new gold discovery, page-14

AGM last week, GT very excited (reminisced about Lihir’s first drill hit of 36m @ 5.8 g/t and started to dream out loud…), said the new discovery is a huge magmatic driven system, not some little porphyry. Believes they’ll be mining this gold province for “generations” let alone decades, underground and so on.

I scribbled these notes on the back of a business card using a very annoying and scratchy pen (so take it FWIW):

Drill rigs being increased from the current four to 8-10 (Chatree) and another 4 (regional), $12m annual drilling budget. Thai copper miners doing it very tough so more affordable rigs becoming available.

Meeting soon with Ausenco for CAPEX quote, will reach $100m. 17% of CAPEX is steel with its price up 78% first 6 months of 2008 followed by a 52% drop. $A 12m worth of long lead time items such as the ball mill have already been ordered from Australia.

Thai inflation running about 9% but KCN costs under control. Workers wages increasing 6% but admin and processing costs per oz to stay about the same. Power cost increasing slightly from 7c/kWh to 8c. $US 350 cash cost estimate assumes $US 100 oil. 60% of cash cost is mining expense and 42% of this is fuel (previously 17% but they are now trucking ore 2km instead of 1km). Replacement of 35 tonne trucks with 55-70 tonne capacity will help.

Most of KCN’s cost (60%) is denominated in Baht which correlates better with the USD than AUD. Most of the rest is in USD (mainly for fuel) with negligible AUD component. Actual cash cost for current plant capacity will be known in the March-June09 quarter when full production rate is met.

Rowingboat.