Good Evening NOT

To the point.

Lets hope there is some substance to the rumours of another hit of nickel… while we wait, why not consider a different way to raise some money, should the need arise…

Perhaps I’ve missed it, but, there seems to be little talk lately about selling a royalty to raise money… given our depressed share price, perhaps this would be another financing option to consider. Remember, Pierre Lassonde runs one of the premier royalty companies in the world… he is also one of our major shareholders. Maybe we could seek his counsel. It got me to thinking….

I wouldn't mind sharing a bottle of wine with Pierre Lassonde.... shoot the breeze and learn from someone whose paid his dues, and succeeded...

If I could speak with Pierre, I would want to learn more about the royalty business. I suppose by the end of our second bottle, the give and take could end up something like this…. I digress.

“Pierre, lets get this straight… NOT has over 100 million tonnes of high-grade chromite and you want to buy a royalty on it. " cwallace stated with a slight slur.

“cwallace, between NOT and the NOT’s jv’s there is enormous chromite potential and rich grades… if we purchased a royalty from NOT, our money would be spent advancing this project to the point where a major would have difficulty resisting a buy in or an outright takeover… the major would then help move the ROF project toward production. cwallace, can I top your glass up?”

“Thank you Pierre, yes. Pierre, can you educate me why you would pay for a royalty rather then by NOT’s equity shares… most would say NOT's share price is currently cheap.”

“cwallace, when we buy a royalty, we give NOT funds to prove up the resource… we think NOT has a beauty find here… and if we are right, when it’s time to turn the Ring of Fire into a producing mine, we will have nothing further to contribute. Our monetary obligation is complete.

NOT, or a major, will have to raise funds to put tremendous infrastructure in place… this may require issuance of stock, taking on debt, or at minimum, a major shelling out significant cash. In the process, our royalty will not be diluted, in fact, our royalty will theoretically gain value as we will be that much closer to production. In this scenario, it is easy to see how an equity investor could suffer dilution. cwallace, if we were to buy a royalty on the chromite find, say a 3% royalty, we would not have to make any further payment to receive our return.

Our greatest risk, of course, is the project never turns into a mine… but, if we are correct on the ROF, this project will move into production one day. When the ROF moves into production, we begin to receive substantial returns on our investment. Remember, this royalty can pay us for years and years as a steady cash stream… as long as the mine produces, our further costs are NIL, and we will take payment, regardless of whether the price of the chrome is where it is today, higher, or even 90% lower… we still get varying degrees of cash flow. This project will be a cash flow dream for many, many years.”

“Pierre, the million dollar question and without getting to bogged down in the various styles of royalties, what is a 3% Royalty worth? “

"Discounting cash flow into the future is a bit of a guessing game because we don’t know what the price of chrome will be, and we don’t know when it will go into production, if at all. But, if a mine is built, we know there will be production for many years.

Lets say NOT or a major can get this thing up and running and producing a million tonnes per year and the price of chromium is $150 per tonne… if we were to receive 3% of that cash flow, we’d bring in somewhere around $4,500,000 per year. That stream could go on for years… when you play with the math, you see if production increased or price increased, there would be some incredible years… conversely, there could be years where we make very little.

cwallace, you tell me what that cash flow is worth… if you could buy a 3% royalty on NOT’s Chrome for $18 million, would you? Or would you buy 10% of NOT's common shares, assuming you could get the shares… Which would you do? And as shareholder cwallace, which would you prefer your company did? That royalty will stay with the title of the land and will hold tremendous value to someone someday.”

“Good question Pierre… I’m sure Richard and the boys have considered the best option to take… hopefully they have played around with the royalty option. Pierre, what say you we order one more bottle and get Canseco and D12 down for a glass to discuss further?”

“Now that sounds like the best financial decision we’ve made tonight.”

end- back to reality

Now I know I haven't gone in to great detail on royaties... anyone wanting to further investigate will not find it difficult to find information. The purpose of my post is to discuss another option, in addition to equity issuance, that hasn't received much discussion.

How much money do we need and how do we raise it? Assuming we get a beauty hit and our share price recovers, I’m OK with issuing equity at much higher prices… but, perhaps we should discuss the royalty option… and at minimum get Pierre’s company to let us know what is reasonable.

regards

cwallace