With Conplats Resources bidding war continuing, I was interested in the aspect of the deal whereby one of the buyout options includes cash per shares, plus a share in a new junior, set up with cash and some properties to develop. So I put four scenarios to Dave Webb, asking which would be better in Tyhee's case (better for the shareholders, in the next few years).

Scenario A: Sell off something like Clan Lake to rasie some cash to put into the development of the mine at Ormsby.

Scenario B: sell of the mine project at Ormsby, along with NIck Lake, and come away with loads of cash for shareholders, and shares in Tyhee continuing to develop the other properties, including Clan Lake.

Scenario C: sell it all, payday for shareholders. Tyhee has to find new properties elsewhere.

Scenario D: sell nothing. Keep the entire constellation of Yellowknife properties, go into production and even gobble up more claims.

DW replied with some new information. (paraphrased, next).

Any partial buyout would leave Tyhee still active in the region, and the new buyer would not want tyhee in competition in the yellowknife region. So that kills A and B.

Tyhee has consistently maintained that they are committed to bringing their projects into production, and to lever off of that production to grow the resources in the YK area as well as ultimately into other areas.

If a full buyout were considered, with no remaining properties in the YK area, Tyhee would then look at some properties in other areas. The idea would be to use the expertise Tyhee has developed in finding gold using their techniques ("DNA") of finding gold in archean belts, and look at such areas as Red Lake, Timmins, Val D'Or, Kirkland lake etc. These areas have long histories of exploration and being staked off, however, and these properties are very higly valued by their owners (who think they are sitting on a mother load), so the entry costs are higher. This is consistent with the fact that when I firste compared Tyhee to Romarco (back when it was about 40 cents), DW told me that he had looked at that area in the past. So as much as they are focussed on the Yellowknife camp, they keep abreast of other areas and probably have some in mind for the future, presumably where their techniques could find gold in areas that are not currently being explored?

With what DW said in mind, my conclusion is that there won't be any buy out, nor partial buy out, and they will go into production. There are lots of other smaller options, including various types of Joint Ventures that could help Tyhee bring the properties into production, but as nice as those are, they are not the core question I am interested in.

When asked about aspects of financing, DW told me that finding cash for a $150 million dollar project will not be that difficult. Financing is available. The rub is what proportion will be debt, what proportion equity, and what will the the timing of such a deal.

As to debt/equity, DW said that in the past five years, most single asset companies did more debt than equity in bringing their projects into production.

To me that means something like more than 50% would be debt, and less than 50% would be equity. Supposing 40% equity of 150 million, that is $60 million. That's how much Tyhee would have to raise as equity. To raise that much, at the right timing, would be to issue more shares. Also, debt financing always includes hedging covenants (at least until the debt is paid out), and Royalty sales are another option (which has been discussed here on Agoracom).

According to the regulatory process / timelines and milestones which we know Tyhee has to get through, that decision would be based on having completed the environmental assessment process, and have a permit in hand or assured. So in 2010 we'll have the pre feas to demonstrate the economics, and have sumbitted the DAR to start the DAR Review by MVEIRB.

Those two milestones should move the share price substantially, in my opinion, but we won't see Tyhee in a position to finance the mine just yet. Tyhee will have to get through those public hearings (if required) and a bunch of steps in the MVEIRB review process, which can take a good year (all of this my own view, it could be faster). Then there is the MVLRB license and permit process, another 6 months before the pre-construction activities start. We know pre-construciton has to fit into the winter road season (Feb/March) due to the winter roads. So the decision on financing , with permits in hand or assured, would have to take place in the late fall/early winter of a given year. Such as, November, 2011 for Feb 2012 pre-construction activiites. Short summer of 2012 starts a year and a half of construction, so ready for production by fall 2013 or early 2014.

Financing can be negotiated just prior to the permit, so let's say summer 2011 for the deal to finance the mine. So to raise $60 million with all of that accomplished, we should be looking at a share price in the $2.00 range (if not much, much better), in my view. There would likely be another private placement or two between now and summer 2011, to keep moving things along and adding ounces. Supppose we see Tyhee raise $3 million when share price is at 50 cents, $1.00 and $1.50 over the next 18 monts, for proceeds of $9 million and the issuance of 11 million shares. So Tyhee would have 250 million shares, fully diluted (and more cash as exercise of warrants etc also raises some cash). Then, when the financing has to be done, it could be at $2.00 or better. So add another 30 million shares, and we are at 280 million shares, and $90 million in debt to go into operation. We'de also have seen more ounces added over this timeframe, giving a higher PE due to mine life being longer than planned, with a global resource over 3 million ounces, growing much faster than the 200,000 ounces of planned production, making expanded production or a second mine at Clan Lake a real prospect after production starts in 2014.

Quite achievable. It will be very exciting to see how all of this plays out in the pre-feas coming in the summer.

So when production starts in 2014, the share price based on 200,000 ounces, say at $1500 gold, suppose oil at $150, Cdn Dollar at $1.10, and mining costs as high as $750, we could be looking at a share price of $15 to $18 by summer 2014.

How does a 24 cent stock get to $15 in 54 months? that would require an increase of 27 cents per month (in jumps, corrections, lulls and leaps). Put another way, it would take 6 doublings from 24 cents! - 24....48....96...$1.92...$3.84...$7.68...$15.36.... Isn't logarithmic growth fantastic, makes a hockey stick just like the US Debt!

OK, it's a very optimistic vision of the next 4 years, but I feel that optimism is warranted, at least to some degree.

My new years resolution: Hang on tight to my Tyhee shares, and not give in to the temptation to sell them when it starts to rise throgh the above price levels.

We are in this to be rewarded for our risk taking, after all.

SKELEG