Actually, I'm much less sanguine about the recent announcement,...

Actually, I'm much less sanguine about the recent announcement, since it represents a downgrade against the expectations they have set:

They say phase 2 is 90km, of which 17km complete, so that's 73km to do in 6 months or 12km/month. This compares to 17km in 2.5 months or 6.8km/month.

So, at some point soon they need to double the number of rigs in operation if they are to hit target. That will take money that AZX apparently don't have.

In essence, they only have half a plan. They set the target of 90km drilling in six months, but they don't currently have the rigs nor the money.

Also, see these announcements from AZX in Sep and Nov 2010:

http://asx.com.au/asxpdf/20100923/pdf/31sntqymcwzwdx.pdf

http://asx.com.au/asxpdf/20101118/pdf/31tzf2kk4ns2g9.pdf

The resource drilling program at Bullabulling planned to total 18,000m has commenced, and is expected to be completed in late January 2011.

?h Historic high grade intersections beneath the Bacchus North pit (at depths of 120m-150m below surface and not included in the current resource estimate) will be targeted initially to confirm continuity.

?h An estimated 5,000m is planned which will twin existing drill holes within the Bacchus ?V Phoenix portion of the Bullabulling Trend to enable the current Inferred Resource estimate to be upgraded to Measured and Indicated categories.

?h Infill drilling totalling 12,000m is required to define the resource within a 2.3km long zone between Bacchus and Phoenix pits where preliminary pit optimisations indicate the initial open-cut pit will be located.

?h Resource consultants Snowden Group have been engaged to advise on the QA/QC program and estimate a new resource and initial reserve estimate based on the results of the current program and due at the end of March 2011.

So, AZX clearly set expectations about Phase 1 delivering M&I resources and a maiden reserve by March 2011. And they've been working with Snowden since November 2010. More than that JL is on record, and there is an investor pres on their website dated May 2011 that also set expectations of a 1m oz reserve by the end of May.

To be 4 months late from original expectations, and not deliver even close to what they said they were going to do is very poor. And today, they have further down-graded expectations, in that they are backing away from a Measured resource.

It is difficult to come to any other conclusion than the current AZX management are clowns. And frankly, it also calls into question the competence of the technical people if they can be working for so long with Snowden, and only now come to the conclusion that they need to be doing far more in-fill drilling to get to Indicated status.

I have little doubt there's a substantial resource here. But this project needs to be sorted out by bringing it under unified ownership and hiring some proper, competent management. It is time for Baker Steel to start agitating for change.