Ann: Quarterly Activities Report, page-99

You get 10 minutes from the release of the Quarterly till trade recommences. A lot to digest quickly for traders. Our share price dropped a cent - if in doubt sell. For the 3 reasons I’ve listed below, I believe their first impression (like my own 1st impression) was wrong, and the Quarterly is quite solid.

1 We only owned Morila for about half the Quarter. One month 20 days to be exact. For the other half we had no revenue but still had expenses

2 Cashflow statements, unlike accrual accounting, only look at receipts/payments within the period. Our first gold pour was 15 days after acquiring the mine, then we have to get it tested for purity etc and eventually receive our payment before it’s recorded. So the $11m revenue vs $13m cost of production is misleading because we really produced an extra $13m of gold, just had it as bullion not cash. Bullion doesn’t get recorded on a cash flow statement.

3 The 1st cashflow statement will show “one off” costs associated with the purchase, such as the $3m overdraft (we didn’t know about), the $3.3m cost of the placement/SPP, legal fees etc etc

First glance it would seem we only have the $17.4m bank balance, however we had $9.7m in bullion (cash received early Jan) and $2.9m in gold sent to Ghana for processing. All up $30m

However in the 7 weeks since acquiring Morila we have achieved much:

- had $24m in revenue (accrual accounting)

- Gold revenue $15.1m operating cost $7.3m (cost of sales)

- Initial drilling N’Tiola complete, 22 holes, resource update & mine plan being prepared

- Drilled 38 holes at Koting

- Presently drilling Viper, then Koting then Domba, then Morila

- Drilled untested areas of tailings dam

- Mining tenders out for 3 satellites, mining to start during the Quarter

- Processing of satellite ore planned for May/June

- $2m cost of refurb of plant

- Inspected primary & secondary crushers by Sandvic, replaced dump pocket liners, only minor refurb reqd

- Ball Mill inspected - in excellent condition

- tailings reserve 3.15m tonnes @ 0.5g/t, (mined 1.5m tonnes in full Dec Q, so should last anothe 2 Qs)

- Built internal walls on new temp tailings facility

Mined 250k tonnes in this area & transported to plant, grade of ore circa 0.3 to 0.5g/t

with > 90% recovery, better than the tailings

- Awarded contract to provide additional 6mw of power, plan to refurb 3 of the 5 Allen 6mw gens

- Lab building refurb done

- Completed main pit resource update - being peer reviewed

- Undertaking strategic review of Goolamina, expect update in Feb

Look forward to the Reserve upgrade coming out shortly & the Goolamina update.
Don't forget the Lithium, we are under valued as a gold producer, we are stupidly undervalued for our lithium asset.