Ann: Operations and corporate update-OGX.AX, page-78

I don't understand why they would be bothering treating the mineralised waste which has unreliable grades that according to the announcement can in theory vary between 0.5 and 6g/t. Clearly very little of this waste actually graded 6g/t!!!

I knew we were flying a bit blind but I sort of expected that we had enough money and mine development under our belts to be optimising the gravity circuit on the production ore. I don't know very much about the specific design of the gravity circuit but you'd think it would be much easier to reach the designed +85% recovery using production ore rather than the low (and unpredictable) grade waste that was fed through the plant and surely they must have know about the lead contamination from the blasting caps when designing the circuit. I can't believe they couldn't have solved this lead problem in the design phase. There is still a considerable difference in the specific gravity of lead compared to gold of about 70%. Surely there must be a way of separating the two using gravity or another low cost technique.

And starting a mine knowing that the turn around for assays in country will be far too slow to do controls just seems like an obvious recipe for disaster (and that applies to any mine anywhere in the world). Thankfully I stuck to my strategy of only buying in small lots and the announcements got iffy very quickly so I stopped my accumulation in its tracks.

I'm not a mining engineer but I think they need enough money to

1) conduct enough development in the mine to reach at least two or three production areas (or however many they need to feed the plant at maximum capacity).

2) build an on site assay lab

3) Solve the lead contamination issue or at least minimise it to a degree so the company doesn't suffer big penalties from the refiner.

How much money all this would involve, I don't know.

I doubt the current financiers (secured creditors) would want to take on the mine but at some point it might become necessary for them if they think they have a better chance of recovering their money that way.

At the end of the day if the so called "production ore" from the known "mineralised veins/structures" doesn't reconcile at a high enough average grade over time, no one will make any money and the only residual value will be in the plant itself (whatever that might be). So the secured creditors are probably only secured up to the value of the plant and what they might be able to sell the tenements for if the production ore fails to produce enough cash in the final analysis. I suspect they will not trigger any covenants and instead they will try to help facilitate additional funding from whatever source may become available. They'd be shooting themselves in the foot if they try and stand in the way of additional time and funding IMO.

How much dilution shareholders suffer to fix the problem is the million dollar question and will the mine even be profitable in the final analysis is the biggest question of all.

No point stressing no matter how much money you've got invested as it won't help the outcome of this trading suspension. If it comes out of suspension then everyone has to decide whether they sell, hold or buy. Personally I think you'd be crazy to buy as this would build risk on top of risk. I'll be holding as that's how I play the market. Never get over exposed and keep your losses in the bottom drawer as a reminder of the mistake you've made.

Note to self: Never invest in Brazil ever again. Sounds to me like this particular state in Brazil has contributed in no small part to some of the problems the company is suffering (ie through having strict restrictions on the mining permits and having poor infrastructure ie few supporting assay labs and ports that seem to be dysfunctional by previous accounts I've read). Obviously the company could have been better prepared as well IMO. Not having assay facilities when you know the local labs can't turn samples around fast enough seems like a beginners mistake. Some larger projects in remote or poorly serviced parts of the world organise portable assay facilities even at the exploration stage!!!!

Eshmun