Ann: December 2018 Quarterly Report, page-5

I am very pleased with the detail in this quarterly and we have been given the figures I have asked for previously. With the vote imminent I'm sure the board had to make sure they gave as much information as possible to ensure they couldn't be sued later if events turned out to be materially different.

Having said that the forecasted figures for 2019 are IMO very very conservative especially when you look at cash flow which is the no. 1 issue here. Let me give some examples ( I assume neutral currency movement in 2019):

- Forecast production for 2019 per qtr is 18% 18% 23% and 41%. In 2018 is was 21% 19% 24% and 36% so we're being advised here that most of the cash will come in later during 2019 than 2018

- Remember the new contractor U&M was only fully mobilised in November and by BDR's admission has and is doing well. We can therefore safely assume that their performance will be noticeably better in 2019 than 2018.
2018 qtrly production was 26k, 24k,30k and 43k and yet we are being told the forecast for 2019 is 26k,26k,33k and 60k so U&M will only produce marginally more ozs in 1H19 than 1H18. How can this be right? and this with the modular liquid oxygen "thing" up and running by the end of March.
I would expect production to be +10-15% on 2018 so 60k for 1H19. Again this would make a noticeable difference to cash flow by +3.5M for 1H19.

- AISC again IMO very conservative and I would expect it to be no more than $1,000/oz. Why? The Sept qtr had AISC of $962 on 30k production and Dec $893 on 43k. So on my 2019 forecast production (30,30,36,60k = 156k) the maximum AISC for all 2019 based on these 2018 figures would be $930! ( 30k x $962, 30k x $962, 36k x $925, 60k x $900)

So what this would mean is (assuming cash settlement is 45 days):

- operating cash flow:
1st Q $13.1M (38,400/2 x 1,221-832 +30,000/2 x 1,275-900 )
2nd Q $11.25M ( 30,000 x 1,275-900)
3rd Q $12.81M (30,000/2 x 1,275-900 + 36,000/2 x 1,275-870)
4th Q $31.3M (36,000/2 x 1,275-870 + 60,000/2 x 1,275-800)

- debt payable (BDR schedule)
1st Q $13.9M
2nd Q $6.2M
3rd Q $4.1M
4th Q $4.5M

At Dec 31 cash & bullion was $12.5M and working capital -$8.1M so net +$4.4M that would cover the $0.9M cash shortfall in 1st Q.
Thereafter for 2nd,3rd &4th Q's operating cash flow - debt would be PLUS $25.7M

So I'm voting against. The offer has been independently verified as unfair don't forget (I hope my figures haven't any major errors)

Note BDR gold price received was $1,221 only $14 less than NCM