In response to a colleague's recent inquiries about Kimber I penned the following piece. I think many of you might enjoy it and also might find it useful when discussing the Kimber Story with others. It is a bit long, but outlines many of the strategies and great minds that have gone into the early stages of making this company. Keep in mind, this is my take on everything. Certainly when you are talking about people whom I would term expansive or "outside-the-box" thinkers like Jim Puplava and Eric King, their motivations for doing the things they do are undoubtedly multifaceted and complicated, but I've tried to take the information we've all been given over time and put it together into a simple and rational framework that all of us will be able to look at and reference involving present and future events. Bull

Joe,

The Kimber story is a very good story. And relatively undiscovered. I stumbled upon it almost by accident. The Monterde property includes the site of what was once the old underground Carmen Mine. The mine was operating from 1937 – 1945 and produced approximately 50,000 oz of gold with a cut-off grade of 15 g/t.

Kimber bought the rights to mine the property about eight years ago with the idea of going down into Mexico and using modern mining methods, (economical at ore grades in the area of one (1) gram per ton) to try and extract ore from the old site. Kimber has a mining concession with full rights to use and exploit the land for at least the next 50 years.

The original management went in with the idea of setting up a mine and going into production as soon as possible while simultaneously funding a small exploration program. Initial drill results, however, demonstrated potentially very large, and up until then, somewhat unsuspected mineral reserves. Thus a battle between ideologies began to set itself up between the original management, who wanted to go forward with building a mine in the hopes of going sooner into production, and a group of investors led by Jim Puplava, the single largest individual shareholder then and still at this time, who possessed a slightly different vision.

Puplava had the idea to pattern Kimber's growth after Silver Standard CEO Robert Quartermain's philosophy. Quartermain, Silver Standard's maverick and forward-thinking leader, saw early on the economic and political conditions that in his view would ultimately insure the future rise of silver prices. Therefore, he started about fifteen years before these events were transpiring at Kimber by commencing to buy up silver properties all over the planet at very low prices. He bought without an immediate plan to mine, but primarily to just accumulate resources. The mining would come years later when the price of silver rose in accordance with his vision. So for several years, he continued adding to his company's silver assets until now, as of this date, Silver Standard has easily amassed the largest in-ground silver resources of any company in the world, readying itself to soon go into production.

Puplava imagined the same type of plan for Kimber. Understanding that the gold bull market was for real, intact and moving, he reasoned along the lines of one who would ask, "Why mine and sell gold at present prices when Kimber can spend money now locating greater amounts of it and, well into the future, sell it for three or four times today's going rate?" The logic was compelling, but depended on a significant rise in the gold price. This price rise subsequently began in earnest and continues although not completely unabated, to this day.

Puplava's plan and vision were much more expansive than the founders'. And such differences in sentiment were soon to result in a significant amount of friction between what was rapidly becoming two rival ideological factions within the company.

About this time, Puplava and a close business associate, Eric King, had also formulated a fascinating business thesis that they had christened the "Pac-Man Theory." Together in 2004 they had detailed it in a co-authored paper entitled, "Open the Checkbook-Buy the Ounces," released on Jim Puplava's Financial Sense website. The ideas behind the Pac-Man Theory came from personal experience and studies Eric King had done involving, most notably Cisco Systems and its methods of using its rising stock as currency to finance growth by taking over companies during the great tech boom in the later half of the 1990's. King was quick to point out the self-perpetuating beneficial nature of this strategy. By using its stock to buy other companies, Cisco could grow much more quickly than competitors. In recognition of this ability, the market responded by promptly and continually repricing Cisco's stock upwards. This in turn facilitated Cisco's ability to repeat
the process. It was a beautiful and virtuous cycle, and the process took valuations involving Cisco's stock to what might be termed stratospheric levels. This did not go unnoticed by Eric King at the time.

