I have new hope!I attended the EGM and was blown away by the new...

I have new hope!

I attended the EGM and was blown away by the new board. Hugh Callaghan, Non Executive Chairman, impressed me especially, but also Michael Fisher MD seems very good.

Hugh held no bones about the fact that the previous board had failed in delivering, on multiple occasions.

All the money raised to progress the project had been used to prop up a negative working capital. The market lost faith due to repeated attempts and failures to deliver.

I do believe that this has now changed. The new board will deliver. Of this I have no doubt.

A major focus at the moment is creating a reserve. 3000 of a planned 20000 metres have been drilled, at Cinabrio. The remaining 17,000 will be drilled over the next 9 months. This time may be shorter or longer depending on rig availability.

Another resource statement is due this quarter.

A new mining plan is due Q1 2007. These guys do things by the book and have very clear ideas about how to achieve success.

Hugh's mantra from his days at Rio is 'Create Reserve, Mining Plan, Budget, Execution, Follow Up and Account for Result'.

A new SSX plan is currently being discussed and seems very likely to get a go ahead. 6 Month pay back time.

Hugh and the other new members of the SMO board are men of experience with much larger companies and projects and the challenges faced to date by SMO to lift of the ground now seem insignificant in the hands of these 'Mining Professionals'.

They now have 3 consecutive quarters of improvement, including the current quarter which will be reported on this month, to build on. As Hugh said "The market will only recognise continued delivery of promises".

One question from the floor asked about the name - SMC Gold, not reflecting the current business. The board has already thought of this and are announcing a name change in 2 weks time.

There are a number of positives I can report from the EGM;

Morale amongst staff in Chile has undergone somewaht of a metamorphosis. Since the local management is now given more input and responsibility they have improved results dramatically. This in turn inpacts positively the fine tuning of plant operations.

The output and recovery are constantly improving. Recovery is currently 72% and is moving towards 80+%, when increasing output to 1250tpd (Dec 06).

September output is 910tpd and will be 1250tpd by Dec 2006. Scoping of further expansion to 2500tpd is commencing in Dec2006.

A new regrind mill is being deliverd end of January 2007.

Plant expansion is on budget and time !!

Here is the beautiful bit - The expansion to 2500tpd will be done with no extra fixed costs, which means all money will hit the botttom line - read profit.

Another possible earner is to extract the copper from the tailing dams, which hold approx .6% Cu.

The current Smelter Costs, which are in place until Feb 07, will be re-negotiated to be on par with industry norm, which means a reduction of 9 cents per pound of Cu.

Charters Tower - they are considering a number of options. Announcement to come this Quarter.

Other projects were mentioned but no details given other than to say that some very prospective ground was being considered at a very low cost.

A fair bit of discussion about the share package for Hugh. In short Hugh has gone from a 300,000K pa + bonuses and share options not taken up to a nil salary and shares in stead. on top of this Hugh has recently bough 2.7Million (or more) shares in the market. He obviously believes this company will succeed.

We were told that Punitaqui means "Roads of Gold".

I believe them now. This share price will go north or I am a clown.

Cheers,
IHS