broker update

I have just received UBS Investment Research's view on the PFS.

They have downgraded from buy to neutral with a price target of A$ 0.35 from 0.88.

Main reason for the downgrade: In UBS view the long term average CU price should be around 2.55 US$/lb and therefore the economics of the project in their view are unfavourable.

However they admit that the study is preliminary and likely to be optimised with further technical work ongoing.

UBS also believes thec ompany should divest its remaining stake in Perkoa to avoid being diluted further. Personally I do not think that it is a good idea to sell Perkoa. However this might be a strategic option at some time in the future. Probably not today.

They also point out that given some of the high grade drilling results, its hard to fathom how there wasn't a more economic mine schedule.

To the latter I have my own opinion: I think that this is tactics. Main aim of the PFS was to keep the deadlines (Mining licence) and therefore the outcome is rather on the conservative side this with the aim to give the new MD the possibility to enhance the economics. Scott = job done. New MD = show what you are able to do.

So overall a rather disappointing update. Would be interesting to see further assessment from other brokers/analysts.

I guess in the light of this update (released today 11th) it is pretty clear why we do not see any kind of recovery for the time beeing.

I will take a wait and see approach for the results from the project optimisation program. Waiting for the results of the pending drilling results (KITDD_034 etc.)which might be very interesting. See what happens at Perkoa (solution for the A$9m additional working capital requirements). Waiting also for the announcement of the new MD (which I hope might have a interesting background).

The drilling that have commenced at other 3 targets at Kitumba will not deliver results before December/January - in addition I have the feeling that we (and BTR) will need quite a large portion of luck to hit some kind of high grade core (if there is one) with the 1st drilling. But you never now.

So again approx. 3-6 "blackbox" months with a lot of exciting or frightening potential ahead.