update to going forward, page-4

The share price will be affected by three factors, operational performance, drilling results, and the gold price. The operational performance in the dec. quarter is a major turn around, but it may take the analysts until the March quarter to fully understand this. Due to the disaster the Pacific mines have been, this stock is not followed that much. In 2014, the Aus. mines earned $140 million in cash flow, while the Pacific mines lost $110 million, leaving only $30 million for admin, exploration, debt etc. Many said this did not make sense and so walked away. Even after spending $110 million in the Pacific, SBM had not shown that they could make money their. During the month of dec. Simberi finally produced positive cash flow, 6800 oz produced at a $1200 per oz cash cost. Now quarterly production of 25,000 oz at cash costs of $900 to $1000 per oz is very realistic. This means that instead of taking of taking $110 million out of the bank they will now be putting $60 million into the bank. However,the improvements in Aus. are just as important. By changing mining methods, SBM mined 65,000 from the Gwalia mine at a cash cost of $600. At a gold price of $1650, they are now making a cash profit of $1050 per oz. This is $273 million on an annual basis less $40 million in capex means this mine is now capable of putting $233 million into the bank. So instead of all mines putting $30 million into the bank as they did in 2014, the dec report indicated that they were capable of putting $293 million into the bank, a 10 to 1 improvement. Put differently, with 5.2 million in reserves, and a market cap of under $100 million, the market is valuing each oz. of reserves at under $20. How much sense does this make when you are now earning a cash margin of up to $1050 per oz? While everyone has different opinions of value, if SBM can maintain production of 65,000 per quarter at Gwalia and 25,000 per quarter at Simberi, then SBM is worth $3.50 per share. The deep drilling program could add $1 to $2 per share. A rise in the gold price to U.S. $1600 would add $2.00 per share. The drilling results should be out in March. The March quarter released in April could see the bank balance increase by $50 million. At this point, investors should be paying attention.