monty!

Hi guys,

We all know that the specie side of the market is dead but this is ridiculous.

What a great announcement!

18m at 10% zinc equivalent and 7m at 15% zinc equivalent and 2m at 17% zinc equivalent in the other holes reported is EXCELLENT!

I can't understand why the market gives us nothing at all for it.

Here are few keys to understanding the Monty Project:

· Monty overall grade = 7.5% zinc equivalent (with lead, copper and silver credits added). I have added 1% for silver even thou it's not yet in the current JORC but based on the last few holes we know that it will be in the new JORC.

· 7.5% Zn equivalent = (0.075*$2,050) = $155/t x 0.75 (typical recovery) x 0.75 (post-smelter credit) = $87/t net revenue (as may be expected)

· Cost of production in Montenegro = $50/t (based on my discussion with our geo at the last AGM), much lower than in Australia!

· Operating Margin per tonne = $37/t

· Annual production = 500,000tpa of ore (as expected)

· Annual Op Margin = $18.5m

· Likely additional margin to this in year one for high grade silver, but this Op Margin may typically run for 10 year mine life = $185m = pretty good return for a $2m cost to date (80% drilling) and likely $40m for 500,000tpa plant.

· Lots of potential for longer mine life with additional drilling, so mine life may be longer and overall returns higher.

· In comparison, an Australian zinc producer would have typical costs of production around $90/t-$100/t and thus the entire project would be worth very little!

· It is all about margin! Break even point in Montenegro is about 3.5% and we make 3.5% margin – break even in Australia would be about 7.5%.
If we could add a further 3.5% margin to that and report a 11-12% zinc equivalent we’d be hailed as heroes, although the margin would be exactly the same!

So it's all about the MARGIN!

The sooner everyone understands it the better for all of us.

In the meantime, the current SP has created a perfect opportunity to top up as I doubt that we will be at this level in January.

We've gone down on a very low volume and a lack of buyers so as soon as the buyers return (after the New Year) the SP will shoot up.

All the best.