Hi Guys!

I sold a few shares today at $2.68 to get my remaining position down to zero cost average. That was always my strategy, although I admit it was very difficult to follow through when the stock was on such an uptrend.  However, to reply to some of the questions raised here, I will just resort to how the emerging discovery group has traded.

I think the two big plays in this cycle have been Virginia and Aurelian.  Virginia was taken out by Goldcorp before a resource estimate was compiled, but most analysts suggest about $200 per gold ounce in the ground was the premium.  That would roughly measure up with the Goldcorp takeover/merger with Glamis Gold as well.

Aurelian is assumed to be about a 10 million gold ounce play at present.  The stock has a market cap of about $1.3 Billion.  So that works out to about $130 per ounce in the ground, and again I do not think that estimate has been proven with a compliant report.

So if KXL trades at $10 per share, that would generate a market cap at the current share structure of $750 Million.  In comparison to the peers, assuming about $150 per ounce in the ground, that would represent about 5 million ounces of estimated resource.

Now I am as bullish as can be on Hercules, and I think it is going to amount to a very significant discovery, but I think it is a long, long way from 5 million ounces.  I think a rational argument can be made for 1 million ounces right now.  If more drilling data shows that the deposit is continuous to depths of 100m or more (and I think it will) then we can start talking 2-4 million ounces.

My point is very simple.  I think the company is a great success story.  But it is going to take a lot of work to get to the kind of discovery magnitude that some people are already pricing in to their price objectives.  Discovery plays have a tendancy to get ahead of themselves.  KXL was a victim of that on Caribou speculation about 18 months ago.  So be careful here.  Take some profits off the table, and keep dry powder to go shopping when the next correction hits.

I do think the company is going to prove up a significant deposit area, and expect that there is a lot of upside ahead.  But it wont happen tomorrow or next week.  Keep it real.

cheers!

COACH247