Mutiny Gold (ASX: MYG) continues to unleash the potential of the Deflector Gold Deposit in Western Australia, with the latest positive news flow bonanza grade gold strikes - which are from the drilling program completed in March.

The importance of the discoveries is not just the high grade, but the fact Deflector has been extended down-dip, along with the confirmation of mineralisation in both West and Central Lodes.

This leads to the outcome of providing confidence in the resource targets allowing the Mutiny team to accelerate exploration planning.

New discovery highlights from the Central Lode at Deflector include:

- 2 metres at 57.1 grams per tonne (g/t) gold and 0.2% copper from 92 metres;
- 5 metres at 41.8g/t gold and 0.3% copper from 218 metres;
- 4 metres at 30.7g/t gold and 0.9% copper from 146 metres;
- 5 metres at 23.9g/t gold and 0.5% copper from 162 metres; and
- 2 metres at 22.7g/t gold and 1.0% copper from 104 metres.

The results will be incorporated into the revised resource estimation, which will be released in the September quarter of 2012.

John Greeve, managing director, said that the continued discovery of high-grade gold and copper is increasing the company's confidence in the asset.

"We look forward to releasing a new resource model and hence a new LOM production profile.

"The distribution of the gold ounces-plus results across the entire length of Deflector shows that we really have one of the best undeveloped orebodies in Australia."

Adding to the future development potential of the deposit, are results with elevated copper levels from diamond drilling to the north of the Deflector Fault at West Lode, with new discoveries including:

- 2 metres at 38.8g/t gold and 0.5% copper from 211 metres;
- 2 metres at 20.6g/t gold and 2.2% copper from 201 metres;
- 5 metres at 10.3g/t gold and 1.1% copper from 209 metres; and
- 2 metres at 13.0g/t gold and 3.1% copper from 163 metres.

These assays and their locations in West Lode have added a potential block of ore 200 metres in length and 100 metres in height to the underground mine shape, and considering the grades ranging up to an over 1 ounce per tonne, it would be expected that Mutiny will deliver a substantial upgrade in the upcoming resources and reserves.

Not to be forgotten were the very impressive discoveries from earlier in the year, such as:

- 3.3 metres at 79g/t gold and 10.5% copper from 62 metres; and
- 2 metres at 24g/t gold and 2.4% copper from 234 metres.


Repetition of mineralised intersections

Worthy of note is the repetition of mineralised intersections in some holes, delineating a number of parallel lodes present at depth within the deposit.

This will add flexibility in the mining sequence and has the potential to add tonnes per vertical metre to the deposit.


Deflector - on the road to development

Mutiny has developed the timeline to commence mine development in the second half of 2012 leading to an open pit mining operation at Deflector, followed by underground mining after two years.

Deflector has a resource of 3.4 million tonnes at 4.9g/t gold for 530,000 gold ounces, 0.85% copper for 29,000 tonnes and 5.7g/t silver for 620,000 ounces.

Measured and Indicated accounts for; 2.1 million tonnes at 5.2g/t gold for 350,000 ounces, 1.1% copper for 22,000 tonnes and 7.3g/t silver for 490,000 ounces. Inferred is 1.3 million tonnes at 4.5g/t gold for 180,000 ounces, 0.5% copper for 6,000 tonnes and 6.2g/t silver for 130,000 ounces.

Mutiny has a target at Deflector 2.5 million ounces of gold (ranging from 1.65 million to 2.5 million gold ounces), and 40,000 to 80,000 tonnes copper.

On the milestone news front, a maiden gold Reserve is pencilled in for May, with the Definitive Feasibility Study in the first half of 2012, along with the completion of project financing around mid-2012.

The first gold pour to be from White Well will be in the second half of 2012, with the mine development at Deflector in late 2012.


Existing infrastructure provides key production component

Mutiny is a near term gold producer, and to further highlight the potential of Deflector, existing infrastructure includes a 300,000 tonnes per annum mill which has the capacity to be upgraded to 620,000 tonnes per annum - along with accommodation and offices, power plant, water, haul roads and tailings dam.

The additional infrastructure required includes a ball mill, crusher, floatation circuit, additional accommodation for up to 150 and an upgraded power plant.

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Mutiny Gold (ASX: MYG) has discovered additional high grade near surface gold at the Deflector Gold Deposit in Western Australia, which importantly delivers another positive for the economics of the ongoing Definitive Feasibility Study.

