scoping study shows net profit before tax of $64 mill so am assuming that there is a lot of corporate payback and deals between gross and net profit before tax = $10.6 mill per year. Bank will finance this deal



2) BFS back of envelope calcs using measured, indicated - 6 yr mine life at 250,000 tpa throughput – this is where it is at now

1.4mill tonnes @ 3.92g/t gold and 1.08% Cu
Gold: 176,129 oz’s @$780/oz = $137 mill
Cu: 15,120 tonnes @$6600/tonne = $100 mill
Gross Turnover : $237 mill
Operating costs: $ 146 per tonne x 1.4 mill tonnes = $ 205 mill
Capex: $26.3 mill
Gross Profit : $5 mill
Net profit before tax: $2 mill = $300,000.00 per annum
Uneconomical - Bank will not finance this deal


3) Re-optimised BFS back of envelope calcs using current measured, indicated - 3 yr mine life without any increase in measured and indicated at 500tpa throughput

1.4mill tonnes @ 3.92g/t gold and 1.08% Cu
Gold: 176,129 oz’s @$780/oz = $137 mill
Cu: 15,120 tonnes @$6600/tonne = $100 mill
Gross Turnover : $237 mill
Operating costs( assuming approx 30% reduction in operating cost by increasing throughput to 500,000tpa): $ 102 per tonne x 1.4 mill tonnes = $ 143 mill
Capex ( assumed the increase capex component): $40 mill
Gross Profit : $ 54 mill
Net profit before tax : $26 mill after 3 yrs = $8.6 mill per annum,


4) Potential based on current mining reserves, including measured, indicated and inferred( 770,000 oz’s eq) and not including 110,000 oz au eq ore from satellite bodies etc – 6.5 yr mine life at 500,000 tpa throughput.

3.321mill tonnes @ 5.31g/t gold and 0.76% Cu
Gold: 568,855 oz’s @$780/oz = $444 mill
Cu: 25,240 tonnes @$6600/tonne = $166 mill
Gross Turnover : $610 mill
Operating costs: (assuming approx 30% reduction in operating cost by increasing throughput to 500,000tpa): $ 102 per tonne x 3.321 mill tonnes = $ 339 mill
Capex ( assume the increase capex component): $40 mill
Gross Profit : $ 231 mill
Net profit before tax $112 mill = $17.2 mill per annum