Ann: Exploration Update at 100% Owned MacPhersons Project, page-9

Been a while since I’ve posted because this share price has unfortunately become very stale floating in the 3’s. There’s been a lot of speculation as to why this has been the case, so I thought I’d put forward my opinion of why and where BCN are at right now.

The price catalysts for institutional buying, in no particular order would surely have to be:

• Increased LOM via Macphersons/existing tenements
• Timor Leste
• Gold price
• Other acquisitions to increase grade/LOM.

In terms of the ever-present question of Buyback vs Dividends vs Reinvest, I think all have their downfalls and merits.

Buybacks are advantageous in that it reduces the denominator (number of shares) over time all while reducing the sell side pressure by constantly wiping out lines of sellers when games are being played. If the directors believe this company is undervalued which they obviously do because of the inside buying by McGarry recently, then buybacks are preferential over dividends in my opinion. If BCN slowly buyback 1 billion shares over the next year, mathematically, the SP should be 4.8c given all else equal. I think most holders would prefer a 40% increase in share price than a 25% divi. Buybacks also have the benefit of putting a floor on the price as the company just buys when it is getting too low.

Dividends are great to give shareholders a payout to also reduce the need for them to slowly sell shares, taking capital gains, hence reducing the sell side. But that’s great for those with massive amounts of skin in the game but for everyone else outside the top 50 holders, the dividends aren’t really seeing holders jump for joy when they see a few $k in their bank every 6 months.

To me though, I trust directors more with the money in terms of the returns on capital they can produce from the money than what I can do with the same amount of money. Going off past investments/acquisitions like Jaurdi, Black Cat, Macphersons, they’ve turned $Xmil into ounces and ounces and I’m sure will continue to do so. I’d much rather those ROI than the 25% I’ve been able to achieve the last 5 years of investing.

I like to invest in companies that have multiple avenues to win. BCN has that, see below avenues.

• Macphersons seems like it’s going to be a big winner for us given historical drill results. Should find out soon what’s going on with that.
• Timor Leste has huge potential. If we hit anything once approvals are all in place, we could use profits over next 12months to fund plant construction and have 2 plants running within 2 years. There’s your 50koz per year BCN were targeting. Timor may have the necessary ounces which also gets them up to the 10 year mine life they were targeting. Albeit via a different mine.
• Add any other acquisitions they’ve been eyeing off lately.
• These are all on top of an already humming process plant that improves monthly in terms of its capacity. One thing I’d like to see is management to have the confidence to start looking at a second crushing and float train or whatever is required to increase production. I know management have generally been conservative, but to me, this would put a bit of a rocket up the share price alone giving institutional buyers the confidence that we’ll find the gold to fill the crusher/s once construction is complete.

One thing I don’t understand is why management have been so slow with exploration. I understand that you need to wait for results on an area before you can analyse them and form drill targets for the next campaign. But what’s been stopping them from doing that on all their targets at once, awaiting results and then forming the next targets? All their tenements (besides Macphersons of course) could’ve been easily been explored by now if they had’ve used their money on exploring them all rather than giving out dividends. Once you know what’s in the ground, you can then have a more defined plan for the future in terms of mining sequence, acquisitions, financial management, etc. If LOM is the issue of why the share price has been so stagnant which a loottt of people on here have suggested, then this will solve that. To me, they should take this approach for all the targets at Macphersons instead of prolonging the campaigns over months or years by just testing one section at a time.

Successful micro-caps are often successful due to the founder/CEO employing quality support staff and directors around him. Graham and Geoff have definitely done that and I’m sure they’ll continue to do that if we want to expand to a larger MC company.

Overall, I think BCN are undervalued but something different needs to be done. The old definition of insanity rings true here “Insanity is when you keep doing the same thing over and over expecting different results”.

Looking forward to the next 12months as I think management have a few big catalysts that could create value for shareholders if they approach them right.