quaterly report out , page-2

I retract my earlier comment:


Subsequent to the initial gold pour, circuit stocks were retained within the treatment plant for an additional two weeks to allow carbon loadings to reach optimal levels, in accordance with normal industry practice. Gold from circuit stocks was stripped again during the first week in July with a normal production profile and regular cash flow expected from this point. As outlined previously, the Company has outsourced gold refining to AngloGold Ashanti and gold delivered early in July will be refined and delivered to banks in the third week of July. While it is an appropriate business decision to allow the circuit stocks to be balanced and gold to accumulate within the treatment plant in order to optimise the long-term gold production profile, all operating costs are effectively subsidised by the Company in this period until a regular cash flow is established. Consistent with Mundo Minerals policy of ensuring effective financial management of the business, a temporary bank facility has been established. This short-term facility, which does not involve any gold hedging, will provide a short-term facility to assist with funding all operational costs at Engenho, ongoing development at the Torrecillas Gold Project in Peru, as well as exploration activities at the Tocantins Joint Venture and newly acquired Jaqueira Project in Brazil, as well all corporate overheads while the production cycle is properly established.. The Board believes that the implementation of this short-term funding facility is a prudent strategy which will not impair the financial robustness of the Company or involve a dilutionary equity issue in the current market conditions. Consistent with the effective financial management of the business, all major exploration drilling activities at the Company’s projects have been deferred until August while cash flows from operations are established