Catalpa Resources Limited (CAH) – Targeting Gold Production of 150,000ozpa to 200,000ozpa or so at Cash Costs of ~A$550/oz to ~A$580/oz by June 2014

• Catalpa’s gold production is currently derived from its wholly owned Edna May open-cut mine at ~100,000ozpa and cash costs of ~A$750/oz in WA, and 30% of the Cracow underground mine realising ~30,000ozpa at cash costs ~A$550/oz. Cracow completed a 20% mill expansion in January 2010 and may be treating higher grade ore which could increase CAH's 30% share, closer to ~35,000ozpa.
• The higher grade ore at Cracow could come from the expected extraction of the sill/crown pillars at Royal Standard and Crown (as they approach the end of their lives), together with the newly defined Empire, and extra long Phoenix, orebodies.
• At Edna May, the commissioning and plant ramp up has taken longer than expected due to a number of internal and external factors that have gradually been resolved such that the June Quarter 2011 could be closer to ~100,000ozpa at cash costs of <A$700/oz. However, it is the progress that had been made on the understanding of the Edna May mineralisation and underground potential that could significantly transform Edna May and hence Catalpa.
• Catalpa has established that the pegmatite zone appears to steeply dip north and passes across the orebody from the northern hangingwall to the southern footwall such that the proposed underground mine should be essentially pegmatite-free. The lodes also appear to be uniformly striking NE/SW and E/W, forming a hinge and apparent curved shape.
• The proposed underground has the potential to significantly transform Edna May, even at an initial rate of ~150,000tpa @ 9g/t for ~40,000ozpa to 45,000ozpa could materially increase production to ~150,000ozpa and reduce cash costs to the ~A$550/oz region (assuming that the Tungsten by-product is also viable).