Have done some back of envelope calcs to try and draw out an...

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