Ann: Quarterly Activities and Cash Flow Reports, page-13

Hammer is doing the best thing by its shareholders in the medium term. Hammer have decided, rightly, to go hard with exploration now to prove more JORC resources and drill test as many hot prospects as they can in their 100% ground. It would have been a difficult decision to go for a capital raise given the expected negative market reaction and the existing reasonably healthy bank balance. However the Board rightly decided to ignore the short term market sentiments and expectations to try everything they can to maximise shareholder value for their assets.

There are two really good reasons to go hard with exploration now:

1 - At this stage in the copper price cycle, now is not the time to be hoarding money. Companies in the sector are not having any difficulty raising money so why not go hard with exploration now so that deposits can be proved up in time to take advantage of commodity prices. Shareholders of course will gain through share price rises if new discoveries are made when copper prices are high and gold not too shabby either. Why not do this right now.

2 - Hammer need to prove up JORC resources and make new discoveries on their 100% ground ASAP to maximise the percentage retained later on if a mine development funding deal is done with the new Japanese company or another party (to maximise the value before any deal). The more Hammer throw into any development deal (in resources and discoveries) the more shareholders win because Hammer will retain a higher % and/or secure more free carried development $.

There will be a lot of pressure to add the HMX 100% ground and resources to the agreement with the Japanese company. I suspect the reality will be that Hammer will eventually agree (1-2 years time) in return for a free carried to production deal with the percentage retained by HMX reflecting the location of the resources in either 100% ground or JOGMEC JV ground. If the bulk of the resources are in Hammer's 100% ground it may be possible to buy out the JV and debt fund and capital raise to develop a 100% owned mining complex (central processing, multiple open pits and underground mines).

The Board are looking out for shareholders interests and have made the hard decisions to do this. The capital raise @ 9.5 cents is well timed in my view. We sat around 9 cents for quite a while recently and then snuck up to 11 or so. To get the raise done at this price is better timing that when we were 9 cents and would have had to discount to 7 or 7.5 cents.

I have never seen the SBW-Yandal project as anything other than having a foot in the gold camp in a prospective brownfields location where any discoveries can be readily sold to adjoining gold miners when the time is right (or perhaps a free carried % retained for cash flow). With any luck some JORC resources that can be sold just in time to fund mine development at Mt. Isa East. There is always the chance of a big discovery and stand alone mine, but it is not my expected outcome.

So well done to Hammer for looking out for our interests as shareholders even when we can't always see it.