YTC Resources Limited 25 Aug 10

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1 YTC Resources Limited 25 Aug 10 YTC AUD $0.18 Drill results are due from Nymagee Mine within weeks It is odd that YTC has fallen from grace from a high of $A0.325 on 23 rd April 2010, to the current share price of around A$0.18. It seems that the share price weakens with each announcement of good tidings. The only possible explanation for this is that the market is expecting a share issue some time soon. We have recently spoken with the company and new shares will not be issued at the current share price. Our last review of the company was in FAT-MIN-226 where we retained our BUY recommendation for all Members at A$0.23. We are keeping our BUY recommendation on the stock, especially for Members that do not already have an exposure. SHARE PRICE CHARTS AND COMMENTS: Turning to the charts, YTC Resources continues to build a base formation since August 2009 between support at 17 cents and resistance at 35 cents. Base building is a bullish sign and can be regarded as building of energy for an eventual break. A convincing break above the September 1, 2009 high of 35 cents would confirm this. Should this occur the potential upside target from there would be the September 11, 2008 high of 54 cents as denoted by the thick red line on the daily chart. fatprophets.com.au/ /Article Page.as 1/6

2 The weekly chart confirms the consolidation in place. Immediate overhead resistance is located at the 39 week moving average (green line) at 24 cents. A break above this level should entail a swift move higher towards the September 2009 high of 35 cents over the longer term. fatprophets.com.au/ /Article Page.as 2/6

3 STATE OF PLAY Since our last review of the company YTC has been very busy. The company announced an initial JORC compliant resource for the Hera deposit of 2.15 million tonnes with an average grade of 4.0 g/t gold, 15.6 g/t silver, 2.8% lead, 3.9% zinc and 0.2% copper. This is high value ore and there are enough tonnes to justify developing a small mine. The Definitive Feasibility Study for Hera is still on track for completion before the end of September In terms of a gold equivalent grade, the Hera resource is equivalent to 560,710 ounces. If the Hera deposit only contained gold, we would argue for a market valuation as high as A$60 million. This is on the basis that the average market capitalisation for companies with over 750 million gold equivalent ounces is currently A$120.2 per ounce. There was a delay in starting drilling at the Nymagee Copper Mine which is only 4.5 kilometres north of Hera. YTC has an 80% interest in this mine which in 1918 produced 420,000 tonnes of ore grading 5.8% copper. A historical estimate of the resource stands at 821,000 tonnes of 2.3% copper. The exploration potential at Nymagee is shown in the following figure taken from an ASX announcement. fatprophets.com.au/ /Article Page.as 3/6

4 An important thing to note from this cross section is assays from channel sampling on the 8 Level. The channel samples are historic and were more than a tad interesting. One 76.2 metre channel south of Main Shaft averaged 3.0% copper. The channel to the north of Main Shaft returned 31 metres at 6% copper. These results were excellent and with other drill results obtained by previous explorers, Nymagee is looking very good. Two drill rigs are employed at Nymagee looking for extensions of the mineralisation. It is interesting to note that only copper was included in the historic resource; perhaps other metals were not assayed for. All the geological indications are that there is a major mineralised system at the Nymagee Mine. We are expecting some very good drill results from the current drilling program that will be a catalyst to re-rate the company s share price. Just to the north of the Hera resource a third drill rig is probing for extensions to Hera mineralisation. It seemed to be completely missed by the market that drilling intercepted near surface oxide gold. Starting from only 9 metres depth, one hole hit 45 metres at 1.5 g/t gold. It s very early days for an oxide gold story to develop but a very promising start has been made. Other near surface drill results at Hera were 5 metres at 5.64 g/t gold, 1.4% lead and 5.51% zinc. A second drill hole intersected 6 metres at 2.94 g/t gold, 0.67% lead and 1.21% zinc. fatprophets.com.au/ /Article Page.as 4/6

5 We are confident that the drill rig probing north of the Hera resource will add significantly to the size of the resource. At some point in time the company might have to issue new shares to develop mining and ore processing at Hera and mining at Nymagee. At Hera some 50-60% of the gold will be recovered from a gravity circuit. The rest of the gold will report to a mixed concentrate which will be leached for final gold recovery. After removing the gold the company will sell a bulk concentrate. At the end of 2Q10 the company had $8.4 million in cash. The exploration program is being stepped up and to day the company has between A$7 million and A$8 million. The company does not have a need to raise cash now, and in any event the company will not issue shares at the current share price. The share price is not expected to remain as low as it is when the news flow picks up and good results are announced. YTC remains an excellent story and the stock is recommended as a BUY for Members without exposure. Snapshot YTC YTC Resources Limited YTC Resources has its headquarters in New South Wales in the town of Orange. The company is focussing its exploration and development activities on the C obar Trough. This is a world class mineral province which is richly endowed with high value gold and base metal deposits. YTC s flagship asset is the Hera gold and base metal deposits. To the northwest of Hera the company also owns the Nymagee C opper Mine. The Nymagee C opper Mine was very high grade with 422,000 tonnes mined at an average grade of 5.8% copper. The exploration potential along strike from these deposits is very high and the company has a good chance of making a major discovery. Market Capitalisation A$29.6m DISCLAIMER Fat Prophets has m ade every effort to ensure the reliability of the views and recommendations expressed in the reports published on its websites. Fat Prophets research is based upon inform ation known to us or which was obtained from sources which we believed to be reliable and accurate at tim e of publication. However, like the markets, we are not perfect. This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each recommendation for their own specific circum stances and realise that not all investm ents will be appropriate for all subscribers. To the extent permitted by law, Fat Prophets and its employees, agents and authorised representatives exclude all liability for any loss or dam age (including indirect, special or consequential loss or dam age) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Fat Prophets hereby lim its its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply. As at the date at the top of this page, Directors and/or associates of the Fat Prophets Group of Companies currently hold positions in ABB Grain (ABB), Aurora Minerals (ARM), Austal (ASB), Australian Wealth Management (AUW), Avoca Resources (AVO), Avexa (AVX), Argo Exploration (AXT), BHP Billiton (BHP), Babcock & Brown Japan Property Trust (BJT), Boart Longyear (BLY), Biota Holdings (BTA), Catalpa Resources (CAH), Catalpa Resource Options (CAHO), Coeur D'Alene Mines (CXC), Fat Prophets (FAT), Fat Prophets Options (FATO), Fosters Group (FGL), Global Mining Investments (GMI), Lihir Gold (LGL), Lion Selection (LST), Macarthur Coal (MCC), Maryborough Sugar Factory (MSF), Mundo Minerals (MUN), Mineral Securities (MXX), Mineral Securities Options (MXXO), Newm ont Mining (NEM), Oil Search (OSH), Oz Minerals (OZL), Progen Options (PGLO), Platinum Australia (PLA), QBE Insurance (QBE), Rio Tinto (RIO), Roc Oil (ROC), St Barbara (SBM), Sirtex Medical (SRX), Territory Iron Ord (TFE), Telstra Corporation (TLS), Tox Free Solutions (TOX), View Resources (VRE), View Resources Options (VREO), Walter Diversified (WDS), Woodside Petroleum (WPL), Merrill Lynch Gold Fund, Platinum Japan Fund, Gold Bullion. These m ay change without notice and should not be taken as recommendations. The above disclaimer does not apply to investments held by the Fat Prophets Australia fatprophets.com.au/ /Article Page.as 5/6

6 Fund Limited ACN (FPAFL). fatprophets.com.au/ /Article Page.as 6/6