This last week I was in touch with a Very Influential Tyhee Investor (“VITI”), who expressed a number of serious concerns about Tyhee Development Corp, Dr. David R. Webb, and his management team .

To address and better understand those concerns I, Baires, and Hysteria (“BH”) discussed them with Dave Webb (“DW”)

Here below, paraphrased, is a summary of those concerns, and our reactions to them.

Cheers,

Baires

1. VITI: Dr. Webb has not done a good job on financing which has resulted in excessive dilution.

DW: Tyhee has always received $1 for every $1 worth of stock sold. This comment is one of the stock is undervalued, basically saying the shares should be worth more. I think we all agree with this.

(BH: Dear Dr. Webb, in our opinion, VITI was not referring to how many dollars were received compared to how much stock was sold. Rather, he was saying that the money was used in a manner that did not add value for shareholders.)

2. VITI: Dr. Webb may have destroyed the stock by putting in a “poison pill” which makes the company less attractive to takeovers.

DW: The Shareholder's Right Plan should be read by investors and who can then decide whether to vote for it. This was done. The Plan says anyone who wishes to take over Tyhee may, however: 1) The takeover bid has to treat all shareholders equally (i.e., you can't pay one price for control, and then pay a different (lower) price to others. 2) The offer has to be open for 60 days (not 30 days), and 3) the bid has to be for at least 50% of the shares, and 4) You can't do a creeping takeover (i.e. buy 2 to 3% a week for several months. The shareholders who voted and approved of this did not believe it placed an unfair onus on an acquisition. In fact, most shareholders’s considered this a good idea, including all of our major shareholders (except one).

3. VITI: Dr. Webb’s reliance on large Canadian brokerage firms is also a problem. They get in on financings then dump their stock.

DW: We have done private placements and we have used brokerage firms for some of these. In no case did the firms purchase stock (they acted as agents to find buyers). In most cases the firms did not get warrants. There is no evidence of firms dumping stock.

4. VITI: In the first quarter of this year Sprott unloaded 1.8 million shares . They own over 20 million TDC.V shares and have continued to sell them. This limits the upside and forces Tyhee to forever finance at lower prices, which will further dilute shareholder value.

DW: VITI might have stated this better by saying, “Although not one single share has been sold from any Sprott managed fund (which cumulatively own nearly 17 million shares), over half of the nearly 3 million shares held in unmanaged accounts, or 1.8 million shares have been sold.” Assuming they wish to liquidate their entire position, they have approximately 1.3 million shares left to sell which could effectively cap the share price for 3 to 7 more days.

The latest filings from Sprott show:

Sprott Gold and Precious Metals, managed by Charles Oliver, last transaction reported December 2009, as a buyer of 10 million shares, holder of 10 million shares.

Sprott Canadian Equity Fund, managed by John Embry, last transaction reported December 2009, no change, holder of 6,294,900 shares.

Sprott also manages shares outside of their funds, from individuals and these show net sales of 1.8 million shares.

5. VITI: There has been far too much dilution. To just keep on drilling, on and on, will not benefit shareholders.

DW: Dilution is defined as "The process of making weaker or less concentrated" or "A decrease in the equity position of a share of stock because of the issuance of additional shares" This has occurred. However issuing shares to add ounces or improve a deposit can be accretive, which is "Growth or increase in size by gradual external addition, fusion, or inclusion." A company that expands its resource or production by issuing shares is not diluting its shareholders, it is growing. This is a good thing.

BH: We agree that we cannot just look at dilution in absolute terms, as VITI seems to be doing. We must compare the dilution to the quantity and quality of ounces added for that dilution. VITI's points #'s 1,5,7, and 9 are all referring to this one issue. We would like to see the numbers from the annual reports dating back to,say 2004, so we can compare a) fully diluted shares issued each year, b) number and category of ounces added for those shares, and c) the average market value for those ounces.

For example, if in one year 10 million shares were issued at 30 cents, that is $3M market cap dilution. Then suppose that 100,000 ounces of M&I gold were found. If the market value for M&I gold is $25/ounce, then that accretion is only $2.5M vs. $3.0M of dilution. That seems to have been Tyhee's problem in the last 1-2 years: the market value for the gold in the ground has not been supportive. If, however, as in 2005 - 2008 M&I gold was selling for $50-150/ounce, then of course the additional shares and gold found are highly accretive.