The impact of the new gold intersections is that they extend the defined high-grade mineralisation 100 metres to the north of the current Measured and Indicated Resources within the Central Lode of Deflector.

The latest highlights from the first seven reverse circulation holes include (from the Central Lode):

- 11 metres at 14.40 grams per tonne (g/t) gold and 0.2% copper from 54 metres;
- 4 metres at 10.23g/t gold and 0.3% copper from 75 metres; and
- 6 metres at 4.45g/t gold and 0.2% copper from 40 metres.


Deflector extension drill results – underground down dip

Deeper diamond drilling was carried out to extend underground resources to the south of the main known area of mineralisation at the Deflector Deposit.

Central Lode intersections down dip of the existing Deflector resources include:

- 2 metres at 21.35g/t gold and 1.06% copper from 193 metres; and
- 2 metres at 9.64g/t gold and 1.10% copper from 209 metres.


Milestone news flow to increase

Astute investors will be aware that the news flow for Mutiny is about to ramp up in the short term, with more drilling results to be received from a step out program in the following weeks, along with surface and down dip extensions of the more copper-rich West lode. 

Not to be forgotten - just last month Mutiny announced some bonanza gold results and very high grade copper, including; 3.3 metres at 79g/t gold and 10.5% copper from 62 metres; and 2 metres at 24g/t gold and 2.4% copper from 234 metres.

On the milestone news front, a maiden reserve is pencilled in for May, with the Definitive Feasibility Study in the first half of 2012, along with the completion of project financing around mid-2012.

The first gold pour to be from White Well will be in the second half of 2012, with the mine development at Deflector in late 2012.


John Greeve discusses the latest gold discovers

John Greeve, managing director, commented on the new gold discoveries and said that the results continue to extend the known length of mineralisation of the Central Load and indicate the open pit mine life.

"Hence, the overall project economics of the Deflector project appear to be extending in line with robust forecasts of the Scoping Study and the company’s resource expansion program.

"The mining team is impressed with the grade and width of the gold interceptions which are over 100 metres to the north of the current Central Load open pit mine design.

“It has been a heavy work load for our team given they were asked to drill through Christmas and then extend the program as we received early indications that the drill program was achieving the target results and would be a boost to an already very strong project."


Deflector - by the numbers, reserves in 2012

Deflector has a resource of 3.4 million tonnes at 4.9g/t gold for 530,000 gold ounces, 0.85% copper for 29,000 tonnes and 5.7g/t silver for 620,000 ounces.

Measured and Indicated accounts for; 2.1 million tonnes at 5.2g/t gold for 350,000 ounces, 1.1% copper for 22,000 tonnes and 7.3g/t silver for 490,000 ounces. Inferred is 1.3 million tonnes at 4.5g/t gold for 180,000 ounces, 0.5% copper for 6,000 tonnes and 6.2g/t silver for 130,000 ounces.


Existing infrastructure provides key production component

Mutiny is a near term gold producer, and to further highlight the potential of Deflector, existing infrastructure includes a 300,000 tonnes per annum mill which has the capacity to be upgraded to 620,000 tonnes per annum - along with accommodation and offices, power plant, water, haul roads and tailings dam.

The additional infrastructure required includes a ball mill, crusher, floatation circuit, additional accommodation for up to 150 and an upgraded power plant.

** Mutiny Gold is presenting at the 'Stars in 2012 Series' in Sydney on May 2. CLICK HERE to register. **

Deflector currently has a resource of 3.4 million tonnes at 4.9g/t gold for 530,000 gold ounces, 0.85% copper for 29,000 tonnes and 5.7g/t silver for 620,000 ounces - although drilling is ongoing.

Mutiny will be presenting Wednesday the 29th February 2012 in Perth at the Proactive Investors One2One Forum.

The event is free - TO REGISTER CLICK HERE.

Part of this project's appeal and scope for early revenues is the free-digging nature of the ore. The majority of the gold at White Well occurs in vein quarts. 

It is the deep weathering nature of the ore that allows for the majority of the deposit to be free-digging which negates much of the expensive drill and blast in conventional mines.

Following mining and economic studies, which included reviews of the metallurgy and geological data, Cobra has begun the permitting process to begin mining.

