Ann: Quarterly Activities and Cashflow Report , page-6

DVEous

HGO have enough cash to get the mine operational, but they do not want to commit the lot to one mine. Sale has allowed them to progress to production quicker. They are keeping cash available for other projects because they don't want to be a one mine producer because of the risks but also because they have visions of becoming a mid tier producer. Kanmantoo will not deliver the riches alone and committing all cash to a marginal mine (at this stage marginal- reserve upgrades will improve the return) is a risk.

I also bought in because the esg exposure acted as a hedge bet with the gas sector. As it turned out the SP was diluted that much that the sale of esg simply restored the value lost and now I am back to square one and hoping (yes it is now turned to hope) that esg is taken over for a princely sum and HGO receive a large top up. If that occurs, finance repayed (or not initiated depending on timing), Kanmantoo fully funded, exploration ramped up in other leases and full steam ahead to realise the boards vision.

I say "hope" because time is running out and the circumstances we find ESG in now could not have been factored in HGO's timing for the ESG takeover. I fear that time has run its course and all is lost. HGO did not mention the potential top up in their recent quarterly. I think this is the first time that it has not been mentioned.

I am now banking on an improving resource in K area as I have always believed the area is rich with resource and current exploration methods will find it. HGO have many other irons in the fire which I hope at least a couple will hit the jackpot.