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Capricorn Metals

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September 16, 2024 at 1:20 PM (MDT)|Broadmoor Hotel & Resort

Paul Criddle

Chief Operating Officer

Paul is a qualified metallurgist with extensive development and operating experience gained over a career of over 20 years in the mining industry. During this time, Paul has held operational, technical, and executive leadership roles in Australian and Canadian Listed companies, developing projects in Africa, Australia, and Canada. Paul joined Capricorn in May 2024 as the Company's Chief Operating Officer.

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With a repeated focus on high margin assets and shareholder returns. That collective experience bodes well for the group today and is a strong differentiator in a sector where successful developments are few and far between with complete operational technical corporate and development, skill sets required to deliver our projects on the ground and returns to our shareholders. We are well positioned for a sustained period of growth. We have an excellent register of institutional shareholders including a large amount held by board and management, the balance sheets in good shape with 100 and $25 million of cash and bullion Australian as of June 30 after paying down the hedge book by $70 million in the last quarter. So the company is in great shape to finance our Mount Gibson project through Karla Winder's strong and consistent cash flows to our cornerstone asset in Klaw Winder and it's been built with consistency and and margin as a core feature, a low strip mine in a high 3 ft plant with a simple flow sheet drives reliable production sector leading all and sustaining costs. The position, Karla Winter is one of Australia's lowest cost gold mines, Kalinda is a great one now, but it's off the back of an extremely successful project execution phase and an operational focus and discipline cost management to get to the point that it is today, Kain was built in less than 18 months on budget and seamlessly transitioned into full production by a development team. Importantly, a 4 million ton per annum project and plant was delivered for 100 and $80 million. Further highlighting the bang for buck inherent in the team that we have from there, the ops team have run it exactly as it was defined in the PFS. As an example, our reconciliations to the reserve are within a 2% variance project to date. This is testament to the technical and operating teams who have delivered some $465 million of operating cash flow since start in 2021 and importantly, delivered it to the balance sheet. Fy 2024 was a consistent year for Kalinda with 100 and $60 million of cash flow delivered from operations at an industry leading all the sustaining cost of $1421. Australian per ounce from 100 and 13,000 ounces produced. The team managed to recover from two significant rain events by accelerating operations out of Bira in the latter quarters. And for 2025 it's a similar story plan with a production guidance range of 100 and 10 to 100 and 20,000 ounces at cost of 1370 to $1470. Australian per ounce a range amongst the lowest in the sector. This consistency is the Hallmark of Kala Winda and the team that run it earlier in the quarter. We were pleased to announce an upgrade to our reserves to see the inventory at Kalindi increase by 15% to 58 million tons at 0.8 g per ton for 1.43 million ounces. The reserve upgrade is a product of predictable geometry, methodical drilling and accurate estimation processes of what is now a very well understood deposit. Importantly is the fact that these answers being a added are a product of the very strong economics of the mine and protect the margins. Realized we're excited by the fact that Klaw Winder continues to deliver consistent production and cash flow whilst being able to grow while the upgrade in the reserve is meaningful. I I want to take a moment to illustrate the consistency with which that inventory has been grown in the last three years. That growth is on top of 350,000 ounces of production making Kala Winder a 1.8 million ounce project over its life to date. This is Testament to the geology and exploration teams that that have delivered nearly 900,000 ounces of growth of the project at a discovery cost of approximately $24 per reserve ounce in that time. And so now with over 13 years of mine life in front of us, it allows the company to reconsider the optimal scale of the Karlow project. OK. And so with the larger reserve table, we've begun work on studying an expansion case at Kain. We're going through the technical trade off studies to right size the project. But we expect the outcome of that to be an expansion in the in the order of 2 million tons per annum flow sheet, design capital estimation. TSE design, water balancing and permanent activities are now underway. We expect the economics of the expansion study to obviously be driven by higher production rates but equally a reduction in our rate of low grade stockpile re handle is an important factor in value. Here, it's a great benefit that we have the balance sheet and the team able to execute on this project. And we look forward to delivering