SEEMS TIME TO GIVE UP, page-407

Hi speculator,

".. I am still surprised that LJ stopped the U/G completely last year..." If I am not mistaken or remember correctly the cost associated with it is very high and therefore the margin between the hedged gold price then and it will be a negative and therefore no point in pursuing it. However now that the remaining hedged gold price is over $2,000/oz mark, the extraction of U/G ore is making sense.

Well the Mar qtr clearly indicated that relying solely on the ores from O/P mine is inviting a repeat of another Mar qtr result. The better grade U/G ores may come useful in tying over a tough qtr when there is not enough O/P ores. The need to be consistent in production is just as important as the need to generate positive cashflow. With the AISC of the U/G now about on par with the hedged gold price, it makes sense to mine them. Also as per their presentation on how to mine the U/G forward, hopefully they can be more efficient about it and perhaps make some money out of it. Another point to note is that the O/P grade has to be 1.3g/t in order to just make it to the annual guidance of 110Koz and obviously without the better U/G grade, it is just cutting too thin because the estimated grade of the O/P can barely make it to 1.3g/t!!

"....surely LJ should just be upfront with the market, its to ensure they have a good buffer of working capital, and for ensure they can afford to access more ore sources outside of Doublejay....."

I thought by saying that the capital raised (up to $20M) for the NTM and the U/G development capital is already very clear that he wants buffer and he needs it urgently as well as the new FY is coming up and money is needed to fund the development work. The same can be said about the $20M allocated for exploration. I reckon with the money earned through operations he can still make it but it is just cutting it too thin and the need to avoid a Mar qtr result is mandatory for DCN and also for his reputation. I suspect that the mar qtr result is the trigger that makes him bite the bullet to rush out to the market to raise capital.

Cheers.