sydney presentation wed 7th may, page-18

Mr Sism, impressive isn't it? Imagine what 14 g/t and leaving the waste rock underground will do for margins. Nellq summed it up here when he/she said most people still don't get the CTO story. That probably includes many shareholders. I'm only starting to grasp the potential myself. Here are a few personal opinions:

1) CTO is still a developer, not producer. The development is self-funding. Contrast IGR which has a similar market cap but future need to raise $100m to construct their mine. I've no problem CTO taking on modest debt to accelerate development of the horizontal drives and to rapidly convert resources to reserves.

2) The 12 month power delay means things appear worse than they really are. This has aggrieved long-term holders but will be behind us in a few weeks (touch wood). As a new shareholder I'm OK with it, my perspective is obviously different.

3) ML is looking after his retail shareholders while this bird gets off the ground. Institutions will be welcomed but at much higher prices (~$1.50) to help meet the long-term targets (250-500k oz pa).

4) 99% of investors who think they know CTO don't. The nonsense I've heard at conferences etc from people I thought I respected is unbelievable. CTO is routinely grouped with BDG, BGF and Gympie. I'm realising it's a totally different story.

5) ML told me of an argument he had with a miner who accused him of lying about the ore dropping out from the stopes (or using high pressure hoses for shallower dipping veins). Few realise that the clay lining between the host granite and veins, formed during the million years between the cracks forming and mineralised quartz entering, means they are detached from each other (usually the mineralised and host rocks are metamorphosed at the same time meaning they are glued together). This is a huge deal. As well as reducing dilution, CTO doesn’t have to worry about mine collapse because most of the granite remains in situ as mining occurs between the 15m horizontal levels.

6) ML is getting tired of explaining the case. It’s all there on the website but most people can’t be bothered. Instead the focus is on ramping up production. 50k pa is a key target because producers are re-rated at this level (the CEO of MUN inferred the same thing to me at RIU – international institutions are circling his company as Engenho in Brazil will likely reach 50-60k oz pa soon).

7) Although only one deep drill, ML explained that due to its position and the work done to date, if any significant intersections are found below 1200m, this would result in a very quick and significant increase in the JORC resource. Something else to watch out for near the end of the year.