questions 1st june 2012, page-31

Supertim asks:

"OK Tony on a slightly more serious note..

Can you give me at a high level your thoughts on the following;

- where do YOU see the largest risks are for PLV? Both controllable and uncontrollable?

- what is the financial criteria for success?

- have Timeone/SS&T spoken much to PLV about the EU debt crisis and its potential impacts to Chinese economy? ie. Would Greece defaulting (and the contagion it would cause) be a game changer for obtaining Chinese finance? (I do take comfort in the IO 62.5% spot price turning positively in the last few days to $134/tonne = $165/tonne for PLV, add a declining dollar and we are still at AUD$170/tonne for PLV at today's prices!)

- I think BDO have valued Cockatoo at ~$11million in the report. From the Dec 23rd 2011 announcement is a fair assumption that the revenue PLV can expect from stage 4 (1.2MT) mining be around ~$AUD50million?

cheers
SuperTim"

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My reply:

Largest risks I see for PLV from a controllable point of view is getting Irvine up on time and on budget. This is taking a lot of PLV staff's time. The environmental process takes a long time, and we need to get the capital cost estimate down by a large margin.

Also for Cockatoo we need to make sure we caputre the upsides. If Cockatoo can only produce from stage 4 then it is still a good purchase however we will miss big opportunities to continue cashflow after stage 4.

Im confident we have the above in hand.

Uncontrollable risks? Well the whole market is one for sure. We have to live on limited cashflow until we start earning our own. Capital raisings are a necessity for non-producing juniors but in this market they are highly dilutive and even difficult to get away.

China is obviously a big risk but our partners Timeone/SS&T are a lot more bullish on their economy that comentators. They point out that iron ore prices remain strong even in these ordinary times.

Our partners believe the Chinese Government has plenty of fire power available to it if it needs to use it.

As you pont out above the iron ore price is still healthy, and the declining dollar only helps this in $A terms.

I also would expect our share of net revenue to be around the $50m plus mark. Obviously depends on iron ore prices.

Cheers, Tony.