ann out r&r claim being paid in full, page-10

Hi again Reiner001
Mr Jim Wall called me yesterday regarding my letter etc. Specifically regarding the three queries I put to KBL I felt he did his best to answer them within the constraints of the Disclosure regulations.

Re where they are at relating to the Operational and Strategy Update. As somebody already said in another post he says the Quarterly will be out in a couple of days time. This will address what is happening with Mineral Hill. He did say that a very large improvement has occurred in production there. Also the fall in the dollar has largely off set the drop in Copper and Gold prices. Cost reduction will also be mentioned in the Quarterly. Jim also mentioned that they intend to liquidate some assets but did not elaborate.

He enlightened me on some historical facts. Triako closed the MH plant in 2005 and it lay dormant for about six years. The management controlling the plant when brought back in to production were less than successful in getting the plant operating to a viable status. That management has since been replaced. Those changes and the off take from Red Terror are expected to transform output. He did say though that even with Red Terror they must retain volume, which means they must keep finding high-grade strata. Expenditure on more drilling has to be maintained to explore what can be provided from the SOX and ESOX sections and others. They are good at that.

As a matter of interest I recall reading that Triako also left KBL Mining a 2,847 hole, 230,000m drill database for Mineral Hill Mine and nearby Iron Duke, they say that work would be worth approximately $50m if replicated today. This logged DD information from Triako drilling plus the fact that Triako also left them 15 Km of underground access, would allow exp DD drills to quickly get on to underground station to drill in most directions.

Re Sorby Hill JW indicated that the amount of money they need to support their share of the feasibility study should be well below a Mil. I mentioned as being a mechanical engineer myself I know that Mining Infrastructure costs are now killing a lot of projects. He says that the SH plant will be built as modules in China and assembled on site. A number was mentioned which I think might be possible.

Re the continuation of the 50/50 SPP largely in its original form in spite of the R & D cash coming through. JW claims he cannot legally kill it at this stage.

In closing the conversation I expressed that the shareholders expect that KBL through Mineral Hill must be brought in to a profitable status ASAP. Jim reiterated that the Quarterly which will be out before the SPP would be helpful for shareholders.

That’s all I can say at this time.