Ann: Market Update Satimola Transaction, page-10

KPC has never announced the acquisition of Satimola only that it has made an offer and entered into an Agreement to negotiate. This is the overriding disclosure as shareholders are already aware that KPC has never had rights to the deposit so further disclosure on details that are going on behind closed doors is not necessary.

Shareholders have the right to know a) what are the main terms of the offer b) how much all this costing them in terms of money and time (like lawyers fees, salaries, deposits, non refundable option fees etc) and then can make judgment about the Boards ability or the pleasure/displeasure of the offer at the next AGM but disclosure of any further details other than whether the negotiations are ongoing or terminated are really not required.

The letter by Gordon Toll to KPC on the 15th February clearly indicated that even though all agreements with KPC have lapsed that Satimola had not terminated any agreements. The purpose of the letter was not to terminate the agreement, which it should have been, but a rather to bully KPC into complying with the Agreements or else they will report them to the authorities about a what they believe is lack of disclosure.

If in fact KPC are not complying with the Agreements but Satimola is still negotiating then there is no requirement to announce anything other than negotiations are ongoing which is what KPC have done. Therefore Satimola assertion of the lack disclosure are false, in fact the irony is that the letter itself is evidence that negotiations are continuing. What Satimola needed to do was to write a letter to KPC stating very clearly that the Agreements have lapsed and that negotiations are terminated, which was not the case.

It seems that Satimola still haven't officially informed KPC that the agreements are terminated even though they have lapsed therefore it is still in negotiations so publishing this letter and the subsequent may be in breach of any cofidential clauses that may apply even though Satimola believe that the conditions of the agreement have lapsed.

I am sure if Satimola inform KPC they are no longer negotiating and the agreements are terminated then KPC will have to announce it as that is required. The letter dated 9th March did not say that the agreement have been terminated, it only highlighted where KPC are in non-compliance. It is not necessary to disclose non-compliance of these types of agreements as it is not material, the materiality is whether the agreement is terminated or not. The reason is that conditions of the agreements can be successfully re-negotiated at anytime, the only time they can't be re-negotiated is if the agreement is terminated. In fact these actual agreements have been re negotiated many times already so it is not unreasonable to expect that it wont be the case this time either.

Either company can probably terminate if the other party is in breach of the agreement if they chose not to re-negotiate. It appears neither Satimola or KPC have terminated the agreement at this time.

If the issue is what has been stated in Gordon Tolls letters that KPC cannot raise the funds to execute the purchase as agreed then they have only too choices a) terminate or b) give them more time and the letter on the 15th February clearly gave KPC more time (even though that may have not been the intention of the author).

It then defies any commercial sense to make conditions harder for KPC to raise the money by deliberate actions to try and publically hurt them and driving down the share price and the ability to raise fresh funds. It is obvious that is not in the best interests of either party.

If Gordon Toll letter is right then simply writing to KPC saying the agreement is terminated on the basis of the appropriate clauses lapsing would all that is required and Satimola then set about finding a new a buyer. There really is no need to get emotional and start a letter writing campaign with ASIC or ASX, that is if there is not some other reason that it cant be terminated.

You then should ask why hasn't that been done? As the reasonable commercial action would be to either terminate or keep the differences behind close doors until it is terminated it seems clear that Satimola is handcuffed to KPC and they can't stand it and desperately trying to get out of it. For some reason they simply cannot terminate the agreement so they are attempting a new tactic to try and hurt the KPC share price and also make direct threats to KPC directors to try and intimidate them into handing over the keys.

All I say Gordon is good luck with that tactic, it is one that is definitely going to hurt you more than them. Sorry mate it seems you have been gazumped by the Chinese, you better wake up to it before you damage your own reputation beyond repair.