A surprise outcome of my attempts to discuss Mark Lynch's...

A surprise outcome of my attempts to discuss Mark Lynch's threats was a call from Chairman John Foley on the eve of the GM.

He even followed up with an email in reply to mine 'Subject: RE: Time to discuss GM & admit errors FW: Private & Confidential - Concerns Notice - Our client: Mark Lynch', copied to my email recipients. I did the same with my reply. Here is our exchange:

Dear Mr Foley

First of all thanks for replying and copying others. As my interest has always been that investors, particularly fellow Citigold shareholders like you, are informed of facts relevant to our company's compliance with the JORC Code and hence ASX listing, I will do the same.

Second I remind you of our discussion of the simple example of omissions of mined grades from many ASX published reports, including the May 2012 Mineral Resources and Reserves report by Mr Towsey. As reported on my report lodged on 6 September: Gold grades mined from the Imperial Mine [2007-2011] to produce the reported 57,000 ounces on page 5, are conspicuous omissions from Table 6.1 on page 27 of the report. we discussed earlier omissions such as gold grades mined from the Imperial Mine in 2009 and 2011 and I contrasted them with published Imperial gold grade of 4.4 g/t in 2010. You agreed and said you would investigate.

Third, I also pointed out that, in terms of the JORC Code, there was nothing to investigate. As you have known since at least the 2010 AGM, it defines materiality by “a Public Report contains all the relevant information which investors and their professional advisers would reasonably require, and reasonably expect to find in the report, for the purpose of making a reasoned and balanced judgement ….”. We agreed that, as a shareholder, you yourself reasonably expect to find mined grades in reports. Even you may have been misled by all those omissions! If you genuinely intend to investigate omissions of mined gold grades, start with Mr Towsey's 2012 Mineral Resources and Reserves report. Start with Table 6.1 on page 27 then go to Table 9.1 on page 38. Then investigate the omission of such tables showing mined grades.

Any defamation proceedings against me by the CEO do not alter the above clear evidence that our company's published claim to comply with the JORC Code and hence ASX listing rules, is false. If any thing they are evidence of another attempt by Mark Lynch to intimidate me.

You said you want an orderly GM and so do I. That is why I wrote the emails to you on Wednesday and Thursday. The latter [We still need to talk, preferably ahead of GM] encouraged you to hand chairing to a less conflicted director such as Kim Koh or Gunjan Goel. I added that you should first discuss this with Mark and encourage him to admit his compounded errors. I concluded with these options for discussion at the GM before you and your board colleagues:
1. Admit that there is relevant evidence that the company's ASX published announcements have included several, like the May 2012 Mineral Resources and Reserves report by Mr Towsey, and others as outlined in the appendix to my report to the GM, that were not JORC compliant;
2. Adjourn the GM until material errors in Mr Towsey's report have been corrected;
3. Request an ASX trading halt until a JORC compliant resources &/or reserves estimates can be announced;
4. Temporarily relieve Mr Lynch as CEO and Mr White as SSE. These could be tempory internal promotions or external contractors, pending outcomes of the resources &/or reserves estimation process. [The cost reduction of relieving Messrs Lynch and Mr White should largely cover the cost of their replacement.]

Finally, as an experienced lawyer you understand better than your colleagues that after my repeated warnings, refusal to act on option 1 would on the balance of probabilities, be evidence of all directors' intentions to continue the abuse of the JORC Code.

Yours faithfully

James Stewart

This was in reply to the Chairman's:

Dear Mr. Stewart,
I confirm my telephone conversation with you today. I rang you to tell you that your claims have been fully investigated and have been found to be without substance. As you know defamation proceedings have begun. A firm of solicitors have written to you to give you the opportunity to withdraw these remarks which the letter says are defamatory.
As the chairman I of the company, I will always listen to matters legitimately raised by our shareholders, and that includes you.

Yours faithfully,

John Foley.