Ann: Appendix 3B-KBL.AX, page-86

Hi Beton,

I agree gold is looking strong. But with respect to KBL, are you not concerned about the fact that they are running out of the high grade profitable ore and have not advised of any significant exploration or development of anything beyond Pearse North which is only 15,000 ounces at an average grade of around 2-2.5g/t?

My analysis of KBL leads me to describe the company as a small short term producer and an exploration hopeful but with big debts.

If it is exposure to the gold price you want and are prepared to make an all or nothing bet on KBL's likelihood to survive its debt obligation, reduce costs, find more ore and develop it then why wouldn't you simplify your strategy and simply acquire a two year gold call option?

Do the numbers, current gold price is ~USD1,350.
A December 2018 gold call option with a strike price of USD1,360 will cost you USD160.
If the gold price goes above USD1,520 anytime within 2 years and 3 months (December 2018), you are in the black.

I think a call option is a much better play if you are looking for a bet that is essentially based on the rise of the gold price.

I am not suggesting that in all cases a call option is better than shares in a gold producing company, only in the case of KBL because of the low amount of ore, high costs and big debts.