In summary, VITI's repeated reference to “dilution” is inaccurate, or at least misleading, without putting it in relation to the value added. But the argument against his logic would be much stronger with these numbers to back it up. Could you please provide them?

DW: I looked at each resource report from 2003 on and compared to the total shares issued as reported at the next quarter after the resource report.

We have seven resource reports to consider with the breakdown in resources and shares and ounces per shares as reported. Note ounces of gold are reported in thousands, shares are reported in millions, so ounces per thousand shares are reported.

At first glance, VITI is justified in reporting dilution up until July 2006. A more detailed analysis should recognize that prior to 2005 we included some resources from the old Discovery Mine. In 2006 we decided not to report these as it was felt a) They might not be recoverable and, b) They relied on old mine reports and not our own sampling and analysis.

In 2006 Tyhee invested over $6 million completing an underground program to a) Demonstrate continuity of the mineralization, b) Confirm our ability to recover the mineralization, and c) Confirm metallurgical recoveries.

Since 2006 our resource per thousand shares has stayed static while the total ounces increased 62%.

So while VITI is correct for the financings 4 years ago, the past years have not diluted shareholders while at the same time increased total ounces for the enterprise. Generally, a company with 100 million ounces of gold is worth more than 100 companies with 1 million ounces of gold. Likewise, the completion of the Preliminary Assessment Study, permit applications, and a Preliminary Feasibility Study also increase the value of the ounces.

BH: Seeing this reinforces that VITI is incorrect in thinking there has been unnecessary dilution over the last 3-4 years. As you show, ounces per thousand shares have been stable to increasing since 2006. The dilution has therefore been accretive (not dilutive) to existing shareholders during this timeframe.

While the price of gold has been increasing since 2006, and the quality of our ounces have also been increasing, ironically, what has been decreasing is the market's valuation for M&I ounces. We have seen this across the board in many junior development companies.

As a result, the dilution has been negative to shareholders in terms of market valuation per share. However, it is our belief that the market will revalue higher (at least back to 2007-2008 levels) all ounces in the ground (M&I, and P&P) as the gold bull market proceeds. Then we will see the last 3-4 years' worth of accretion in ounces per share translate into accretion in terms of dollars per share.

It is disconcerting that VITI seems to be mistaking the market's lower valuation of ounces in the ground with negative dilution for shareholders.

6. VITI: Tyhee’s management doesn’t have the depth or experience to take it into production.

DW: There are always better people available; however I personally have managed two mines from acquisition, development and into production. Lorne Anderson was CFO for Glamis Gold and did the same for three mines in finance. Doug Levesque has brought three mines into production; Hugh Wilson has done the same on an environmental side. On our board Bill Burton has brought six mines into production as senior manager, including some with production profiles exceeding 200,000 ounces per year. Additional support from mine builders comes from Tyhee’s Rod Mackay and Val Pratico.

There may be more experienced people out there, but to say we lack that experience needs to be supported.

7. VITI: Even if Tyhee tried, the dilution to shareholders from attempting to go into production alone would be so great that it would render the cash flow and earnings meaningless. So shareholders would be better served if another more capable company took over.

DW: This is an opinion I disagree with, however it is a perspective. Someone who invests $100,000 or $1,000,000 in a $150 million venture should get that ratio. Some may feel that if they place $1 million in when the total venture is worth $50 million might feel "diluted" if they get less than 2% of the $150 million venture. It would be good, but it isn't realistic.

8. VITI: If Dave had the best interest of his shareholders he would sell rather than keep diluting their interest.

DW: Selling Tyhee might be an option, but at what price?

9. VITI: The share issuance far exceeds the value of resources added each year. The cost of financing has become too high.

DW: This depends on what one values an ounce of gold for. We have issued shares at prices of between $20 to perhaps $80 per ounce (an average of $35 per ounce) (I haven't done the calculations here yet). We have found gold at between $5 and $25 per ounce. This seems to add value to the company. In addition, we have moved inferred ounces to indicated, and, indicated to measured. We have also completed a positive Preliminary Assessment that demonstrates robust economic potential, and are completing a Preliminary Feasibility Study that should deliver RESERVES. This would seem to add value to the company. We have also invested in applying for and advancing our operating permits. This improves the value of our ounces, and so should add value to the company.