Ann: Quarterly Activities Report, page-27

To describe this quarterly In a couple of words, I'd say VERY disappointing. These guys certainly know how to over promise and under deliver. With regards to mining activities, the information provided thus far IMO suggests that management's forecasting and planning skills are not up to scratch to effectively manage three mines, let alone one. Below are a few of examples of complete and utter incompetence IMO:

1. 'Following blasting, considerable time has been lost waiting for the clearing of blasting gases to allow personnel to re-enter the working areas. This issue is being resolved with the installation of ventilation fans and ducting, which should considerably reduce the work cycle time for drill and blast activities.'

Seriously? Forgive me if this is not new news but one has to ask the question as to why ventilation fans and ducting weren't installed in the first place? This is the sort of mistake that only amateurs make in the mining game. Sorry Zeff, but there are no excuses for poor mine planning.

2. 'Material movement is currently hampered due to the long tramming distance from the stope drawpoints and the surface using only small capacity scoops. This problem is being addressed and the Company intends on purchasing suitably sized haulage trucks to enhance material movement at the El Roble Project.'

So during the planning phase they didn't foresee basic observations like tramming distances and small capacity scoops hampering material movement?  Again, no excuses for poor planning.

3. 'First revenues from the delivery of material were received during the quarter with payment received for the first 270 tonnes of material which returned an average grade of 2.52% Cu.'

They're taking the Michael out of us right? Go back to Zeff's interview with BRR back in July when he stated 'I guess the Panga experience was with other permits required and everything we'd be able to smooth out some of those bumps and timeframes also. So what we'd like to see is somewhere around getting up over 5000 tonne a month by probably September/October time I'd like to see that.'

Even after the company's subsequent 'shock' revision in August to 1000 tonnes for July-Sept I wrote (on 27th August)..... 'It appears that what he'd like to see and what we're going to get are two vastly different numbers. Even if Paraguay were approved in the next 4 days i.e. by end of August, based on Panga's current rate of production I have doubts whether they'd be in a position to extract much more than say 150 tonnes per week from Paraguay in September. That gives us a total across the two mines of @1600 tonnes in 10 weeks (from mid July until end September). I'd expect that to increase to between 1500-2000 tonnes in October (4 weeks) but 5000 tonnes?? Zeff, I think you need to be a little more realistic when giving interviews (stop smoking that Chilean weed) or has there been some issues at Panga that you haven't told us about yet?'

My since imagined response...'yes actually there has been some issues Elpha, but we didn't want to discuss these with shareholders because it's easier to hide such embarrassing news in the middle of a long report many weeks later!' :-()

And in terms of revenue for the quarter, it appears that even my lowball forecasts were too optimistic. Out of the 1200 tonnes of copper bearing material mined for the quarter, they so far have received revenue for only 22.5% of the total, and at the lower end of their previously estimated average grade. This is totally unacceptable based on the previous estimates provided. Simply not good enough guys.

After this quarterly I completely understand why the share price is where it is and why I believe it will continue to move lower for some time. A shame because the strategy as a whole has potential but I'M OUT until I see signs that management are actually getting their act together, if they are at all capable.