I've been reading our MD&A's thoroughly for a year or so now (so.. a couple of docs LOL). Everybody with skin in the game should read them. There are often nuances of discussion and how things are summarized that give a different angle (maybe a hint) on the last Quarter's developments.

I think Elmer's discusssion on 422 while leaving out other exploration targets, for example, is a big hint.

Baja has a number of things that obscure the effect of the rising Capex situation at Bolero. Mount Kellet has been stirring the pot, throwing out accusations and making life difficult for management. Also a bunch of directors resigned on Friday (over what exactly?). There have been a few minor hickups at the mine development site that have impeded progress.

I havent' seen any hints on the direction of Capex costs in our MD&A. We only need to look at rising commodity and labour costs to know that we will face this challenge too. A while back management mentioned rising steel prices being a concern. That should be well entrenched in everyone's dd by now.

Rising Capex is one thing, amoratizing the bigger Capex is another. By massaging the operation (initial production volume, subsequent increasing scale of production, starter pits, and realized grades etc) the Capex and payoff can be adjusted. While a big price tag is not desireable (impediment to development), it is the amount of time for the mine to pay down the Capex cost (IRR) that is the big factor that would determine our value. Schaft Creek is already a big enough mine that only the big boys can manage. The IRR will be what gets the big boys interested in taking that leap.

Here's hoping that the RE for the Paramount is significantly improved and Capex is constrained.

If we apply the 20% increase to Capex that BAJ is realizing to our 2008 Capex (minus the contingency)...

i.e. 2008 PEA $2,423M X 120% = $2,907.6M... an increase of $484M or close to double of BAJ's increase of $250M. That doesn't factor in a larger production volume (more Capex cost) which seems quite likely.

I don't own BAJ and only follow it out of peripheral interest. I think the $250M is not that big an issue for a project of its quality and considering that every mine being developed out there will face the same challenges (recall the level playing field on the world stage). I don't think the world will stop mining over it in the face of increasing population, standard of living and the diminishing quality of future mines. It wasn't that long ago that oilsands were not economical and their costs haven't been going down per se.

mho