[When the time is right, I plan to write an analysis of the factors I believe have led to some of the "Plott difficulties." Meanwhile, I'm convinced that Harry Plott is doing his best to salvage the situation and to provide bondholders with the best solution he can. (If Harry had been a scoundrel, he would have disappeared with whatever assets he could a long time ago.) See also Part V.]

Update Feb. 13th, 1999

To all Registered Bondholders of Mali-Suisse Mining International, Ltd. Debenture Bonds

We have received many requests to try to give you a better understanding of the situation we all face. Many of you are telling us that if you just knew the truth about what is going on, it would help ease the grave concerns that many of you have expressed. In order to do that, we have asked Harry Plott to explain himself. Below is a transcript of the conversation between Harry and one of the larger bondholders (1.6 million in bonds) associated with the group prepared to file the Class Action suit.

Bondholder: First off Harry, I'd like to get a little background on this situation. Can you tell us why you sold the trust assets to Mali-Suisse in the first place?

Harry: It's a complicated and tedious story. Before I answer, I want to make a statement.

I know that most people won't understand, and some just don't care to understand what's going on. I know I have little or no credibility and what I say will probably be considered just more fodder! It does bothers me what people think about me. And yes, I know that many of you have financial problems. That fact is not lost on me. I just can't do anything about it right now.

I am currently under criminal investigation by two federal agencies and I don't know how many state agencies are still after me. I was informed of this fact by "visits" from these people at my home and office (now closed). Everything I say and particularly write, can and believe me will be used against me. When government agents sit across the table from me and/or others associated with me and show us stacks of newsletters, contracts, documents and complaints, it's time for me to stop being a witness against myself. Allegations are one thing, hearing it directly from me is another.

I never hid the fact that the "establishment" was pressuring me. I told you this repeatedly. I also told you we were trying to create something that did not conform to the usual way of doing business. I think many of you joined me for that very reason. The risks were greater than just trying to do business. We were trying to operate without the blessing, protection or control of the government. How much greater risk can you ask for?

The one thing not clear to them is how, or if, the assets are owned by me. In other words, do I, and if I do, how do I control these assets? For the record, I do not legally own any of these assets. Any alleged control is not by ownership. It would be foolish to expose critical information to a large group of people when some have already proven they can't be trusted to keep it confidential.

Quite frankly, I no longer know who I can trust. Naming any of our associates brings an almost immediate barrage of complaints, accusations and harassment upon them by some of you and by the "agencies." This interference just causes more delays and more expense.

I've been accused of only corresponding with you when I'm asking for money. Let's get this straight. In 1998, I continued to keep our main companies going at a cost of over $1.5 million. For all of 98, I asked for help by giving you the opportunity to buy the pre-mined gold at a steep discount. I told you about the offshore banking. All of that money went to the bank. It did not go for our operations. In total, all of you sent in about $40,000.00 in purchases.

I had to raise the $1.5 million by borrowing against our real estate properties and then finally having to sell them, selling all of our gold and silver that we had purchased in the earlier years, selling off everything that would bring in any money at all. At the same time, I cut funding, dissolved companies and abandoned projects. The effect of these crash and burn tactics was to almost destroy my long term goals for this group. Some of the people from the companies that we could not keep going, have also damaged us and our progress.

The officers of the surviving companies, that we identified as our best hope to meet our obligations to you, are owed hundreds of thousands of dollars in back pay, but they still hang in there with us. They are still moving these initiatives forward. But interference and lack of sufficient funds makes this job almost intolerable. How much are we to expect from these people. No one can continue to work for us without being paid.

Quite frankly, people in the business world don't think we can do this. Some "business associates" have even tried to use my conflict with the government to blackmail me into giving up any claim of ownership for our investment. When I stopped financial support to one individual, he volunteered as a witness for the SEC that started a lot of the problems for the public company. Trust members use like tactics to try to force me to give them their money back, but they still want all the earnings. And all the time, the government may just be waiting for their turn at us. I say us, because if you think they are not just as interested in your activities as they are mine, you'd better think again.

I'm sorry that I wasn't smart enough to see this coming. I'm sorry that some of you over committed yourselves in this effort. But the fact is you gave me most of this money under an irrevocable trust agreement. I could have given in to the demands of a few and paid them from the funds we raised, but then what do I do about the rest of you. I don't care if you are demanding payment of your $70.00 voucher, or your $300,000.00 bond value, my policy will continue to be "No one gets paid until we are capable of giving something back from the growth of our businesses, not their lifeblood."

I would think that after all the years we have been in this battle, it would be apparent that I'm still here trying to protect and enhance this property which now just happens to be in the form of corporate bonds. Yes, this is a battle for our financial survival.

Bondholder: Do you feel better now, getting that off your chest? So you feel very uncomfortable talking with us!

