report, page-10

Boyle, Hawker, I love your optimism in relation to MSC however what has the company the company hasn't done anything to justify this.

The plant has been in operation for years now and is still not covering costs or generating revenue.

While things like Cominco, CCG, the rights issue etc will generate some short term cash inflow, the simple fact remains that all this will be eaten up by Skardon River over the next 6-12 months.

If no big order eventuates in that time all this cash will be spent and in 12 months when the new debenture redemption date comes around we will be sitting here having the same discussion.

Take a look at the Cash Flow from Operations number - this was NEGATIVE $11.5 in 2005 & 2006. Taking out finance & interest costs this number comes to $8m.

This means MSC spent $8m each year over the past two years and they generated less than $1m each year in year in kaolin sales.

Where is the "big order" that has been promised by Vic for years?

This company is starting to remind me of the movie Groundhog Day, ie, they keep repeating the same pattern:

1. Make promises to the market
2. Fail to meet those promises
3. Suffer a cash shortfall
4. Issue shares to fund this cash shortfall

and so it goes on ..............................................