Ann: Production Update Q2 December 2015, page-2

All going to plan - USD216m debt, down from USD325m at start of 2015. Unfortunately due to the drop in the AUD since the start of 2015, the debt reduction in AUD terms is not that impressive (they shouda hedged it like I have been suggesting). Current debt is AUD$308m, but with cash balance being aprox. AUD$100m, the net debt is AUD$208m.

They really should keep some of their money in US accounts so that those US funds get applied against their US denominated debt. AUD will head lower this year - 65 cents seems a certainty given commodity prices and a slowing China (and slowing capital inflow), and perhaps we get to 60 cents next year. Very disappointing and shows a lack of financial skills in the way they have handled this issue. The CFO needs to go, as he obviously does not understand how to protect the company from currency fluctuations that are pretty well known.

The fairytale they put out about POG AUD being an offsetting natural hedge against the USD debt does not wash with me. The two issues need to be handled separately. A hedge on part of production and a separate hedge to cover the USD debt.

But overall a great preliminary report telling us everything is on track. Simberi doing great and Gwalia production operating as predicted (a bit down due to lower ore grade as forecast). It seems to me they can produce at around 400k ounce pa on a sustainable basis. Debt to be cleared around mid 2017, in net debt terms, IMO.

I am still expecting lower USD POG sometime this year, under USD1000, but not sure where the AUD POG will be given a lower AUD I think will eventuate.

Good luck punters.

loki