agm report part 1, page-8

Seals, a massive thank you for everything you've done. Your post has hugely lifted my spirits. Yes, we seem to have 3 very big hitters on our board now: Dr Reid, Norman Lamont and Karl Axel Waplan.

What convinces me about Dr Reid are the very few words he uses in the presentation to create a scathing picture of what we are up against in Iran. The lack of process, the use of people who are not up to the job and who have no wish to display independence of judgement, the lack of engagement and the opacity of decision making all help to magnify the errors of judgement of the people at the top of the regime. We can present win-win solutions to them for years on end and get nowhere? But the use of Russian finance or help to make ourselves more acceptable in the current anti Western atmosphere sounds very exciting.

I still have two worries though: a) what the fully diluted NPV per share of the project is likely to be (post finance and tax costs) if we are not allowed to make a margin on the mining of the ore and b) just how enforceable arbitral judgements are against Iran.

I remain convinced about the injustice of cancelling all but one of the agreements, and that we would win our arbitral case without any problem under UNCITRAL rules. After all you do not wait x years (coincidentally just after the zinc price had trebled) before complaining about the lateness of delivery of the Feasibility Study. The nonsense they believe in about how big mines must, constitutionally, be run by the State only adds another motive for cancelling the agreements. The real reason I am sure is they are afraid to fix the revenue sharing arrangements in case they misjudge future zinc prices and end up getting very little for a scarce, non renewable resource. I think it is unlikely anyone in IMIDRO or IMPASCO has any understanding of how mines are financed in other countries and of how mine developers have to be paid for willingly taking on production risk, commodity price risk, political risk, dilution risk, risk that future funds will not be available, liquidity risk, litigation risk, exploration risk, exchange rate risk, etc. And of course explaining all this to ministry officials is no easy matter, let alone to the voting public who periodically pass judgement on their performance. I can empathise with the ministry officials' fears about giving away too much, and I imagine with no one wanting to take responsibility for any agreement the easiest thing to do was to cancel the agreements. Dr Reid sure is going to have a huge amount of work to do to help them arrive at a decision that is in Iran's long term interests. Many thanks again for yours and Andrewe's hard work. PS I'm also in other companies with disputes with other Govts. in the same region: Oxus $80m claim from Kyrgyz Govt. for illegal cancellation of a mining licence (18 months' of arbitration and we have only got to the stage of arguing where the arbitration should take place!) and Frontera Resources (4 years to win a judgement against the Azerbaijan Govt. for $1.2m + interest, and they are now trying to enforce the judgement.) When the gold price took off, the Uzbeks grabbed back the NPV increases by cancelling the tax holidays previously granted and by hitting us with a "tax and penalties" bill that was 100 times the cumulative profits ever made in their country. The share price bombed 90%, at which point a local well connected indigenous investor popped up and offered to help us out on condition he was issued with a stack of cheap shares (right near the bottom). After he obtained the shares, the sp trebled and most of the back tax claims were suddenly dropped. It can't be beyond IMIDRO's imagination to copy the Uzbeks. Long term I am sure the agreements will be restored: they need time to work out a system to make sure we don't make too much money out of them? The Uzbeks are way ahead of the game in that respect!