Ann: MD's Company Update - December 2021, page-73

TODAY'S ANNOUNCEMENT!!

Well clearly a bad day all round and not a pretty sight with the share price dropping like it did today. There has been a lot of griping and venting and that is fully understandable and probably also a good thing, therapy wise. I have left it to late in the day to do a post, both to let the dust, and hopefully anger, settle and also because, quite frankly, I for one am still working my tail of to try and make things happen and happen as fast as possible.

I more than most of you, with both a significant shareholding and a carried 5% share of the Frewena projects (given the history of how they came from Rob and I to the company), have a compelling and vested interest to make sure things progress and that we drill in the NT asap. However, at the end of the day, when you are in other people’s hands, you can only run or walk as fast as they let you. I have been frustrated, in the extreme, about the bloody delays we have encountered and will continue to push everybody, and the envelope, to try and make things happen as fast as we can.

So, if you will permit me, let me try to rationally respond to the various issues and points raised by shareholders on this HC thread today. All valid, at least in part, I am the first to admit and I completely understand everyone’s frustration and even anger although I must remind you all that we are an exploration company and not all exploration is successful. Everyone needs to remember that this is a high stakes and high-risk game and whilst the rewards, if we are successful, will be tremendous, the chances of finding a economic Tier 1 deposit are low.

Let’s deal with the Riqueza NE drilling results first. Clearly not the outcome we all wanted. No cigar, despite all drilling showing that we are in a porphyry system. A number of points I would like you all to remember here:

· First, the NE is just 2 of 14 identified Tier 1 targets and whilst the result was most disappointing, it does not diminish the overall prospectivity of the Riqueza area and we have a lot more targets to test. So we can’t and should not write Riqueza off just yet but we will need to carefully review all recent drilling results and use this to help guide future exploration decisions;

· Drilling porphyries is a difficult task at best. You are talking about large areas (up to 7-10 km in size) and you have a drill hole with a 10 cm diameter. Geochemistry and geophysics helps to narrow down the target area but you are still talking large scale and it often takes many drill holes before you might get a decent intersection. A good and recent example is Sun stone Metals (STM) with the Bramaderos gold-copper porphyry. The last few holes are starting to look very good but they drilled many holes over the last 3-4 years to get to that point. So, it is not a quick, easy or cheap task and that is why if we can secure a JV sooner, rather than later, I will be very happy as that will take the financial risk and burden of us;

· The new ground recently secured in competition with Anglo American is also likely to add to the target count and we will no doubt have positive exploration results to come from here in the coming months now that drilling has paused and our Peru staff can move to that work program; and

· I have a feeling that the whole of the Riqueza area is part of one large mineralised system (my gut hunch only although based on observations of results to date) and that the NE area just drilled is really an outer halo of this system and therefore the recent drill results, which “smoke but no fire”, are understandable. My hunch is that closer to the SW area near Alteration Ridge where we also have some compelling Tier 1 targets might be more likely to deliver. However only time and further drilling will tell. Also, it is important to remember that the drill permit that we need to be able to drill here is a lot more complex and time consuming to secure than the one that was used to drill in the NE and that is why we have not drilled here yet.

One very important outcome I want to see as a result of this less than hoped for drilling in the NE is for a rigorous review of all other targets (generated by the geochemistry and geophysical work) to assess whether they need to be re-evaluated in terms of priority or ranking. I have already asked that we get the independent geophysical consultants who generated these targets to do this re-assessment and to do it with a very cold and clinical analysis, informed by the actual drill results from the NE targets.

In terms of NT drilling, despite comments that we are allowing ourselves to be “held captive” by the landowner by having him do the access track and other earth disturbing work the blunt truth of the matter is we pretty much need to do it this way. The last thing we need is to have a major landowner offside from the start of what is going to be a multi-year drill program! Under the MMP we are required by law to have landowner approval to disturb ground on his land and if as part of the negotiations he requires us to comply with certain standards to conform with his current land management practices that is the way it has to be.

Criticism has been levelled at the company that we should have managed the engagement process better, notwithstanding that he is a hard man to get any response from. We continue to try and track him down to get this matter resolved and a firm and tight timetable of actions agreed to. We will also continue to explore other contingencies as at the end of the day we all want the drilling and we all want it yesterday. I am op[en to all any any idea that are practical and workable and I am speaking to shareholders such as Adam who has generously offered to help us progress these matters. We will be drilling and we will be drilling relatively soon. I will continue to be a thorn in the side of anything and anyone that gets in the way of being successful and doing things as quickly, but sensibly, as possible.

Jonathan