Here is a post from our resident detractor on another board. Thought I'd bring the exchange over here. Anyone know of the smelting arrangements? I'll ask IR this week.

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First, an initial arrangement was made to transfer the leases, in exchange for stock and future royalties. What was the price paid to the sellers ?

Control of the mine then moved to Goldcorp, put on the books there for $350K or so... Goldcorp management signs up to take a VERY LARGE 15% net smelter royalty... and also pay themselves nice salaries for their management efforts, then, Goldcorp sells the rest of the effort to SFMI... for $1.2 million.

SFMI shareholders are responsible for funding and SFMI for doing all the work, and SFMI has a $1.2 million debt to repay for getting control of the project from Goldcorp. SFMI management gets paid a salary for management of their efforts... even though they are already getting a salary for the same efforts as the management of Goldcorp. Double dipping ? The CEO's wife gets $80K per year. I guess she is a mining engineer living in Boise ? No ? Hmmm.

I also note... there is a contract for smelting services... which is not, like the other contracts, made a part of the filings. Surely they have contracted with a well known smelter... maybe... say... Teck Cominco ? No ? Who IS the smelter ? Since the smelter is in business to provide services to customers, you will be able to find them on the web, advertising their services to others who need smelting services. Probably in the Thomas Register.

What are the terms of the smelting contract ?

I note that the property owners get paid based on a percentage of the RETURN FROM the smelter... so... what portion of what goes into the smelter as potential... doesn't return ???

What I see is a plan for skimming in a three tiered arrangement, that has management taking a cut from the smelter, has them taking a 15% cut from what they don't take at the smelter, and then taking salaries and expenses twice, once from Goldcorp, and once from SFMI. The plan is to have SFMI shareholders fund the development, and Goldcorp will keep the profits. The first $1.2 million that makes it through being skimmed by the smelter and again by Goldcorp... goes back to Goldcorp... which... should be probably be right about the point where the money runs out ???

I don't have a problem with management getting paid or making a handsome profit from enabling the SUCCESS of the business...
I do have a problem with posturing to have shareholders take all the risks, while management gets paid twice or more and takes the profits... upfront... leaving the company unable to succeed after management gets paid.

This looks like it is a plan to have investors fund an effort to enable the transfer of value from the easy pickings in the surface ore... to the pockets of the management... and nothing more.

If that IS NOT the plan, they can fix the structure to show the money will support real development, and not pay profits to management first, along with double dipping on salaries, before funding any other development, and before any other, larger potential for success is enabled...

And the smelter ? Show me the contract... and show it is a legitimate deal with a REAL smelter, and not another shell controlled by management to enable skimming even before paying the royalties to the land owners.