Good news at Flamingo

Our focus has been on three projects, namely Mt. Freda Goldmine which we didn’t do any, really any work on last year and we’ll need to do another round of drilling. Those diamond drill hole results are coming back to us now and we’ll be plotted up and announced with the previous extensive drilling that’s been done there before. David Price and Robert Cotton (an elder of the industry and well respected) are working on that now to try and give us an indication of our potential resources and for mine design purposes, and we’ll have to do more drilling there. It is encouraging to what we’re seeing and we are anticipating that we can get cash flow from this mine again. Our approach to it will be low CAPEX (capital expenditure) in redevelopment of the mine as far as equipment that goes there, with the opportunity of trying to buy equipment in at the right price, due to the downturn in the market place. That will be supported by the Gilded Rose Mine and plant. We can upgrade that at little cost which will give a far greater input and we are looking at that as a high grade plant. And we are looking to putting in a copper offtake circuits there and Gemini tables for the gold that’s classed as free gold. That’ll be supported out of Duck Creek where there is a lot of gold in quartz.

Flamingo Project The second major focus of drilling has been the Flamingo which we’ve announced and we’ve completed 14 holes there out of probably around 20 to 24. We’re not sure yet on the wet season which has been raining and causing us problems at the moment. And those results are very encouraging with the intersections of the ore body. Our previous drilling was done by Estrada. There is some high-grade gold and copper that’s visually been seen on the intersections and again, the team’s going to plot that up, so that we can move towards resources and plan mining. The good news about Flamingo is that it appears that the oxide cap which could be quite rich is obviously near the surface, but the sulphides have come up near the surface and they carry good grades. We do have the opportunity of getting cash flow out of both these areas of oxides which we can treat at our own plant copper/gold and with the sulphides we have the opportunity – we’ve had discussions and Estrada and Ernest Henry wish to receive those there. Their capacity is 11 million tonnes per annum throughput and their cost of production of processing there is in the $5-$6 range – it’s quite low actually. So you can afford to transport it there and do a deal with them.

Morris Creek At Morris Creek, we are drilling there or at the moment rain’s interrupted that and the rig had to be demobilized the other day. They were doing two diamond holes and they are intersecting the breccia zones and all the RC and diamond holes there, which is very encouraging. Those breccia zones range from 20 to 40 metres wide and we need to do more work and we’ll have to wait for the results to come back. Hopefully Morris Creek is carrying copper and gold as we get into this more. So the focus of the company in the next twelve months will be enhancing these types of projects and also Duck Creek.

Mt. Norma Mt. Norma, which we want to come back and do more drilling, from last year in the Evening Star Mine. And the Young Australian Mine is going to be modelled as well and probably require a little bit more drilling. All these particular mines do fit into our core areas of operational plants that we can bring back in the Mt. Norma copper processing plant and our gold plants, both either at Mt. Freda or Gilded Rose and the possible re-establishment of a further plant in the Duck Creek Malbon area.

Corporate activity On the corporate scene, we are doing two things. One is that we are now going out in the near future to raise a bit more capital for the company. The previous capital we raised, 2.5 million went for the repayment of convertible loan and $2.5 million has gone into this current drilling programmes and the maintenance of our operations. To progress into next year, we do require a lot more capital.

Our aim next year is to get in-situ resources up to economical starters so that we can look at potential cash flows or opportunities. What we are going to do with our assets and this is also going to be enhanced by corporate activity, where we are reviewing some very serious opportunities, and if that comes to fruition, hopefully in the next three or four weeks, we’ll be able to make a very important announcement to the market.

2010As far as the commodity prices are concerned, at the moment gold is running at about $42 a gram. Therefore, when you look at a lot of our mining, which is open cut to mining at this stage as opposed to underground, and you look at coal mining which I’ve had a lot of experience in – in costings and, you know, bringing mines up to a stage where they should go into production. I can only say to you that when you’ve got 2 or 3 grams of gold, it’s worth $80 to $120 a tonne in-situ. You get 1 or 2 percent copper with that and copper at the moment is $3.50 a pound, or on a percentage basis at the moment it’s 7,600 - it’s $76 for 1 percent. So it’s $100 for 1.5 percent, that’s our aim. Along with 2 grams of gold, you’re looking at $180 to $220 a tonne in-situ in coal runs - at the moment about 80 to 120. So it’s a great time for a company like this to really try and convert its assets in one way or another to unleash the shareholder value.