global speculator article - 5 may 2009, page-3

Thanks for the article Goldduck

I talked to Citigold re:the distribution and Christopher Towsey (I believe) answered the phone.

Key points:

- in comparison to peers, the company believes that the shares should be trading at about 41c. My back of the envelope calculation was a bit short of this (at about 30c) but still well clear of the current 17c.
- Chris is very bullish about the capacity of the company to raise necessary development funds from major shareholders.
- He believes stock price is unlikely to move until a significant production increase is demonstrated - he believes this will happen.

My analysis:

- Yes it costs a lot of money to get a large gold mine up an running. This was never going to be an "easy eldorado" of unlimited riches for all concerned (not withstanding the artists impression of that yellow blob under the CTO reefs). Reasonable long term profitability is however forseeable.
- There may be some capacity to trim administration costs BUT this won't happen IF a significant production increase is "just" around the corner.
- The Global Seculator article combined with Christopher's comments leads me to conclude that there could be BOTH a significant production increase AND an additional capital raising. That's the the gold business!

An alternative lower capital expenditure (organic) approach would reduce economies of scale necessary to make a good profit on these particular digs AND miss the benefits of the bull market.

CTO has upside potential BECAUSE it still needs to prove itself to the market.

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Not investment advice - and I don't provide a 100% guarantee on my recollection of the phone conversation.