Ann: Change in substantial holding, page-5

I'd say a few of the funds who hold the stock are getting some pretty big redemptions given the iron ore price slide. This is what happened in 2012 with a lot of resource funds forced to sell resource holdings on market in order to raise cash and pay out redemptions.

This tends to put further pressure on resource stocks particularly given that when people are redeeming there tends to be a lack of buyers which further exemplifies the problem. I think EQX along with many other small, mid and large cap resource stocks are being sold down by fund managers. Naturally it hurts us more than most due to the lack of liquidity which has always been a problem. But we are not alone - FMG is down over 30% in the last few months and they are the worlds 4th biggest producer.

We know for a fact that Blackrock have been selling. I am sure they are still selling EQX along with their other holdings to raise cash. What is interesting is that Blackrock were buying EQX late last year and even early this year, which suggests to me they continue to like the story. I think their hand is being forced currently and this will probably remain the case until the Iron Ore price stabilises.

As far as a financing deal or JV I think sentiment is just as important as our share price. At the end of the day Mayoko is worth a hell of a lot more than our current market cap and as such I would not expect management (who have plenty of skin in the game) to do a deal based on share price. I think it is more likely that a deal will be based on the value of the asset as this will be a project level deal. To be honest though my preference would be for EQX to take it to production by ourselves. I think the quality of the project means we should not find it difficult to do an off-take deal which could help fund the project.

When markets are under pressure the baby tends to get thrown out with the bathwater. I think a lot of Iron Ore projects are going to fail to get off the ground. In fact there are a number of Australian producers who are barely profitable when Iron Ore is under $90.

Our scoping study shows an opex of around $40 and if we add $25 transport we get to around $65 all up. This sits pretty much in line with the all up cost of FMG however there product is inferior to ours and sells at a discount to the benchmark 62% fe price. Our ore is 64% so one would expect that we would sell at a $5-$10 premium to the benchmark price.

Even at $90 Iron Ore we should have free cashflow of around $60m a year. I am basing this on a selling price of $95 ($5 premium for higher quality) and an all up cost of $65. Leaves a pretty healthy $30 margin which many 'would-be' producers would be very envious of. If the Iron Ore price stabalises at around $100 as most expect the free cashflow increases to around $80m! The fact that we sit so low on the cost curve is absolutely critical and the main reason why I continue to believe the Mayoko project is worth many multiples of our current share price even if Iron Ore is sub $100.

I feel once we have the mining convention management will be in a position to press ahead in terms of project funding. As long as management are able to get this project moving forward the share price will follow.