I was also at the AGM and agree with most of what bigbuck says. I also asked a number of questions which were answered. I will outline those below. This was my first AGM, my first-time meeting and speaking to Elmer and Ernesto. David McDonald, Michael Smith and Hector MacKay-Dunn were also there. So was Cathy, Michael Smith's wife and a geologist woman who is working on the Arizona properties. I agree there were no more than 30 people there and at least eight of them were company people or spouses.

A disclaimer. What follows is based on my extensive notes made in a darkened room (you could hardly make out bigbuck’s antlers) and my recollections of what was said this morning. I don't want anyone to place substantial reliance on this however. I will echo something Elmer said during the meeting. Don't rely on anything you read on bullboards. Call him and ask him and he will talk to you about any of this.

I don't know anything about geology and mining but I know a lot about cross-examining and reading body language. And I have to say, my overwhelming impression is that Elmer and David believe Schaft Creek is going to be a mine and they believe we are going to be bought out at some reasonable price. Ernesto has some pretty emphatic body language and it was interesting to watch him as Elmer and David were speaking. He is obviously a very enthusiastic and happy shareholder. Lots of nods and smiles.

Elmer regretted the delays we have all suffered through but emphasizes that this is a huge project and that Teck has to do a lot of due diligence. One area where we have all been misled on this board is hearing (in my case believing) that Teck had people at Schaft Creek working side-by-side with and monitoring the company’s drilling. Which would lead you to believe that they could make snap decisions, that they didn't have to do their own drilling and due diligence. Elmer says however that Teck hasn't had people on site since 1985, with the exception of one or two very brief visits looking at some cores.

Another area where I have been misled was with respect to the option (Salazar) agreement, the allegation of the four-year clause and the "gun to the head" benefit it gave to the company. However enforceable that clause might have been, it doesn't exist in the option agreement. Elmer says it is part of the Liard agreement.

The other thing that both Elmer and David were anxious to emphasize was how the JV agreement now "completely de-risks" the financing of the project, to the company's benefit. Under the previous option agreement, they described that there was what they called a "gap" during which the company could have been called upon to arrange its own financing. The company is against issuing new shares and unless it sold part of its 25% position, it wouldn't have been able to fulfill its financing obligations during that gap in the option agreement. Under the JV agreement, that won't happen, the company is along for the ride. There is no need to issue new shares. And the company won't need more funds for 2-3 years at the earliest. Putting it another way, David said that our 25% "can't get diluted out" as it could have under the old agreement.

I asked when the "liquidity event" would occur and that led to Elmer discussing the timeline referred to by bigbuck. Here are some more details. Elmer said that Teck is presently turning four drills, "spending 12-$15 million to move the project to the next stage". The results will be in Teck’s hands before the calendar year end and they're obligated to turn them over to the company forthwith thereafter. Elmer says that when those results are received by the company, they will announce them publicly. Sounded like immediately. That's when the 2-3 months referenced by bigbuck commences. I asked Elmer and he confirmed it would be early spring at the earliest before we were ready to shop our 25% share.

Incidentally, the environmental application and its timing are now in Teck’s hands. There is no incentive to rush it and in fact there is a disincentive from the perspective that Teck doesn't know what size of mine might be supported by Schaft Creek. They don't want to push ahead with, for example, a 150 tpd application only to later discover that 190 tpd is possible (I think those are the numbers he used but I stand to be corrected).

I asked Elmer what he believed Teck would require to make a production decision. I asked if they needed to see spectacular drill results. He said that the area where Teck is now drilling is to the east of an area where the company has already established profitable grades (or words to that effect). Sorry I don't have Chappy's skills at explaining that area or zone. In any event, Elmer said, "grades of .25-.35 would be very good because that would extend our block model". Apparently to a huge extent. In other words, they don't have to find something better, they just have to find that there is a continuation of the grades they are already aware of.

Elmer was properly cautious, giving a disclaimer about the science not being exact and so on. He nevertheless said about Schaft Creek "I suspect it's going to get a lot larger".

