news release

Tax 'no threat' to Ravensthorpe gold dig Matt Chambers From: The Australian June 28, 2010 9:52AM TECTONIC says its $125 million Phillips River gold project is unlikely to be quashed if the RSPT is implemented in its current form.
The Tectonic Resources project - near the West Australian town of Ravensthorpe, from which the Perth junior hopes to produce 370,000 ounces of gold over 7 1/2 years from 2013 - would not be rendered uneconomic by the tax, a scenario KPMG said would happen to typical gold projects.

Managing director Steve Norregaard said the project was expected to make profits above the long-term bond rate (of about 6 per cent), so would be hit by a greater tax burden.

"But we don't believe this will adversely affect our project to the extent we can't get it off the ground. This will be confirmed in modelling to come," Mr Norregaard said last week.

"Tectonic is in a unique situation in that we have significant tax losses which in part mitigate the tax effects early in the project life, which therefore doesn't affect the payback period dramatically."


According to a November 2009 scoping study, Phillips River would generate $823m in gross cash over its life for net cash of $283m.

The company says it has overcome metallurgical issues at its Trilogy deposit and is on track for a definitive feasibility study by the end of August.

The scoping study showed cash costs of $440 an ounce after byproduct credits, but Mr Norregaard said these could be improved by using the renewable resources of the windswept southern WA coast. The company wants to have the nation's first wind-powered mine.