pluses & minuses

1.The "process" is working in the respect that we have actually produced REAL dore bars. The bars that have been produced to date have "evidenced minimal contaminants on refining in Switzerland". Good. What is not evident is the actual grades & recoveries {critical in determining if projections are accurate as regards expected free cash flow and economic viability}. The arrival of this critical piece in the jigsaw has been further delayed due to mechanical issues. Not so good.

2.What concerns me at this juncture are the TYPE of mechanical failures. It's not as if we had to fine tune a few components but these are major failures on two critical components of the process. I know ramp up issues are the norm rather than the exception but its obvious that there have been major flaws in the initial plant design. Not so good. Since the appointment of Andrew Pooler as MD in July 2012, he has appointed 3 senior EXPATRIATE "hands on" mining executives to oversea the LL project. Good. {Better than before at least}

3. Pooler canned the Azuay foray with an intent to concentrate resources on our DR tenements. I personally thought this was a good move. Current sentiment around DR & sovereign risk {as highlighted in a recent mineweb article} do not bode well in regard to further advancement of our DR tenements at present. This should have no effect on the LL project however.

4. From previous posts I have calculated a fair market value share price of approx 40c based on the projected economics of LL alone. {This assume a P/E of 5 based on LOM of 6.5 years, a gold price of $1600 with hedging taken into account, grades and recoveries as projected etc etc. At a current SP of 11.5c one can see the potential should the above come to fruition and a re-rate eventuate.

The wait for this re-rate has now been extended further. To begin with we were simply waiting for production, grades, recoveries and cash costs to be confirmed. Those questions remain but are now overshadowed by significant plant equipment failures and possibly some recent negative sentiment as regards DR sovereign risk {albeit I believe not relevant to LL but possibly our future progression of our DR tenements}.

Prior questions remain to be answered and now a few NOT insignificant ones are thrown into the mix. Is it just the mill & the motor for now or are we going to have to re-design other components of the plant to get it all running in sync? I'm no engineer but these certainly remain unsettling times.

On a more positive note, POG at $1750 now and if we can get this baby up to spec say in 3 or 4 months time then that re-rate should come very quickly. Personally, I can only hold at this point in time. 11.5c or below seems attractive from where I averaged in at but it would be a pure "gut" gamble to buy more. I feel that the process at LL can deliver {we have seen early evidence so far}, however it's the time frame of when these doubts can be put to bed that concern me at the mo.

Ahhhh, so many IFS.

GLTAH