Exploration and development expenditures include all of the costs associated with manpower and activities such as geologists, contractors, engineering, drilling equipment, metallurgical testing and economic feasibility studies.



Gold mining requires the use of specialized facilities and technology. Gold prices can fluctuate widely and are affected by numerous factors beyond the Company's control. Gold is measured in Troy ounces, which weigh 10 percent more than the ounces used for potatoes and feathers. Gold is often found in rock that contains sulfides, which when exposed to oxygen, water, and specialized bacteria produce highly acidic water.

Gold's attractive appearance and malleability mean that it can be enjoyed as jewelry or other ornamentation and yet is easily convertible into coin or bullion. Where the gold price is presented in currencies other than the US dollar, it is converted into the local currency unit using the foreign exchange rate closing price on the same day.

Gold prices have surged past the $500-an-ounce mark, and more gains are predicted as investors look to protect themselves against inflation fears. Gold prices historically rise when faith in paper currencies erodes, as investors seek the intrinsic value of gold to protect themselves from inflation. Gold has continued to show strength in Asian and European trading.

Like all prices, the gold price reflects not only the inherent value of gold, but also the relative strength of the currency in which it is quoted. Costs are allocated to a stockpile based on relative values of material stockpiled and processed using current mining costs incurred up to the point of stockpiling the ore, including applicable overhead, depreciation, depletion and amortization relating to mining operations, and removed at each stockpile's average cost per recoverable unit. While gold is a more stable store of value than paper currencies, it still remains a market in which governments have a heavy presence. Thus, taking into account the ever-shrinking value of the dollar, the real price of gold has hardly changed in a century.

Since 1982, average annual gold prices have stayed between $300 and $450 per ounce. Record upside price potential remains firmly in the hands of investors, with average annual gold prices for 2007 on track to beat the 1981 record of $614.