Harry: Yes, particularly putting things in print. It's not just me at risk here. Our few remaining friends and business associates are also at risk, which means that our businesses are at risk, and our bond redemption is at risk. You know it's true. Tell me you haven't been approached with offers to give you the "low down" on me.

Bondholder: Yes, by several. One man told us he had everything you've written since 1991 and was ready to hand copies of everything over to us.

Harry: So this has to be the ground rules of our conversation. If you ask me specific questions about ownership, I may give you a cryptic answer or no answer at all. I'm trying to protect myself, which is my right. I'm also trying to protect the assets, the people responsible for those assets, and believe it or not, the bondholders.

Bondholder: Back to the original question. Why did you sell the assets of the Trust to Mali-Suisse Mining?

Harry: As I said, I was being pressured in several different areas. One the US SEC and several State SEC offices were investigating our activities. This has been, and still is, an ongoing investigation since 94. I had been contacted by the US Attorney General's Office; several State Attorney General's Offices and was once even visited by US Customs. During 96 and 97, I had been subpoenaed 3 times by different agencies. These subpoenas were issued for my person and for my records (your records). You all know this, I told you in the newsletters.

When these agents called or came to our place of business, they didn't just talk to me they questioned everyone. The impact on the people around me was devastating. Business people questioned our legality and our ownership rights. Moving the asset ownership offshore and changing the structure from a Trust to offshore corporation(s) seemed to be a prudent thing to do.

Bondholder: Give us a better understanding of the Mali-Suisse situation.

Harry: I've had a few conversations with Gary and one talk with Karen. As so often happens, conversation leaves unanswered questions and also leaves room for misinterpretation. Gary and Karen have done a good job but it's a little more complex than just raising $60,000.00.

Here's a little background information that might make it easier to understand. A typical gold mining operator will usually spend up to several million dollars on preliminary work before ever setting up the first actual mining site.

Obviously the more money he has the faster this process goes but even money can't move things faster then the physical realities at certain points in the process. We are in the final stages of this process. We are also into our 2nd and last extension of time to complete the process. However, it is not the time element that is pressing us right now. I believe our lease is good until mid summer. I'd have to look up the actual date.

Bondholder: Why all of a sudden the great urgency?

What is pressing us right now is that we are finally approaching the end of work. When this drilling is complete, we must pay the drilling company. Until we don't pay them, they will not release the results (formal documents) to us. No certification means no bank loan and no permanent lease.

However, once this final preparation stage is complete, we can then apply for (a formality) and receive our 10-year mining lease. This will mark the end of all the preliminary stages. As a proven reserve mining site, we become a real mining company with real assets. In other words, this becomes a "bankable" deal.

Up until now, we have been treated like a speculative investment and in the gold mining business, not big enough to even be of interest. Once this process is completed, there is no more speculation, what it is, is what it is!

Bondholder: What do you expect "it" to be?

Harry: The reason a lot of money is spent in the development stages of a mining operation is to determine in stages whether it is economically feasible to continue spending. At each stage of this operation, we passed these feasibility tests. We are far enough along in this process to have more than just an educated guess.

We have already discovered that there are actually three separate deposit sites to mine on our leased property. (We also have other leases in the same area.) We know the first site, the one on which we've completed the most work, will come in at an estimated 150,000 to 225,000 ounces. We will have a more accurate number when this drilling is finished. However, the other two discoveries have been determined to be larger than the first. As soon as we start taking gold out of the ground on the first site, we will begin this final drilling phase on the other sites. The total estimated reserves of the combined sites are approximately 1,000,000 ounces.

Bondholder: How long do you expect this to take?

Harry: If you mean actual mining time, it will be fairly quick. The first site won't take more than about 9 months. The whole process of working all three sites will probably take less than 3 years.

Bondholder: So let me get this straight, you're saying that within three years Mali-Suisse could have somewhere around 1,000,000 ounces of gold. Even at today's gold prices, you're talking about $287,000,000.00. How much of that goes to the bondholders?

Harry: Here's the breakdown of ownership. "Mali-Suisse International, Ltd.," the bond issuer, owns 25% of "Mali-Suisse Mining Exploitation, SA," the actual Mali mining company. (These are both foreign entities with foreign ownership.) Let's say the first site is 200,000 ounces. The approximate net return, again at today's prices, would be about $33.4 million. Our share from the first site would be about $8.3 million. Over the next three years, we stand to receive a net return of close to $42 million.

These numbers are assuming that the price of gold stays were it is through the Y2K crisis. (Assuming a crisis actually occurs, considered a sure thing by some and a minor glitch by others. I'll let you decide whether this is a factor or not.)

Bondholder: So the $60,000.00 is the final amount needed to make this all happen?

