2013

Rabbit thats a good article you posted on the other thread and got me thinking more about what a disaster 2012 has been .... and really points to one of the major deficiencies/let downs with the nmdc/lcy relationship to date. mainly that they just dont seem to have a plan with any substance - well none that we know about anyway. We have no idea about what they intend to do. I've posted this before and I think part of the problem is NMDC being a bit of a rudderless ship and a bureaucratic quagmire. I also think with all their departments they should be giving us numbers in regards to growth and business plans that include legacy. TO me this is an epic fail and why we are seen as a bit of diaster and why no brokers/funds will get near us.

However ...

the silver lining is that 2013 is right around the corner and maybe (just maybe) this could be our company making year. so if they can get it right this is why and how i think they could be a 250-300mill MC company sometime during 2013. a very basic blue print on how we could do it.

1. Mt Bevan 100% owned and forward planning. Buy it out and give us a plan as to how they are going to get magnetitie ore out of the ground, how they intend to move it, process it and sell it. Much of this would come out of the BFS.

2. Define some DSO and then give us an idea about how they could get this moving asap. and give us an idea of what they would use this income stream to fund or to as a means to pay back a LOC to get other projects going. Perhaps they should start thinking about JV with our neighbours to realise some of the potential and get the Yilgarn firmly on the map. We start shipping DSO with JMS or our other Yilgarn buddies and I think we could see us as one of the leaders in the area - at the moment we're only a small part of YIPA but the potential there is to be one of (if not) the leader.

3. Spin off gold assests. Lets face it I just cannot see how we can spin off our gold assets as they are now - they just arent that good. So unless we want a 1:1,000,000 in specie with 20c list price .... we must be looking for something else to headline this. Maybe I'm way off but to be a successful in specie my thoughts are we would have to have a 500k JORC with a plan to get to 1mill - we just dont have the potential unless they are sitting on something we dont know. So my feeling is that with some acquisitions that have a defined resource as well as some ground with some real potential to increase a resource base must headline the spin off. If they can get a shallow defined resource close to an existing plant then toll or stock pile treated gold could be the way to fund further exploration - especially if gold increases above 2k. Take a look at a company called PXG - they have built a large JORC albeit at low grade but have funded some of their exploration through toll treatment and then once they showed they could do this, were serious and had management that could pull this off, they completed a CR for 20mill. Investors have seen the amazing work they did in 18 months proving up a resource and self funding part of it (something thats pretty hard to do) and the confidence led to placement for more drilling ... because people believe they will deliver.

4. Coal. The leases may well prove to be a masterstroke but I think to be taken seriously we also need to acquire something that has either ... dare I say it ... producing or near producing resource base. Now is the time to strike with coal prices low. I think that a lot of confidence would be returned to lcy/nmdc if they made a decent coal acquisition - it would show they are serious about being - Legacy Resources.

5. So that leads me to - Legacy Resources ... i'll admit that to me it sounds good .... but they need to follow it up with something other than a new name and a new logo. This would take a massive amount of work but they need to reformulate their company structure and governance. Put out a blueprint on how they intend this to work. Then back it up by doing it and investing the money to make it work.

6. Disclosure - i think they could definitely do better on this regard. Sure part of it is that they are bound by confidentiality but I'd say some of it is being a junior and not being able/understand that disclosure is a key ingredient in getting us to a mid cap and then to a major. The idea of backroom deals, hollow announcements without substance and arrogance/contempt towards to shareholders just doesnt cut it on an international stage.

Could go on and on, but I'll just be ranting.

I'm still very bullish as if you actually sit back and look at the market and how well we are placed from a POTENTIAL point of view - then we would have to be one of the best small caps - cornerstone investor and big asset. Problem is post GFC no one is fooled by just having this .... we need all of the above and more to make us a company that the 'right' people will sit up and say 'these guys actually have a good plan, know where they are going and have the track record that backs it up'. Long way back from 2012 but lets hope they can make 2013 the beginning of something special.

Anyone got Nanda's email address ?? I'd like to send this (and any other comments you guys want to add) to see what he has to say. If lcy was based in Melb (no offense WA crew) perhaps I should send in my resume. Hell I'd volunteer if it meant our SP got above 25c in the next 6months.

Happy NY everyone and stay safe.

DW.