Production is expected to begin in the second half of 2012, with the project to be developed as an open pit mine.

Cobra is required to pay $750,000 on attaining approval of the mining proposal, of which Mutiny will receive 70%.

Mutiny managing director John Greeve said the activity at White Well was a positive development for Mutiny and its shareholders at a time when the company’s Deflector Project is also poised for production.

“In addition to the upfront $750,000 payment, the company expects to receive strong revenues from White Well over the coming years as mining operations ramp up,” Greeve said.

“This will supplement the expected strong revenues from the company’s flagship Deflector project which targeting commencement of production in late 2012.”

White Well alliance

The White Well alliance will see Cobra fund and conduct the mining operations for a 70% share of the profits.

Mutiny will receive 21% of profits, while joint venture partners Lee/Daxon will receive the remaining 9%.

The agreement will provide a revenue stream for Mutiny, allowing the company to take advantage of record gold prices with very low risk.

In addition it utilises Cobra’s expertise, financial strength and mining capabilities to bring the project into production.

The agreement with Cobra does not include the Bounty and Bligh advanced exploration targets, which are separate zones within the White Well tenement.

Importantly, Mutiny will use the White Well agreement as a pilot for multiple future alliance agreements on special selected small mines that require specific skills.

Deflector Gold Copper Project

In addition to White Well, Mutiny Gold is making significant progress at the Deflector gold Copper project in Western Australia.

The company recently revealed that gold production costs are expected to be less than $600 per ounce; a substantial gain in metallurgical performance.

Achieved through refinements to the project’s flowsheets, this lift in gold and Copper recoveries was an important step for the development of the project.

Mutiny is undertaking a Definitive Feasibility Study at Deflector.

Developing High Grade Gold Opportunities at Gullewa

Mutiny Gold Limited (“Mutiny Gold”, “MYG”, “Company”) is looking to join the ranks of gold-copper producers, through the development of the Gullewa Project, located ~450km north of Perth, WA.

The Company currently has 70% of the project and plans to move to 100% ownership soon, through the final payment of A$4m, for a total acquisition price A$13m. The project vendors retain a 10% net profit royalty (payable after capital pay-back).

The Gullewa project contains the high-grade gold Deflector deposit, which contains a current mineral resource of 590Koz of gold (5.4g/t Au) and 25Kt of copper (0.8% Cu). The deposit is near-surface and is expected to offer open pit mining and overlapping underground mining opportunities, for an initial 10 year mine life.

Mutiny Gold expects both mine life extension and potential production growth as the deposit remains open along strike and at depth. The Company has a resource ‘exploration target’ of 1.65Moz to 2.5Moz for Deflector. Exploration upside outside of Deflector includes highgrade mineralised zones at Pieces of Eight and Spanish Galleon, both located within 1km of Deflector.


Gold production targeted for late CY2012

The Company is forecasting production in late CY2012 in excess of 50koz of gold and ~2Kt of copper per annum at low cash costs
Pre-production capital requirements are estimated to be A$52m (fully scoped), with an estimated A$19m needed for the existing plant upgrade, which will include the addition of a flotation and gravity circuit to provide milling capacity for 320Ktpa.


Project loan and hedging facility secures 100% and DFS

Mutiny Gold acquired a 70% interest in the Gullewa gold-copper project in mid-2010 through the scheduled payment of A$9m. The Company recently announced a move towards 100% project ownership, funded through a A$11m loan and hedging facility established with Credit Suisse.

The loan provides funds for the remaining 30% of the project and working capital to complete the project‟s definitive feasibility study (DFS), expected in the March quarter CY2012.


Initiate Coverage with a Speculative Buy Recommendation

We see Mutiny Gold as a near-term gold producer (with copper and silver credits), with a portfolio of projects that should deliver more resources. We see the Company producing over 50kozpa in FY‟14 at low quartile cash costs from an initial good-grade open pit operation, followed by a longer life high-grade underground operation.

Through resource growth and a mill upgrade we believe production beyond 100Kozpa is achievable. The Company is trading at a large discount to our preliminary 15cps sum of parts valuation, which includes a fully funded and risked NPV12 Gullewa project valuation of A$153m (or 18cps).

Mutiny Gold compares favourably to peers on a number of key metrics, with a grade and cash costs advantage over many. With a Price Target of 17cps we initiate coverage of Mutiny Gold with a Speculative Buy recommendation.

