YOUR GUIDE T O PROFI T ING FROM N AT UR A L RES OURCES

www.wallstreetreporter.com A Wall Street Reporter® Publication Fall 2007

CEO INTERVIEWS
GOLD

Fast-tracking to
Minefinders Corp., Ltd. AMEX/MFN
Mark H. Bailey, M.Sc., P. Geo, Director, President & CEO 4
Banro Amex/BAA TSX/BAA
Peter Cowley, CEO 7

be mid-tier nickel
Gryphon Gold Corp. TSX/GGN OTCBB/GYPH
Tony Ker, President & CEO 11
E N E R GY

producer
Skye Resources Inc.
Ian G. Austin, President & CEO
Continental Resources Inc. NYSE/CLR
Harold Hamm, Chairman & CEO 13
Alternate Energy Holdings, Inc. OTC/AEHI
Donald Gillispie, President 16
CityView Corporation Limited OTCBB/CTVWF
Mark Smyth, Chief Executive 19
P 70 Index Oil & Gas OTCB/IXOG
Daniel L. Murphy, Chairman 21
Burleson Energy Limited ASX/BUR

Constructing
Michael Sandy, Executive Director 24
Felix Resources Limited ASX/FLX
Brian Flannery, Managing Director 27
Sydney Gas Ltd ASX/SGL
29

open pit mine

Dr. Philip Moore, CEO & Managing Director

Renewable Energy Holdings PLC LSE/REH

Minefinders Corporation, Ltd. Mark H. Bailey,
M.Sc., P. Geo, Director, President & CEO P4
Michael J. Proffitt, CEO 31
Essential Energy Services Trust TSX/ESN.UN
James Burns, President and CEO 33
Petro Andina Resources Inc. TSX/PAR
Wayne Foo, President & CEO 35
Anterra Corporation TSX-V/ATR
Owen C. Pinnell, P.Eng., Chairman & CEO 39
Dejour Enterprises Ltd. TSX-V/DJE
Robert L. Hodgkinson, Chairman of the Board and CEO 41
Run of River Power Inc. TSX-V/ROR
Jako Krushnisky, President & CEO 43
West Siberian Resources Ltd OMX/WSIB

Leveraging
Maxim Barski, Director & Managing Director 45
M E TA L A N D M I N I N G
Southern Copper Corporation NYSE/PCU
Oscar Gonzalez Rocha, President & CEO 47

11 million
Allegiance Mining NL ASX/AGM
Ian Levy, CEO 49
Homeland Precious Metals Corp OTCBB/HPMEF
Bruce Johnstone, CEO, President & Director 51

ounces of gold
Arafura Resources Ltd ASX/ARU
Alistair James Stephens , Managing Director & CEO 53
Monarch Gold Mining Company Ltd ASX/MON
Michael Kiernan, Executive Chairman 56
Banro, Range Resources Ltd. ASX/RRS
Peter Cowley, CEO P7
Peter Landau, Executive Director & Company Secretary 58
DiamondCorp plc AIM/DCP
Paul R. Loudon, Managing Director & CEO 60

Building
Candorado Operating Company Ltd TSX/CDO
Rene Bernard, President & CEO 62
Duluth Metals Limited TSX/DM
Henry (Rick) Sandri, President and CEO 65

impressive
Khan Resources Inc. TSX/KRI
Martin Quick, President, CEO & Director 68
Skye Resources Inc. TSX/SKR
Ian G. Austin, President & CEO 70

track record
Brazauro Resources TSX-V/BZO
Leendert G. Krol, Mark E. Jones, III 72
Frontier Pacific Mining Corp. TSX-V/FRP
Peter F. Tegart, Director, President and CEO 75
Index Oil & Gas, Nayarit Gold Inc. TSX-V/NYG
Daniel L. Murphy, Chairman P 21 Michael A. Dehn, President, CEO & Director 77
gold rush!
Yo u r g u i d e t o f i n d i n g t h e n e x t b i G THING

I
n a world where the
price of crude contin-
Issue N º4 20 07
ues to scale new peaks

