reply, page-10

Why is that ruled out?

I think with AZX holding the operator status of the Bullabulling project makes AZX is in the box seat.

And no, a takeover of AZX by a third party does not have to go for GGB as well.

Historical example was DIO or Dioro Exploration NL (one stock I use to hold). They had 49% of Frogs Leg gold mine, with Canadian listed La Mancha Resources holding 51% and operatorship. Avoca (AVO) was interested in DIO and Frogs Leg. Then came RMS. Both AVO & RMS fought over DIO, with AVO winning. For many years AVO tried to convince La Mancha to see the remaining 51% of Frogs Leg to AVO. La Mancha refused. Even up until today, Alacer Gold (AQG) is claiming La Mancha using unsafe mining practises at Frogs Legs and reporting them to the WA Dept. of Mines in attempt to get operatorship.

So in the case with AZX and GGB, AZX holds the operatorship for Bullabulling, hence is why GGB wants the rest of the project at a low ball offer.

But given the current gold market and many M&A going on. I think the Bullabulling project is excellent with much exploration upside.

Yes, we got low cash levels and a potential capital raising is not appleasing to us. But for a market cap of around $38m stands very cheap for a 50% interest to a 2,603,100 resource of gold is TERRIFIC and heavily undervalued.

Looking at the May presentation, if feasility studies shows a excellent economics for this project and a targeted production in early 2013. I'm sure lots of potential acquirers out there would be keen esp. when you get the operatorship for the project too.

Eg. SBM wanted to acquire CAH, but failed as CAH & CQT are merging. SBM previously stated they are looking for potential acquisitons. Though, I think AZX is a small chance for SBM, but still there is a possibility.

Eg. RMS (I just sold out yesterday), has excellent fundamentals I love that stock. Though, Wattle Dam is excellent and a cash cow, but it only has 2.5 years of life left and extension for it is unlikely and limited as the 2.5 years life till end of 2013 is already that extended life.

As for Mt Magnet lots of work was done on it already by RMS so further exploration upside again is limited. RMS bought it from Harmony Gold for $40m and done a lot of work on it and upgraded the resource and feasibility results with a cash cost of $866 per oz is ok at current gold prices. But it has 6 years mine life left. First pour is at the end of this year or beginning of next.

So what happens to RMS after 2018? With no more operatable mines? It has Mt Windsor exploration project in JV with LTR, but its at a very infant stage and developing it would take a while.

Though, RMS management have not said they are looking for targets, what can you do with $100m cash in the bank?

If I was RMS, I would merge with another company of RMS's size eg. SLR, IGR, or SAR.

OR takeover a small good undervalued company for very little cash and scrip.

Not that I'm saying it would happen, but its a possibilty and "hope"

50% of the JORC resource of 2.6m oz is already quite massive for a $38m price tag.

RMS being so rich can pay the feasibility studies easily.