without a coal delivery, we're going nowhere, page-12

sales,

The coal in the ground doesn't count for much as the share price will tell you. Plenty of companies have gone to the wall whilst sitting on large tenements of coal they couldn't get out of the ground, ship or sell for whatever reason. You'll have to do better than that if you're trying to spin some positives on the current situation. What we need to know how KRL plans from going from the current situation to medium size producer. That's the story we want to hear. These valuations floated by you and others without any kind of logical explanation of how we get there are really pointless.

The suggestion that GPK won't sell is a pretty dire one and would give light to my darkest fears. It suggests that the thermal coal assets we hold in Kalimantan are not worth anywhere near as much as has been previously suggested by research reports. We're already seeing this in Stonebridge's valuation of GPK. If we can't even get 30 million for it then things start looking a bit bleak. It doesn't appear worth KRL mining it (presumably why it's been put on hold) and noting that the SP didn't move after the 297Mt resource announcement at TJ I'm wondering if the these thermal coal assets have any real value to us. The market is certainly not impressed.

The reason why you'd care what the current SP is sales is that it determines the company's ability to raise capital. The recent Notes raising was NOT a good deal for the company or shareholders. We took a 20% dilution for a piddling 16.5 million dollars. This company needs capital. Without it all the coal which is making you feel so warm and fuzzy will continue to sit in the ground. And it is becoming increasingly difficult for KRL to raise funds at anything approaching fair value for current holders. Additionally in the event of KRL getting into financial difficulties the Note holders rank ahead of shareholders in the proceeeds of any asset sales so theres 16.5 million dollars to come out of the bottom line before shareholders would be entitled to anything. This adds a level of risk to holding the shares that is not lost on potential investors.

You are right about something else. It would be ridiculous for the company to post every piece of bad news or delay they have. No company does it or probably should. What would be useful from the company would be the release of a plan for creating value from it's assets through the use of the money raised from the notes. As I've said they came at some pain to existing holders so it would be nice to know how the money is planned to put some value into the assets. By this I mean more than vague suggestions we've seen to date.

If the company is producing from all assets by 2012 I'll send you a whole case of wine. I can't see KI producing by 2012 despite previous ascertions by the company. There's too much infrastructure needed, drilling, permitting and financing. It's a big project and we've already lost time with drilling coming to a halt through lack of funds and fnunds coming to a halt from lack of river flows.


So, do you know how we're going to get from here to full production or are you just feeling lucky ? Do you have certainty on the sale or otherwise of GPK ? I can highlight all sorts of issues with the company at present. What I'd like to see is someone posting some insight on the postives. Not vague feel good posts to re-assure themselves that all is well or that one day it will somehow happen but some real fact based info on how we get from here to there.

Illiquid