Ann: Quarterly Activities Report September 2015, page-15

Hi Peppie,

Good to see all the mine management initiatives are showing through in regular performance improvements. Rob Gregory has certainly made a big difference.

Ore hauled and milled is still constrained due to the mixed personnel/ore usage of the L8 shaft and the continued large proportion of waste that is displacing ore. However, we do at least know that there is a finite time left for these restricting factors and that (all being well) mine ore haulage should be at near maximum of 204Kt/qtr by the next September quarterly.

The evidence of the above is clear from the large (and increasing) ore inventory held within worked stopes underground and plant utilisation still at only c. 74% for the quarter due to the lack of available ore from the mine.

The really marked improvement in head grade to 6.8 g/t was a bit above my estimate and is another testament to RG's influence in altering the payment terms for stope draw-down.

We are seeing a steady improvement in AISC qtr-on-qtr. It has fallen from US$1,238/oz a year ago to the current US$953/oz. All other things being equal it looks (according to my estimates) as though it could fall to below US$800/oz over the next 12-18 months as a number of positive factors all contribute to it's decline. Namely:

(a) Diluted head grade up towards the reserve level of c. 7.2 g/t
(b) Ore milled approaching the targeted rate of c. 204kt/qtr
(c) Completion of remaining Capital Works and consequent reduction of total outflows by c. US$3m/qtr

No one can predict where the gold price will be in 12 months time but with MML's costs falling within the lowest quartile of global producers they will have a good margin in all but the most bearish PM environments.

Cash accumulation still looks relatively tight over the next few quarters as they finish all the underground improvements, but (IMO) FY17 should look far more positive and may even lead to a resumption of their dividend in the second half of 2017 - although, perhaps that's wishful thinking!

Well done MML!
CPDLC