agm tomorrow, page-5

Sorry about the delay, here is my report;

AGM Summary
=========

Everything is on track. Hugh reigns supreme.

Some little changes, since the EGM.

We are now looking at an expansion to 3,000 tonnes per day, up 500 from 2,500 per day.

At 3,000 tpd the mine life is approx 7-8 years.

St Andres, 400 meters from Cinabrio looks an absolute twin in size to Cinabrio. This was not explicitly said, since no drilling results are in yet, but explicitly intimated. Both are on the same fault line.

This would of course double the mine life. ļ

The current mining exploration budget is currently 2.4 Million, but will be increased substantially.

Phase I ¡Vis on time and budget at cost of 4.25 Million
1,250 tpd Dec 06
80%+ recoveries Mar 07
Cu grades produced 25%+ Mar 07

Phase II ¡V Low capital expansion to 3,000 tpd.
Scoping by Mar 07.
Total Cost estimated to 15 Million US.

SX-EW Plant is definitely a goer, which will produce 2,000 tpa Cu cathode (on site!).

EBIT Dec 06 ¡V 4 Million
Mar 07 ¡V 5 Million Projection
Jun 07 ¡V 6 Million Projection

These projections are based on $3 per pound of Cu and 1,250 tpd production rates.

With 3,000 tpd and $3 per pound Cu we are looking at $US 14-15 Million per quarter

Hugh is very committed to NOT diluting the number of shares any more. The only exception being shares /options directed to directors and staff.

No more capital raisings. All projects will be funded using cash flow and / or debt.

Charters Towers is still being pursued. An $800,000 drilling program aimed at proving the resources thought to be there will take 6 months to complete. Weather may impact ETA.

Historic data points to two kinds of systems at CT;
High volume low grade (2 g/t)
Or Low Volume high grade (10 g/t).

The AGM atmosphere was a great improvement from the EGM. People were smiling.

One investor put to the meeting his unhappiness about Peter Evens staying on the board. It was pointed out that without him SMO would probably no longer exist.

I wrote, after the EGM, that if the share price does not go north from here then I am a clown. I believe this is still very true. I see a five bagger here.

Cheers,
IHS