Publisher Jack Marks

and the vice-chairman of
Newmont Mining Corp.
Business Operations Lisa Gutierrez is telling people to expect
bullion to break $1,000 an
Senior Analysts
ounce, you don’t need us to
Kilian Brandon
make the bullish case for
Todd Santorelli
hard commodity producers. And there are plenty of com-
John Ortel
panies out there, from established giants like Newmont
Design Director Irving Grunbaum and ExxonMobil to the new generation of lean but ambi-
tious prospectors—each with a story to tell and a unique
Contributing Editor value proposition to prove.
Robert Scott Martin

That’s where Wall Street Reporter comes in. We drill down

Research Analysts
Harald Hendriks
into the mining and energy sectors to find companies that
Nicholas Casella have already distinguished themselves and, more impor-
Priya Kumar tantly, have substantial upside potential ahead. Are these
Simone Thompson the giants of the future? That’s for history to decide, but
Johanna Kocab
in the exclusive CEO interviews we’ve assembled in this
Lauren Pilon
(and every) issue of Gold Rush, top management will take
you on a personal tour of their prospects, resources, and,
Internet Group Chima Dillon
in several cases, actively producing projects.
Administrative Support
Angela Shapovalova Whether you’re looking for opportunities in oil, gas, alter-
Stephanie Perez native energy, copper, nickel, iron, uranium, diamonds or
gold, you’ll find plenty of ideas here. And if you want more,
it might pay to monitor our Web site wallstreetreporter.
com, where we break news on a daily basis with all the
Published by Wall Street Reporter Magazine, Inc. latest one-on-one discussions with CEOs, analysts, and
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Important notice and terms of use Copyright© 1998-2007 Gold Rush!, a Wall Street Reporter
Publication. ALL RIGHTS RESERVED. Reproduction in whole or in part is prohibited without writ-
ten permission. By using the information contained in this publication you are agreeing to be
bound by the following terms of use: This Magazine is published with the understanding that They say real value is created through the drill bit. We’ve
the publisher is not engaged in rendering business, investment advice and/or services. Nothing
contained herein is a solicitation to buy or sell securities, and shall not be deemed to offer any done some drilling for you here and uncovered what we
securities. Gold Rush! relies upon information received from companies and individuals, which
although believed to be reliable cannot be guaranteed as to completeness or accuracy. Certain think is a wealth of prospects, many of which have been
companies have paid a fee for inclusion in this publication. The publisher does not endorse any
company or advertiser featured, and is not responsible for any claims made by the companies or
individuals. Companies participating in features or interviews in this magazine have purchased
overlooked by Wall Street so far. I’d say that these are mar-
an Investor Relations Program from Wall Street Reporter Magazine, Inc. in compliance with SEC’s
Rule 17-B. Details of compensation are provided as follows:Minefinders Corporation – $12,500; ket diamonds in the rough, though there’s nothing “rough”
Banro – $12,500; Gryphon Gold – $9,850; Continental Resources – $12,500; Alternate Energy
Holdings – $9,850; Cityview Corporation Limited – $12,500; Index Oil & Gas – $9,850; Burleson about them—but I’ll let the CEOs speak for themselves.
Energy Limited – $12,500; Felix Resources Limited – $12,500; Sydney Gas Ltd – $12,500; Renew-
able Energy Holdings PLC – $9,850; Essential Energy Services Trust – $12,500; Petro Andina Re-
sources – $12,500; Anterra Corporation – $9,850; Dejour Enterprises Ltd – $9,850; Run Of River
Inc – $9,850; West Siberian Resources Ltd – $9,850; Southern Copper Corporation – $12,500;
Allegiance Mining NL – $9,850; Homeland Precious Metals Corp. – $9,850; Arafura Resources
Ltd – $11,800; Monarch Gold Mining Company Limited – $12,500; Range Resources Ltd – $9,850; Jack Marks
DiamondCorp PLC –$ 9,850; Candorado Operating Company Ltd – $9,850; Duluth Metals Lim-
ited – $12,500; Khan Resources Inc. – $12,500; Skye Resources Inc. – $12,500; Brazauro Re-
Publisher
sources – $12,500; Frontier Pacific Mining Corporation – $9,850; Nayarit Gold Inc. – $12,500.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 
TABLE OF CONTENTS

