John

I have heard it said that big firms farm out projects to jrs if they like the geologists and the management and they can use their resources on other things. I have also seen exploration companies who build up portfolios and form joint ventures so they do not have to spend money at the first point of development. It has also been said that mining companies always need to feed their mills because resources get used up so they need many projects on the go.

Falconbridge to my mind would have been a very reputable firm in the Sudbury Basin/Shaw Dome Area to get a piece of property from. Many of the choice properties would rest with these older companies. When I was doing my DD and searching the web the one thing I noticed was other properties refer to themselves as being "x" distance from this property.

I look at development costs now also. It is not going to get cheaper. The companies that own existing mills will have a much better go of it then companies that are having to go for financing. The price of Ni has been falling. This can affect us two ways. In terms of supply and demand - some mines are going to prove uneconomical. Big Ni producers are getting ready to come on line - others are winding down. We have to be economical.

We do not even have a clue what size this discovery will be. They have drilled to 500 ft. So for $500,000 we take a chance. If we do not like the results - we return it to Xstrata. But for that amount we can really look at a property and have our geologists figure out if we really want it. We as share holders will also see the results of the drilling. Now, what kind of initial drilling can we accomplish for $500,000 in totally virgin territory.

In terms of all the other ramifications, the resource is currently 350,000 tonnes. If the feasibility report shows an economically mineable resource of more than 4 million tonnes and Xstrata meets its financial obligations detailed within the option agreement, Xstrata has the back-in-right to earn a 50% interest in the project.

What we are also not acknowledging is the cost of the work already done on the property. In affect part of the cost we are paying for this property is for the work that has already been done.