In speaking with an Analyst that is in contact with the CSG Board I have learned that Castle Gold has recently made great strides in reducing their expenses and increasing their production and revenue.

Due to the advanced stage of the Strategic Alternative Review process (the lion’s share of the work is now behind them as are the costs), the Board has let expire the M&A advisory contract with Griffin Partners in July and they have informed their legal counsel, Cassels Brock, that all billable work must be approved by the Board prior to being undertaken. In addition, the Chairman, James Mark Plaxton has requested that his intensive M&A work fees since March to date and going forward be held in escrow until and only if a definitive agreement is announced (i.e. no M&A fees from March onwards for JMP unless a definitive agreement is executed for a Board approved M&A deal). Effectively, M&A spending has been reduced to $0 (i.e. a zero burn rate). The Board is also looking at several other ways to reduce G&A expenses such as optimizing IR expenses among other large expense items that are currently under review.

In addition, James Mark Plaxton brought John Van De Beuken onto the CSG operations team for the critical phase two production ramp-up that is currently underway. John Van De Beuken most recently served as the Chief Operating Officer and Vice President of Alamos Gold Inc, and is a mining engineer with over 30 years of experience in successfully ramping up gold heap leach operations. John Van De Beuken has been hired as a consulting operations engineer, under competitive terms, to assist with the ongoing ramp-up of production at the Castillo property. John is largely credited with the successful ramp-up of production at Alamos Gold Inc.’s Mulatos property (i.e. under budget, quicker than the planned time line, and with better production rates and costs then planned). An industry icon like John is exactly what CSG needs to push production to the next level of 50,000 to 75,000 Oz’s p.a. and at reduced costs. CSG is very fortunate to be able to bring on an operating engineer of John’s caliber given the low supply and high demand for mining professionals.

This is all welcome news for both reducing expenses and increasing earnings over the coming quarters and I look forward to CSG increasing their net positive cash flow.

I am also told that the three bidders interested in merging / acquiring CSG are all still negotiating with CSG and that Chairman James Mark Plaxton is still very active, working full-time in Toronto and travelling, with M&A. The timing of negotiating an M&A transaction during the second phase of the production ramp up and potentially during a gold bull market break out (i.e. > $1,000 Oz after a year and half of gold price consolidation) could not have been planned better and this all bodes very well for SHAREHOLDERS of CSG from both an organic growth and acquisitive growth perspective. As gold is looking to break out past $1,000 USD per ounce and potentially run towards $1,250 USD Oz, there will be an added sense of urgency within the industry to consolidate and/or buy up assets at increasing valuations.

After several years of investing in CSG, to now have the Board of CSG take its time in negotiating the right deal at the right time and under the right terms for SHAREHOLDERS, at this stage of the production ramp up and at this stage of the gold bull market, in an effort to reach critical mass (e.g. achieve numerous cost reducing synergies, reduce ALL expenses on a per Oz of combined production basis, increase earnings per share, provide significant accretion, provide significant re-rating and multiple expansion, increased volume, increased buying power and marginable shares, much higher stock price, etc., etc.) and thus optimize SHAREHOLDER VALUE, makes perfect sense to me.

I feel very confident in my CSG position. I may have to be patient a little bit longer for the right business combination to be consummated under the right terms to reach critical mass for the SHAREHOLDERS and for the company to grow further organically, regardless, while I wait and watch these developments I know that the company is hugely undervalued and that my patience will be amply rewarded.

- old school miner