performance, page-2

Tranquility

You may have seen last year that IAU was the highest - best - performing stock up 608% for the year. Unusual in that it had a meteoric rise but apart from a few unscrupulous attempts to force the price back down (this played out here on HC and was so obvious) the price has held up well and is consolidating after a placement and raising from the SH.

This is not a done deal and there is some risk. Being in Indonesia is one but mitigated somewhat by the presence of other large mines -Batu Hijau, Indonesia by Newmont and Papua by Freeport.

There is also the forestry issue. In my last contact with the company they said they were seeking to have the area re-zoned. If the price goes substantially above $2.50 within the next 6 months or so then we will know that approval is close. There is also a possibility that a price rise may also indicate that the resource has been re- classified to measured or even better proven. But it will not move much without the approval and this is somewhat mitigated by the placement made at $1.77 to raise $120m that is to say you wouldn't hand over the readies if you had no confidence in the project going ahead. The other mitigating point is that Indonesia needs the funds from projects like this.

IAU have 500m shares on issue and are listed on the TSX as well. They have some $160m in cash and seem to know what
they're on about. This mine has the potential to be one of the 10 largest mines on the planet if not 5 largest. This compared with other speccies gives me confidence in the Co and management.

I think there is $4.00 baked into the cake should a takeover be made however, the IAU board have taken steps to guard against a T/O and I believe they would like to see the project through. In any event everyone has their price and it would probably be north of $4.00.

In my opinion this is a keeper now but like all stocks it needs to be monitored. Just be careful of manipulation and be wary that there is programmed buying and selling going on ATM.

Hope that helps you out.

Cheers
BW