dividend, page-29

nursery,

Although I have never followed CFE or CUO, when doing the background research, I did notice some similarities with both ZFX and OXR.

IMO, all four companies tended to use a shotgun approach and have multiple projects running across multiple geographic areas. Dare I say it, I think they wanted to play with the big boys. In a rising share and commodity market, that is fine, but when the GFC hit, they were too thinly spread without the cash flow from current operations to support development.

Let me show by example what I mean

CFE has
19% interest in Global Iron (area?)
35% interest in Maranpa Iron Ore (Sierra Leone)
100% interest in Cape Lambert South (WA)
$127M cash
100% interest in Lady Annie Copper Mine (QLD)
25% interest in Lady Loretta Zinc and Lead (QLD)
100% interest in Sappas Gold (Greece)
Buka Gold? (area?)
Some others I have probably missed

ZFX and OXR when they merged had
Century (Qld)
Rosebury (Tas)
Golden Drove (WA)
Avebury (Tas)
Sepon Copper(Laos)
Wolfden (Canada)
P Hill (SA)
Sweden exploration
Menindee exploration (SA)
AIM resources exploration (Africa)
Some others I have probably missed

The problem with being not a tier 1 producer of commodities is that every few years the market price will revert back to the marginal cost of production (where tier 1 sits) and you begin to lose money. (ala CUO and OZL) If this is a reality, then a non Tier 1 company needs a strategy to counteract this. That strategy could be a lazy balance sheet (keep $200m to $300m in the bank at all times as a buffer for the downturn) and keep focussed on doing a few things well rather than a lot of things poorly. This reduces your risk and keeps the company focussed.

The above reflects my conservative approach, and I am sure that there is a good argument for the proactive approach.

I would prefer OZL to work on the critical few rather than spread themselves too thinly. Using the current cash to expand P Hill to a mine life that is greater than 10 years (10 yrs is what the analysts are currently using and why the sp sits where it does) and then increase throughput to 150,000t of Cu per annum & with the increased mine life pushes the sp to about $2.00 (assuming Cu is at USD$2.64 / lb Goldman Sachs prediction). We would all love to see that!

The approach I have talked about would also allow dividends to be paid and a share buyback to be done.

I hope the long response was OK.

HT1