As discussed, there are two issues facing HGO at the moment:-...

As discussed, there are two issues facing HGO at the moment:

- The ambit claim for $10m from a contractor
- The delay to the commisisoning at Kanmantoo

The first issue - the claim from the contractor - concerns me less than the second. For one, HGO will probably not have to cough up the whole $10m. And besides, the $10m is still sitting in HGO's back account. We have the money, the contractor doesn't and has to try to claim it. Their problem more so than ours.

The second issue, related to the first, is somewhat more concerning. As also discussed, HGO incurs extra expenditure mining now while there is a delay to the processing and shipping of the ore at the back end. HGO has extra stockpiles of ore ready to go through the mill. The extra costs are borne now but will be recouped later. So this is an issue of cashflow, not of profitability. But cashflow is all important, particularly at this stage in the company's life.

TACKLE THE ISSUE HEAD ON, DON'T LIMP ALONG...

Cash is going to be very tight for next 6 months. HGO can do one of two things - belt tightening and reduce discretionary expenditure on things like exploration, OR, bite the bullet and raise more cash to fund operations and maintain exploration.

IMO, HGO should just bite the bullet and quickly raise more cash via a private placement. Yes, they can limp along, counting the pennies, for the next 6 months as the mill ramps up and the cash starts flowing in. But in doing so, a cloud will continue to hang over the company. In a weak market, investors don't like piling more money into companies whose cash position is low and there is the threat of further capital raisings. And there are always predators who would love to snatch a new copper producer who is having problems...

I don't have access to HGO's cashflow budgets, so cannot comment with absolute authority. However, if in doubt, raise the money. Raise it quickly and early, rather than limp along and create more uncertainty and doubt. Because, if some other unforeseen hiccup should occur, a later capital raising would be at an even lower price and cause even more dilution.

Sometimes, you have to act quickly and bite the bullet. I sincerely hope HGO does this so the comapny can rapidly move forward.

Yaq