What King also noticed involving the gold industry in and around 2000 was how highly fragmented it was. During the difficult period of the 1980's and 90's when gold was languishing and the Dow was climbing year after year in a seemingly unstoppable fashion, many mining companies, out of a sense of simple self-preservation, had to do away with their exploration departments, setting loose upon the world a huge number of adventurous and often very ambitious and talented geologists to explore and create their own new projects. Many went out and had great success at finding valuable, new deposits and starting potentially valuable, new "junior" mining companies.

Believing that gold, after a twenty-year hiatus, was primed and ready to enter into a major bull market, King formulated the theory that in order to grow assets, large miners would eventually be forced into making acquisitions of these small "junior" or non-producing exploration companies in order to grow, compete and thrive. He envisioned that as the price of gold continued to rise a "Pac-Man" like scenario would occur, where bigger companies would essentially "gobble" up smaller resource-rich companies rather than have to spend their own capital to rebuild their own long-defunct or poorly functioning exploration and development departments. It would be a win-win situation for all involved, provided, of course that gold continued to rise, which King believed to be an almost inevitable certainty in light of economic conditions developing both nationally and internationally at that time. In this assumption, King would prove to be dead-on correct.

So, after a proxy battle led by Puplava's investor group in late 2006, a significant reorganization of management and the Kimber board took place. The focus of the new management at Kimber was to "prove up" as many ounces as possible and set the company up as a takeover target, a strategy that Puplava and company have aggressively continued to pursue to this day.

Kimber has a measured resource officailly at this time of over 2 million gold equivalent ounces with a drill program in place that has a good chance of "proving up" another 2 million ounces within, perhaps, the next 24 months. Four million ounces of reserves, in the gold mining industry, is considered by many as a meaningful benchmark for any junior miner. Notably, during a recent interview, Sean Boyd, CEO of Agnico-Eagle, made reference to a deposit of such size as one that could be considered "world-class." With less than 5% of its entire land package explored, and a well financed drilling program presently in place that is regularly intersecting new high grade ore bodies, Kimber is in a very good position of soon achieving that coveted "world-class" status.

Why does no one know about this company yet? This is a good question. Why didn't anybody know about Steve Jobs and Steve Wozniak when they were building the Apple I in Jobs' garage in 1976? Some people did. When I lived out in Santa Clara one of my patients was a man named Michael Baum, the son of Elmer Baum, who loaned the two Steve's $5,000 to help build that first computer. In a later interview upon the elder Baum's death, Wozniak stated, "We would never have built the Apple I without that loan."

In short, all great ventures must somewhere start small and, initially at least, mostly remain unknown. It is my view that we have found such a venture of magnificent potential here with Kimber Resources.

A diamond in the rough, Kimber, as a non-producer remains at least for the moment, priced like an explorer would be, an explorer without assets or proven reserves. Yet Kimber is a prime takeover target because it does have assets and reserves of very high quality. Because of its location in a very mining-friendly jurisdiction in Mexico surrounded by already-producing mining operations, these assets take on an even more valuable function.

All that is needed now is a little bump in the gold price and therefore a little bump in the profits and aspirations of the bigger producers that surround Kimber on all sides. Agnico-Eagle is there, Goldcorp is there. Minefinders will be producing in a few months, and it is there. Any one of those companies could take over this project for a very nice premium within the next year or two.

I would remind you here that the Palmarejo project, positioned about twenty miles to the west of Kimber, with similar ore grades and with about two million gold equivalent ounces at the time when it was taken over, went for $13.76 a share in 2007 when gold was priced at less than $700 an ounce.

I hope this brief essay has informed you all and helped bring into better focus some ideas you have held involving this very unique and special company involved in a very unique and special position in relation to this still-burgeoning gold bull market. I hope you will agree with me that the Kimber story remains a very compelling one. The opportunity we have all been presented with at this time, in this place, is a very fortunate one. I wish you all well in drawing your own valuable conclusions, studying the messages and signs of the times and in looking forward to the greater opportunities ahead. Bull