Harry: I wish it was that simple. (By the way, we do have a tentative commitment for the $60K.) The $60 thousand is just the final payment on the pre-mining stages. It is a major stepping stone, but that's all it is. There have already been additional costs of about $9 thousand added to that fee for expenses over and above the contracted drilling services. Plus the currency exchange from US dollars to Swiss francs to Mali dollars are always fluctuating. Sometimes it works for us and sometimes against us. Right now the exchange rates are against us and could add several thousands of dollars more.

We also are required to maintain (rent) an office with at least a secretary and we have to pay our Mali partner a monthly salary. We have been paying these cost since the beginning. This is all relatively minor to the next step. We need to raise between $3 to $4.5 million to begin the mining. This is what it will cost to set up the physical mining operation. The good news is that two African National Banks have already contacted Stephen to prepared the loan documentation for this money.

Bondholder: If this can be made to happen, with this amount of money coming in, will our problems be over?

Harry: It's certainly better than where we stand now, but, no, our problems are not over. The bond obligation stands today at $62 million (which is almost 3 times the amount invested by the Trust members) and grows at about $700 thousand per month, assuming of course, we are able to continue. (If Mali-Suisse is forced to default on the bonds, or if total liquidation is demanded, all interest accrual will stop.) In less than four years, the total obligation will be $125 million. We sent everyone a copy of the sales agreement between Ages and Mali-Suisse, so this shouldn't be a surprise to anyone.

Bondholder: That's an enormous amount of money. How did this get so out of hand?

Harry: If you anticipate a project will take three years and cost x amount of money, you can estimate how much you can afford to give as a return on investors' money. If, however, for reasons of cost overruns, technology failures, excessive legal fees to defend against individual and government actions, plus all the other usual delays every business experiences, a company (the Trust) ends up carrying the cost of the investors' money 3, 4, 5 years out. It then ends up owing more money than the company can afford to pay back without extending the time of payback.

Sometimes companies fail altogether and everyone loses. Sometimes the companies are able to continue on a limited income because officer and directors continue to work with limited compensation or even keep advancing the company their own money. Plus as in our case, the investor (the Trust) also continues to sell off its other assets to keep the best companies going. Then you still have a chance to succeed. But the cost of the initial money becomes very punitive.

Bondholder: How are you going to meet this obligation?

Harry: Well, the Mali-gold can be a big part of the answer. But remember, Mali-Suisse also owns, directly or indirectly, the other business assets. Here's where I get into a conflict with disclosure. You must have some idea of the other assets. At one time or another, I wrote or talked about them.

Bondholder: Can you give us any clues and when do you think these items can be disclosed?

Harry: We've discussed engines, generators, pumps, boats, marinas, satellite communications and monitoring, paging equipment, wireless compression and a few others. One of the things that I will try to do in the future is give some kind of an accounting of the funds invested. The trouble with any type of an accounting is that it's hard not to disclose information that needs to be confidential.

Bondholder: OK, let's change the subject for now. I'm one of the bondholders involved in the Class Action Suit. We have had a lot of problems in dealing with the attorneys in the islands and I'm giving you info that was passed on to me. A few people were given the name of the attorney and now the attorney is asking us to pay for his time in handling all of the calls from those people. One person has called every day since being given the name. The attorneys charge $200.00 per hour. If everyone tries to handle things individually, this could get very expensive. Who would like to handle these costs? Anyway, our group of bondholders has agreed to hold off on any further legal action until we have some time to sort things out.

Harry: You are not immune to the same problems I face. Everyone that becomes involved with this process goes through this assault and it doesn't matter who it is. Professional business people will just not put up with this kind of harassment. Every time we try to be open about what we are doing, it backfires on us. You will also have the problem of government intervention when (if) an action is actually filed. Believe me, I've been through it.

Bondholder: Having a direct line of communication with you helps. You always seem to be on top of things and I for one would rather deal with you than a bunch of attorneys.

Harry: This whole Trust project has been my only concern since 94, but I can only do so much. I have never been out of the day to day grind of this operation. I just need to keep a low profile.

Bondholder: It getting late and we've only covered a few subjects. Would you be willing to talk to us again?

Harry: Yes I will. I have a couple of comments about communications.

I've been told that some people are asking for names and addresses of all the bondholders. I don't think this is a good idea. You can gather some of this information from talking to each other and that's between you. When First Mercantile sent out the emails, they did them in batches of 60 to 80 people. That was bad for confidentiality but it did allow you to communicate with each other and I think that's good. There were 5 batches totaling about 350 people and that probably represents even more bondholders when you include family members and groups.

We did forward the information about the Delphi Forum to all of those email addresses. So now you have a better idea of how many bondholders can be expected to know about it. First Mercantile will send this interview to all of the email addresses. You can post it on the forum if you like.

Maybe it would be a good idea for you to ask other bondholders for their questions and I can try to answer them in this interview format. There is no longer any staff here, at the bank, or at the processing center. I just don't have the time to answer everyone directly. We (H and S) will have to try to deal with this and maybe with the help of some of you. We will talk again soon.

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