Ann: Update on Hammer Mill 3 Commissioning, page-106

Good post Jimone - can always rely on you to see the big picture & be a voice of reason.

Last month, with the shares at 12/13c every man & his dog was bullish & very few folk were considering the commissioning risk, but I remember you were sceptical that all was well, because of the delay in releasing the HM3 numbers.....good call.

Fast forward to today & there is widespread disappointment & dissing on management, due to not entirely unreasonable teething troubles.

My view is that today's update is not a disaster...a disappointment for sure for those who were projecting wildly unrealistic production targets but there's nothing in today's news which suggests that the turnaround is totally derailed.

I'm prepared to wait & let events unfold further, because it seems to me the stock is still replete with potential:

Operations

* HM3 commissioning is expected to be completed by the end of April. They will process 5,428t of a blend of low, medium and high grade ores and development material currently on the pad and another 1,041t of mainly high-grade ore which is underground awaiting haulage. HM3 will be run at 50% capacity (25t per hour) until commissioning irons out some of the equipment breakdowns in other parts of the gravity mill, which again should be overcome before the end of April.

* Level 5 Mestre was reached on 10 April with a vein that appears to range between 0.5 and 2.5 metres. So far Orinoco has mined 25 metres of this lobe, HM2 processed 4t of this material in mid-April and returned an average grade of 26.4 g/t of recovered gold. This bodes well for HM3

* HM3 - May expected to be the first full month of commercial production utilising run of mine ore, I'm not sure whether this is the 6.4mt referred to above but this is what the mkt will now be focusing on. lets see what the oz & grade is like then.

* HM4 is expected to arrive at Cascavel in May (OK its 3 weeks later due the slower runup of HM3). A diesel generated machine so that there is the option to locate it at the tailings from time to time - Orinoco believes that the tailings will be an important source of production material this year. A logical decision.

Exploration

* Drilling along strike and down dip at Cascavel and Cuca will commence in mid-May.

* Results from the first 3 holes at Antenna (8 kilometres to the south of Cascavel) should be returned from the lab (ALS) later this week & be reported next week.

* The Cobalt rock chip sampling at Tintiero (2 kilometres west of Cascavel) are expected to the be returned from ALS early next week and will be announced soon after.

* Eliseo’s initial pit sampling programme will also be announced before the end of this month.

* Drilling at Sertão (25 kilometres south of Cascavel) is likely to commence in late May. Work at Sertão will focus on both the in-pit optimisation study and down dip mineralisation. Management is currently assessing the option to restart Sertão in the existing pit alongside the potential Antenna restart.


In summary plenty of opportunity for good news to re-ignite a rally.