to the board and especially opaline, page-15

Thank you for taking the time to post eatingapple and I pleased to respont to a few of the issue you raise.

Firstly HEGOB risk: Options by their nature are higher risk instruments than the underlying shares. My own investment is all free carried and a quantum I can afford to lose. I would not put the price of a new car on HEGOB unless we are talking about a Tonka car. I'm pleased to read of your successful exit.

HEGOB expiry is less than seven weeks away and they will cease trading in about five and a half weeks. Current buoyancy in the options is a measure of market confidence in the underlying security. I expect volatiity in HEGOB prices over coming weeks as demand fluctuates in response to HEG announcements. I do not KNOW what announcements may be made. Last week I made a series of predictions about what news COULD be released. Please read the disclaimer I made right at the start of the thread.

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Secondly disclaimers: I think it's a bit arrogant to quote my own post but I'll do it anyway. This is my disclaimer from 12 months ago."I have been thinking about this question, mindful about just how easy it can be to get these kinds of predictions wrong."

The question was posed by vast524 and was asking for predictions of HEG prices in three to six months. Before the six months was up, we had the financial meltdown. I didn't see it coming along with most of the rest of the international investing public but no excuses. I didn't see it coming.

Closer to "home", in fact right at Hill End the company was mining gold and investigating at the same time. The word they use is "scoping" and its still hapening. The company is conducting mining operations with the twin purposes of extracting gold but also investigating the economics of a larger operation. They are digging between three and five times as much space in the mine as they actually need to extract the gold. This extra space is allowing them to identify if a larger mine will be economic. The decision could come at any time.

Digging, "developing" the extra space costs money to do, takes time away from extracting ore, and produces large volumes of low grade ore. These three factors work together, increasing costs and decreasing the amount of gold mined. In the short term this means negative cash flow but it MAY mean a bonanza over the longer term.

Provided the scoping studies justify a larger scale operation, we can expect HEG to go on to bigger and better things. A larger mine will bring increasing production and decreasing unit costs. !2 months ago my expectation was that the scoping operation would add less to the costs and be less restrictive on the mining of high grade ore. I was wrong but the scoping operation may be giving the company a brighter future so I don't feel too bad about it.

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Thirdly Paxtons ore grade: The current stoping operation on Paxtons is complete. Twelve months ago, I made some assumptions about grade and came up with a figure of 40gpt. Not sure how I'm going with this one. There's plenty of Paxtons left to mine. I've stood on a floor of this vein set where it is running at 300gpt undiluted and about 120gpt diluted but we could do with some updated figures on average grade and tonnage mined from this orebody. I'll see what I can find out.

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Plant capacity: I estimated 80tpd and current output is 90tpd or thereabouts. I'll give myself credit for that one.

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Thank you for your interest in posting to this thread eatingapple. Contrarians encourage us to take a good hard look at our assumptions. This improves our chances of getting things right and making a few more $$$.