The present depressed state of most gold stocks leads me to believe we should not expect to get enough $/oz. for SFMI in a 2009-2010 buyout by a large Au. co.

A recent article by Barry Sergeant of April 8, 2009 listed his "20 top potential target acquisition" gold co.'s that collectively hold 258 mil. oz. Au, BUT said in-ground Au is only valued at an average USD $32.60/oz.

Doing some math seems to indicate that selling an estimated (end of 2009 drilled indications) 2 mil. oz. Au equiv. SFMI for $50./oz inground resource ($50./oz. would appear to be a high offer ) only raises $100 mil. divided by 78 mil. shares = $1.28/share as our sell-out price.

When you compare what the WEM mines can produce when they really get going with a new large mill at Sinker Tunnel, we as shareholders could be making $1.28 dividend /yr for many yrs.

What would it take to produce $100 mil./yr.? Assuming there are 3 mil. oz. Au-Ag in WEM now, that turns out to be 12 x the known production of Au-Ag from WEM from 1863-1934. If we produce half of the 3 mil. oz. Au-Ag in the next 12 yrs, then we would produce on average 125,000 oz./y Au equiv. @ $900./oz. = $113. mil./yr before rent, taxes, COP, or 15-85%split. This $113. mil/y would return approx. $1./share/yr. as profit for the 12 yrs of production on WEM.

Could our present mill deliver 125,000 oz. Au-Ag/yr.? Yes. Div. 125,000 by 365 days = 342 oz. Au-Ag/day. Using the 400 t/day mill, the per ton Au content would only have to be .85 oz. Au/t to equal an output of 342 oz. Au/day.

The point is that selling all of SFMI for a total per share return of $1.28 is one twelfth of the return/share if we mine WEM for ourselves and wait for the sp to go up on Au prod.

If we mill each day tailings of 5.1 g/t Au and 72.7 g/t Ag for 400 t/d, then we make $18. mil/y profit (rent, COP, and split to GC already out). $18. mil. profit div. by 78 mil. shares = $.23/s profit/y. Now for P/E. Kitco Metals analysis pg. shows large and med. Au co's with P/E averages in 2009 of 24. Kitco shows small cap Au co's with P/E average in 2009 of 20. Take your pick. To be conservative, try 10x earnings for SFMI in early 2010 at $2.30/s, which I think proves the point that shareholders should not accept a takeover bid of $50./oz. Au in-ground from a larger Au co. Waiting for WEM Au-Ag production to take off in 2010 to (?) $50. mil. profit/y. would be $.64/s profit x P/E of 10(?) = $6.40/s.

I think shareholders will make much more by letting investors buy up our sp as Au-Ag prod. really begins to produce in 2010. If the price of gold does go to $1500./oz, and we sell out for even $100./oz to a large co., they will be laughing all the way to the bank at buying us so cheaply. Selling 2 mil. possible WEM Au oz. @ $100./oz in a buyout would only net you $2.56/share. That is still peanuts compared to what we can make producing ourselves.

The 2-4 mil oz. Au equiv. estimates I used are within the stated values for WEM by Idaho Bureau of Mines.

I hope to start a discussion with the rest of you concerning the relative merits of selling WEM at prevailing takeover offer ranges of $30-50./oz Au drilled and proven.

I expect to make the largest profit possible, even if it means holding SFMI for 3-5 yrs(?) while the investors drive up the sp.

I welcome comments and further analysis.

Ed