I would caution that people need to be aware of the biz plan for KXL regardless of the underlying market conditions. The company went ahead and completed a major financing last year specifically so they would be able to continue exploration without having to worry about the market. So now that we are in fact struggling through a very nasty credit crunch, I do not think the company should change their plans now. They have the money in the bank to continue for several years.

Keep in mind that it has only been about a year and a half since the original discovery at Hercules was reported. However, we should also keep in mind that a hell of a lot of drilling has been done since then, and we are still waiting for the first real economic deposit to be uncovered. My point is simply that there is great upside ahead, but also that it will take a long time to get to the pot of gold. If we suddenly wind things down now, we are putting off until very much farther in the future any potential for investors to make money.

I have not seen any tendancy towards irresponsible spending from the KXL management. I can think of dozens of juniors that literally pissed away the money they raised so easily earlier in the cycle and now have nothing to show for it. Late in the last cycle there were a lot of companies that had cash in the bank, and they just wound down activity to continue paying management expenses until all the money was gone. Then they became tech companies.

We have to remember that KXL is a mineral exploration company. As an investor I expect KXL to remain active and to continue with prudent exploration work. We have to remember that the time frame is often several years in order to prove up a deposit, if we are lucky enough to find one. Just because the sector is on its ass today, does not mean that a year or two from now it will not have recovered. If we hold off activity until then, and then it takes another couple of years to prove something up, how many people will have the patience to wait for that?

KXL should keep going to follow up on the early success. We do not have to fight to get access to drills, or sector service companies, or assay labs. There are fewer active companies out there now competing for investors attention. Gold has held up well despite the intensity of the correction, and majors will still be interested to acquire good projects. And we have the money and people in place to carry on. So getting conservative now and winding down is a mistake.

Maybe by next year the worst is over. Maybe gold will break through the manipulation and trade above $1500 by then. Investors may be coming back to the sector by then. Where will the money go? Will people buy crappy juniors that have been on life support and accomplished nothing for several quarters? Or will they be buying stock in a company like KXL that has been carrying the ball and hopefully reported several huge high grade zones as a result?

I lived through the bear market of 1997 and it was no picnic. But the sector survived and it took just a few years to come back. This time will be no different.

cheers!

mike