sydney presentation wed 7th may, page-2

Hi Chuckey, yes I was at the RIU conference. Tuesday I had a long chat with the IR manager, John Ross. Later in the day I had a three-hour conversation with Mark Lynch. Here are some recollections of what was said. Suffice to say I am most positive about CTO’s prospects (and reassured being a new shareholder).

1) The 100k pa rate target by end of 2008 which ML said was once achievable evaporated when the power delay from Q108 to Q208 occurred. However, as of Tuesday the trebling of power is still expected by end of June. Lack of power has severely restricted progress in the past 12 months and this is the prime reason for shareholder frustration.

2) Splitting of the vein as reported in the Q1 quarterly is of no concern to ML whatsoever. They know such splits exist and occur over a small percentage of the reef. They have no adverse consequence moving forward. Although the waste was trucked to surface in Q1, ore sorting will allow it to remain underground in future.

3) Using Q1 results to forecast future production rates based on trebling of power (as has been attempted on HC) shouldn’t be done. Production simply wasn’t higher because the mining team decided to continue vertical development instead of stoping one of the open faces. Focus on the vertical continues because they need a sufficient number of stoping areas (open faces) to maintain steady production once production begins in earnest. 24 / 7 working time (which is coming) would have helped the Q1 production figure but not so more power. All according to JR.

4) Think of the vertical development as occurring in 2D (like on a sheet of paper). This is very slow going and the underground room is tight (“tripping over themselves”). With horizontal development comes lateral opening up of the mine in 3D and capacity to produce high grade ore (14 g/t) using the extra power and space available to move equipment around. Horizontal development is fast compared with vertical.

5) In percentage terms, JR expects solid and consistent production growth from Q1 to Q2, Q2 to Q3 and Q3 to Q4 for the rest of the year. So in absolute quantities, a modest rise in Q2 followed by much healthier numbers in the second half of 2008.

6) ML expects reserve increases to also re-rate the share price. A significant upgrade before end of 2008 will be announced using existing drill results and those still to come. In his speech, ML restated the 1m oz reserve target by end of 2008 and 2m oz target by end of 2009.

7) ML was keen to stress to me that they are a frugal company. The cash tin has always been low. A small cap-raising similar to prior years will probably be needed. He is also considering a much larger debt facility to expedite Warrior production (opening up a number of tunnels simultaneously etc) and Sunburst development. Maybe $30m this yr. The company assets would likely be used to securitise the loan so no forward selling of gold required. The loan is an option and is not essential because they could still meet targets - just more slowly using cash flow.

8) ML is very upbeat about the convergence of the new technologies, power upgrade, increased working times and the nature / their understanding of the geology. He knows they are very close to delivering and he was very excited, which makes me excited. For me personally, the stock price today is a steal and they are nearing launch into orbit (within next 6-12 months is my guess). Long-term buy to say the least.

And one final thing. When the beers started to flow at 6.00 o'clock, ML grabs an orange juice and keeps on talking. He is passionate and focussed. Everything's gonna work out fine my fellow CTO'ers!