In the absence of real numbers for SFMI production and in the midst of the current sideways trading pattern for SFMI, we fall back to trying to calculate how much gold and silver is in the big bucket so far. Granted, it would make us all feel better to know that we had a lot of gold and silver in there by now. I know I would feel a little better. But in the big picture, does it really matter all that much what is in there today?

My guess is that we probably don't have as much actual gold and silver harvested as we tend to speculate. My thinking is as follows. We were told that it takes about 6 months to tune a mill circuit. At this point, SFMI's circuit has been running about 5 months. The startup certainly would have been slow, just turning the different components on and beginning a minimal flow rate of material. How long does it take to optimize a ball mill or a falcon or to find the optimal mix of water and solids for the process? I have no idea, but I believe that the adjusting of multiple variables like this can be quite complex, even though we as investors just view it as grind it, spin it, shake it, collect it, smelt it, spend it. Turn a knob too far this way and too much waste is left in the concentrate, too far the other way and a whole day's gold and silver go out the back door. Run too fast (150 tpd) and your gold and silver percent recovery drops and you increase wear on your machines. Add to that equipment failures (pumps, plumbing, etc.) requiring shut downs or slow downs. My guess is that things were just beginning to get "tuned" only recently, and that in spite of the water problems that we have heard of. That points to an average low yield from our "trash" material (5-7 grams per ton).

So, my guess is that the current concentrate is not that great, maybe significant volume but relatively poor quality overall. I tend to think that the early concentrate was really bad, that from a couple of months ago fairly poor, and that recently may be good, giving an overall average of poor. Counter that with info that the water problem may be nearly solved and the better grade ore is at the door. If the mill is now largely "tuned", I don't really care much about Phase I. Phase I was not for revenue generation, it was for tuning the mill. Now I have higher expectations for the mill.

Let's play with some conservative numbers. The next ore is supposed to have 2-4 oz gold per ton. Let's assume 2 oz per ton and a 14 to 1 silver to gold ratio. Let's assume that the mill can soon process 100 tons per day and that the efficiency of recovery is 50%. With that scenario, we could get 100 oz gold and 1400 oz silver per day. That amounts to just over $150K per day, just over $1M per week, etc. And remember, our "good" ore was the trash that the old timers threw out. Wait until we get to the real stuff in the mountain, then recalculate.

I'm from the Detroit area, Motown, and I can't help but think of the song RESPECT by Arethra Franklin. I wish she would write one called PATIENCE for us while we wait for news and better share prices. For now, sideways trading, no problem. For now, no news, no problem. I believe SFMI "ain't gonna do you wrong".

http://www.youtube.com/watch?v=nwPEHeRa39k

Enjoy,

Osprey (JMHO)