looks like buying time again, page-15

Well
I am prepared to put the bullish case. In my view this is one of the best investment propositions I have seen for a long time. My opinion is backed up by my very significant holding.

My views have been established by following the stock for around 3 years, conversations with management and my recent trip to the AGM where I re-confirmed my confidence by asking questions during the meeting and after the meeting and with conversations with other shareholders.

Summary is very simple

Market cap 63M
Debt 50m

Potential earnings range
Low 55,000 ounces
High 70,000 ounces

Costs fixes 34M pa

Gross surplus Cash flows per year

Low 49M
High 72m

In first year will get all cash flows
After year 1 will only get 75% (25% to DR Govt)

From cash flows have to
1. re-pay loans of around 50M over 2 years
2. Any explorations costs
3. Capital requirements which should be minimal

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So where are we now (Mid May announcement)

Thoughput 820,000 Tons PA
Recovered grade 1.45
Annualised production 38000

What is the improvement plan to increase from current annualised rate of 38,000 to 70,000(max)

1. Blinding material for preg robbing - Implemented end of May
2. Replace agitators with larger and better quality agitators. To be completed end of June
3. Upgrade carbon in CIL plant to higher quality - Planned end July

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The only issue outstanding is recoveries which are only around 1.45gt versus a plan of 2.68gt. The company has 3 fixes to be implemented which will significantly improve recoveries. Whether these fixes gets us to plan of 2.68 or somewhere lower will not be know for 3 to 4 months. Hence I have a high and low option.

Even at the low option the company is significantly undervalued.

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In addittion to Las lagunas the company has

1. Very prospective leases in DR. These leases could easilly produce a second mine of a size bigger than Las lugunas

2. The company is looking for addittional feed for the mill once the existing resource is used up after 6 years
This feed can come from
(a) Other tailings from inside the DR (This is not likely)
(b) refractory ore found inside the DR from exploration
(c) Importing ore(concentrate) from outside the DR

3. Joint ventures using the Albion technology where PGI can leverage their practicable expertise

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