Ann: Quarterly Activities Report, page-8

The $119 "ore movements" adjustment downwards (non cash) look very suspicious to me. You will notice that in previous quarters there have been adjustments as below:

	Column 1	Column 2	Column 3	Column 4	Column 5
0	Quarter	Dec 16	Mar 17	Jun 17	Sept 17
1	ASIC Adjustment/qtr	-167	97	-57	-119

This means that over the past year they have adjusted (down) the AISC by $246/ozs. This type of adjustment is usually mining more ore than is needed and placing this surplus ore into stockpiles for use in following months and consequently not appropriated to the quarter identified. The underlying problem with this type of (non cash) adjustment is that the lower grade ore can be placed in these stockpiles thus artificially lowering the AISC in earlier quarters thus distorting those quarterly numbers. In the end it catches up with you and you either have to use the ore in these stockpiles (in which case head grade and therefore gold production/revenue are reduced) or the stockpiles written off; either way it catches up with you. Is this what SLR are doing? I don't know but it's a good question for the AGM. Another indicator is the cash flow statement which makes statements:

"Project expenditure of $4.3 million including $3.0 million in capital drawdown on recommencement of the Cock-eyed Bob underground mine"

"Working capital movements of $4.7 million"

"The Company’s strong cash position will continue to fund the remaining capital drawdown on the Cock-eyed Bob underground mine in Q2 FY18, estimated at approximately $5 million"

Note also that

"Pre-stripping activities at Imperial, involving the removal of approximately 1.8 million BCM of topsoil and overburden, were completed in August with ore production commencing in September. Pre-stripping activity at Majestic West, adjacent to the Majestic and Imperial mines, commenced in the quarter with 427,000 BCM of overburden removed in the quarter."

My question is has some low grade ore which is marginally overburden been placed in stockpiles? It would be interesting to get breakdown of the ore grades in the stockpiles.

The resources statement (dated /8/2017 - pg 2) shows the average grade over all their stockpiles (419,000 tonnes containing 17,000 ozs) as 1.2 grams/tonne - this would indicate that they are putting low grade ore into stockpiles and using this as a credit against their AISC; another question for the AGM.

Note also that they are still paying off their debt to WA government at $1.1m/quarter (for the IGR takeover); this should soon be complete and will then go to the bottom line.