GOLD 45
West Siberian Resources Ltd • OMX/WSIB
Maxim Barski, Director & Managing Director

4 Metal & mining

Minefinders Corporation, Ltd. • AMEX/MFN
Mark H. Bailey, M.Sc., P. Geo, Director,
President & CEO

47
Southern Copper Corporation • NYSE/PCU

7
Banro • AMEX/BAA TSX/BAA Oscar Gonzalez Rocha, President & CEO
Peter Cowley, CEO

49
Allegiance Mining NL • ASX/AGM

11
Gryphon Gold • TSX/GGN OTCBB/GYPH Ian Levy, CEO
Tony Ker, President & CEO

51
Homeland Precious Metals Corp. • OTCBB/HPMEF

ENERGY Bruce Johnstone, CEO, President & Director

53
Arafura Resources Ltd • ASX/ARU

13
Continental Resources Inc. • NYSE/CLR Alistair James Stephens,
Harold Hamm, Chairman & CEO Managing Director & CEO

16 56
Alternate Energy Holdings, Inc. • OTC/AEHI Monarch Gold Mining Company Limited • ASX/MON
Donald Gillispie, President Michael Kiernan, Executive Chairman

19 58
CityView Corporation Limited • OTCBB/CTVWF Range Resources Ltd. • ASX/RRS
Mark Smyth, Chief Executive Peter Landau,
Executive Director & Company Secretary

21
Index Oil & Gas • OTCBB/IXOG

60
Daniel L. Murphy, Chairman DiamondCorp plc • AIM/DCP
Paul R. Loudon, Managing Director & CEO

24
Burleson Energy Limited • ASX/BUR

62
Michael Sandy,Executive Director Candorado Operating Company Ltd. • TSX/CDO
Rene Bernard, President & CEO

27
Felix Resources Limited • ASX/FLX

65
Brian Flannery, Managing Director Duluth Metals Limited • TSX/DM
Henry (Rick) Sandri, President & CEO

29
Sydney Gas Ltd • ASX/SGL

68
Dr. Philip Moore, CEO & Managing Director Khan Resources Inc. • TSX/KRI
Martin Quick, President, CEO & Director

31
Renewable Energy Holdings PLC • LSE/REH

70
Michael J. Proffitt, CEO Skye Resources Inc. • TSX/SKR
Ian G. Austin, President & CEO

33
Essential Energy Services Trust • TSX/ESN.UN

72
James Burns, President and CEO Brazauro Resources • TSX-V/BZO
Mark E. Jones, III, Chairman

35
Petro Andina Resources Inc. • TSX/PAR Leendert G. Krol,Director and Advisor
Wayne Foo, President & CEO

75
Frontier Pacific Mining Corporation • TSX-V/FRP

39
Anterra Corporation • TSX-V/ATR Peter F. Tegart, Director, President and CEO
Owen C. Pinnell, P.Eng., Chairman & CEO

77
Nayarit Gold Inc. • TSX-V/NYG

41
Dejour Enterprises Ltd. • TSX-V/DJE Michael A. Dehn, President, CEO & Director
Robert L. Hodgkinson,
Chairman of the Board and CEO

43
Run of River Power Inc. • TSX-V/ROR
Jako Krushnisky, President & CEO
 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W M inefinders C orporation , Ltd. • A M E X /M F N

Near-term gold producer

combines value with strong upside
Minefinders is a highly successful precious metals exploration company with
advanced projects in Mexico and the United States. The company is cur-
rently developing an open pit mine on a large gold and silver reserve at its
Dolores project and has several excellent exploration projects in its pipeline.

Minefinders has taken

a substantial precious
metals project in
Mexico from discovery
to the verge of
production. CEO Mark
H. Bailey tells us why
his company brings
everything in terms of
both growth and value
to the table. (Interview
of January 3, 2007.)

