my responce from cc

After reading Blythefans post "the great igr high-grading furphy"

http://www.hotcopper.com.au/post_single.asp?fid=1&tid=1451137&msgid=8240435

I contacted Chris Cairns and asked him to comment.
As usual his reply to me is the fastest in the industry.

His comments to me are below which I have permission to post. All publically available info.

Stillthefoxhat, (obvious name change)

Thanks for sending this to me, I was not aware of this post which is more than misleading, it is so factually wrong that the poster should consider his liability position.

Our Phase 1 mine plan had an average grade of 3.1 g/t over an initial 4 year mine life ? this is all set out in detail to the market with our feasibility study release.

The Phase 1 mining had production from 2 open pits over 4 years ? Salt Creek and Maxwells. Salt Creek has been producing since early September and will continue for the next year to 15 months.

While the HC poster is correct that high-grade production from Salt Creek is being processed directly while medium-grade is being stockpiled, to do otherwise would not make commercial sense ? of course we are going to make as much profit as we can at the earliest opportunity. This treatment of Salt Creek high-grade will continue for the next year or more as production from Salt Creek continues, while the 1.5g/t stockpile builds to about 1.7 or 1.8Mt over the next year. As we also have explained in our ASX releases, Maxwells is expected to produce circa 4g/t material at a rate of about 300-400 kt per year over the subsequent 3 years. This higher grade material will be blended with the medium-grade stockpile to provide an average grade of circa 2.5 to 3 g/t for the remainder of Phase 1 production. Throughout this initial 4 year period we expect Integra to be one of the lowest cost gold producers in Australia and we have excellent prospects to extend that profitability well into the future.

We have also flagged that the Majestic discovery will be brought into reserves mid-year with a reasonable expectation of another 2 years of mill feed circa 2-2.5 g/t ? this to be confirmed mid-year. Note also that Maxwells Reserve will be upgraded at the same time as per announcements and the upgrade of the Maxwells resource last January.

Then there is the underground production which we will trial mine later this year. This has the potential to add circa 500kt per year of ~5g/t mill feed. The strategic impact of having a large medium-garde stockpile is that it will blend very well with the potential high-grade underground production which, if we successfully demonstrate viability by trial mining, has the potential to produce over +10 years.

As for the claim that the stockpile is marginally economic ? that is rubbish ? I am sure that other gold companies (Catalpa, Navigator, Norton, Norseman) would love that grade. We currently calculate that our breakeven grade is about 0.7g/t so the implication is that we have a 100% profit margin on 1.5g/t material.

As for profitability, Integra is amongst the most profitable Australian gold miners and this will continue for some time - especially if we are successful in demonstrating the underground production potential. Yes, we have paid (as per 'inventory' provision in our financial report) $13m in mining costs to mine the stockpile to date, it will return us net $40 million on processing and, if you take off the mining cost, $27 million after all costs ? I hardly see this as marginal. Further, the flexibility that the stockpile provides us in blending with other high?grade feed sources is a real strength of the operation ? yes it is an investment in the future, but a very attractive future.

The very suggestion that we cart this large volume of ore to the Superpit for processing demonstrates that the HC poster is delusional and does not understand the first thing about gold mining. Some quick numbers are 75km distance with a trucking cost of say 20c per tonne kilometre is $15 per tonne of transport or about $150 per ounce not including mining and processing cost. For 300,000 ounce (less than our Phase 1 Reserve) that would be $45 million in transport ? the mill cost us $35m to build and is an asset that will support a long-life operation. Why in the hell would we cart ore to Kalgoorlie, and give away profits to some other mill operator when it is more profitable to process through our facility right next to the deposit? Madness.

That commentary on HC is one of the worst distortions of pseudo facts that I have ever seen.

Regards,

Chris