Hey Gang,

I had the pleasure of spending the afternoon with Jim Tilsley on Friday. I requested a visit with him to continue my education on the nature of the Bellechasse deposit and to get his opinion on the potential for its future mineability/profitability at current gold prices. I am very pleased to relay the fact that his health has improved dramatically and he plans to be on the golf course for the start of the spring season.

I will start out by saying that Jim Tilsley is quite optimistic about the future of this project and, in fact, his own words to me were that he is “even more optimistic now than he was a year ago”. I think his excitement stems mainly from the new exploration holes showing similar style mineralization to Timmins 1 in the 88 zones and the potential extension of the Timmins 1 zone along strike to as much as 300m. If we add to that the fact our bulk sampling program has continued provide support for his model that drill grades underestimate the true grade in all of the mineralized zones I think we can understand why his confidence in this project continues to grow.

Want more proof of his commitment to this project? He said that if he won the Lotto649 Jackpot for $50 million he would use $20 million of that money to build an access ramp down to this deposit, bulk sample out of stopes for each mineralized zone and/or send the ore for milling/processing to offset some of the capital costs of the program. His point was – “Yes it is a risk, but at the end of the day you will have the answer to your question as to whether this will be a profitable and mineable resource”. You would also have large enough samples to determine the true grade of the ore. He said the ramp could serve three purposes: exploration, deposit definition and grade determination all at the same time so the seemingly large initial costs need to be compared to the long-term costs of carrying out those three programs separately. And the added advantage is that if everything works as planned the ramp is already built. If I had $20 million in the trunk of my car, I would have given it to him on the spot. I called Frank Candido to discuss the ramp option and Frank confirmed that it is one of the many possibilities that the third party engineering firm will be evaluating, pricing and summarizing for himself and the board of directors prior to a decision being made on the best plan of attack. I am very interested to hear the result of the third party assessment and I remain confident in the company’s ability to prove up the value of the Bellechasse claims in both a time- and cost-effective manner.

Something I also didn’t realize (or remember), was that a large amount of Jim’s academic training and professional experience has been in the area of mining economics and so he is quite adept at crunching the numbers to determine the economic feasibility and NPV of a project. I can tell you that even when we used some of his most conservative estimates for grades (2.5 g/tonne) and tonnage (10 MT in the T1/2 zones), mining costs that are 50% higher than Agnico-Eagle’s, a resulting mine life of 11 years, with the current POG his the numbers predict an NPV (even at 20% discount rate) that is significantly higher than our current share price. I think we all expect that 10 MT will significantly underestimate the tonnage at Bellechasse and I would also mention that these current tonnage estimates are only down to 450 m depth, but that Tilsley remains confident that this thing will be mined down to depths in excess of 1000 m at the current POG and that would significantly add to the lifetime of the mine and of course to the NPV. Tilsley said that he likes to do these “back of the envelope” calculations (funny since he uses Excel spreadsheets) to remind the youngsters on his exploration team that the final objective of the project is to turn dirt into money. Sounds good to me!

I mentioned the market’s tepid response to the 88 zone data and he replied “when have you ever known the markets to be rational?” I laughed and explained that many investors were worried about the widths of the zones in the 88. He explained that in Canada the majority of the gold is mined from stopes that follow veins< 4ft wide and with true grades similar to our own. He indicated that in the 88 zone the vein widths (9-12 ft) are much wider than the average mineable vein width and that every vein has a core that would permit high-grading at the expense of tonnage should that prove a more economical strategy. There is of course more exploration work needed on 88 before we can start assigning tonnage numbers but he reminded me that the only zone where the quartz came to surface, and was therefore fully accessible to surface bulk sampling was the 88E zone (remember Hoov and Bratty’s rind, egg white and chocolate covered caramel analogy). So that means that the quartz did not penetrate the diorite to the surface at the other zones and if we sampled just a little further below the diorite “cap” we would likely get assays similar to the 88E zone for a number of the 88 zones.

We talked about a number of other things including heliophysics, the genesis of the Timmins 1 deposit, and how the brain works (he’s trying to decipher his granddaughter’s behavior) but I won’t get into any of those topics in this post. I am very pleased to see Jim so excited about the recent progress on the property and if that progress continues to prove up more tonnage through the new Timmins 1 extension and characterization of the 88 zone, I believe the longs in this play will be justly rewarded.

Hope you all enjoy the rest of your weekend.

Best,

Scott