Ann: Quarterly activities report , page-13

I have to laugh speculator, as the ramp up phase has become a joke. The 3Q commentary was as I expected. What is more concerning is the Q4 commentary. In saying that the following are important take-outs:

1. Plant Equipment; crusher broken. Fixed by end of month (Oct).

2. Plant Equipment; crusher teeth insufficient. Fixed by month end introducing another crusher (jaw) in the plant circuit.

3. Pump failure; fixed sometime in Oct.

This all means Oct was a write-off. But it was indicates that there should be no further issues to enable good production during Nov-Dec.

There was 5Mill at Q3 end. Sprout was drawn down after costs (7.85Mill) on the 4/10 - as reported. The natural conclusion is that we have 13Mill in the bank. The est outflow for Q4 was 17Mill. This means we burnt through roughly 5.6Mill. The implied current cash position is therefore 13Mill-5.6Mill=$7.3Mill. If I were the company I would be thinking CR (obviously current issues were unforeseen).

There is no doubt they could get by without one, but it is dependant on a smooth November-December. This is the key question, are there any impediments to ramp-up in November. Their operationing models should be able to forecasts cash requirements - if there is too big a difficency then there will be some form of financing arrangement.

I will contact CJ today and report back.