Topping up sounds like a great idea.HGO suffered from some very...

Topping up sounds like a great idea.

HGO suffered from some very wasteful decisions during the mining of the giant pit. They were fooling around with tenements in Indonesia and exploring Kanappa instead of exploring all those exploration targets within 10 kms of the plant so they could seamlessly start UG mining back in 2020 as soon as mining the open pit finished.

There was a total lack of focus on the important stuff. Which we are all able to benefit from today by buying the assets very cheaply.

I personally think a big part of the problem was the major shareholder ARA who are asset strippers not business builders. They were anxious for a quick return of their investment which looked like a strong possibility when the proposal to sell the Giant pit to AGL for $30m (another hidden gem asset) emerged. They also were insisting that the only way forward to further mining was through a JV or IPO. A lot of time was wasted. Finally Murray Boyte who has a long history with ARA was bought in and they had a change of heart and supported the continuation of mining which has led us, three years late, to the restart we are now funded for.

Current shareholders who have been able to buy the assets for a song are in a very good position.

You raised the issue of where HGO sits on the cost curve.

Again its worth looking at our close neighbours Oz minerals to see where we sit in relation to them on that score.

Oz minerals fourth quarter cash costs compared to HGO's economic study were:
* Prominent Hill US $ 60.56 /tonne of ore processed
* Carpentarra US $67.50 /tonne of ore processed
* HGO US $59.64 /tonne of ore processed

HGO has the advantage of drive to work rather than fly in fly out and of course closeness to port for transport of the ore.

The cost per tonne of copper then boils down to grade processed which in an underground mining situation is a function of cut off grade.

At the grades processed in the forth q and the economic study:

* Prominent Hill US $ 2.26 /lb of cu eq
* Carpentarra US $1.80
* HGO US $2.63

HGO is processing lower grades as it doesn't, at this point in time, have enough proven resources to fill the plant with higher grades. Which is highlighted in the attached slide.

I notice BHP takeover over OZ minerals is a done deal. There will be a lot of folks who like investing in copper in SA loaded with cash we only need a few of them to notice HGO to put a decent bit of pressure on the buy side.