project status

This is how I see the project status after updated cost estimates were released to the market.

When looking at cost escalations we shouldn't use the CAPEX figure of $483m extracted from the DFS as it does not include contingency & accuracy provisions. We need to look at the subsequent Annual Info Form of 24/10/05 where a total estimated CAPEX of $550.4m is given which incls. these provisions as well as some minor expl. costs. Even taking this into account, we are still looking at a cost escalation of some magnitude ($212m or 38%) which is comprised mainly of pre-production mining +$26m, process plant +$115m, general & admin. +$26m, mining fleet +$69m and an offsetting -$28m in provisions. These mostly unfunded cost blowouts, if funded via further debt, will probably insure that the operation is burdened by onerous hedging commitments.

Development capital raised to date comprises debt & equity components of $355m and $109m respectively which amounts to $464m. We now learn that additional debt of $60m has been mandated and finance arranged for $133m toward the mining fleet which still leaves approx. $100m to be found to satisfy the revised capital requirement of $762m.

The 3rd pushback of the finance completion timeline is certainly testing the patience of this holder.

The market release points out that the $381m cost assigned to the process plant, infrastructure, engineering, EPC fee etc. is a maximum price which should reduce.

Cheers ... WJ