At the risk of being further labeled a basher by some I'll offer what I think is a logical viewpoint that even Prezone could appreciate.

Both GRZ and KRY have legally binding agreements though of differing natures (GRZ a concession and KRY an MOC).

I believe Hugo has been intimately involved in what has been going on. I also believe that Hugo does not want to allow either KRY or GRZ to mine. I think he does not like that GRZ's HQ is in Spokane Washington, USA and is a concession which he has publically termed as dead. With KRY, we seem to believe we have history and that it was Chavez who approved our contract and kicked out Vennessa after they bought the expired contract from Placer Dome for $50. At the same time we must remember that after the coup that same year KRY came out and endorsed the interem government that temporarily toppled Chavez. While it may not have been prudent to retaliate I don't think Chavez has ever forgotten it. However, despite what some think I believe he is far more intelligent than any give him credit for. Dictators who are stupid do not last long.

My opinion is that Hugo recognizes the difficulties of his continued seizures despite his hatred for GRZ/KRY. I think he knows he will have to pay something eventually. I also believe he thinks it would be easier and less costly if KRY and GRZ left on their own. He could always claim that we abandonded the concession/contract because we were impatient.

I think Chavez's plan has always been to delay and deflect while never violating his contracts. His plan has been to make things so difficult for GRZ and KRY that we quit and fail in our MOC. I think he has been behind all of the bad press and even the permit denial...remember that Ortega who denied our permit is the wife of Chavez VP. Chavez could shield himself behind a "rogue" and avoid being seen as breaking contracts. I think Chavez backed the RML attempted take over of GRZ as well, though it failed. Also keep in mind that VZ's political stance is that spoken words do not matter, only actions. Anyone can lie and it does not matter. Only actions do. So all of the bad press and statements of taking LC/LB is just words and he has not violated anything in his mind.

It all comes down to a question of limits. GRZ has the money to complete arbitration, their debts are not being called in, and they made the decision that enough is enough and filed arbitration. It was not a surprise that the property was then seized. Based on current market reaction this seems to be the better choice.

KRY however has taken the position to follow through on the MOC and remain in compliance, perhaps a very good move. Rather than succomb to the bad press they have ignored it. They may have even believed that if they submitted any PR responses to the negative press such as GRZ has done whenever there has been bad press would be seen as a violation of the relationship. KRY has been blasted publically as being only interested in stock gains. The problem I have is that while this is OK for a private company a public company has an obligation to keep shareholders informed and to work to improve share price. It is in this area I feel KRY has failed.

I still believe VZ/Hugo does not want to honor the KRY MOC. As a publically held company VZ is well aware of KRY's lack of financial resouces. I think if there are any discussions going on it is a stalling tactic to give the impression VZ is honoring its contract while delaying and secretly hoping KRY will go bankrupt. They did not need to go after KRY because they believe we will run out of money.

So, now we are where we are. KRY is in compliance with the MOC as documented by CVG. If VZ tears up the contract now it will strengthen KRY's position in arbitration, but KRY does not have the cash to go into arbitration. I think Fung knows VZ has no intention of settling or giving a permit but he is using this time to seek financing. I have stated numerous times that this should be the focus and once financing is achieved I think we will see a deal with VZ. I do not believe VZ will allow KRY to be involved in LC.

So why do I stay invested? We are at a cross roads. VZ is also almost bankrupt. They need the gold and have infact pledged the gold in numerous bonds/debts. While they lack the technical expertize or the research to get it quickly I think they can do so. They have already commissioned Cuban engineers to assess the potential gold. Russian or Chinese companies could quickly get equipment but these same companies do not like the thought of participating in the theft of money and breaking of contracts. Never forget that VZ asked for Bond/taxes as the final step for the perimt that was approved and we paid it. To tear up the contract is to commit a heinous act that even they want no part of.

This is our hope. If we can get financing to sustain us then I think VZ will make a reasonable settlement. Until then, VZ will delay, bash us in the press and wait for us to run out of cash. Our bondholders are silent because they know that while we will never mine LC thus confirming the change of possession, they will have trouble proving it and we have not yet defaulted on an interest payment. The next payment is due in January 2010.

My belief has been we should have filed arbitration as soon as we could, sold the equipment and paid off the noteholders and used the bounce such as GRZ has experienced to obtain financing to get us through. But that option is gone as Fung has opted for another strategy. He could prove me wrong and I would be extatic.

I know I'm rambling so I'll conclude. We are at a point where VZ has to make a decision to revoke the contract and hope we cannot obtain financing or make a settlement. I have broken every rule my trading mentor taught me by staying in KRY but be that as it may be right now our/my hope is that Fung is smarter than I think and can get this done. He will undoubtetly get some lawsuits from shareholders who sold since they have not lived up to the spirit of keeping investors informed but that may be his gamble and shareholder lawsuits rarely gain much.

So now we wait and watch for someone to blink. The key remains, in my opinion. whether Fung can get financing.