WSR: Bring us up to speed on the company’s assets and operations.

MFN: Our main focus for the last several years has been bringing our Dolores gold and silver deposit
in Mexico into production. We are currently in the construction phase on the property, which is fully
financed. We completed a convertible debt financing this past October and now have more than signifi-
cant funding to complete the construction of the mine, which is scheduled to go into production in the
summer of 2007. While we have been focused on that, we are also expanding our exploration activities
on our other properties in Sonora, Mexico with drilling underway at our Planchas de Plata silver prospect,
and continued drilling at Dolores to expand the underground resources for future development. We have
been active in bringing Dolores up to production, and we are on track to be in production in the summer
of 2007 at a level of 18,000 tons per day from the open pit.

WSR: Expand on the Dolores play, and give us a feel for where you are in terms of reserves and re-
sources.

MFN: Dolores currently has a proven and probable reserve base of more than 2.4 million ounces of gold
and 128 million ounces of silver. We have a total measured and indicated resource base at Dolores of 3.1
million ounces of gold and 149 million ounces of silver. This is in our current block model and does not
include the peripheral underground mineralization or deep mineralization below the open pit mine plan.
The current mine plan is that the proven and probable reserves of 2.4 million ounces of gold and 128
million ounces of silver be put on the leach pad. It has a 15–year mine life, averaging between 200,000
ounces to 250,000 ounces of gold equivalent per year. We also look forward to adding a mill to Dolores
in the third year of production. We will start collectively mining the high−grade from the open pit and run-
ning that through a flotation mill with leach circuit, which substantially increases our recovery in both gold
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 
A M E X /M F N • M inefinders C orporation , Ltd. C E O I N T ER V I E W

