This Friday afternoon Dave Webb and I exchanged a number of emails regarding what many people consider to be Tyhee's excessive share dilution.

Who knew this issue would explode the next day on FSN's broadcast discussion between Jim Puplava and John Embry. I'm not sure whether Dave knew what was to come when we discussed this issue the day before, but he did mention that he had been getting calls and emails from folks using the word "dilution", and wanted to clarify what many seem to misunderstand.

Dave explained that Tyhee has not diluted its shareholders once in the past four years! Every time it issued shares, Tyhee used the funds and discovered more gold. So, at the end of the day, there were the same or more ounces of gold per share.

This is ACCRETIVE, not dilutive.

Take a look.

*I asked Dave if it was a mistake to not use fully diluted shares in his estimations. He said that the problem with using fully diluted shares is that it’s like only looking at one side of a balance sheet. Not one share can be issued for any warrant unless it is paid for. Tyhee has shown, year after year that it can find gold when it spends money, typically at rates less than $25 per ounce. Therefore, to count the shares without counting the ounces that could be found is rather biased.

What Dave pointed out was that there’s been a 76% increase in the total number of shares issued between July 2006 and December 2009, while there's been a 70% increase in the total gold resource, with the measured and indicated (M&I) resource growing the fastest. So although the total number of ounces per thousand shares is marginally lower over the last four years, there has been a material increase in the more highly valued M&I resource.

On a hypothetical note, Dave mused over the idea of how a 1.3 million ounce resource might be interesting; whereas 2.2 million ounce resource would be more interesting. Likewise, a reasonable person might even want to have the same or greater interest in a 3.0 million ounce resource rather than the smaller one. So, if Tyhee were to merge with another company with identical resources and identical reserves, Tyhee’s shareholders would own half of this combined company that now would then have twice the resource/reserves. That would be accretive, not dilutive.

Now, a key question remains. How many more resource and reserve ounces will Tyhee discover and prove up when/if this financing is successful? And, when those rigs start turning their drill bits again on what could be a very large and growing deposit at Clan Lake, with its many newly discovered Zones, will it again be seen worth while, especially as those added ounces may well end up making the Feasibility Study looking much nicer than the PFS with its current C$300 million plus NVP and 55% IRR.

Cheers,

Baires