Okay, as that 1st report was written for some friends and it...

Okay, as that 1st report was written for some friends and it could be misunderstood as i put in some hunches to get them over the line to invest as well, so a had to rewrite some lines not to speculate too much ;p


Anyways, here is the report;

Report developments Integra, London 6/12/11
Lunch with Chris Cairns (CEO) and Peter Ironside (CFO) from Integra (asx:igr)

In general
Integra has had a growth startegy aimed at increasing their JORC and to start the mine running for the last years. It this moment it has 2,5mln ounces of JORC reserve, resulting in a 6 year minelife. 2011 they will mine 100.000 ounces of gold which will be increased over the coming years to an estimated 300.000+ ounces per year in 2013 and they have 1.7million tonnes of ore stockpiled (@1,6g/t). Now priorities are still focused on increasing their reserves so they can increase the minelife to over 7 years. This is mainly a must to realise in order to get institutionals from USA to invest. The underground mining development is crucial for realising that goal.

Underground drilling at Randell (maxwell mine) resulted in an estimated 2700 ounces per vertical meter down where 700 ounces are needed to mine economically, so if they can mix the ore from the underground mining operation with the open pit mining at an 50/50 ratio, you can effecivly increase minelife by 6 years to 12 years. Integra drilled to a depth of 400meters, which if you mine 40m per year will result in a 10year program, which translates to a little over 100.000 ounces coming from underground operations alone per year when fully operational. Note that @400m they still found good g/t gold, they will explore deeper later. There was a slight delay here though because of the permits; the forest on the ground has the status "reserved"; ironicly reservered for the construction of underground mines, but somehow morphed into "reserved forest" in general. Expected is that the drilling permit is coming in anytime soon.

The cashflow generated by operations will not be used to pay out an dividind at least for the next 2 to 3 years ahead nor for a share buy-back programm. It will be used for buying out current Joint Ventures (like Newcrest) and/or any chance for takeovers in general. Also an agressive exploration programm (next year 25$mln aprox. in 2012) is needed to increase reserves and find new potential mining spots as the total area of the Randell-Aldiss area is over 1500km2. Another large part of the money is reserved for the future development of a plant in the Aldiss region. Also Integra wil be debt free by next year and there will be no share consilidation or any cap raiding in the foreseeable future. The gold hedged for sale will be left in place, but it will be significant decreased to just 8000 ounces per quarter in June 2012 from 15000ounces hedged (@1350ish per ounce) in this quarter. By March 2013 ALL gold sold will be on the spot market.

The appointment of Ms. Unwin to the board was made by looking for the most suited candidate for the job; she is a laywer with a corpotate/resource background. Here ties to Alcacer mining are irrelevent according to C.Cairns as they are more focused on the canadian market now then on the australian and are not seen as "predator" by the Integra board. If there will be a conflict of interest situation, it will be dealt with in an open fashion. Her appointment to the board is to assist in the acquisition trail in general as earlier reffered to give her legal oppinion when needed. The main risks for Integra are the Gold price, an hostile take-over and mechanical failure in the processing plant f.e. With falling supply and still increasing supply they expect the goldprice to rise over the medium to long turn.

Exploration and developments
Integra has 2 RC rigs and 1 RAB rig at this moment. They just finished up follow up drilling at the Mt. Monger side (where they found the anomalous 4m @ 1000g/t) and are moving them to the Aldiss region. The big advantage of the exploration from Intgra is that use a technically sophisticated fluid flux modelling analysis of the region, which has already led to the definition of other high quality targets. They are the only (small) mining company in Australia which uses this exploration technique, which according to C. Cairns gives Integra a hugh advantage. There are especially some very interesting prospects in the Aldiss region where the explorations rigs are now as they just finished their 3months exploration review and prioritisation. The reserve of the Aldiss region at this moment is 500.000 ounces, but the managment hopes they can increase that over the next 9 months. They actually only need to find a little bit more (250.000ounces) in order to open a second processing plant in the Aldiss region, which can be operational in early 2014 (estimate by C. Cairns), where some of the future cashflow will be used for as well. Also you will derisk the mechanical problem here with 2 plants operating.

At Salt creek (Randall area) they found a nice straight "railway" of deposit which is not related to the recent finds of Octagonal (asx:ors) according to C.Cairns; it's apperently another anomaly, but C.Cairns didnt have the chance yet to see their results so couldnt comment on that specificly. He did explain the layout of that particular deposit and it runs from east to west, not south towards Octagonal.

Future expectations
To summerize; We can expect drilling upgrades from Mt. Monger and other regions over time (Queen Lapage, Imperial) and over the next 9 months some results from the Aldiss region. Once the deposit area's are established Integra plans to build second plant in that region (2014). We can expect buy-outs of current joint ventures, like the one with Rubicon in the Queen Lapage area or example. The cash cost of producing is AU$500 per ounce in 2011, AU$550 in 2012 where production is expected to be 300.000 ounces plus in 2013 with the development of the Aldiss area and the upgrades to the current facility at Randals. It is crucial for Integra to explore more as to increase their reserve (and minelife) and increasing their production in order to create shareholdersvalue and thus decreasing the risk of an hostile take-over.