Ann: Quarterly Report March 2016-MML.AX, page-10

The biggest issue is the fall in the average grade of the ore being milled, down to 5.5 g/t from 6.8 g/t.

I think this reflects the loss of mine management skills when the COO ran off with his main expat helper. It meant that the locals were just going back to their old ways of running the mine for themselves and too bad for the owners.

If they keep to their projected 108k ounces for the year that would mean that they will produce around 25k ounces next quarter, a minor improvement on this quarter and well below the 30+k they were projecting at the start of the year.

There are some positives -

1. A slight increase in the bank balance
2. ASIC OK given the reduced output, and comfortably below current gold price
3. They are making progress on the service shaft - but the report is a bit incomprehensible to me in parts as I am not a mining engineer
4. If they do achieve 25k ounces next quarter then AISC should come back down a bit and they should be profitable/add to bank balance (depending on USD POG and how much they spend on the shaft)
5. They have the funds on hand to fund the service shaft, which is a huge positive.
6. They are talking about doing acquisitions - hope its good.
7. Once the service shaft is completed they will have the capacity to produce 150k ounces pa on the basis of only a 5.5 g/t milling grade, and much higher level if they can get back to 6.8+ g/t.

Report is definitely a miss, and it seems the market expected things to be off, which is why it did not rally in last few days.

The Chairman gets a high fail grade for his services as acting CEO, and I hope the newly installed CEO can turn things back on track ASAP in relation to mining grade.

loki