Ann: Celsius Resources MCB Project takes step closer to Operation, page-9

Thisis a considerable milestone and represents a lot of effort and consultationwith stakeholders.

I believethe Company announced earlier this year the government gave them prioritystatus, that presumably means this will be approved quite soon. Thisnow sets a new critical timeline of deliverables and locks in certain projectparameters.

Whilstnot stated, we are assuming the Declaration of Mine Feasibility will convertthe Exploration Permit to a Mineral Production Sharing Agreement. This Permitwill need 60% Philippines ownership. The clock is now ticking to achieve thisownership.

Notonly will they need to buy 60% at current value, but they will also need tofund 60% of the future expenditure and Capex. There is the possibility that theprocess plant could be held in a separate 100% Celsius owned entity, but thattakes away all the upside from the Philippines investor. This will not be aneasy sell.

Theother critical steps the Declaration of Mine Feasibility now triggers islocking in that there will be no tailings dam nor open cut mining. Myunderstanding is that this was critical to getting support from the community.

As positiveas this sounds now, it may be an impediment moving forward. The Declaration ofMine Feasibility is based on the scoping study released late last year. You canget away with a lot in a scoping study such as we will dispose all the tailingsunderground, but to attract finance you will need to produce a bankablefeasibility study where such statements need to be more rigorously demonstrated.I believe you may be able to place 70% of tailings underground and will need toconstruct a small tailings facility or co-dispose in a waste dump.

Thisalso poses a problem with the logic behind a separate process facility. Howcould you take third party ore with nowhere to dispose it.

On apositive note, Peter Hume has dealt with these conflicting issues when he waswith Tampakan. The end result was a positive project, that unfortunately washalted by the open pit ban by the local authorities at the time.

Letshope all these issues can be sorted whilst we have a pro mining administrationin the Philippines.