Ann: Toronto Listing Update, page-40

Hi Guys,

Esh, from memory the hit to Stockpiles was all taken in one hit in the Annual Accounts. I am not sure whether the Auditors required this or whether it was a smoke-and-mirrors effort from BDR.

IMO, this was an intentional effort to fudge operating performance at the mine by capitalising mining costs to an asset. It then gets reversed later as a "non-cash item" in the Annual Accounts with the narrative "don't worry about it, it's non-cash".

I am, of course, speculating re intentions, but this is consistent with other pieces of the puzzle.

Again, IMO, BDR have been so opaque in their reporting and use of accounting trickery that investors cannot rely on P&L accounts. Cash in the bank is the only metric that should be looked at.

Over time, the trend of cashbuild/ reduction paints the picture and we know that BDR have been extending trade payables and reducing inventories/ consumables so the cash at bank figure will not understate the health of BDR.

I think that, consistent with past performance, June will not be a flash Quarter for production at Tucano. It is probably fair to assume that this relationship-breakup between MACA and BDR has been on the cards for some time and MACA's focus this current Quarter has been to minimize its cashburn and exposure to BDR and extract themselves vs. going the extra mile for BDR as a LT partner. I would expect a less than stellar tonnage movement to the plant this Quarter as a result.

If I was the new mining contractor, being aware of the financial strife that BDR is in, I would demand prepayment of invoices on a month-to-month basis ... I certainly wouldn't be extending terms as an unsecured creditor.

Good luck guys, but the gold sector/ mining is tough enough to make money in as an investor, without putting even more challenges in front of you such as investing in near terminal cases such as this.

Cheers
John