Ann: Drilling Update - Morning Star Goldmine , page-4

Reasonable drilling report. My read is,

1. They are opening up donaldsons to stope, open a wide face..

2. Burns is almost ready, installing power and air.

3. Interesting new offshoot reefs uncovered at Maxwells can be mined straight away

4 Additional mineralised reef discovered while drilling kennys poss extension of WMC cross cut

5. Campbells looks like a fizzer

So the upshot of it is we're going to get lots more resource defined over the next 12-18 months as the drill programme progresses. In the big picture this is the foundation for sustained share price appreciation. The market wants to see.

1. Initial prodution
2. How that production can be sustained and grown

Then we'll see the price rise.

The production report will be of great interest of course, I'm taking a conservative view and think if we can avg 10gt initially I'll be happy. This will grow as they refine their resuing technique and start to blend ore from different stopes. Hopefully his will give us a consistant grade of 12-14gt. We'll see.

I think consistancy is the name of the game. Not point in having 20gt one month and then 6gt the next, hence the focus on assaying and getting an idea of what they have so it can be blended properly.

However I do thing we will need to raise capital, running an operation that size you cannot drop sub ~$2mill in the bank its just too much risk if something left field happens and $ are required it could be the end of MCO.

So much as I hate dilution, I think a smallish cap raising to get 4-6mill in the bank while they rampup production would be appropriate.