We are advancing our two main projects as fast as we can even with the uncertainty in the markets.

To ensure we can finance our upcoming obligations, we have recently closed a $110,000 private placement and have closed $170,000 of a $250,000 flow though financing, of which Graeme O'Neill, the President & CEO, is participating in approximately 25% of the total. The balance of the financing has been spoken for an we expect to close it before the end of this month.

On the oil front, we do not believe that many investors have yet grasped the significance of Saturn Minerals announcement that it has identified a new closed structure on the Bannock Creek property last week, so let us do some math.

The newly identified, 480 acre closed structure, has a reported potential for up to 38 million barrels of oil. This structure is in addition to the earlier announced 1,920 acre structure and both structures are close proximity to each other. If the 480 acre structure has the potential for 38 million barrels, the math for both structures becomes quite exciting. The ultimate potential is world class. These two structures cover approximately 4 square miles, or 1.9% of the 123,000 acre Bannock Creek Property. With two structures already found, what lies under the remaining 98.1% of the property?

Saturn decided to change the drill program from the first identified 1,920 acre structure to the newly identified structure, hence the delay in drilling, and is presently permitting the first well on this new prospect. Once drilling commences, the results should come very quickly. Any positive results should be very beneficial to the Bayhorse share price.

There are an allowable permitted maximum of 8 wells per square mile so we could see as many as 32 wells developed in these two structures alone. At an average of between 125 - 140 barrels a day per well (assuming all wells hit, and based on estimates in the recently filed technical report on Little Swan), and assuming all wells are completed and producing, the daily production could be as high as 4,000 barrels a day of light sweet crude.

The estimated production cost is C$20 - $30 a barrel. As light sweet crude is currently quoted in US$ at approximately US$50 a barrel, the potential gross daily revenue could be as high as US$200,000 or C$255,800. Subtract estimated daily cost (C$120,000) from estimated daily gross revenue (C$255,800) and the math says there should be a potential gross margin of C$135,800. Per Day. No wonder that we consider the Farm-In Agreement with Saturn to be in our shareholder's best interest

Tundra Oil & Gas, a Richardson wholly owned subsidiary operating to the south-east across the border in Manitoba, has been producing +/- 26,000 barrels a day at, we understand, approximately C$15 barrel and the Tyvan pool has been producing since 1999 at approximately C$20 barrel. It is worth noting that the Bannck Creek and Little Swan properties are similar in geology and economics to the Tundra lands and Tyvan, as previously reported.

The current seismic on Little Swan is showing similar structures to Bannock Creek, and the new round of seismic, currently underway, should enhance our understanding of these structures. The same math that works at Bannock, is applicable at Little Swan.

We have filed an updated NI- 43-101 report on the Bayhorse Silver mine, that incorporates the information developed this past year, and also includes relevant information on the historic resource of approximately 160,000 tons at between 17 and 20 oz ton Ag. This report can be viewed on our website at technical-reports