Ann: Major Capital Cost Reductions Reposition Wa Gold Project-AZM.AX, page-9

Hi Guys,

I think the issue that is being alluded to is that whilst the capital reduction is excellent (reduced by US$54m) the development still requires US$142m or A$182m.

Assuming that the project follows the standard financing model and is 60:40 debt:equity it will mean that AZM will require A$73m in equity to be injected before the A$109m debt package is likely to be forwarded.

Whilst this is not impossible (or improbable) it must be contemplated carefully to ensure that existing and long suffering shareholders maximise their returns.

Based upon the most recent Quarterly cash flow report the company has less than A$1m cash at Quarter's end so a capital raising will be coming soon.

This, IMO, will be a smaller one that allows the company to progress it's plan to the next stage as opposed to the 'big one'.

I would like to see additional value being incrementally added to the SP by way of (1) additional resources being firmed up and thus LOM for the project being added, whilst (2) the POG continues to strengthen, further improving the NPV prior to a major equity injection (thus it can be done at a much less dilutive SP).

I would not like to see a royalty streaming deal which locks in the gold price received. One possibility maybe to find a JV partner that is willing to recognize the cost incurred by AZM to-date and be willing to take [x] % of the project (even if this is a majority) to provide the cash equity to get ground broken.

I am sure that one way or another shareholders will be rewarded in time.

Cheers
John