Laser Yes - On hindsight maybe I was too cautious. So herewith...

Laser Yes - On hindsight maybe I was too cautious. So herewith the correspondence. I must say as an experienced project manager I would be MOST surprised if they achieved production Q1 - Q2 2006. But then its hard to know without being close to the action.
Westmoon -Like you I have substituted my nick.


....The March Quarterly Report stated production from Batchelor Oxides during 2006. If such is the case it will be an excellent achievement. I am concerned however that you will not be able to do this with a resulting negative reaction to the share price. My reasons are as follows:
1. Use of second hand plant and equipment (crushing, grinding, solvent extraction etc)
Because of the heightened present mining activity in Australia it is likely that other companies also seek such equipment and it may be difficult to obtain ALL you need in this way. The option to order new plant will be more expensive with much longer lead times. (?)
Question 1. Have you actually located such items and are able to "reserve" it somehow? If not what are you able to do?
2. Lack of adequate utility power supplies.
If you are not able to purchase electricity from the grid the same comments as above apply. This also implies you will need to instal a diesel power station which may cost A$5 - $10 million for say 5-10 Mw. (?) (I understand Compass has cash funds about $4 million)
Question 2. Will you be able to enjoy grid power ? If not, What to do and how and when?
3. Ongoing drilling program plus infrastructure.
I believe you intend to progress this work before financing is arranged. You will benefit with Resource reserves information and the present dry season. This of course is the intelligent thing to do but it begs the Question 3. of how it will be paid for ? (Roads, Drainage, Hard standing, Foundations, Sheds, Water and Power supply, plus Drilling, Assays, Consultants, Salaries etc.
4. Formal approvals.
It would be expected that Financing would not be approved until after the Public Environment Report and Government go ahead is approved. According to the March report the PER will be ready by July 2005. If it takes several months for beaurocratic processing it is likely that Financing could not be confirmed until the end of 2005 at the earliest. Following that plant and equipment can be paid for, dismantled and delivered, installed, maintained, commissioned etc. A very big program in 2006.
I think you can understand my apprehension - especially if any process modifications prove necessary. Question 4. What is your response to this ?
5. Skills.
The present mining activity besides soaking up available S/H plant also puts pressure on the ability to engage the necessary operational skills. Although the proximity to Darwin is a plus It is no guaranty you can get the skills you want either by direct employment or via a contractor.
Question 5. Are you comfortable with being able to get operators to run your operation?
6. Metallurgical processing.
Question 6. Does the presence of Pb in the resource ore introduce unwanted problems in the processing ?
I have been told that you and your colleagues are experienced talented professionals and therefore the foregoing questions will have been carefully considered and your planning would have included critical paths. I would therefore value your reply and thank you in advance.

Dear Westmoon
Yes, many of these questions were answered at the AGM, but I will attempt to answer your questions using the question numbers in your text below. Whilst it is difficult to give definitive answers, we have set ourselves a tight timetable and are striving towards it. I trust the following give confidence in our approach. 1. We have commissioned an engineer to identify available plant. Some plant has already been visited and inspected. Certain elements will be purchased new. We have developed plant design criteria and are prepared to place holding deposits for critical item where appropriate. This work is ongoing. 2. Power: We have held meetings and are awaiting a formal response from PAWA on the supply of grid power. Alternative options being studied include diesel generation provided by others, as well as options such as production of copper chemicals instead of copper cathode. 3. We raised $3.5 million last November and have sufficient cash in hand to maintain our critical path for some time. We are in active consultations on funding with a variety of parties. As well as equity and debt we are looking to selling products in advance and have already been provided a term sheet on this. Our numbers show the project to be financially very robust and this has not been lost on potential financiers. At this stage all options are being considered. We have now planned our site layout resulting in many of the costs you mention being minimised. 4. One advantage of a Public Environmental Report is that once submitted, a statutory fixed time process begins. I acknowledge our program is tight, but it is also achievable and we will make it work. 5. We are planing for contract mining and milling for the first two years, avoiding all the issues of establishing and training our own workforce. We are confident that this will minimise the issues you raise. 6. Lead: There is little lead in the oxide ore. A small portion of higher grade lead ore will be stockpiled and an area for a lead recovery plant is being allowed for in the plant design, though it is unlikely we will build this initially. We do not anticipate the lead causing problems with the recovery of the other metals. Cheers, Rod