Shareholders Group Letter, page-21

I read the blog and guess what is the conclusion.....

About an year ago I wrote the following as a answer to a group member, back there I was even attacked by some people, seems to me that my predictions were not that off. 

HI SJB,

I know that you were not critical of me, do not worry about it you seems to be a very honest person and I respect that a lot.Yes I have done some research about Orinoco and also I am a mining industry professional with the bulk of my career in operation and planning, thats the reason why I am trying to paint the right picture for you guys.

Even with comminution problems and low recovery rates on the plant, lets say 80% or 75%, if the ore was let's say 30 g/t and the plant process about 2kt month, with a mine recovery of 85% : 2000 x 30 x 0.75 x 0.85 = 38 250 grams / 31.104 = 1229 Ounces, this numbers seems to be awesome, but there a trick thing that changes everything, the dilution. If the gold vein has 10cm width and the minimum stope width for extraction is about 1.2m tall, with lets say 2.8t/m3 density rock, we will have the vein representing just 8.3% in mass of the total extracted volume, so for each tonne of material mined just 83kg of ore @ 30g/t, so calculating the total gold contained: 0.083t x 30g/t x0.75 x 0.85 = 1.59 g/t recovered per each tonne of material processed by the plant, thats the reason why I believe that the grades announced are in situ grades and not the proper mined grades. Lets put this way, IN SITU GRADES = the ore grade of the orebody before the extraction/dilution, MINED GRADE = the real ore grade of the ore after extraction with the dilution applied. Hope this answer helps to understand what could be the issue.

Thanks SJB