Spiny and Pic

Thanks for your kind replies. I appreciate your willingness to share your perspective and reasons for owning GHDC. Even though I have chosen to be a silent voyer here in recent times I have grown to appreciate and respect both of you for your great contributions to this board. So please don't percieve this discussion as in any way intended to be adversarial. I'm just feeling the need to allow my understanding of the facts and situation to be veted and challenged so I don't miss something important and potentially profitable. Please endulge me a reply to a couple of your points.

Spiny

1) You make the assumption that in some cases both GHDC and New Vision could both get 15% on the same ore. This is the exact question I posed to PQ at last years SHM. I was concerned that this might be the case and this would obviously not be good for SFMI. He assured me and 3 or 4 others listening in that this would NOT ever be the case. The understanding I came away from the conversation with was that the royalty would be paid based on what ever hole (claim) the ore was mined out of.

2) You seem to minimize the point that SFMI creates leverage because the companies profit margin grows significantly as the price of bullion rises. You say "SFMI's leverage presumably will not be very great" and "that leverage is relatively small and limited". I would encourage you to play with some numbers a bit more and see if you still feel that way. You provide the example that when gold rises from $1,800 to $3,000 per oz SFMI's net profit margin will rise to 68% and that is "only a 20% increase". Yes but we're talking a 20% increase in "PROFIT MARGIN" not in profit. The NET PROFIT for SFMI rises in this scenario from $1,030 per oz to $2050 (your number). This is a 100% increase in NET PROFIT not just 20%. During this same scenario the GHDC gross revenue (NOT net profit) stays stagnant at 15% so it's revenues increase from $270 to $450. This is only a 66% increase. The concept becomes even clearer when you look at what happens when the price of gold goes from $1,000 to $3,000. When this happens SFMI's net profit rockets from $400 per oz to $2,050 per oz (over 400% increase) while GHDC's gross revenue only increases from $150 to $450 (200%). We must also keep in mind that this comparison is completely unfair to SFMI because we are factoring in ALL of the SFMI's business expenses and assuming ZERO expenses for GHDC. In other words we are comparing SFMI's increase in net profits to GHDC total gross revenues before any expenses. If we factored in any expenses at all for GHDC the power of the leverage would be even more obvious. If GHDC actually follows through with their stated business goal of purchasing and exploring new mining properties their business expenses will, like every other explorer, be massive. If they do this it seems likely they won't see any significant net profits for at least a decade or more, if ever.

Pic

Fair enough if your primary basis for investing in GHDC is the recommendation of someone you trust. That is worth a lot especially if your friend is as smart as you are. But I guess for me it would be helpful if the person making the recommendation could give me some substative reasons for their recommendation. It is true that PQ and others (your friend?) have a large stake in GHDC. But keep in mind that for the most part these major blocks of shares were not purchased on the open market. They were awarded when the company was first formed or shortly after as the BOD was formed. This was well before the Sinker Tunnel deal and New Vision came into the picture which significantly changed the equation and potential for GHDC. When this happened PQ, and presumably other major players, were also given large positions in the new entity (New Visions). This way they are assured of their royalty cut no matter where the ore comes from. It also seems to me that a recommendation from one of those major GHDC share holders is unavoidably tangled in some conflict of interest because unless a significant market can be created for GHDC shares (which so far there is not) it will be impossible for them to ever liquidate a significant number of shares without tanking the stock price.

These are just a few more thoughts for your consideration. I welcome any additional input on the topic from either of you or anyone else who has a serious perspective. However, I have no interest and see no benefit to a protracted debate. If there is a little more dialogue that helps us all come to our own conclusion then great. But then lets move on to encouraging each other to remain strong and long as we anticipate the success and profitability that Lord willing will come to the shareholders of both SFMI and GHDC.

Silver Falcon (aka Mr Z)