Really interesting at the low end of the market, page-39

Hi @sreeve and all

I've been going through the Navigator story myself today and @speculator101 is right, the plant never gave any problems except for a short shut down in Feb 2011 to replace a broken mill pinion shaft and bearings and other works. The shut down was planned for 5 days but the work was completed in 60hrs. Towards the end of the ramp up in 2010 the mill was processing above the 2Mt/annum rate (that EAR have in their presentations), at a rate of 2.4Mt and 2.5Mt in Nov and Dec 2010. Recoveries seemed OK as well at around 91-92% for most of the ~3 years the mine was running. Given the plant hasn't been operating since 2013 one would imagine that there will be significant work to do to bring it into service again. I'm not sure if electrical systems can survive that long and motors need to be maintained as well I'd imagine (P.S. I'm no electrician or mechanic....maybe someone out there can comment more). At a complete guess $20 million sounds reasonable to me if all major components are serviceable.

The problem was always with the mine (the Cockburn Pit - rebadged Oreila Pit from what I can make out). Apart from those early few months at the end of 2010 and just before the mine shut they could never get enough ore to the mill. The mine never made money and for the whole 3 years the company was constantly raising or borrowing money. The excuses given were varied ranging from insufficient high grade ore for blending, pit slippages, fleet problems (equipment access problems), weather (rain), mine grades not reconciling with modelled grades, depleted ore grades above the base of the oxide (leached zone), and near the end they were also blaming their mine mangers and high staff turnover.

The fundamental problem I think was that the original pit shell was modelled on A$1,350/oz and when they went to mine that didn't end up bringing enough ounces into the mill to run it efficiently..........at one point I can't remember exactly when they started doing a lot of grade control drilling to try and reconcile the mined and modelled ounces. During that drilling they found low grade zones as low as 0.7g/t that they were using to improve mill efficiency and to recover these marginal ounces.

Sometime near the middle of 2011 they realised that a lot of mineralisation existed below the base of the pit outline and started modelling new pit outlines based on gold prices between A$1,600oz and A$2,000oz.

Eventually they made the decision to switch to a A$1,700/oz pit shell which involved lots of pit cut backs, they also decided to back fill the southern end of the pit to reduce costs and were also down sizing the work force by 25-30% to save money. Unfortunately the higher gold prices of 2011 started to decline in 2012 and 2013 was a killer. If there is one positive out of all this the company did move a lot of waste during this time although I think one cut back (on the west?? of the pit was deferred and never started). Another good thing is that according to Navigator they were reaching fresher ore positions with supposedly higher grades when things went wrong in the end (sounds like what all companies say when they are on their last legs).

sounds like what all companies say when they are on their last legs

Navigator did keep up grading its reserves and resources through that whole period but it did little good. Also when they backfilled the south of the pit they ended up sterilising part of the resource at that end of the pit. Those resources can in theory be recovered with a high enough gold price.

Below is the last resource/reserve upgrade that NAV published in June 2012 and EAR's numbers from Nov 2017. The success of the mine is still heavily weighted to the success of the Cockburn/Orelia Pit as Julius is not a very big component of the gold inventory. I wouldn't read too much into the slightly superior grades in EAR's estimates, what will make this mine more viable is a gold price above A$1,700oz and if they can get a decent and suitable mining fleet in. To steal a phrase.....Move that dirt.

I'm not sure the reasons why NST are interested but I'd probably not own any myself without NST's endorsement. The old mine couldn't produce 100,000oz per annum.

I'll take a look at the exploration and put my comments in another post. Esh



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