Some notes

I did manage to connect with Peter.

Of note, one should be aware that Lamaque is a work in progress. One should keep this in mind when reading this post and when trying to evaluate the current state of Lamaque.

At the end of the day, I am the ultimate one accountable for my investments. I am the one that will have to live with the consequences of my decisions, regardless of the info provided by the company. As a result, I find that it is extremely important for me to be completely objective with my evaluation approach (of all my investments) regardless of any type of positive forward looking info from the company.

I don`t think I have reached a comfortable state as yet about the near-term Lamaque start up, but at the same time I haven`t noticed any major red flags either. This is positive, especially given the start up delays. Again, my view is only from a 10,000 foot level. I may not see the entire picture.

It sounds like infrastructure development work is on track with the Bedard Dyke. It doesn`t sound like there are major issues with Lamaque no. 2 area, at least based on the descriptions I received (see below).

I personally don`t have a good sense of the data at a granular level (at least the averages) for current and near-term periods. As such, it is difficult to compare actual data performance to my own near-term expectations for evaluation purposes. However, the company`s Q1 (unofficial) guidance appears to be somewhat reasonable relative to my expectations.


Notes:


1) It seems like the capital lease financing agreement (from the June 28th NR) has been closed off.


2) Apparently, it shouldn`t be too much longer for the long-hole permit. Also, it sounds like they still have some extraction room under the original Exploration permit, if necessary (part of the 20,000 tonne bulk sample). They haven`t started long-hole mining yet, naturally. The BD ore currently being processed I think is from the areas being developed (development material from the top and bottom cuts). As such, it will fluctuate from day to day.


3) They are looking to average 1,200 – 1,500 tpd in Q1`11. It would be aligned with my expectations, if they can hit it. It would include all 3 zones (Lamaque 2, Bedard Dyke, North Wall), but at different tpd levels. Naturally, North Wall is planned to come online later than the other 2 zones, thus will have a disproportionate contribution to Q1 average tpd (1,200 – 1,500) relative to the other 2 zones.


4) As I figured, the 820 tpd (July) and the 1,000 tpd (early August) were rich partly due to heavy mineralized material from development areas (especially Bedard Dyke). The tpd decreased back down to more sustainable levels once they got past those mineralized development areas. Based on the best answers I got from the company (strictly based on this, and I have nothing else to confirm it), there doesn`t seem to be major problems with the Lamaque no. 2 stope ore area. Lately they haven`t had to use the Lamaque 2 reserves due to the Lamaque 2 non-reserves continuing to be rich. Back in June, I remember an NR stating that the non-reserves stope ore was contributing 30 – 35% of Lamaque 2 ore to the mill. Apparently, the non-reserve stope ore is now contributing at a rate of 100% (calculation excluding mineralized development material from both Lamaque 2 and Bedard Dyke of course). If I understand this performance correctly, it means that the Lamaque 2 stopes are still strong, and they are able to save the Lamaque 2 stope reserve ore. The low-profile equipment appears to be a key in allowing them to extent the stopes. I believe I heard that there is only 1 jackleg and slusher combo remaining in production. I believe I also heard that are ordering another low-profile combo to replace the final jackleg/slusher combo.

Once ramped up and working well, they are expecting each zone (Lamaque 2, BD, NW) to be contributing at a rate of 400 – 700 tpd. The 700 tpd level from each zone is consistent with my long-term expectations. I don`t have a good sense of what the company is expecting with regards to grade in both the near-term and mid-term periods. The company may be waiting for further development progress before they feel more comfortable discussing forward looking near-term or even mid-term grade numbers. This somewhat hinders my personal evaluation.


5) They are looking to access the North Wall underground via the Lamaque no. 2 area. It sounds like they have made good progress on that front. They are looking to begin mining NW at some point in Q1. It sounds like their NW access focus is via the Lamaque 2. It sounds like finishing the NW portal then building the NW decline is secondary priority (after they begin mining NW via Lamaque 2 access).


6) Still a chance of accessing the Performance Hurdle B (Deutsche Bank, escrow) funds in Q1.


7) Peter`s understanding is the same as mine with regards to the Deutsche Bank agreement (the agreement is posted on SEDAR, Jan. 14`11). There doesn`t appear to be any near-term or mid-term show stopper dates (BEST I CAN TELL, but I`m not a lawyer), just as long as we continue to deliver the 667 monthly ounces to Deutsche Bank and we are able to continue funding the operations. The ounces to Deutsche Bank does not increase beyond the 667 monthly commitment until June 2012.


8) I don`t know how much of this next info is strictly company speak. I asked about the relationship with Deutsche Bank. For what it`s worth, Peter says that the relationship is excellent.


I will make another post about conference call questions. Peter is willing to answer about 4 questions during the conference call, prior to the question period. We should post questions on here and then someone can take the most popular questions and send it to him via email by November 8th. Again, I will make another post for this.