The significance of the latest gold intersections is an extension to the defined high-grade mineralisation just 160 metres to the north of the current Measured and Indicated Resources, which are located in the West Lode.

Highlights from the reverse circulation extension drilling at Deflector include:

- 6 metres at 37.5 grams per tonne (g/t) gold and 7.8% copper from 102 metres;
- 7 metres at 12.8g/t gold and 1.1% copper from 116 metres;
- 2 metres at 10.7g/t gold and 0.0% copper from 132 metres; and
- 3 metres at 5.7g/t gold and 1.9% copper from 80 metres.

Importantly for the future development of Deflector - these results will now be incorporated into the revised resource estimation, which is forecast to be released in the coming months.

John Greeve, managing director, “The results from the northern extension drilling are very positive and have increased our confidence that significant economic mineralisation will be added to this area.

"This mineralisation will be quantified in the next round of mine feasibility study work.”

Spanish Galleon gold copper hits add extra dimension

Adding some spice to Mutiny's exploration success at Deflector, is the nearby Spanish Galleon Prospect - which is between 400 metres and 700 metres to the west and parallel to the Deflector mineralisation.

Six targets were reverse circulation drill tested, with the highlights:

- 4 metres at 3.3g/t gold and 0.3% copper from 56 metres; and
- 29 metres at 0.9g/t gold and 0.6% copper from 34 metres.

The holes were partly sited to follow-up relatively shallow gold intersections made by previous explorers.

Mutiny said combined with geological logging of drill spoil from historical shallow drilling, the first pass drill results have further refined the character of these gold-copper targets.

Current interpretation of these encouraging results indicates at least four mineralised zones within an intrusive body of granodioritic to dioritic composition.

Deflector by the numbers

Deflector currently hosts a resource of Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.

The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.

Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.

Mutiny has said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.

The reason is exploration has uncovered high grade intercepts in multiple locations, which predicate likely extensions to the planned open pit.

Scoping Study - Recap

- IRR of 83%
- NPV of $187 million – likely to increase significantly
- Cash surplus of $427 million after payback of capital costs
- Capital cost of $52 million and State Royalties including A$19 million for plant upgrade and A$12 million for the first three months working capital
- Annual production of 50,000 ounces gold, 2,000 tonnes copper and 34,600 ounces silver
- Cash costs over first ten year life of mine estimated at $524 an ounce
- Contained gold ounces of 578,000 ounces (comprising 100,000 ounces open pit and 478,000 ounces underground)
- Estimated average production grade of ore ranges from 4.1g/t gold to 6.5g/t gold

Mutiny has now paid a total of A$7 million, and has the right to purchase Gullewa by scheduled payments totalling $9 million plus replacement bonds for 70% ownership - with the right to acquire 100% for a further $4 million.

The final $2 million required to move to 70% (to bring paid total to $9 million) is not due until 30 October 2011.

Mutiny is currently well funded to meet this future commitment, in addition to funding the upcoming exploration activities - due to completing a $9.7 million heavily oversubscribed capital raising in July.

What is so important about Gullewa is that the project hosts the Deflector deposit, which already holds some resources in the higher confidence categories, with Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.

The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.

Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.

Mutiny has said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.

The reason is exploration has uncovered high grade intercepts in multiple locations, which predicate likely extensions to the planned open pit and, also, importantly, confirm the down plunge continuity with depth of high grade shoots that can be included in underground mine planning

The results provide further confirmation of the exploration potential of the Deflector Corridor but they are likely to be just the tip of the iceberg as far as upside in exploration target and production ounces.

Scoping Study - Recap

- IRR of 83%
- NPV of $187 million – likely to increase significantly
- Cash surplus of $427 million after payback of capital costs
- Capital cost of $52 million and State Royalties including A$19 million for plant upgrade and A$12 million for the first three months working capital
- Annual production of 50,000 ounces gold, 2,000 tonnes copper and 34,600 ounces silver
- Cash costs over first ten year life of mine estimated at $524 an ounce
- Contained gold ounces of 578,000 ounces (comprising 100,000 ounces open pit and 478,000 ounces underground)
- Estimated average production grade of ore ranges from 4.1g/t gold to 6.5g/t gold

Funds will also be allocated to make the next $4 million instalment for the Gullewa Project acquisition.

