G'day Ash. Thanks for this. Awesome information.Yes, I am a...

G'day Ash. Thanks for this. Awesome information.

Yes, I am a hardcore S32 fan. Guilty as charged! We're told we should not love investments. Apparently they are just ticker codes and numbers on a screen. But I struggle to hold stocks that I feel no affinity for. I'm sure the founders / board / management and probably the staff of small cap stocks I hold feel devoted to the company to some extent, and it influences their behaviour day in, day out.

The more Hermosa is investigated, the better it seems to look. Kick a rock on the site, and there's potentially something of value dislodged! Yes, there's a legitimate argument about whether we paid too much, and if work could have progressed faster. However, there seems to be a genuine attempt to prioritise this project this calendar year. A no more messing around approach. It was apparent in the annual report that there's company-wide focus on the Hermosa development. I like that.

It's officially a manganese / silver focused development, however the copper grades we are getting at Peake certainly get the imagination racing. The stars of the show were always Taylor and Clarke. And it's very early days....but Peake was like the set of steak knives we picked up as part of the Hermosa site that nobody seems to have shown much interest in. A kind of Josh Kennedy-type situation, if I am so bold to say so, and not offend any Carlton or West Coast fans. Included as a minor part of a larger deal (for Chris Judd) just to get it over the line. Then ends up as a superstar in his own right.

My question is around cost, and copper. And something I have been wondering for a while, but it's so far off into the distance I haven't mentioned it here. before.

If we were to buy Khoemacao it would cost about US$2 billion. Ambler / Arctic wouldn't be cheap despite the awesome grades -- frozen for much of the year, the permitting nightmare, and costs to truck supplies in to build the mine. Both capex and opex would surely be huge. If we bought out a junior in the middle of WA or Canada it would be similar. Getting a project started in Argentina (across the mountain range from the Sierra Gorda site) likewise. Buying the likes of MATSA or taking over Sandfire would cost a pretty penny. The Hermosa site on the other hand is looking like a super-site with lots of pathways to profitability.

If we have Taylor and/or Clarke operational and spend the US$1 billion or so building the mining infrastructure at Hermosa, could we expect a type of marginal cost discount for Peake? Similar to getting an electrician to install a new ceiling fan....paying the call-out fee and having him at your home. Then saying "hey mate, while you're here, can you change this light switch which has been broken for a while". Just paying for 15 minutes of extra labour. Could we expect each subsequent mine at the site to be cheaper and tap-into previous capex to some extent, or would each site be totally independent and not attract any savings?

Would permitting be easier for subsequent mines compared to a completely greenfield development elsewhere? Maybe Peake becomes the Josh Kennedy of Hermosa! The more we drill, the more we are finding at Hermosa. The grass always looks greener in an exotic location, but there could be a case for exploiting Peake for copper since: a) we've already bought it; b) we've already done initial drilling there; c) we will already have a workforce and equipment there; and d) maybe it would cost less to set-up even if grades or the overall deposit are inferior.

I hope that make sense to someone reading this!