and silver. The mill will then be MFN: We are a huge success bottom of the mineralization.
available for the underground story. We are a company that High-grade has been extended
production, which we anticipate made the grassroots discovery at depth below the pit bottom “Dolores is well
commencing in years four or five at Dolores and brought it to at least another 150 meters. In
of the open pit mine life. Again, the point of production. There the past, we have drilled numer- on track and
Dolores is well on track and bud-
geted to be in production this
are very few companies that
are able to do that. We discov-
ous high-grade gold and silver
zones peripheral to the current
budgeted to be
summer. We are looking at a ered Dolores in 1996 and have Dolores mine plan and will be
in production this
total cash cost of approximately fully financed it ourselves and following up on these over the
$237 an ounce of gold equiva- brought it to this point. We cur- next year. We are also drilling summer. We are
lent, which obviously under cur- rently have US$130 million in our other projects in Northern
rent market conditions should be the bank; of that, we will have Sonora, particularly Planchas looking at a total
a very profitable operation. to spend approximately $90 de Plata and Real Viejo, which
million more to complete con- are both silver properties. cash cost of ap-
WSR: Educate us in terms of the struction. We will have approxi-
infrastructure in place within this mately US$40 million left over, WSR: Tell us about the present proximately $237
region. which is enough cash to do fur-
ther exploration on the Dolores
Board and management team.
an ounce of gold
MFN: There is nothing out there; property and our other assets. MFN: Minefinders is composed
equivalent, which
we are building everything. The We’ve already raised in excess of all mining professionals. I
capital cost is $132 million to of CDN$250 million, and still have been in the exploration obviously under
build the mine, including the only have 48 million shares out- business for over 30 years and
purchase of all new mining and standing. I don’t think there is have a Masters degree in Geol- current market
processing equipment, which any other company in our peer ogy. Our Board of Directors is
we are taking delivery of now group that will have that few a composed of senior mining en- conditions should
and have been for the last sev- number of shares outstanding gineers and geologists and two
eral months. We have to build with a project of this size and senior mining executives. Bob be a very profit-
the infrastructure; it will run from
a 300−person camp that is in
economics. We have a lot of
leverage to the price of gold
Leclerc, our Chairman of the
Board, was the CEO and Chair-
able operation.”
construction now. Everything and silver. Dolores is a gold and man of Echo Bay Mines before
will be supported through the silver deposit and will produce coming on at Minefinders. Our
camp. We are 90 kilometers both commodities at a very cost- exploration team is composed
from pavement, and it’s a bit re- effective price, which produces of a seasoned group of explo-
mote, but it is not inaccessible, very good return to our capital. rationists and development
and we have already put in a That is what makes us unique to people, all of whom have 25 to
new mine road. We are now a lot of our peers, which have 30 years experience in the busi-
building the mine itself. a lot more shares outstanding ness. Again, this company is
and deposits that aren’t nearly comprised of mining profession-
WSR: What is so unique about as advanced or as robust as Do- als, not people from other indus-
Minefinders that defines and dif- lores. In addition, we still have tries who decided that mining
ferentiates this company from excellent open– ended upside was the place to be. We have
others in this industry? at Dolores. We’ve not seen the all been in this business a long
time and understand both the
risks and rewards. This makes us
SUMMARY: Minefinders (AMEX: MFN) has taken its lead project,
also unique to some of the other
a significant precious metals deposit in Mexico, all the way from dis-
companies out there that don’t
covery to open pit mine construction. Goal is to be in production by
have the same group of sea- we have been working at Dolo-
summer, generating an estimated 200,000 to 250,000 ounces of gold
soned professionals at both the res longer than we should have.
equivalent per year for at least 15 years. Current reserves represent
Board and management levels. They seemed to have lost sight
2.4 million ounces of gold and 128 million ounces of silver, with ad-
of the fact that we discovered
ditional indicated resources and excellent high-grade peripheral and
WSR: Does the investment com- the Dolores project and that we
deep extension potential. At a cash cost of US$237 per ounce of gold
munity understand this company did all the work to bring it to
equivalent, the project should generate substantial profits. The com-
and the direction it’s going in? production. We didn’t purchase
pany is fully funded to finish construction and has an additional US$40
a property that had drilling or
million for additional exploration. Drilling on other projects, primarily
MFN: I don’t think it has been any other work done. We had
silver plays, continues.
fully understood. I think the in- to do everything ourselves, in-
vestment community has looked cluding obtaining the financing
www.minefinders.com Phone: 604-687-6263
past us. I believe they feel that to do that work. This was during
 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W M inefinders C orporation , Ltd. • A M E X /M F N

holes to develop the deposit.

“We are a company that made the grassroots discovery at Do- We have had it engineered by
numerous outside engineering
lores and brought it to the point of production. There are very firms. It is not something we
have designed ourselves but was
few companies that are able to do that. We discovered Dolo- done by outside engineers from
very reputable firms. The deposit
res in 1996 and have fully financed it ourselves and brought it has a 15–year mine life for the

to this point.” open pit mine. It also has open-

the years 1998 to 2001 – when
the markets made it difficult to
raise funds, and when gold was
heading to US$250 an ounce. I
made the decision not to raise
money and dilute our sharehold-
ers during that period. We have
only 48 million shares outstand-
ing, but we lost several years of
development due to lack of funds
and that set us back, but that’s
par for the course in this busi-
ness. Still in terms of timeline,
we have been very successful in
taking a grassroots discovery to
production. The market has mis-
understood that. We are still rat-
ed as an explorer, even though
we are in construction now and
fully permitted, and we’ll be in
production this coming summer.
We are still getting evaluation
of approximately 0.8 times our
NAV, or Net Asset Value, for
the Dolores property alone, and
intermediate size producers are
trading between 1.5 and 2 times
their NAV. We should see that
re−rating for our stock this year,
which should be beneficial for
our shareholders.
WSR: In closing, why should in-
vestors consider Minefinders as
a long−term investment opportu-
nity?
MFN: A couple of points. One,
we are a value play in the sense
that we are building a very sig-
nificant gold and silver mine in
a mining friendly country. We
have a well−defined deposit,
spent the money, and drilled
over 170,000 meters in 700 drill
ended exploration potential
for an underground high grade
mine. By itself, Dolores is a very
robust deposit and excellent
value. We also have a portfolio
of other projects to bring along.
With our other properties and
the upside at Dolores, we have
growth potential. We have value
in the Dolores mine, currently in
construction. As an investment
vehicle, Minefinders brings ev-
erything to the table, in terms
of both growth and value, and
I don’t think there are a lot of
opportunities out there to better
track it.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 
A M E X /B A A T S X /B A A • B A N R O C E O I N T ER V I E W