Mutiny placed 101 million shares at $0.096, together with one free attaching option for every two shares subscribed for exercisable at $0.14 by November 2013.

The company said the decision to proceed with the capital raising comes on the back of recent, highly encouraging exploration success at the Deflector deposit, and the subsequent decision to expand the scale of the Deflector Project.

John Greeve, managing director, said “This financing, coming on the back of our announcement that we are proposing to double our annual production rate at Deflector, confirms that Mutiny Gold is serious about its stated intention of becoming a significant, profitable, low cost gold producer in the very near future.

"We now look forward to completing the metallurgical testwork, drilling and DFS for Deflector and bringing the project into production in 2012.”

Last week Mutiny said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.

The Deflector statistics

Deflector already holds some resources in the higher confidence categories, with Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.

The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.

Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.

Mutiny has not yet indicated where the potential capital injection will be allocated, but yesterday the company began highlighting to the market the potential of the Deflector Project in Western Australia.

The company has doubled the initial production target rate to 100,000 gold ounces annually, with the increase supported by extensions of both underground and open pit resources.

Recent drilling at Deflector testing the northern and southern resource extensions is the catalyst behind Mutiny's target, as results reinforced the company’s view of the potential for a significant increase in resources.

Mutiny said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.

Deflector already holds some resources in the higher confidence categories, with Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.

The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.

The increase is supported by extensions of both underground and open pit resources.

The current drilling program is now close to completion, with the results to be included in planning for further resource upgrade drilling programs.

Recent drilling at Deflector testing the northern and southern resource extensions is the catalyst behind Mutiny's target, as results reinforced the company’s view of the potential for a significant increase in resources.

Mutiny said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.

John Greeve, managing director, said that the increase to 100,000 ounces annually should provide significant increases in forecast annual profits to be derived from Deflector.

“The doubling of production at Deflector will allow Mutiny to unlock significant value for our shareholders.”

The recent exploration success has given Mutiny the confidence that the resource at Deflector is of sufficient scale to justify an expanded mining scenario.

The current Pre-Feasibility study work indicates that this may be attained by increasing the underground mining rate from 320,000tpa to 500,000tpa should the strike length be extended as expected, as this will allow an increased number of underground mine headings and therefore the increased production rate.

The Deflector statistics

Deflector already holds some resources in the higher confidence categories, with Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.

The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.

Mutiny is looking at an initial production profile of around 50,000 ounces of gold, 50,000 ounces of silver and 2,000 tonnes copper in concentrate annually over 10 years.

Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.

The high grade intercepts are being achieved in multiple locations.

They predicate likely extensions to the planned open pit and, also, importantly, confirm the down plunge continuity with depth of high grade shoots that can be included in underground mine planning

The results provide further confirmation of the exploration potential of the Deflector Corridor but they are likely to be just the tip of the iceberg as far as upside in exploration target and production ounces.

- 12 metres at 11.6g/t gold and 2.2% copper in 11DRC048;
- 4 metres at 8.0g/t gold and 3.3% copper in 11DRC050; and
- 3 metres at 8.8g/t gold and 0.3% copper in 11DRC066.

The north of the Deflector Deposit is in an area that previously had not been adequately drill-tested and would seem to offer significant potential for further exploration success     

Additionally, 140 metres to the north of the new high grade discoveries returned the high result of 3 metres at 9.9g/t.

The Western Lode intersections to the north of the existing Deflector resources include 3 metres at 42.1g/t gold and 2.3% copper in 11DRC053.

New results in the south of the existing Deflector resources extend known depth of high grade mineralisation and include a super high grade intersection of:

- 1 metres at 72.2g/t gold and 1.2% copper in 11DRC074.

What does this all mean?

- The Deflector Corridor is vastly under-explored;
- Its full potential is now just being realised with these early results;
- However, the latent and emerging potential of the Deflector project is best exemplified by the intercept of 3 metres  at 1.3 ounces per tonne;
- What is the Exploration Target potential?  The current target of 2.5 million ounces is on the low side and is likely to be easily surpassed.  By how much?; and
- Based on results to date and these latest results, the Project could have as much as 4-5 million ounces and a production profile of 120,000 -150,000 ounces of production per year.
 
Even this could be dwarfed given the potential of the Deflector Corridor which has been previously under-explored. 

