Ann: Resources Rising Stars Presentation , page-49

Why do you think it is a bad idea to have two Ansteel members n the board? I am personally think it makes lots of sense and helped with our funding. Ansteel own 36% what % do you own?

It is very possible without Ansteel we would be in liquidation (i.e. equity = 0). Asking for a bigger stake in Karara is only fair since they are providing liquidity.

I however think it is not prudent to expand projects outside of Karara at this point. We have no means of funding these arrangements. If we get a partner what % will they take. My two cents, noting I am not part of the company would recommend the following:

1) Focus on getting Karara cash flow positive
2) Once we proved it is CF positive expand to phase two 16mt, assuming it makes financial sense
3) Sell the business getting value for the projects that have not yet begun.

Now you and management may say why would we do that, well someone else can do it with a lower WACC. Now the CFO might say what do you mean a lower WACC we have 1.8bn in debt at a very low interest rate. I would say interesting point, but the value of future projects will rely on future funding, can you expand on your debt position probably not. So your future projects will be at an Equity discount rate for a small cap company that is extremely high, get it?

Let someone who can use a feasible balance sheet utilize future assets. If you say they want a discount, I say take it. You say well we want to build a bigger company I say stop making academics look good with their definition of agency theory.

Now let me also say congrats to management on achieving what they have done. I am grateful for their ability to keep this project going, but I feel very strongly on the profitable future of this company.

BTW is anyone as scared as I am when a company says the project is profitable at current iron ore prices!!! Maybe it is because I am not part of the resource industry but I would of used a long term average or a discount to current prices before I consider a project profitable (yikes!).