Ann: Exploration Update, page-47

Hi Midnight,

I spoke to the BBX Company Secretary Simon Anderson today.

What I learnt:

1. Trial Mining / Pilot Plant

The purpose of the trial mining licence is to provide bulk feed for the pilot plant. Both the mining and pilot plant activities are primarily investigative, not commercially driven. Whilst some revenue from the pilot plant treatment is to be expected, it is not the main point of the exercise.

The capacity of the pilot plant is 1 to 2 tonnes per day (this is typical of the large scale laboratory pilot plants).

The pilot plant is located in Rio, a considerable distance from the project. (I googled it and got 2,400km) Therefore haulage of the ore is a large factor and does not lend itself to scale of any nature.

(I will do some calculations for you based on a maximum production scenario from the pilot plant:
2 tonnes per day x 356 days x 2 oz/t = 1,424 ounces per year.
There will be various batches of ore, various types of metallurgical settings, public holidays etc. I can assure you the plant will not run at the maximum availability calculation I have provided).

What you see if that the gold production from the trial mining is not set by the permit conditions, it is set by the processing capacity (the same for all mining projects).

2. Timeframe to Commercial production

When I asked about the step of assessing or building a project as suggested by the presentation released in January, Simon said that so far 3 holes out of 30 drilled to date have been assayed for grade. It is a slow process and the company is being prudent with its appraisal. As each sample requires complete pyrometallurgical treatment and extraction to determine the gold content, then back calculation to determine the average grade of the sample, it is a slow process and they are still refining techniques. Any project appraisal and development is some way off.

So what are my personal deductions?

1. The cost of the trial mining and pilot plant treatment is likely to exceed the revenue from the exercise.
2. The project has a considerable timeframe to go before any commercial production occurs.

Note that none of the above comments affect the geological potential of the project.
It is just about timeframe.

You will also note that none of the information given by Simon is new. It is just how it is just how the ASX releases are interpreted.

Simon said that the CEO was in town next week. Perhaps if you are "heavily invested" in this project you should give him a call to see if I have it wrong.

Good luck.

Gosouth