Exploration is underway to the north of the main known area of mineralisation of the Deflector Deposit.  Such is the prospectivity of the ground held by Mutiny Gold, ongoing exploration is likely to result in new discoveries and a large boost to Mutiny’s Exploration Target that will underpin expansion of the project to a production level significantly greater than the Scoping Study rate of +100,000 ounces of gold production per annum.

We believe there could be potential for some extremely high grade zones north of the current deposit.  If drill results confirm this, there is likelihood the current resource parameters, project cash flows and the paradigm of how large the Deflector project is will be turned on its head.

Ultimately the current valuation for Mutiny Gold will look like “small potatoes”.

Already, the results received from 30 reverse circulation holes of the ongoing drilling program which recommenced in early May have again added length to the Deflector Deposit mineralisation.

The length has more than doubled to 300 metres, since the onset of this drill phase. These results will be incorporated into the revised resource estimation to be carried out at the conclusion of the current reverse circulation and diamond drill programs. 

Checking off key milestones

While the market has been in the doldrums and likely fretting over the capital raising, the company has been ticking boxes as it picks up the pace of exploration and the road to production.

- Underwriting agreement to underwrite the listed $0.10 options due to expire on 30 June to  raise $500,000
- Strong Scoping Study results.  Gullewa Project to deliver highly robust returns; IRR of 83% for project
- Exploration success and news flow is continuing
- Capital raising is underway, likely to be completed early July.  The pullback in equity markets delayed the raising as share prices pulled back. Funds need to be in by October to move project along on time frame
- Resource upgrade on completion of drilling program – August / September
- Pre-Feasibility Study (PFS) due for completion in July 2011.  Will provide more information on costings and modelling on mining and pit shell optimisation model. Item by item GRES handling the work
- Bankable Feasibility Study due in October 2011
- Diamond Drilling program is critical to BFS, as current reserves of 250,000 ounces can be increased to 400,000 ounces of reserves
- Increasing reserves to 400,000 enables greater mix of debt financing for project, up to $80m
- Delivered resource upgrade
- Resource target of 2.5Moz gold for Deflector and 80,000t copper
- Increased the mineralised length by 50%
- Unveiled the potentially rich adjacent Gold-Copper discovery of Spanish Galleon
- Additional income stream from treatment of White Well gold concentrate at Gullewa mill
- On track to become a significant gold producer in the Murchison region
- Exploring regional prospects to take advantage of existing mine infrastructure
- Existing infrastructure in place – saves time and CAPEX

Scoping Study - Recap

- IRR of 83%
- NPV of $187 million – likely to increase significantly
- Cash surplus of A$427 million after payback of capital costs
- Capital cost of $52 million and State Royalties including A$19 million for plant upgrade and A$12 million for the first three months working capital
- Annual production of 50,000oz gold, 2,000 tonnes copper and 34,600 ounces silver
- Cash costs over first ten year life of mine estimated at AUD$524 / ounce
- Contained gold ounces of 578,000 ounces (comprising 100,000 ounces open pit and 478,000 ounces underground)
- Estimated average production grade of ore ranges from 4.1g/t gold to 6.5g/t gold

Production profile – likely to be increased

- Short Term production target at 50,000 ounces per annum
- Belief the mine will go down to 160 metres, and ultimately 220 metre to increase tonnages
- Open pit production of 3 years of 70,000 ounces
- Underground production of 3 years of 50,000 ounces
- 20,000 ounces production pa at White Dam
- Increase open pit mining from 50,000 to 70,000 ounces
- Increase mine life from 6 years to 9 years
- 120,000 ounces per annum production in year 3, length of Deflector production maybe longer

Project Financing

- Is available
- Banks visiting site
- Numerous banks discussing debt finance
- Waiting on completion of equity raising and increase in reserves

An off take agreement is not an issue, as the project will produce gold concentrate and copper concentrate

- Payment deadline to Sherwin to be extended
- Resources and Scoping Study: 590,000 ounces current resource

