Ann: Lake Torrens IOCG Project - Drilling Update, page-74

hi sb,

you appear to speaking about two completely different things.

With regard to the placement, I agree that GS probably had everything lined up with a broker well beforehand. When the TAS SP rallied strongly GS simply pulled the trigger at a much higher price, which was most fortuitous for TAS. It is also fairly obvious from last Friday's interview that GS wanted TAS to be in position where it could assist both CNJ and EDE with financial liquidity. This may also include raising TAS's stake in both companies.

With regard to TAS selling its 20% stake (or just 10%?) in the Vulcan Project to FMG for $250 million, by the middle of this year, FMG will control 51% of the Vulcan Project. After this, and probably by the end of this year, providing the drilling results continue to be impressive, FMG will then control 80% of the Vulcan Project. I can therefore well imagine FMG buying out TAS in full, or at the very least in part. Why? Because once the decision is made to develop the Vulcan Project as a mine, TAS will probably have to fork out at least A$100 million in order to retain their 20% stake. This would mean TAS would have to undertake a massive CR, or take on significant debt. Both of which I don't see happening.

Possibly the best solution for TAS is to sell 10% of their stake in the Vulcan Project to FMG and be free carry after this. When the mine is up and running, TAS would then earn a very attractive 10% royalty.

Cheers.