Baru Gold Corp V.BARU

Coffin & Pescod

[insiderinfocan]

Most of you must have already read this but i thought i should post.

AN INTERVIEW WITH DAVID COFFIN

EDITOR OF THE HARD ROCK ANALYST

(As of November 3, 2009)

We are here with David Coffin of the Hard Rock Analyst and

it looks like East Asia is starting to attract a little more atten-

tion largely through his efforts.

David Pescod: I guess Dave, someone has to ask the silly

question first…how come more brokers and analysts aren’t

following this story?

David Coffin: The appropriate answer is that you need to

ask them, but I think it’s a matter of the company has had a

large institutional share holding base and has done only one

placement recently, most of which went to a single public

company. There has probably been some concern that there

would be some selling from that placement which just came

free (it was a
.51 placement and the warrants are priced at

.75). The other point is they haven’t had a lot of people on

site to look at the deposit and do the final confirmation that

analysts like to do before recommending a stock.

D.P: Why don’t you give us a background on this project

because it looks like there is quite a number of small plus

some very big deposits grouped together in Sumatra?

D.C: Sumatra is a northwest trending belt of volcanic and

intrusive rocks with highly mineralized sections along pretty

much the length of the island, and beyond. There are sepa-

rate belts in Java and the other islands, a number of which I

have visited in the past. What distinguishes north Sumatra

in particular from most of Indonesia is that historically there

have been some terrorist activities in an attempt to move the

northern end of the island into a separate state. What East

Asia did was come in and pick up a bunch of projects after

the politics changed; the politics changed for two reasons.

One was unfortunately a natural disaster – the tsunami that

hit the island a few years back - and the other has been a

basic change of heart in Jakarta. There have been important

moves to de-centralize the Indonesian government and give

greater autonomy to areas like Ache. Recognizing the

changed climate, these guys went in and picked up this

ground. Its highly prospective and was recognized as such

because there was a several year exploration window in the

1990’s when people were in working in the area and Miwah

had been drilled.

East Asia Minerals

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Page 2

David Pescod 780-408-1750

Debbie Lewis 780-408-1748

Fax: [phone]

So the data was there, and for a number of the other pro-

jects that they picked up in Sumatra, so really what they did

was be smart about recognizing the change in the geopoli-

tics and going in and acquiring ground ahead of the crowd.

D.P: There are a number of deposits in this area, correct?

And is there not production already on this island?

D.C: Oh definitely. There’s at least one plus 5 million

ounce deposit already in production. There are also a num-

ber of smaller ones. These epithermal systems can be rela-

tively small – relatively small meaning a few million ounces,

but quite high grade. What they are dealing with is slightly

different. It’s more analogous to the Pierina deposit in

Peru; in fact it is very analogous to the Pierina deposit in

Peru. And the other thing that they have picked up is a sec-

ond (these are epithermal gold deposits we are talking

about) deposit on Sumatra that they have already drilled

and has a different configuration but is looking like a one to

two million ounce deposit. The third set of projects is large

scale porphyry targets, some of which have had work in the

past and others of which have never been drilled. If any of

these work out they could potentially be the large 10 to 20

million ounce bulk tonnage gold-copper deposits.

D.P: If you could take a look at the different projects they

have and how big you think their size might be?

D.C: There is one other project in Indonesia that is on a

separate island plus the smaller project on Sumatra that

they’ve drilled. Based on last year’s drill results, which

unfortunately they were delivering into a market that was

falling apart, these probably represent at this point one and

a half to two million ounces. Both are quite open to expan-

sion when they get back to testing them. Based on the

previous guesstimates, and they were based on limited

drilling but a lot of surface sampling, the Main Miwah zone

is a target in the five million ounce scale. I’m talking guess-

timates and that’s not meant to be an accurate number, but

it has a solid basis from existing results and target scale.