Leveraging 11 million ounces of

gold in the rejuvenated DRC
Banro is a Canadian-based gold exploration company focused on the develop-
ment of four major, wholly owned gold projects along the 210–kilometer Twan-
giza–Namoya gold belt in the South Kivu and Maniema provinces of the DRC.

Banro has put together

a commanding land
position on one of the
Democratic Republic of
Congo’s two remaining
undeveloped gold
belts. CEO Peter Cowley
gives us a sense of his
timetable for getting
11 million ounces of
known resource into
production. (Interview
of June 20, 2007.)
WSR: Banro Corporation. Let’s start off today, if we can, by bringing our audience up−to−date on the assets and
operations for Banro.

COWLEY: We’re a Canadian−based junior exploration and development company that is focused on one country,
the Democratic Republic of Congo in central Africa. Now, within that country, there are probably two remaining,
major undeveloped goldfields, which have been prolific producers in the past. We have a commanding position
on one of them, the Twangiza–Namoya gold belt. We’ve picked up four major concessions along the gold belt,
which gives Banro a very commanding land position with a very large resource base. We have over 4 million
ounces of measured and indicated resources and 7.36 million ounces of inferred resources. That’s in total over 11
million ounces of gold. These resources are close to the surface, so we are talking about low−cost open pit mining
operations. Certainly, I can think of no more than half a dozen junior gold explorers in the world today who have
such a significant resource. To appreciate the potential of these projects you should know that in the past they pro-
duced 2.4 million ounces of gold, which is significant. I was involved in the discovery and development of the Geita
mine in Tanzania, which is East Africa’s largest open–pit gold mine. Historically, this area produced under 1 million
ounces, much less than what has been produced in Twangiza–Namoya. Today, the current resource base in Geita
is 18 million ounces, thanks to the application of modern–day exploration and mine development methods. That
demonstrates the potential of modern–day exploration methods, which we are using on our projects in the DRC. The
company is listed on the TSX and the AMEX exchanges, our market cap is approximately US$400 million.

WSR: Banro actually acquired these assets during the mid–90s when there was a pretty low level of interest.

