Ann: Kharmagtai - Zaraa Drilling Update, page-13

Hi Arsenic,
I do look in on XAM and like the fundamentals though the current SP makes my decision to move limited funds elsewhere seem like a reasonable idea. There was a flurry of ?pumping not long after I left that took the SP to the 30c range but the overall market trend seems to have caught up with XAM again. Most/all? shares I hold have been impacted similarly since January so grin and bear as a mid to LT holder.

XAM (as would most) would benefit from hitting a Hugo Dummett style of porphyry and they are certainly in a highly fertile environment at Kharmagtai. OU is not too shabby either IMO.

The grid drilling done ?last year showed up a number of targets. Zaraa was one of the higher priority ones and it looks quite good. A bit deep and possibly a little light on grade in some ways for what has been drilled so far to be a game changer. If intersections keep coming in like these, are closer to the surface and with some sweet spots it really adds to the Kharmagtai complex. Toss on the other 10 or so targets from which some may be better or worse than 250-500m spaced holes to bedrock show the area as a whole could reach a critical mass for economic development.

The discovery and mining history at Oyu Tolgoi may give some idea of what could happen at Kharmagtai. The initial 3? porphyry discoveries at OT were probably similar or perhaps a little better than Kh as it stands at present. Then came Hugo/Far North as a bonus from following up an IP anomaly I believe. A bonus that turned an ?average project into a major Tier one mine.
Initial mining has come from the near surface deposits. It will be somewhere north of 15 years (post discovery) and ?multi billions of $s before high grade ore from Hugo finally reaches the surface.

Mongolia has differences to CZI's West Musgrave Project as you are well aware. Location may be better for XAM but sovereign risk and Australian investor perceptions are tougher to overcome so need to be factored into one's investment strategy for deposits with apparently good fundamentals.

Sorry just waffling on a Perth long weekend. Hope things work out for Xanadu and SH's