the study for it towards the end of the year on the expiration front. We're excited with our plans for fy 2025 where we have worked up some interesting regional targets in the form of central road, bad lands and mission road. All prospects that represent the bulk of an aggressive 43,000 m program on targets within 30 kilometers of the mine. A central load, in particular, with the gravity signature being a clear analog to what we see at Bira along with the strength of the scouting results seen on the right here. We're very keen to expand the footprint of this one given we've only tagged 450 m of it. Of, of what is a system? Was it sorry? Of what is a 10 kilometer system that we believe to be open? A long strike and at depth. So we look forward to delivering the results of these programs in the coming quarters. It's now turning to our second asset, the Mount Gibson gold project in the Murchison region of Western Australia. Mount Gibson's a project that's revealed its rare scale and quality consistently since acquisition in 2021 an historic operation in the Murchison adjacent to excellent infrastructure. It ceased operations in the nineties due to a low gold price environment. It's now been advanced by our exploration and development teams to what is a significant reserve base of 1.83 million ounces. And importantly, that is growing in parallel with growing the reserves. We've been desking the project with early works on the ground and finalizing our permanent activities. Mount Gibson is a genuine large scale project in the hands of a company with the capacity to deliver it. As I mentioned earlier, the reserve base at Mount Gibson is a solid 1.83 million ounces and it's growing the current reserve base is estimated using a very conservative base of $1900 Australian some 1800 bucks below the current spot price, driving the margins that we focus on. Importantly, the reserve pits have an average depth of only 100 and 60 m below the surface. So we believe there's great potential for these to be driven deeper over time with more drilling across the seven kilometers of strike. So we're very bullish about this reserve increasing in the next couple of years, which will put it in a very rare company. In terms of size, we look forward to providing the update to the Mount Gibson Reserve later in the year, the PFS for Mount Gibson was completed in April 2023 and further updated early this year. It supports the reserve and shows Mount Gibson as a robust large scale and low cost mine in an exceptional location. These factors combine to deliver very strong financial outcomes including a pre-tax N PV of $898 million Australian and a payback of 2.3 years utilizing a conservative gold price assumption in the financials of $2750 Australian. In terms of permitting, we've completed the final field surveys in the coming weeks and we we plan to submit our public environmental report for final approvals by the end of the year. Importantly, the project is intended to be funded by the ongoing and strong cash flows from our Klain project. Given the success of Carla Winders project execution, I think it's worth reflecting on the similarities between it and Mount Gibson. The operating and design themes that drive low cost production and reliable cash flow from Klaw Winda have been baked into the larger Mount Gibson project. Importantly by the team that delivered Klaw Winda and now operate it. We're excited that Mount Gibson's designed to succeed. And importantly, we have the team ready to execute it in the same way as Carla Winder only bigger. Our exploration and geology teams have a solid record of adding reser resource ounces in recent years at Mount Gibson with 3.3 million ounces and growing and importantly, 80% of that inventory sitting in the indicated category where the company has a good record of reserve conversion. The exciting results on the left here from our recent programs post the last estimate illustrate the strength of continuity of the deposits at the base of what are relatively shallow resource shelves. So we will continue to aggressively drill the deposits as we believe the resource can grow at modest open pit depths as well as potentially as an underground opportunity. Before we discuss that underground opportunity, I'd like to illustrate the growth credentials of the project and of the team in the last three years, the group really have their eye in and are reliably extending the resource and reserve bases at Mount Gibson through meaningful programs at low discovery and conversion costs of approximately $30 per ounce. Not all answers are created equal. And a Mount Gibson drilling continues to deliver high quality reserve answers consistently. And we look forward to seeing what Fy 2020 five's 100,000 m program can deliver for us. As I mentioned earlier, we're quite excited by the evolving story at depth at Mount Gibson and Diamond rigs are currently turning on a 5000 m program following up on last year's results highlighted here on the left and including stellar intercepts like 14 m at 12.85 g per ton and 17 m at 9.6 g per ton. These results provide tangible encouragement below the current reserve shelves and begin to shape an underground opportunity at Mount Gibson. A good number of these