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Gold/Mining/Energy : Mongolia Gold Resources -- Ignore unavailable to you. Want to Upgrade?

To: Bearcatbob who wrote (3025)	1/15/1999 11:34:00 AM
From: Dave R. Webb	Read Replies (2) \| Respond to of 4066

Pete is right. The mill operated for the last quarter of 1997, and for an additional 2 week into 1998. Mill liners wear, and regularly must be replaced. It is analogous to a car and its tires. A used car will wear tires, as will a new car. The age of the car has little bearing on the tires. The age of the mill has little bearing on the liners. At the time of shutdown, MGR had contributed in excess of its partner over US$900,000. Our partner had agreed to make all contributions until it had caught up, and had agreed to pay a penalty on all under-contributed amounts according to our JV agreement. The routine shutdown required new liners to be purchased and installed. Our partner notified us, after these had been ordered and were set for delivery, that they did not have the funds, and could we advance further funds. MGR refused. The production at Bumbat during this commissioning stage yielded approximately 1,500 troy ounces of gold. The cost to run Bumbat during this period, including office and support totaled approximately US$360,000. This yielded an operating profit before interest, taxes and royalties, and depreciation and depletion allowances of about US$100,000. Once it became apparent that MAC wished to sell, and that they rejected three offers that I am aware of, the plant was prepared for an extended shutdown. This included cleaning, and draining of the circuits, and the hiring of contract security. This is the current status as previously reported. Dave

To: Bearcatbob who wrote (3025)	1/15/1999 11:48:00 AM
From: Pete Schueler	Read Replies (1) \| Respond to of 4066

Bearcatbob, If you go back to post Message 3583823 you can see that cash operating costs for 1997 (startup and commissioning)were $205/oz. This was during a period when ore grades and mill throughput were below target but improving. I think we expected that cash costs were headed towards $150/oz and that the mill could operate profitably with POG <$300. Positive cash flow from the mill was designed to fund MGR's other activities. Today's gold market seems to give positive cash flow greater importance than reserves alone. BTW I'm up to my butt in snow here in Richfield. How's it up north? Regards, Pete