Many thanks for your query. As I have said repeatedly, the...

Many thanks for your query. As I have said repeatedly, the primary focus of the company at the moment is the development of it's Penumbra mine. This is being developed at a cost of ZAR284m and through the availability of debt funding. The completion of this development later in the year should provide a strong platform for the company to develop it's portfolio of assets through operating cash-flow and further debt funding.

It is the ongoing strategy of the company to develop it's assets through such debt funding be it through conventional project finance, corporate debt funding or through prepayment structures such as the EDF Trading facility The assets we have are largely advanced sufficiently enough to support debt funding and the robust economics they demonstrate provide the necessary comfort to lenders who are specialists in debt funding. We have successfully negotiated several debt and convertible debt facilities already and these have been on quite attractive and flexible terms. Management have numerous years in mining finance and as you may know I have been involved in mining finance for a significant number of African mining projects for major investment banks such as Rothschild, Investec and Dresdner Kleinwort Benson.

In addition to developing our existing portfolio we are continually assessing new project opportunities - it would be remiss of us not too as at all times we must be looking to add shareholder value by whatever means possible. Let's face it if we didn't do this we would not have the Mashala assets now. However for us to proceed and acquire an additional asset or company, it must be quite exceptional and add significant value and i mean quite exceptional - we are not here to just do deals for the sake of it. As you are aware BHP is divesting a number of assets in South Africa, 12 in fact, and whilst we have strong support from the UK institutions to raise additional capital which could possible be used to acquit all of them, there are possible only a very limited number of these assets that are of interest (located adjacent to our own operations) and these we feel could readily be funded by a large degree of debt funding

Furthermore the type of assets that we are looking at are operating assets, with major infrastructure and substantial resources. These are one that would be funded by a combination of debt and equity with the majority (approx 70%) funded by debt. Thereby substantially reducing the impact of dilution through any potential capital raisings ie in very rough terms a $120m acquisition would add more than 50% in value to the company (if acquired at fair value) and would only potentially lead to dilution of 10-15% to existing shareholders.

So as you can see the focus will continue be to successfully develop the existing assets and in particular Penumbra and deliver on what we have promised shareholders. At the same time we will only look to the equity markets to support acquisitions of stand out projects and then only to top up the costs which can not be funded by equity.

Trust that this assists and answers your query

If you would like to discuss further please email me.

Thanks



Jason