results illustrate strong grade and with tenor at depth and we're currently expanding upon these with our current 18 whole program due for completion later this quarter. It's an exciting development for the Mount Gibson story which has already developed already illustrated its bona fides in terms of scale and quality and now with the potential of underground grades emerging, we look forward to having more to say on the underground potential of the project. Later in the year in Mount Gibson, we have a scarce large scale and high margin project that we believe to be a clear stand out in terms of growth projects in the sector. We are making it bigger and we're also advancing the project on the ground by building key infrastructure such as the camp, as well as advancing detailed design and procurement works. All of these works will compress the construction timeline and ultimately derisk the project. We know that it takes time to build and permit these projects. But we believe the massive value inherent in Mount Gibson warrants the right amount of time to be taken to paraphrase Warren Buffett. Our delivery of this project in the next couple of years is going to see a massive transfer of value between the inpatient to the patient. And we believe our shareholders to be on the right side of that value transfer to start to wrap up. I'd like to remind you of the compelling quality of our two assets. This chart shows plus 1 million ounce reserve projects in Australia. Outside of those held by the majors, Mount Gibson and Carla Linda represent two of seven of these quality assets in the mid tier sector. They both have plus 10 year mine lives. They're both growing and they're both producing the lowest quartile operating costs. Running those assets are a team with a proven track record and the job in front of us that consistently deliver for our shareholders. Capricorns combined business is in great shape. We have a 3.3 million ounce company wide reserve base that's growing and we run a business that's consistently produced industry leading cash flows. We have a multifaceted growth program that includes near mine targets being developed through systematic exploration, extending our resource and reserve basis through logical step out drilling programs. The Mount Gibson Development project, the Mount Gibson Underground Opportunity and now the Kara Winder expansion study underway that is a lot of growth and a lot of value to be delivered in the near term. And so as illustrated by our position in the chart here, Capricorn's 3.3 million ounce reserve base represents an excellent opportunity for the investor to enjoy the accretion and move up the vertical axis as we deliver on these initiatives, we look forward to providing you updates on these in the coming year and I thank you very much for your time today. Yeah, thanks Paul. We do have time for some questions. If there are any from the floor, just wait for the microphone. If you do have one for the false start, I'm quite happy to ask one for you, Paul, the the underground potential at Mount Gibson. You obviously, I don't assume you need that to move to final investment decision, but could we see a substantially different development pathway in terms of more underground in the first sort of five or six years or is it well set? Look, I think it's early days Hayden, but I, I think that it doesn't change what we would build on day one, you know, and if anything, obviously, the more of it we can develop down there, it it'll, it'll improve grade and not, not necessarily stress the, the scale of the milk. you know, what it might do is cos the higher grade material is under the one, the one pit. So we may accelerate that, that that stripping regime in the early years. But I, I don't think it changes the footprint of what we'd have to do and maybe an unanswerable question, but the timing on the approvals and what has, what you have to go through to get to sort of get the construction underway. I mean, what, where are you at with that? And, and what confidence have you got on the timeline? Yeah, so we're, we, we're currently closing out the last of the field surveys. that's on site at the moment and our consultant as, as well as the assessing officers at a federal level are, are, are geared up for our submission to be made later this year with a view for approvals to be early next and just a, a final one then just on, on car window. I mean, obviously the looking at the mill expansion. Now, how quickly do you think you could see some regional answers being brought into the production profile? Yeah, look, I think it's a good point. I mean, we've, we've put a fair bit of work in the last 18 months, two years into getting heritage clearance. You know, I'm, I'm sort of new to this scene and I, I didn't realize how much heavy lifting was involved in it, but we do actually have a large runway in front of us now. And, and you know, I think that central load is in particular is, is, is the one the guys are focused on. So, you know, I think we'd like to be able to delineate a bit of that towards the end of the year. There's no questions on the floor. Paul. Thanks very much for presenting today. Thanks. Yeah.


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