This is a Takeover!!, page-30

Had a very long chat with SJ yesterday. I started the conversation believing that SJ was not working in the best interests of shareholders and I ended the conversation with the same but stronger belief.

The most positive and animated he got was when we discussed Lundin and how fantastic it would be for shareholders if Lundin grew their shareholding to 15% of the company - he did state that he had no knowledge of what Lundin's intentions were beyond the current agreement to invest $2M, but wouldn't it be great -it was all about the market attention this would bring...The timing of the announcements and the damage done to the share price were of little concern to him........Listing in Canada is the most important thing to be done.......I disagreed and suggested a delay.....not going to happen.

The main reason for the move, he kept repeating, is that the Australian market is NOT supporting the company and a move to Canada is needed, there are more companies of a similar nature and they are better supported by that market.........I told him that the reason the Australian market is not supporting the company is due to one disappointment after another and the lack of operational performance.......He didn't disagree that operational performance had been poor.

We talked about the mill. He clearly stated that without the mill upgrade there is no company. He stated that there has been plenty of sulphide ore available to mine for sometime now and specifically that the sulphide is easier to mine during the wet season....... He also stated that the mining of the oxide has been problematic. It is heavily impacted by weather conditions and the high strip ratio and varying grade have created mining problems.

So the obvious question is.......Why wasn't the mill upgrade completed 12 months ago?.......He flippantly replied that it should have been completed 2 years ago by his predecessor.........Yeah so why??..............His reply was, that a feasibility report was needed and he didn't have time to do it sooner..........?? I found his answer inadequate, if it's that important to the operation just get it done. If you have quality management it shouldn't take three years to complete a relatively small mine upgrade ........We disagreed.

So if you think about how the company would look if the mill had been completed 12-18 months ago everything would be very different. Sulphide ore could have been mined thru the wet, more efficiency less cost. The amount of ore available for processing would have been that much greater, far less need for low grade ore, more efficiency less cost..... MORE CASH. Multiple options that allow meaningful mining of ore year round........The slow progress on this front would have to be considered a serious error in judgement......We disagreed.

Progressing the mill earlier, at worst, would have resulted in funds raised at a higher share price, the whole perception of the company would have been different in the market.........It would have removed his central argument for the urgency to list on the Canadian market.......

My other main area of concern that I wanted to understand was the mining rate........He point blank refused to discuss the mining. He acknowledged the existence of problems but no more.......discussions with mining contractors would appear to be happening as we speak.....for me though, again this is two and half years too late..........

So we have a new mill about to start; we are negotiating new terms with the mining contractors to reduce cost; and, we will soon be mining sulphide and therefore greatly improving the options and efficiency for getting ore out of the pit.........SJ is confident(?) that this will provide the cash flow to fully service the loan demands of the company.............Imagine the effect this should have on the share price.

The news flow leading up to this point: really bad Q3 with very low amount of ore mined; bad Q4 when revised forecasts were missed; concerns about funding and operational viability causing price decline leading to $60M loan; a disastrous annual report with massive loss; and finally merger/move to Canada with new investors.

All the bad news is baked in, the good news is near and the funding lined up to achieve it.

We do not need to issue 5.5% of the company for a piddly $4M to close associates of SJ at multi-year lows. SJ admitted it wasn't about the money it was about gaining the investors. He believes we are lucky to have landed a couple of well known investors who will raise the profile of the company.......I voiced my concerns about SJ's existing relationships with the investors, and strongly disagreed about the timing of the announcement - 3 days after the release of a disastrous annual report and at multi-year lows when it just didn't need to be done. He had/has complete control of the time table, I questioned his motivations.

In summary we have very different views on what is important. From day one I think SJ should have been in Brazil, with a spanner in his hand if necessary, getting the upgrade done.........SJ......he just wants to go back to Canada.