Exchanged a couple of emails with Dave Webb end of last week regarding some concerns I had over the strategy for financing the ongoing operations of the company.

I queried the value of continuing to dilute existing shareholders to prove up ounces when we already had enough of a resource to make a mine feasible.

Dave pointed out that banks, JV partners etc will only look at proven and compliant ounces when making a decision to finance or buy into a project. Anyone can stake a piece of land (think Clan Lake) and say they have a pretty good idea there is a lot of gold there but this will not wash with the bankers and you won't get much for hope value off a trade buyer/partner, they want proven ounces.

He also explained that a FS which included more and better ounces would result in better economics for the project in terms of NPV and IRR (due to economies of scale in the mine construction and lower per unit production costs) which would give a shorter payback and allow a higher proportion of debt to equity in the eventual mine financing.

My interpretation of this is that he expects good results from the funds just raised for drilling which will improve the overall economics of the project such that by the time we get into production we will have fewer shares o/s because of better financing terms for the mine than we would have under my proposal that we "start small" so minimising dilution at this stage.

We expect drilling at Clan Lake but he also mentioned some material within a pit which had been classed as waste in the PFS but which is actually high grade material and will improved the economics in the FS by improving average grade and reducing waste disposal costs (not sure where this is but perhaps it requires some further work for which we now have funding?).

I also, queried PPs as the preferred method of financing and asked if other options had been considered such as shareholder rights.

Dave said all methods had been considered and PPs are far and away the cheapest method of raising funds in terms of the costs involved (he did not comment on any possibility of share price manipulation during these financings) but that this may change as the project develops. He also made the point that the board have extensive contacts with people at high levels in the gold mining industry and regularly discuss all these issues. Plan A is to build a mine at YGP then use the cash flow from there to explore and develop the rest of the properties but Dave made the point that they have other options which always remain under consideration.

In summary, I feel much more confident that all these issues have been well looked into and that the Board have made a rational decision that it is worth doing some more limited drilling sufficient to get us a better FS and hence better mine financing terms. I can now understand better the logic in this and I'm much happier with the direction they are taking.