Managing Director and CEO’s Report 3 MD and CEO’ Report continued Gavin Thomas Managing Director and CEO Chatree's Total  mill throughput  for the year was  5.7 million tonnes,  11.4% higher than 2012... Managing Director and CEO’s Report Challenger Operations Chatree Kingsgate had a solid year with gold production  of 199,897 ounces at a total cash cost of  US$888 per ounce (including royalties).  The overall plant availability of 98.1% was  slightly lower than the previous year’s 98.4%.  The expanded plant is operating around 24%  above the annual “nameplate” throughput rate  at 6.2 million tonnes per annum and this is  expected to continue. Total cash costs for the year were US$767 per  ounce (US$620 per ounce exclusive of Thai  royalties). The average royalty paid to the Thai  Government was $US147 per ounce of gold. Chatree continues to demonstrate world’s best  practice for safety and the environment with no  lost time incidents (“LTI”) or reportable environ- mental incidents occurring at Chatree during  the year. Chatree had a strong year following receipt of  the final approvals for the expansion plant and  the combined plant has been operating at a  steady rate of 6.2 million tonnes per annum,  24% above nameplate capacity.  Challenger had a difficult year and was severely  impacted by an unplanned dilution and deple- tion at Challenger Deeps, that when coupled  with the lower gold price and ongoing metal  price uncertainty, led to a major restructure of  mining at Challenger to focus primarily on the  higher grade Challenger West orebody.  Kingsgate management and staff continue to  work towards realising the operational poten- tial of the Company’s two gold mines and to  complete the feasibility studies currently  underway at Nueva Esperanza and Bowdens. The Challenger Mine had a difficult year and  produced 66,216 ounces of gold at a total cash  cost of US$1,135/oz. The grade of the processed  ore was 3.91 grams per tonne, which was lower  than expected due to a shortfall in ore supply  from the mine that was supplemented by low  grade ore from stockpiles. Higher dilution in  stopes at the base of the mine (Challenger  Deeps) and depletion on those levels, due to the  additional displacement of the ore horizons  following the identification of the ‘215 Shear’,  contributed to the lower than expected produc- tion from the lower levels. A shortfall in under- ground development also limited access to ore  sources. Chatree continued as Kingsgate’s primary  production asset throughout the year, producing  133,681 ounces of gold and 1,000,569 ounces of  silver. The strong production performance was  achieved despite some operational hurdles with  slower than anticipated Government approvals  to allow full utilisation of the expanded plant. Development and mining commenced at the  higher grade Challenger West orebody during  the year but was insufficient to offset the short- fall from Challenger Deeps. The transition to the new mine plan, focussing  primarily on the higher grade Challenger West  orebody, will take around three months before  the cost and operational benefits start to be  realised. These changes are complemented by  the changeover to a new mining contractor who  commenced operations on 1 August 2013. The delay of 63 days in approval of Plant #2  Metallurgical License and lower than expected  availability of some of the mining contractors’  major mining equipment negatively impacted  production. However, near surface higher grades  in Q Prospect mitigated these difficulties  resulting in a strong final quarter for the year. Total mill throughput for the year was 5.7 million  tonnes, 11.4% higher than 2012, despite the  impact of the 63 day delay during which the new  plant was not operating. 