I chatted for about 20 minutes this a.m. with Neil.  We discussed SPQ's joint ventures so that the retail investor might understand how they are structured.  Neil and I also discussed Why they are structured they way they are.

KWG's latest NR raised some eye brows with its 50/50 wording.  The most important point underlying this wording is that Neil Novak's business approach to the McFauld's Lake area plays is very different than that of Mr. Smeenk (KWG).  This difference brought a "divorce" (layman's terms) whereby all of the work, which SPQ & KWG had done up until 2006, would be split 50/50 including all expenses until that time ($29 million).

Some background history: In 2004 Spider Resources was approached by a large company proposing a takeover.  Neil (SPQ) recognized that the McFaulds #1 & #3 needed a "major" to mine the VMS discoveries.  However, Smeenk (KWG) did not want any other partners.  Heated discussions took place (which included, I expect, company lawyers involved).

In 2006 SPQ and KWG decided it was finally time to focus on projects of specific interest ("the divorce").  KWG wanted to focus on MacFadyen because it has the kimberlite.  Lawyers got involved which yielded this very confusing and similar wording found in many of the joint ventures: "SPQ has elected not to participate in funding the MacFadyen exploration program until its 50% JV interest has been reduced to 33%." 

Neil explained to me the mathematics of this clause but it very convoluted - so don't worry about it.  However, PLEASE NOTE:  It is highly unlikely that SPQ will invest in MacFadyen.  HOWEVER, the above clause is like a backdoor for SPQ in case something really good is found.  AND THE SAME, but in reverse, goes for the Kyle, McFaulds Lake properties, the Diagnos and Wawa properties.  KWG DOES NOT want to invest any money in these properties - but has a backdoor.

Neil and I also discussed the Freewest Option property.  A news release came out shortly after our discussion.  A drill contract has been signed, and drilling should start in the next couple of weeks.  Dr. Lahti will be up at McFaulds next week.  I, for one, appreciate the very methodical approach that Neil is taking.  It increases the likelihood of some very good drill results and assays. 

With regards to the McFaulds #1 and #3, Neil met with Jim Voisin this week.  They also have interim aerial data.  UC Resources is the operator on this project and a detailed project plan is forthcoming.

A few final points on SPQ's JVs:

1) SPQ and KWG are "joint" only on paper.

2) JVs take a lot of time.  For example, any negotiations for work on a property e.g., the Freewest Option requires three sets of lawyers.  So joint ventures are great because the bring in more exploration money and help share the risk, but are not so great (for the investor) because they take more time.

3) SPQ & Noront as sharing a booth at the upcoming PDAC conference.  Neil will be there should you wish to meet him.

4) SPQ and NOT will have drill cores at PDAC.  Neil said that Dick Nemis also wants to try and get a complete hole drill core.  Should be interesting.

5) Below I have included my interpretation text of the SPQ JVs and percentages which I faxed to Neil yesterday.  Neil reviewed it and found no issues.

I have endeavored to make my discussion as thorough as possible without writing a thesis.  I apologize if any errors have inadvertently snuck in.

Snug

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4. On or prior to the third anniversary date [March 7, 2010],  UC shall give notice to Spider of its intent to continue the option for a fourth year [March 7, 2010],  in which case it shall be required to incur exploration expenditures of at least an additional $1.25 million on or before the fourth anniversary date in order to earn an additional 15% vested interest in the Property bringing the UC interest level to 55%;  22.5% SPQ / 22.5% KWG