David McDonald made an interesting point regarding our operating cash flow (I think this was from the feasibility study) of $500 million per year. He pointed out that if we aren't bought out, our 25% equivalent is $125 million per year, about $.30 per share for 21 years. Between he and Elmer they then emphasized there were all sorts of ways that the $500 million figure could go higher and depending on further exploration and proving up the "district" to 21 years could be vastly longer. They were talking about that in the context of how significantly undervalued we are. Not in the context that they want to hang around until the mine is in production.

The question came up as to whether they anticipated offers would be based upon a premium to share price or pounds in the ground. Elmer's response was they would expect that potential purchasers would look at what other projects were selling for and on that basis we would be valued substantially higher than our current share price. He mentioned being aware of companies that had sold for 300% premiums over their share price. No specifics were mentioned.

Elmer and David both talked about how Teck doesn't share what it is thinking but only tells them what Teck has decided. And when they make a decision, they never back out. They then referred to various factors which they interpret as being highly positive. First, that if Teck was not interested, they would have been long gone by now. They would not have invited the company back into negotiations the same day the feasibility study was delivered. They would not have agreed to the $60 million payments to the company with the $20 million paid already. They would not have four drills turning with a $15 million drilling program. They wouldn't be dealing with the environmental application. They wouldn't be dealing with Hydro, as they now are, over the NTL (and I didn't get the exact figure, but I believe Elmer said it was something over $100 million they have now committed to proving up Schaft Creek). Elmer specifically said that Teck is now 35-$40 million into their efforts (I'm assuming that's $20 million to the company, almost $15 million for drilling and the balance for whatever else). They just don't make those kind of commitments willy-nilly. David said a negative production decision is not anticipated.

Elmer said that quite likely Teck is looking at the 171 M tons of "waste" and not counting it as waste.

It turns out the Port of Stewart access is quite significant. Elmer described there are five slots at the port available for existing exporters. There were only two left and a large number (26?) potential producers who might want one. The company secured one and transferred those rights to Teck. The cost-saving is massive, it would have cost $60 per ton extra to ship to an alternative port.

There were some interesting comments about Van Dyke and Sombrero Butte. I think Elmer said that one or both of them have the potential of being more valuable assets to the company because of the size of the deposits, the grades and the 100% ownership and the lack of any obligation to comply with exploration agreements. On the Van Dyke property alone, they estimate 1.2 billion pounds at .52% copper. I believe Elmer said there is another 2 billion pounds if you drop that to .25% copper. As pointed out by bigbuck, the leaching production costs are relatively modest.

I asked Elmer about the concern regarding water that I had heard on this bullboard. Elmer had already commented on how he can't rely on anything you hear on a bullboard. He acknowledged that of course there isn't abundant water in the area but that there is sufficient water available. You simply have to make a deal with whoever has control of the water and in that context he mentioned the town of Miami. They have hired a former mining guy with Van Dyke experience, who knows everybody in the town and who is helping them line up the water (paying him only $300 per month!). Elmer got into a technical explanation I didn't really understand as to how the water used in the leaching process is reused - I think he said it was a closed loop or something like that. BHP is doing exactly the same thing 400 m away from Van Dyke. Elmer observed that there's obviously enough water available for BHP and Rio Tinto (who are also in the area) to do exactly what we propose to do. They are examples of two potential majors we might eventually sell to.

Elmer also talked about considering new acquisitions. They really believe that the commodities turnaround is finally taking hold and that within another 6-9 months, the real bargains in mining/exploration assets will be gone. So I wouldn't be surprised if we hear something about another acquisition in a very short timeframe. This seems to be consistent with us being one of the very few juniors around who have cash in the bank, a free ride on a joint venture agreement with a major and the ability to locate, purchase and prove up mining assets.

I spoke briefly to Ernesto before I left. I urged him not to sell his shares to cheap and we both had a laugh about that, he said he wouldn't do that, that this was a good project and that he would wait (i.e., for the right price).

I hate waiting. I hate "soon". I hate being kept in the dark. But having attended that meeting today and having reflected the last several hours on everything I heard, I have to say I am very reassured and confident that this investment will eventually pay off.

neofight