INTERVIEW WITH JOHN LANGFORD, CHIEF EXECUTIVE OFFICER OF MUNDO MINERALS LIMITED (MUN)

“Engenho Project Update”

http://www.brr.com.au/event/51099

MONDAY, SEPTEMBER 8, 2008, 1:30 PM.

            BRR    Good afternoon and welcome to Boardroomradio. Today, we’re speaking with Mr. John Langford, CEO of Mundo Minerals Limited. Thanks for joining us

10                    today, John.

            MUN    Thanks, Eddie. I appreciate the opportunity.

            BRR    John, we’ve seen in your announcement  you released today, there’s been a minor downgrade in the Bola ore body  in your Engenho project. Can you

15                    update some of the details of this?

            MUN    Yes, I can. It’s a minor downgrade that’s come as an unfortunate time for us, I guess, when the geologists interpreted the ore body. Just to put people in perspective and remind people, it was in the previous broadcast. I guess, we are mining the Engenho gold project, it is an ore body that was previously

20                    owned by AngloGold Ashanti, had a small open pit over the top of the ore body and I guess, while we are developing the decline down to the major part of the ore body, we were running some remnant ore that was left in the open pit wall.

25                    What has happened was that when the initial ore resource interpretation was undertaken, a small portion of the ore body, known as the Bola ore body, was interpreted as a high-grade ore body. Once an old portion of the ore body,….once we’ve developed into it, we discovered that it was in actual fact, a low-grade uneconomic portion of the ore body which means that it does not

30                    make sense for us to mine it.

                        The impact of that is that it reduces our total resource by that 8,000 ounces. To put that in perspective its 8,000 ounces over 293,000 ounces or only 2%. But what is really unfortunate is it comes at the very front of our production

35                    profile when, I guess, we’re really focused on cash flow. If it has happened in six months’ time when we had a production profile in full swing, we probably wouldn’t have had to announce the short or small downgrade because we would anticipate finding additional ounces on the way down. It does have an impact on us from a cash flow perspective and we have taken reproduction

40                    through our major shareholder, AngloPacific Group. We have had a cash injection of A$4 million poured into company which secures the financial security of the company.

                        Importantly, it’s also relevant to state that the overall integrity of the ore body

45                    remained sound. We are conducting audits, but we’re seeing nothing, you know, in the audit that causes any concern. I guess the reinterpretation of the ore in the pit wall, in hindsight, now reconciles very well with the major part of the ore body.

                        Just very quickly, I’ll just mention that we are developing into the major part of the ore body at the present moment. We have nearly completed three levels which we will allow us to start stoping in November. The ore body is reconciling very well from a grade perspective from a tonnage perspective

5                      and then on integrity perspective. So we are not expecting this to be a major ongoing problem.

            BRR    John, how is this going to affect the Engenho project, although you’ve talked about previous sales approximately 2%, so it’s safe to say that is not going to

10                    really to play a huge impact on the whole Engenho project?

            MUN    We expect that it will have an effect on our production profile for the next 2 to 2-1/2 months, and the by end of November, we expect to be back into that full production profile of around 2,800 ounces in 10 months. We expect that our production for September will be about 1,600 ounces, for October and

15                    November with 2,400 ounces, and from December almost back up to 2,800 ounces, that’s what we’re seeing in the present moment.

                        Till then, it’s important note that the Engenho ore body is -- has only been drilled down to about 270 meters. We expect with the grades that we’re

20                    operating on, economically, it will be mineable down to around 500 meters. The ore body in this district are very, very deep, and we’re having some significant exploration success on our tenements as well.

                        In the announcement (inaudible) (00:04:06) in this broadcast, but in the

25                    announcement we have provided some guidance subject to disclaimer, I must say, with respect to the potential we see of our assets and there is significant upside.

            BRR    John, you briefly mentioned a bit earlier about the funding that you’re saving

30                    from one of your investors. What are some of the details and conditions of this?

            MUN    AngloPacific Group, who is our major shareholder… they’re into institution-based over the United Kingdom and have been very supportive of us has agreed to provide a $4-million convertible debenture facility. The debenture is

35                    repayable from a royalty stream. We’ve agreed to provide them with a royalty stream of ore that’s produced through the Engenho treatment plant of 2.5%. The initial part of the royalty stream goes through just a principal portion of the convertible debenture.

40                    Once we’ve repaid the $4 million, the royalty stream continues. It’s a cost of this funding that to be quite honest with you, in the current equities market, we see there’s a very attractive alternative funding mechanism. While we do owe AngloPacific Group, we will be paying them interest which is LIBOR plus 2% and any outstanding balance on the principal fund is convertible to shares

45                    at 35 cents per share which is a premium to the current market price. The conversion is really seen as an insurance policy for AngloPacific Group should anything go wrong with the project, not that we’re expecting it to. AngloPacific Group responded very quickly when they heard that we have this issue and we’re’ very grateful for their support.

            BRR    Lastly John, can you just finish up with some updates from, you know, your current projects in Brazil?

            MUN    I certainly can. Well, this has been a short-term production hiccup for Mundo

5                      Minerals. The ongoing development of the other assets is proceeding. I guess, we have made some interesting announcements recently with respect to exploration success we’ve had on the Engenho tenements. We see this as a very, very exciting scenario and expect through ongoing exploration success to be able to replicate the ore resource that we have with Engenho

10                    and current indications over the grade may be slightly higher than we have in Engenho. We will continue to fund this exploration and anticipate drilling some of those targets out. I think, it’s commencing towards the end of November or early December.

15                    We also have a very exciting project called, Jaqueira. Jaqueira is a project we have done, not a lot work on, but we have some most interesting targets there. The targeted resources are around to 0.5 million ounces at 10 grams to 12 grams per tonne. It will be high grade. We have completed our exploration program and anticipate drilling that project down early in 2009.

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                        The work we are undertaking in Peru has not been deferred by this production hiccup. It is proceeding as we expect and we are hoping to move into full feasibility study with respect to Torrecillas in mid 2009. Interestingly enough, we are developing some of the mineralised zones there and this

25                    week we have sent some of the ore off to a treatment plant for torque rating. In Peru, we’ll start to generate some very small production, and it’s a low-production base, but albeit, it will provide us with a small cash flow and some valuable information for the feasibility study.

30                    Finally, with respect to Tocantins, the dollar review is ongoing with respect (inaudible) (00:07:57) and we expect that to take another couple of months, but the Tocantins Project remains very exciting, as well.

                        Overall, apart from this production hiccup, I can inform everybody that all of

35                    the assets that Mundo Minerals are progressing as we would expect ahead of our expectations.

            BRR    John, we thank you for taking the time out today to update the investors and listeners, and thank you for your time. We look forward to speaking to you

40                    soon.

            MUN    Thanks. Once again we do project the opportunity, it’s a small hiccup. It is a hiccup. It’s somewhat embarrassing. Unfortunately, the resources affected do have their issues at times. We are managing it and we are managing it as we take in a most appropriate manner.

45

            BRR    That was Mr. John Langford, CEO of Mundo Minerals Limited. If you have any questions about this broadcast or any other broadcast, please feel free to contact us on brr@brr.com.au. I’m Eddie (Inaudible) (00:08:54). Thank you for listening to Boardroomradio.

INTERVIEW CONCLUDED

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