Ann: Quarterly Activities and Cashflow Report, page-9

My observations on quarterly report:

- Thing that immediately stood out was the mined grade at 4.2 gpt and that’s with minimal contribution from Allansons which has the highest grade. Conceivable that this could push to 4.5-5.0 gpt if they cherry pick the good areas at Allansons over the next couple of quarters.

- Open pit grade still struggling to pick up but in line with what I expected. Going to need a step change here. I looked back at some of the drilling results from 2015/16 trying to get a feel for what high grade is in the open pit but hard to tell. The way the company has been pretty vague on the grade to be expected at the Cornwall Shear Zone worries me slightly, especially with it all in the last quarter. Considerable risk I think that grade doesn’t pick up as quickly as required.

- Average daily processed tonnes dropped off a fair bit from the previous quarter. I thought this would be higher since the company said in the first three weeks of November they were running at 2.9 Mtpa or ~8500 tpd. Not sure if something specific happened in the plant (like planned maintenance) to bring this average under 7000 tpd. Could be that processing more higher grade is showing the hard rock limits in the plant capacity. Recoveries fell off slightly too.

- Seems they made a debt repayment but cancelled out by the debt drawn at the company level.

So all in all it seems like the underground is going to have to do the real heavy lifting here. Still reckon 180koz is probably going to be a few thousand ounces too many (although I don’t think that will matter too much if costs are in line and quarterly production gets up to 50koz+).