Ann: Quarterly Activities & Cashflow Report - 30 June 2014, page-2

This report says very little more than info we already have or at lease inferred:

Cash $6.7 mil cash & gold
of which
$5.19 mil was tax refund
&
$1.7 mil gold from development ore

The confusing thing about the report is that while it extols the merits
of the Spaly Vein as having a weighted average of 27.6 g/t AU & 95.99 g/t AG
(combined about 29 g/t AU with silver factored-in) the forecast for the FY is
still 40K ozs.

I don't believe this forecast for the following reasons:-

(a) that high grades have been foreshadowed
(even the development 8500 ton stockpile has a grade if 13 g/t)
(b) that we will be at capacity rate of 140K t/p/a (383 ton/day) by the end of Sept
(c) That the ramp-up between now and 30th of Sept should produce 15,500 ton of ore
(d) That from 30th Sept to the end of the Fin year that there are 273 days & at
a production rate of 383 ton/day ; that's 104,500 ton
(e) that the 8500 ton stockpile will be processed on or before the 30th Sept

Now let us do the sums:
FY estimated tonnage: = (c) + (d) + (e) = 128,500 ton

Now if the CEO's forecast of 40K ozs is correct , then the grade would have to be 9.68 g/t
including silver.
IMO, this is not credible because:
(1) our development stockpile of 8500 ton has a grade of 13/gt
(2) The Splay Vein section "A" as per today's report has " a weighted average of 27.6 g/t AU
plus 95.99 g/t AG; thats about 29 g/t with the silver factored-in.

A more reasonable FY forecast would account for grades ranging from 13 g/t & 17 g/t
This would yield gold ranging from 53,700 ozs to 70,240 ozs.
Krm's 85% share would amount to 45,645 ozs to 59704 ozs
or an average of ........52,675 ozs.

I'm aware that we have a new CEO who is likely to want to err on the side of safety
but given the info already announced, the 40k oz forecast is ultraconservative, IMO.

Cheers and good luck
moorookamick