tax will not greatly affect the small fry., page-6

Hi Aber,

If the proposed change can pass the upper house/senate, it will take 2 years to become in operation.

On the positive side, the new proposed RSPT (Resource Super Profit tax) has no impact on the overseas Bobrikovo gold project and has minimal impact on the Western Australia Melrose gold project due to accumulated tax loss, CAPEX, and the new proposed exploration rebate (part of RSPT).

Often the share market listed minnow resource companies do not turn a profit and under the current tax system, these junior explorers are unable to claim tax benefits for their exploration expenses until they start to turn profit. This put the smaller companies at a competitive disadvantage to the major, diversified companies that were the best poised to conduct exploration because of the tax system. The new rebate forecast will change this and will cost A$1.1 billion in two years after start in 2012-2013 and will apply at company tax rate. For further details, refer to page 8, "small explorers to benefit from expenses rebate" Australian Financial Review, 3rd May, 2010. This will be a big change to all explorers.

In the mean time, wait for the good news within one or two weeks such as the following to name a few:

* The gold price is moving higher and has passed the previous record high (about US$1234/oz). So the outlook for gold IPOs look better and it is a matter of "when it will proceed" rather than "if it will proceed"

* The notice of EGM (extra-ordinary General Meeting) for in specie distribution of shares for the new gold IPOs.

* The upgrade of Melrose gold resource that will add value to the IPO (A$4 to 5 millions to be raised)

* The two most recently listed gold /resource IPOs are still doing well. VKA/Viking Ashanti gold (26.6 million new shares 30c with priority to RSG /resolute share holders), listed 10 May 2010 still above issue price and trading 34c today and Hot Chilli /ASX code HCH, (issued at 20c, uranium, copper and gold advanced explorer with NO JORC resources yet in West Africa) listed on 4 May 2010, is still doing very well, "very hot indeed" =): and today at traded 28c. It shows that with Good underwriter/ lead manager and Institution support, a small company can still do well even under most recent correction (PIGS debt issue).

* The exact ratio of the free distribution (currently the range is for 1 KOR shares to get free 1.3 shares in Melrose shares and 1.3 shares Bobrikovo shares).

* The majority of top share-holders endorsement of voting for "yes" before the EGM date (similar case to UAU free distribution)

* The possibility of a Joint Venture for Winchester MgO project. Korab is currently in negotiations with a syndicate of financiers, builders, building materials suppliers and providers of pre-fabricated housing with regard to the development of the project
as supplier of MgO-based products. For further details, refer to the last two quartely reports.


* The possibility of monetisation of Geolsec Project (eg 5% stake for A$500k to A$1 million). For further details, refer to the last quarterly.

As always, DYOR.