Painful day!Listened to the * interview with the CEO...

Painful day!

Listened to the * interview with the CEO justifying the $20M raise.

It is well documented they got the ramp up painfully wrong and it consumed more capex than envisaged and allocated. In the interview he states from this new CR, capex for mill (tailings line) and Sandking prestrip are relatively minor, stability in the plant is done essentially.

I understand the bulk of CR is all about exploration now. OBM is a break even project (+/-) with current AUD gold prices with current grades and operating conditions, is the way I interpret his comments.

From the interview I think he is saying that without exploration success (superior grades, lower strip ratios, better recoveries etc to the current) we have a 5 year life at 'break even' at these gold prices and operating conditions.

So I interpret the management and the major shareholder are backing themselves with this CR to find an ore reserve that supports a positive cashflow operation and $20M (minus some leakage for other purposes) isn't a lot to achieve this, understanding that there are no obvious well advanced targets that have been highlighted in their communication? Hopefully they are keeping that up their sleeves?

As painful as this to me personally, Hawkes Capital are funding an exploration program to keep OBM alive and I understand the rationale for the 35% equity discount as they are effectively acting as a 'lender of last resort'. However I am not thrilled at the hit I am suffering.

Obvious risks;
- gold price falls in AUD term CR used for WC rather than exploration;
- no exploration success or disappointing grades- cash burn doesn't warrant the results achieved;
- current mining and processing are not really in steady state.

Anyways I think this is going to be a long & painful process so lets see how it goes. Easy to blame the management but mother nature can be a very challenging master.