Spanish Galleon prospect (nearby to Gullewa) – potential for large resources

- Initial drill-hole into nearby Spanish Galleon Prospect intersects high-grade gold mineralisation The intersection included 3m at 6.6g/t Au and 0.37% Cu including 1 metre at 20.4g/t gold, 0.3% copper and,
- Provides second mine potential not given any value in market value of Mutiny Gold
- Second mine potential (with real potential) with highly prospective mineralised targets to be tested now
- Discover ounces at Spanish Galleon Prospect. Drill programs commenced.
- Based on Geochemistry undertaken at Spanish Galleon, this nearby prospect (to Deflector), looks to be even larger than Deflector, and could herald a resource of many times the size of Deflector
- Looks to have a larger resource and exploration target potential than Deflector which has 2.5m ounces
- Spanish Galleon could conceivably look to kick in after 3 years of production from Deflector
- Drilling to start today at Spanish Galleon

Mutiny’s large copper “footprint” at Gullewa is also not taken into account by the market.  Interestingly, this is located next door to the Golden Grove copper mine owned by China’s Minerals and Metals Group.

On the Scoping Study results, Mutiny will be a low cost and profitable gold/copper producer of 50, 000 ounces of gold pa, 2,000 tonnes of copper per annum and 35,000 ounces of silver per annum for 10 years from an open pit then underground operation.

However, this is likely to be increased significantly given recent drilling results and the emerging potential of the deposit.  MYG could have production profile of 100,000 – 150,000 ounces per annum.

Mutiny Gold could pay dividends as early as 24 months from production

Unlike many explorers, Mutiny Gold has personnel with a strong production profile including:

- Allan Brown from Golden Crown, Wiluna, Cobar;
- John Burgess from both Big Bell and Golden Crown; and
- James Stewart from Homestake, Newmont and Deltagold.

Blue Beard Corridor ( More exploration upside )

- Targeted by Sons of Gwalia and reaffirmed by Mutiny this corridor represents a large regional dilation zone in a mafic sequence against felsic intrusive masses with a strong multiphase hydrothermal character.

- Over 8 vein stages and at least 4 superimposed, significant hydrothermal breccia pulses indicates a proactive multistage gold copper mineralisation even on a par with classic EGF Achaean and fertile intrusive concepts.

- Consequently, in addition to the barely explored Spanish Galleon and PO8 Anomaly clusters there are a number of very carefully selected additional target zones such as contact lodes (Magellan and Flinders) and Reflector. Each of these zones, whilst still exploration targets, are priority 1 (as ranked against Yilgarn Craton Gold Endowment) – with a high probability of yielding additional multimillion oz gold – copper discoveries

Gullewa Banded Iron Formation

- Not factored into Mutiny Gold valuation
- Potential for iron resources within Gullewa
- Extensive unexplored BIF, units (over 150km)
- At up to 42% iron grade, is actually higher than nearby Gindalbie at 34% iron
- Non-core for Mutiny Gold
- At right time, likely to be spun out to MYG shareholders

Catalysts

- Drill results
- Capital raising completion
- Pre-Feasibility Study completion
- Project financing
- Purchase of long lead items for plant
- Pre-strip for mine
- Exploration news at Spanish Galleon

Summary and Valuation Guide

We believe production is still possible by mid 2012. However, critical lead time plant orders would need to be made by December 2011; pre-stripping could commence by Jan 2012, and Mutiny would need three months ore supply at the ROM, enabling first ore to be extracted out of the mine by March 2012.

Mutiny Gold has ticked just about every box to date, except finalisation of the equity raising – which is in progress – and delayed by the current market slowdown. 

The market appears to have adopted a wait and see attitude to Mutiny Gold; waiting for the completion of the capital raising and Pre-Feasibility Study as signalling time to invest.

The market also appears to be treating the exploration upside and production profile as known and already factored in to the current valuation.

However we think Mutiny Gold is a standout opportunity NOW – primarily due to clear exploration upside not being factored into the current valuation of $29 million.

The exploration upside and hence production profile are likely to be significantly greater than many would expect.

In short, the Mutiny Gold share price should be significantly higher than current $0.11.  In fact, the recent pullback in share price of Mutiny Gold to $0.11 affords an excellent buying opportunity. 

We believe Mutiny Gold should be a 5-6 bagger (or $0.50-$0.60) within 12-18 months, based on market recognition of the potential still untapped from the significant exploration upside as it translates into higher resource inventory.

There could also be a higher production profile than previously assumed. An Ev/Ounce comparison with Mutiny’s peers also supports the case for a re-rating from the current Mutiny Gold valuation.