Ann: Gwalia Mass Extraction Feasibility Study, Guidance & webcast, page-145

Hey guys,

Having worked at Gwalia in recent history I have two comments to make about the company:

The company and management are very diligent and the operation on site it well conceived and executed. It is very much the slow turning wheel of endless productivity that lots of gold mines aspire (and fail) to achieve.

My concern at the time of working there and still is the depth at which this ore extraction is taking place. The 1 mile mark is passed on the decline and the ground stresses are clear for all to hear. My ongoing concern with SBM is that they are very exposed to the risk of 'natural disaster', in that they have one average performing mine in PNG and one great asset in WA that is nearing the end of its workable depth in Gwalia. The share price IMO was far too high for a project that although monitored and designed by some of the world's best could still be ceased and/or experience serious delays due to the depths of the works being complete. The ongoing mining costs (AISC) will no doubt increase as, increased ground support, stope sequencing complexity, trucking limitations and other issues with working at extreme depth will need to be taken into account within the mining cycle.

I just dont see the MC, even after the current dip, being realistic unless dramatic gold price upswing occurs.

Assumed GP of $1750 for next 10 years & assumed AISC from latest announcement for next 10 years

Gwalia: 220k oz @ $1000 AISC
Profit of $1.65bn

PNG: 135k oz @ $1250 AISC
Profit of $675m

This is very basic maths but it doesnt seem to stack up against the overall MC of the business considering its lack of current pre development sites. The old mantra of all eggs appear in one basket: an ageing, ever complex, deep, basket at that?!

All IMO and not ever held SBM.