pattersons report on coretrack, page-10

Hi tretchikoff.

My prediction of your exorcist announcement is what has got me out of the stock after a long time on board. Your other 2 scenarios would get me back on board, albeit at higher prices, but I'd be happy to wear that. I believe a takeover is logical at some stage, but I wouldn't haven't thought right now, unless it was from Warren himself for a bargain.

I agree with your other points you've made about what would be best from CKK's perspective, I think all shareholders would want the GT3000 on site somewhere working through glitches in various scenarios whilst being paid, but I was more coming from what will be required from the clients viewpoint. Or put another way, if there is no real or perceived value in further drilling the test hole, why did the company indicate they were planning to to exactly that. I would have thought if there was a reason it was worth doing 2 months ago, it wouldn't stop being worth doing now just because we are behind schedule.

Maybe this imaginary conversation at a potential client explains my thinking:

CEO: So who should we go with for the XYZ project?

Project Manager: I think Coretrack with the GT3000. Its cheaper and faster than the others by a long way.

CEO: We need it to drill to 3000m. Can it drill that deep?

PM: I'm confident it can, it's certainly designed to. The guy who designed it, Warren Strange has built at least 15 rigs before, so that won't be an issue.

CEO: Have they actually used the rig to drill a test hole to 3000m?

PM: They started to, but there was some unexpected issues, these things happen with new technology.

CEO: Would they happen on our project?

PM: Not this particular issue, I'm sure.

CEO: When did the stop drilling?

PM: Just before Xmas.

CEO: That was over 3 months ago. So what happened when they restarted drilling the test hole?

PM: They haven't yet. They had to wait on some equipment to arrive from overseas.

CEO: When did the equipment arrive?

PM: It hasn't yet. By the way it's custom, not off the shelf equipment.

CEO: When was it due?

PM: They expected it to arrive Mid Feb.

CEO: What happened when it didn't arrive?

PM: They said they were happy to announce they expected it to arrive mid March.

CEO: So when it didnt arrive in mid-March, when did they say it would arrive?

PM: Don't know, they haven't said yet - I've just been reading the ASX announcements like everyone else. It might not have arrived yet, it's not a huge focus at the moment. To be fair, they've been flat out with some roadshows.

CEO: Are we likley to have a similar 3 month delay on our project?

PM: I wouldn't have thought so. Sure their having some cashflow issues at the moment, but if we sign a contract with them, they'll raise some capital quite easily. They did indicate they'd prefer us to sign up ASAP, because they have to release a Cashflow statement by the end of April and without a contract or capital raising announced before then, the ASX will be on their backs about going concern issues and then the crunch will be on for them.

CEO: So you think we should still go with them?

PM: Well they've just released a brokers review. The analyst looked at the company in depth and was quite positive about their potential.

CEO: So did he recommend them as a buy?

PM: No he didn't rate them.

CEO: Not even a Speculative Buy?

PM: No. Actually I thought that was a bit odd myself.

CEO: So you're willing to risk your reputation and go with them?

PM: Look, when you put it like that, maybe we should use them on the next project once they sorted out their finances and demonstrated that everything is in working order and the test hole is complete to 3000m.

CEO: Sounds sensible to me.