Ann: AUL: AuStar Gold to be acquired by White Rock Minerals, page-24

Hi Wack ..... I have been following you for years over at the degrey forum . you probably know my handle . I didn’t realise you were invested in white rock too . Totally agree with your overview and thanks to lawyer trader for posting the moriarity piece as well .

I see similarities between degrey and white rock . I got into degrey when the whole conglomerate hype was running . Degrey was one of the less sexy conglomerate plays , say compared to Novo and Artemis . However it had roughly 2 M ozs in the ground of more traditional type gold resources.

Then the conglomerate hype fizzled and the price collapsed but the conglomerates were a clear pointer that there was likely a regional source to the shallow gold and a reasonable chance of a larger good resource in the area being discovered still . It seemed a reasonable hypothesis degrey could build out there 2.2 M traditional resource into a much bigger number still given the nature of their shear zone ground.

In that period the market hardly put any value on those traditional resources at all and the market was completely ignorant in connecting any dots ...... ie there is shallow alluvial style conglomerate gold in patches everywhere in the region , gold and shear zones are often found together , Degrey have 100s of miles of shear zone tenements , degrey have already found 2 million ozs in localised areas of their tenements , hence its not unlikely they were going to find more . Yet despite all that the market took the company almost down to zero . So for me , even when it was totally unloved and that went on for quite a period , degrey seemed to me , with a large tenement package and already proven up resources a good risk reward with more than one arrow to their quiver .

I got into white rock thanks to following whack wholly ( hedge less horsemen) . Again wrm have a lot of arrows to their quiver, in fact much more then degrey , and the market again seems to be putting almost nominal or zero valuation on some of them . Big silver resources too which is likely to appreciate and last chance is showing all the signs of something being there from soil testing and very limited drilling. Even if last chance fails the company’s worth more than its valued putting zero on last chance , so you get to roll the dice on last chance being a success with limited downside . That’s how I felt with degrey with the conglomerate hype that ultimately didn’t deliver .... they had other eggs .

Now add to that the merger with Austar and again its a really good diversified exploration play that can be delivering news both not only in the northern summer but all year round now . Plus the small local mine that comes with Austar once tweaked a bit should be throwing out a small cash flow to cover at least some of the exploration costs hence less need for further cap raises .... and if they can get Mt carrington producing that’s more cashflow again.

Put all of this together and it’s a compelling risk / reward ratio for a long term investor . But like degrey , it’s not a 2-3 month story but likely a 2-3 year story to play out here .