On top of that, their own work has located the South Miwah

mineralization which they’ve only put a couple of drill holes

on – it’s hard to put a precise target scale in it. But what it

does have definitively from the surface sampling and the

initial drilling are areas of quite high grade at surface. It

could be at the same scale roughly as the Main Miwah

zone. It certainly is too soon to say that, but what it should

do at a minimum is a significant amount, and significant to

me is in the ½ million ounce range, of higher grade material

plus whatever is there once they get a proper test of it. So

you are looking at a company which in three projects, and

again these are not official numbers these are my guessti-

mates, that already has the feel of being in the 8 to 10 mil-

lion ounce class amongst three projects, and with a big

lump of that being at Miwah.

To receive the Late Edition and be on our daily circulation simply e-mail Debbie at

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on the list tonight.

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Page 3

David Pescod 780-408-1750

Debbie Lewis 780-408-1748

Fax: [phone]

D.P: Am I also correct that they also have a few additional small projects in the area?

D.C: They have a few additional small projects only in the sense that there has been limited work on them. The por-

phyry projects are large-scale. There simply isn’t enough work to quantify them in terms of their real potential. Within

that region system is the largest gold/copper mine in the world that belongs to Freeport McMoran, and Newmont also

has a significant producer in Indonesia. So these are projects with good potential

D.P: Canaccord is using this rule of thumb that to value gold companies these days, they give it $70.00 an ounce in

the ground. So how can you use that to come up with potential targets for East Asia?

D.C: If you did the math on $70.00, what I just described would be in that $8.00 target range. Our take is that the

$70.00 number is valid and partially that is based on what the market is telling us. When you actually sit down and

figure out the value of a specific project, it’s not an exercise of using a rule of thumb, it’s an exercise of CAPEX and

operating costs. In other words, working through what the actual bottom line would be. So in a nutshell, higher qual-

ity ounces are going to be worth more and the bigger a deposit is, because it brings in bigger players, are also gener-

ally worth more. In both cases, Miwah fits the bill. If my assumption of a five million plus ounce deposit, that puts it in

line for all of the players in the business. The grade so far, given that it should be a very simple process to extract the

gold, puts it in the high-quality category.

D.P: You have been following this story firsthand for a while, what kind of an investor should be looking at this, be-

cause it still sounds speculative even though you previously had a target of $5.00 to $12.00, but now seem to be fo-

cusing on the $8.00 number?

D.C: We are not going to get overly focused on the $8.00 – those are conceptual targets. We pretty much save our

targeting for producers where it is a nuts and bolts exercise. The type of investors that should be looking at this are

a: people who want to be in gold; b: are looking for something that has speculative upside and c: are willing to take

some risk. We are comfortable with Indonesia. I have worked there in the past so I have stayed on top of the political

changes and I am comfortable. That doesn’t mean that the market will get comfortable, nor can you ever assume any-

where that adverse changes won’t come. Indonesia is still in a political process whereby it has democratized – the

democracy that has been established there is real, but you still have bureaucratic issues to deal with. It can take quite

a while to get things done sometimes because the bureaucracy set a pace based on when it was a dictatorship which I

don’t think they have worked through yet. It doesn’t mean it never gets done, but it can make timing difficult and

when people are looking at valuations, they are going to fit that in as one of the parameters. I am saying the quality is

there and the scale is there, others will argue and reasonably, but yes then you have to apply a discount because it is

in Indonesia and people aren’t sure what to think of the place. I do think that will change by the way – I think a “I” is

going to be added to the BRIC countries and that will be for Indonesia.

D.P: I guess the question is, if you could only buy one stock these days, would it be East Asia?

D.C: It would be East Asia, which doesn’t preclude me from liking others, but on the basis of what I can see – the fact

that they are working actively and its current valuation, yes it would be East Asia. The timeframe for significant lift

with the gold price taking a big jump on the announcement that India bought half of the IMF gold sale could be soon –

the EAS volumes have stayed up and I think it is a matter of working through enough volume and it could pop up as it

did from the
.50 level or
.40 level where we started. It was a matter of some accumulation on volume and then it

popped and I think the same thing will probably happen again. How quickly? I am not going to try and guess that, but

there will be a shift in the market in January (there always is) and I think between now and then, but if not then cer-

tainly early year. At which point I will put in my wine order!

D.P: Thank you very much Mr. Coffin!

DEB’S DITTY:

Truism: Age improves with wine.

Thanks Jack L.