Hi ActurtleRBK hired RSG to do a preliminary valuation of...

Hi Acturtle

RBK hired RSG to do a preliminary valuation of Chirano about 6 months ago (from memory). They provided a NPV pre capital expenditure... and i have povided a figure post expenditure (which may be way off - i'm not very knowledgable when it comes to the costs of initially establishing the mine).

I suspect RSG used a pre-capital NPV becuase:

1. It obviously is a higher number- and thus more favourable. (wink, wink)

2. The capital costs of Chirano are as yet still unknown. Three option exist - a stand alone operation (the most expensive option), or a tie up with either Resolute or Ashanti with their nearby facilities. Thus, it they may have come to the conclusion that excluding capital costs is acceptable - note they have clearly mentioned that capital costs have not been taken into account, it's very transparent. One can easily deduct est. capital costs from the NPV pre-capital costs to arrive at a proper (ie, post capital exp NPV figure). This is very simple as capital exp can be taken as a one off expense in the base year... no discounting is required.


Re. your comments about my estimates of POG...

I was not implying that the BFS will use a POG of $350, $400...or even higher - they clearly won't. In all likelyhood they'll use a figure in the low 300s ($320 at a guess).

My mentioning of higher POG in the future was not in relation to the BFS to be released sonn... but rather to the potential upside RBK will have to POG at higher levels.


Re your comments of the effect of a lower POG on the projects fundamentals...

The first NPV pre cap exp gives an NPV of US$73M with gold at US$300/oz... i consider this to be conservative considering POG's currently at US$350.

With a est cash cost of US$200/oz, RBK obviously provides ever diminishing returns if gold were to approach this level...

However, i my estimation, with POG currently at US$350/oz... and with the primary trend (imho) being up... i don't consider this to be off too great a concern.


As i said in my initial post... RBK is in some ways a perpetual option with the undelying being POG...