Director's have invited shareholders to come to an informal meeting, at Thomastown, 18 September next. At this meeting, those present will be shown what plans and documents for a "TSF" look like in today's Victoria. I imagine there will be much discussion.

In advance of the 18 September meeting, a simple explanation may be useful. In today's OUTLOOK, my purpose is to convey why these "TSF" government procedures have become items of equal value to the gold in the ground.

For present investors in Mount Rommel, pay-back comes about through these steps --

• Work Plan, plus TSF use acceptance;
• Council Planning Permit ( for a land use right);
• Issue of a Work Authority ( only after Planning Permit issue) cleared by Department of Health ( site licenced for cyanide use);
• Do the job, recover the gold.

These process steps are unlikely to change. The same rules for TSF's are present in the W.A. goldfields.

The simple explanation is this -

• "New gold-mining" in Victoria has a different "face", called a TSF ( tailings storage facility).
• The returns to Members come through government acceptance of the Company submission for TSF approval, Glenfine.
• The strength of this submission is its approach, which has merit beyond Glenfine, and including Clunes.

The risk we take as investors is tied up in the ability to deliver O.K. documents.

• Unsatisfactory documents, no TSF, no gold.

So - the document approval has the same value to shareholders as the gold itself.

Moreover - the best growth path is when a Company can discover at low cost, and go on to develop ( perhaps with partners). In this sense, delivery of permits for Glenfine has greater value than gold from there. It will be the reference measure for government officials on the next Mount Rommel project, be it Clunes or Allendale.

Gold production in Victoria is running at about 220,000 ounces per annum. Exploration licences blanket the State.

The Mount Rommel program is positioned for growth, given permits to do so.

This old photo of Clunes ( from GSV Bulletin 6, Plate 1) was taken before the closing of the mines about 1890. The wastes were dumped into Creswick's Creek. Today, for good community relations, wastes need to be seen to be controlled, which is what drives the permit process. A TSF technique suited to this site, and to this gold mineralogy, will dictate the future value of the Clunes property. The TSF use technique we devised for Glenfine could be adapted to suit Clunes.

The recently approved Work Plan for drilling at Clunes opens the door to grow the resource.

Is it a coincidence that the Work Plan for drilling at Clunes came at the time when Directors were being instructed in how to complete the final documentation for Glenfine??

The above photo is said to be taken after the demolition of the large works so dominant in the foreground of the first photo. The description of the demolition made front page news in the Ballarat "Courier" - 14 March, 1899. These works once belonged to a gold producer par-excellence in Victoria, for over 30 years. Yet 10 years after it closed. Reporter William Bradford could predict where other gold would be found - see the caption below this 1903 photo.

Predictions based on the information supplied by former miners may be open to doubt. The more trustworthy path to investor information comes through drilling - see Mount Rommel's releases to NSX for Clunes.

Here is what the surface looks like today, 100 metres above the good drilling intersections at Clunes - see the previous Outlook for some details.

The proposed new Hole D - see the published Work Plan, on NSX - allows the Company to proceed at a time of its choosing, to expand the zone carrying gold-bearing veins found underneath those once worked as can be seen in the above photo.

A resource developed through drilling from surface gives us a basis for future judgements -- all to be done after the Company demonstrates it can deliver gold from Glenfine, at a price which profits shareholders.

The first of these next two photographs shows that the dumps on site at Clunes have much the same landform as when William Bradford was writing about Clunes in October 1902. The second photo will be familiar to shareholders - it shows by a view from the air, the overall size of the hill which so far produced over 500,000 ounces of gold.

Mount Rommel owns the gold it can find in the centre of the ridge so evident in this aerial photo.

After the 2006/07 drilling into this hill, the prospects of outlining 10% more gold than won in the past, in concentrated zones, is why words like "growth-enabling" apply to the Clunes project. Completion of the Glenfine program is a prerequisite to that growth potential.

 

Mount Rommel owns the gold in MIN 5931, at Clunes. It will be sharing the gold won from Glenfine, after costs. It has a proprietary first right to gold found at Allendale.

These are selected Victorian Central goldfields assets, not possible to be found freely available today, and held at a time of upwards pressure on the price paid by buyers of gold.

My Outlook for the future of those assets is coloured by two observations - one down, one up:

1. The inability to forecast Company holding costs while waiting on government to approve is a definite penalty to would-be gold miners : in the immediate future, those carry costs require resolution. Once permitted, the total cost for the Work Authority must be brought to account, as it is part of the construction costs met prior to production of gold from Glenfine. This is an Australia-wide problem for miners of any metal.
2. World news continues to report activities which illustrate large scale transfers away from US$ assets into natural resources, gold in particular. The price of gold in US dollars is moving up. No TSF, no gold, less new production from Australia. The best place to be might just be the goldfields of Victoria, once you have your first TSF.

Directors understand the strength of Company purpose is built into our Submission for Glenfine. By 18 September, we hope to know more. Best come to the meeting, see the plans for yourself, and while there, take a look at the mini-plant. You may also see and learn about the sample material sent down by Parks, Victoria. I anticipate a lively discussion.

Fred Hunt
Chairman
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Previous Chairman's Outlooks
13 August 2010
21July 2010
24 June 2010
20 June 2010
8June 2010