Ann: Quarterly Activities & Cashflow Report - 30 September 2014, page-10

Hi Andy, Robert, Kenny2 & All,

Taking Stock;
If KRM's forecast for FY 14-15 is correct
then let's see what that means.
KRM's forecast for FY 14-15 is 40K ozs
KRM has produced 6000 ozs in its ramp-up FY to date
This means the KRM will produce 34K ozs gold for the remaining
9 months.

Now lets suppose that KRM is processing at current nameplare
i.e.: 140k ton/P/A; that's 105 K tons for the remainder of this FY.

If 105K tons throughput produces 34k ozs gold @ 94% recovery rate
then we have:

34 divided by 105 x 31.1 divided by 0.94 = 10.7 grams/ton average grade

That's what we have now at ramp-up without any feed from the
much spruiked rich Splay vein which averages 29 g/t (incl silver.)

So what is it folks:
(a) the 40K ozs production for FY 14-15 is an underestimate
or
(b) that the much spruiked Splay vein won't be accessed this Financial Year.

Even without the $2mil plant upgrade to take throughput from 140K rate to
200K rate p/a, one would expect that supplemented feed from the Splay vein
would take overall grade to at least 14 g/t (incl silver).

So,
(a) for the remainder of the year without the plant upgrade this would mean :

105,000 x 14 Divided by 31.1 x 0.94 (recovery rate) = 44430 ozs
which when we add the 6000 ozs already produced we get 50,440 ozs
for FY 14-15.

If the plant is upgraded to 200K p/a rate in say the March Qtr then:
(b)
70,000 x 14 Divided by 31.1 x 0.94 = 29,620 ozs (2 qtrs)
+
50,000 x 14 Divided by 31.1 x 0.94 = 20,464 ozs.(1 qtr)

This is a total for FY 14-15 of 56,484 0zs (29,620 + 20,464 + 6000)

Perhaps a shareholder who is going to the AGM could ask the following
questions:
(1) What throughput does KRM expect in the remaining 9 months of FY 14-15?
(2) what average grade does KRM expect over this period?
(3) when does KRM expect to access the Splay vein and by what tonnage/day?
(4) what will the av throughput grade be then?
(5) when does KRM expect to upgrade the plant to the 200K tpa rate?

If the company answers these questions, then there is enough forward
guidance for the market to re-rate KRM and price it fairly according to
forward fundamentals.

Loyal long term shareholders who have supported this company over the
past two years of non/minimal production expect full and frank forecasts;
not understated figures for the sake of understatement.
cheers
Moorookamick