Vlada,

I hear your frustration.

You raise a couple of valid points which I would like to address.

Firstly, my understanding is that any change vis a vis MOC terms or increased royalty payments would be grounds for bondholders to claim breach. As far as I'm concerned KRY has no room to negotiate these terms. By all accounts Vz has not asked or requested any changes so I don't believe there is any particular need to be too concerned about this point. KRY is not attempting to renegotiate. We are technically legally conforming regarding environmental and MOC - albeit without permit!

KRY retains the option of commencing arbitration. No doubt as the bondholder claims are addressed and as the community projects are completed in April then KRY will have a better idea as to the best course of action. Wishing for arbitration isn't going to make it happen. Personally I can see valid points in both a delay and in commencing the process.

I'm not convinced that KRY is 'in a strong negotiating position'. Till KRY completes their commitments then the jury is out. I'm working on the assumption that this will take place however till the community projects are completed and handed-over to Venezuela then we will just have to wait and see how strong their case is. It appears strong, however we are not party to all the facts so we will just have to wait and see!

My feeling still remains, at least today, that we will avoid arbitration and we will receive either the permit or a possible move by RML. Time will tell. None of us know for sure!

Teutracker