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Message: A reason for optimism?

Both 2004 and 2009 Magino resource reports are now posted on the PDG website so I went through the numbers to see what exactly led Brian to make this deal. The 2009 report had a M,I&I of 1.6 million oz with a grade cut-off of 3 g/t while the 2004 report had a M,I&I of about 632,000 oz with a grade cut-off of 1.37 g/t for an open pit design. Both of those grade cut-offs appear to be high compared to other similar projects, particularly the 3 g/t. Also included in the 2004 report is table 17.8 on page 39 that has a large range of grade cut-offs, which range from over 5 g/t to below 1 g/t. You have to do some converting and interpolating, but it's possible to compare the change in resource from 2004 to 2009 using the same grade cut-off of 3 g/t. I get a change from about 300k to 1.6 million oz or about a 5 fold increase, although most of that increase is in the inferred category. This increase should be due only to the drilling that occurred during the 5 years between reports. Now what if a lower grade cut-off of 1 g/t was used in the 2004 report? That's a more likely cut-off that we should see in the upcoming resource estimate.Then the difference in the number of oz between the 1 and 3 g/t cut-offs in the 2004 report should be the minimum number of oz that will be added to the revised report later this month. I calculate about 500k oz which would give a revised estimate of about 2.1 million oz. That's the number that Brian has been quoted on and implied in the website presentation. I invite anyone who's interested to check this number as there's no point in carrying on this analysis if it's wrong. These are numbers based on NI 43-101 standard reports. Then we get into speculation as to how much more will be added from the drilling between 2004 and 2009, the selection of a lower grade cut-off and the additional assay data from the 2800 m of recently cut core. I think this is the type of due diligence that led Brian to make this deal.

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