Summary
The Chatree mine performed well, during the past year, despite low grade ore. The production forecast was achieved with similar operating cash costs as the previous year. This achievement was commendable considering the difficult circumstances of low grade ore and tight open pits with industry-wide cost pressures of rising fuel and consumable prices. Chatree is still the safest gold mine in the world with over 9.2 million hours worked (over 2,000 days) without a Lost Time Injury. The processing plant throughput was higher than the previous year at 2.5 million tonnes per year, 25% higher than its rated capacity.

In the coming year, higher grade ore feed from recently granted mining leases should see costs per ounce decline, although unit costs will increase mainly due to higher capital charges and a longer ore haulage distance. A timetable for the expansion of the processing plant to 5 million tonnes per annum will also become available with construction anticipated to commence during the coming year.

Chatree North Mining Leases
In July 2008, the Chatree North mining leases, which are a northern extension to the Chatree mine, were granted. This triples the area available for mining and provides access to much larger defined ore reserves with mining planned to commence in August-September 2008. A series of open pit extractable deposits have been delineated for mining over many years. The initial mining areas will allow the mine to return to full production by the end of calendar year 2008.

Mining
Ore feed for the year was mainly from remnant parts of previous, tight, open pits at Chatree. This was supplemented by stockpiled ore, which was mostly of a marginal grade.

Remnant ore was removed from the C, D, H and S pits. New working areas included H West Pit and a cutback on C Pit. Minor ore was supplied from the starter pit at Chatree North (A Pit). The higher gold price helped in expanding some of the pits as marginal grade ore became available as the cut-off grade was lowered from 0.6 to 0.5 grams/tonne gold. Low grade, stockpiled ore supplemented the ore feed to the processing plant.

The Chatree leases have been fully exploited this year except for an extension to the C Pit at C North and underground potential.
New ore sources at higher gold grades are available within the recently granted mining leases at Chatree North. Production will ramp-up during the December quarter of 2008 from an expanded A Pit and from new pits at K East and C North (which straddles the lease boundary). Gold grades are higher near surface (1.7-2.2 grams/tonne gold) due to the shape of the orebodies to be exploited. A revised mine plan was recently completed for Chatree North, as earlier plans had envisioned ore being treated from both Chatree and Chatree North, with a slower ramp-up phase.
Lotus Hall, the Thai mining contractor, had been mining with equipment with higher operational hours. This had impacted on equipment availabilities. Currently, a new mining fleet is arriving on site. By December, the new equipment will be able to produce ore feed at double the previous rate. New Caterpillar trucks are able to move up to 100 tonne per load and the excavator buckets are twice as large as the previous models.