Dear Mr Carland, To date shareholders have invested over $150...

Dear Mr Carland,

To date shareholders have invested over $150 million advancing the Hillside Project to completion of a Bankable Feasibility Study. I understand this to be a comprehensive study in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors have been considered in sufficient detail that it could reasonably serve as the basis for a final decision by a financial institution to finance the development of Hillside for production.

Back in July 2011, RXM’s scoping study recognised that a staged development of the project was not that attractive due to the high capital intensity for a 7.5-9 mt/annum scale operation (and presumably a low IRR and long payback) and consequently the share price fell off a cliff. In October 2011 RXM return to the 15mt/annum case for the pre-feasibility study and since then we have been going through the motions of advancing the project to completion of a BFS when suddenly today without prior notice we are advised in vague terms that “studies have identified other options that the Company believes should be investigated” and “The potential for a smaller-scale start-up operation is among these options, and the Rex Board believes it is in the best interests of all shareholders to broaden the scope of the Feasibility Study into an Extended Feasibility Study, and include these alternate development options.”

While I don’t profess to be an expert in this field, common sense dictates to me that for such a big, low grade deposit in this copper price environment, a large operation is the only way to deliver the requisite economies of scale and therefore an acceptable IRR and payback to the financiers. While a smaller scale operation may provide less financing risk to RXM, it certainly adds credit risk to the financiers (if they are at all interested) and could leave us in a less advantageous position.

RXM is sitting on around $20 million cash and I would be horrified to see that sunk into more studies without the appropriate justification to shareholders, particularly at the rate RXM has been burning cash in recent quarters. So please take my advice and park the BFS for the time being and dedicate your shareholders precious remaining funds to looking for a partner as well as making the project more attractive by assessing other potential value-add copper resource opportunities on offer in your neighbourhood from the large stable of cash strapped junior explorers .

Yours sincerely
Disillusioned shareholder