Ann: Logistics Upgrade, page-8

I was lazy yesterday. Instead of looking at the website to confirm the tenements were continuous after Bluebird correctly pulled me up I simply phoned the company.

Ive had a good response from companies by phoning lately, perhaps this depressed mkt makes people more amenable to any potential investors and some chit chat. Anyway yesterday was no exception, I got Chris the exploration manager for almost an hour. Bloody brilliant for an arm chair investor. Good guy is Chris.

Anyway key points that Chris was keen to stress in no particular order.

1. Our cash balance is going to be 2.5 mill as soon as the payment hits from SBM in the next couple of days. This means we avoid a capital raise until almost the completion of the DFS. (Q2- probably the end of- my cynicism not Chris who was upbeat, but I say stretch a time line any day of the week.)

2. The deal with SBM was a huge talking point obviously. It allows APC to focus capital on SOP project and not be returning to capital mkts with any degree of frequency or urgency. The deal was the best availabe. Chris pointed to the deal done between IGO and Anglogold on Tropicana. He was working on Tropicana at that time and pointed out the similarites in the deal structure. Basically IGO was free carried in a very similar manner, Chris keen to point out the exploration spend of Anglo once they had a sniff of Tropicana went through the roof. 180-200 mill spent on expl/defining that resource. We dont have to pay any of that. Not having to fork out expl costs is huge for us. IGO were able to really expand as a company through that J.V.... so if they get a sniff, it could be a company maker.

3. Chris very confident about the gold tenenments. He mentioned Mark Creasy is involved as a shareholder and has pegged the surrounding tenements also. Apparently the story goes that Creasy had been speaking to some highly respected geologist who stated that the next golden mile type deposit would likely be discovered in the Yarmana. Chris an unashamed bull on the region. I asked about Gruyee, he believes grades in the region could far exceede this. The only positive he could find in that comparrison was the depleted nature of the first 50 m of the Gruyere resouce. (Apparently our aircore grades early this year were low, but equally as high as those at Gruyere during the aircore phase of exploration at that project. Grades get better at depth it seems in this region.

4. Chris felt that the recent announcements had not been factored into the share price. The appointment of Jim Walker being a big one, Jim was a director at 7 network, a current non excec director at macmahon and a former president of the Australian business institute. Hes apparently fairly well connected around Perth.

5. M.D Shakleton had definately felt the blow back from the Hartleys raise. Chris mentions the chorus was loud, but reiterated that capital mkts were difficult. In theory we should not have dilluted so much, but the actual mechanistic rapacious nature (my inference and hyperbole) of broking firms is not to be underestimated. Bastard Hartleys- again my sentiments.
Personally I have witnessed this myself I have to say with even very large projects that will almost certainly be developed unable to get finance at reasonable terms. Hopefully Jim will be able to help with this, though Chris not willing to elaborate here as this could get him in trouble.

6. The deal to offset rates against road build shaves possibly 20 mill off the 40 mill capex needed to go into road upgrades. Strategically we are better situated than some of the other projects. 2 hours drive and then train to either Esperance or Freo. Some of the other SOP hopefuls are trucking their products for 5 hours. Again Chris talked about the capex for these companies to upgrade their roads.

7. Touched on the fact we are 3-4 times undervalued on a comparative basis with many of the SOP hopefuls and thats not including the latest gold deal and what that could mean.

8. Talked about the conversion of MOP into SOP. Apparently the process producers Hydrochloric acid and the Chinese have been pumping this into the rivers. Due to environmental laws they can no longer do this. It makes it more likely that Chinese fertilizer companies will look to replace SOP, and could look to invest or buy companies - go private etc.

There was more but it doesnt immediately come to mind. Well I doubled up this morning so lets leave it at that for now.