Hi Sam!

Yes, hitting a vein structure at depth is a lot like dropping a penny from a skyscraper and trying to put it on a manhole cover. But it is also true that with every drill core the company completes, they learn more about the geology of the project and therefore get a better handle on where to drill the next hole.

The company has already established a trend to the higher grade zones of the vein, and smaller parallel veins have been encountered within the overall system. The fact that the entire project is so intensely mineralized is also a good problem to have.

KXL has the advantage of attracting some very talented geos to the exploration program. I have met some of the guys that are running the program and these guys know how to follow up on the early stage results. If there is a big deposit at Hercules, I think they will find it.

Within a vein system the gold values will not be evenly distributed. There are going to be higher grade zones, and there will be parts of the vein that have almost no gold values. The vein itself will also be variable, swelling to wide intervals in some places, and pinching off to very narrow intervals elsewhere. This uneven distribution is not just random. It comes down to the plumbing of the vein, where enriched fluids may have been induced to precipitate the metals due to chemical reactions with the host rock, or perhaps a change in presure, temperature, or pH. Perhaps the confluence of several structures at depth is where the highest grade zones will be. It may depend on several pulses of thermal activity that affected some parts of the vein and not others. There are just so many variables to investigate, and as many have already pointed out, we are only scratching the surface so far.

As the company continues with the exploration work, they will start to find out what the factors were that generated the higher grade zones, and they will begin to narrow the search.

I could outline literally dozens of mines that encountered the richest grade and tonnage as they extended exploration to greater depths. The Goldcorp Red Lake mine and Kirkland Lake's South Mine Complex discovery are just two recent examples.

I do not think that much of a resource has been outlined so far. But what has me excited is the extent of the high grade intervals that have been encountered and the potential that we are going to see a significant ore zone (and possibly several) as the work continues. In mineral exploration, where there is smoke there is usually fire. If a company is financed to go about discovery, and has the right people in place to do a thorough program, then its just a matter of time.

A final point: I am very happy that we have not hit a big discovery zone yet. In this market, the news would just fizzle and then the next results would disappoint the market. KXL is going to be busy at Hercules for years, and they control most of the district. There will be lots of noise from this project before its all over, and anyone that wants to participate will have to knock on our door, hat in hand. This market is going to end like every other precious metals bull market - in a frenzy. When the world is paying attention, and juniors are going up 5 and 10 percent in a day, that is when I want to hear about fat new high grade discovery zones at Hercules.

I have accumulated about as much KXL as I can afford right now, or I would be buying again this week. Now its just about the waiting. The biggest money in a resource bull market is made by those who buy before the herd get excited.

cheers!

mike