COWLEY: Exactly. We’ve got such a commanding land position mainly because we obtained that acreage in
the mid–90s at a time when the political, social and security position in the country was a no−go area for most
companies. That is how we were able to obtain such an outstanding land position on a major gold belt. This doesn’t
happen very often. Usually a large gold belt will host several junior explorers in the early days. Then gradually, as
the projects grow into sizeable projects, these juniors are taken out by the majors.
 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W B anro • T S X /B A A
WSR: You referred to the resource
base; perhaps you can give us a
better idea as to where the compa-
ny is in terms of sampling, studies,
drilling, and so on.
COWLEY: We’ve got four major
concessions plus much of the inter-
vening ground, giving us a contigu-
ous piece of ground with a strike
length of over 100 kilometers. At
the moment, we’re busy exploring
on three of these concessions. Twan-
giza is the most advanced project,
followed by Namoya and Lugush-
wa; we’ve yet to start to work on the
fourth project, Kamituga. Banro has
been really busy there for the last 2
to 2.5 years on these projects. We
have drilled in excess of 150 holes,
and based on that work, we’ve
been able to build our resource
base to just over 11 million ounces
of gold. In July, we announced the
results of independent scoping
studies for Twangiza and Namoya.
Combined projects show annual
production of 512,000 ounces of
gold at average total cost of $216
per ounce and a combined NPV of
$715 million. With Namoya, which
is the smaller of the two projects, the
study indicates average annual pro-
duction of 194,000 ounces of gold
per annum over the first five years
of operation; operating total cash
costs of US$217 per ounce for the
first five years; a net present value
of US$204 based on a discount
rate of 5%; a gold price of $600
per ounce; and an internal rate of
return of 37%. These very promis-
ing results, which were developed
by outside consultants, are based
on the current Namoya resource
of 938,800 indicated ounces and
621,500 inferred ounces, which is
expected to increase with further
exploration. Twangiza is a much
larger project, with measured and
Indicated Resources of 3.15 million
ounces and Inferred Resources of
3.1 million ounces. Our consultants
have projected average produc-
tion of 317,500 ounces of gold per
annum during the initial 7 years
of operations with operating total
cash costs of US$215 per ounce;
A M E X /B A A
a net present value of US$511 mil-
lion based on a 5% discount rate
and a gold price of US$600 per “We’ve picked up four major conces-
ounce; and an internal rate of return
of 33%, with a 2.6 year payback
sions along the gold belt, which gives
on project capital expenditures from
Banro a very commanding land posi-
the start of production. So, as you
can see, we’re not just drilling holes tion with a very large resource base.
in the ground, we’re coming up with
resources and then taking these re- We have over 4 million ounces of mea-
sources to the next step of develop-
ment. sured and indicated resources and 7.36
WSR: Do the strong gold prices million ounces of inferred resources.”
now in the markets today really en-
hance the economic viability of the
play?
COWLEY: Yes, overall, I am sure
a lot of the listeners know there has
been dramatic change in the gold
price. A few years back it was less
than $300 an ounce, and it’s now
holding steady above $600. Cer-
tainly, the gold market has signifi-
cantly changed. There are fewer dis-
coveries, an increasing demand for
gold worldwide, and at the same
time, production is decreasing. So,
you have a supply and demand
situation that is reflected in a signifi-
cantly increased gold price, which I
think analysts agree, is going to be
with us for quite a while.
WSR: Earlier, you also mentioned
the improved political environ-
ment. Perhaps you can bring us
up−to−date on the current situation.
COWLEY: When we got the
ground in the mid−90s, there was
a President, Mobutu, who had been
in power for three decades, and
the country really wasn’t going any-
where. There was a good deal of
internal strife until 2002. Then the
international community got togeth-
er and said to the country, “Look,
we will help you get out of your
demise, but you need to do certain
things, i.e., you need to improve the
investment climate and you need to
begin putting in place democratic
institutions.” From that, a new mining
Additional exploration potential north along the
code was introduced in 2003, com-
trend at Banro’s Twangiza project.
bining features of the most progres-
sive mining codes from across Af-
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 
A M E X /B A A T S X /B A A • B A N R O C E O I N T ER V I E W

the Twangiza–Namoya gold belt.

This is a significant infrastructure im-
provement and one that will benefit
communities up and down the belt
as well as Banro. There are also
other projects in the pipeline, in-
cluding hydroelectric schemes. The
Congo still has a long way to go,
but there are definitely many signs
of improvement.

WSR: One difficulty that many

rica. There was, and still is, a major
UN presence in the country, which
along with other elements of the in-
ternational community, helped to or-
ganize the democratic elections that
were held last year. These were free
elections; they went well, and the in-
ternational community was happy.
This is a very large country, the size
of Western Europe, so it costs a lot
to organize the elections, in excess
of $400 million, which was paid
for by the international community.
As a result of this progress, there
is today a democratically elected
President, Joseph Kabila, and the
country has an elected parliament
and senate, as well as autonomous
provisional governors in place. So,
certainly last year, there was con-
siderable progress, and now the
new government is getting on with
the business of running the country.
A strong indication of the improved
situation is the dramatic increase in
investment in the country. Last year,
for instance, there was a ten−fold
increase in equity investment in the
Congo with over $1 billion raised,
primarily for mining projects, includ-
ing gold, copper, cobalt and dia-
monds. Finally, I think the proof of
the pudding is that, besides for the
juniors who usually lead the way in
new mining frontiers, there are now
a number of major international mul-
tinationals who have become active
in the DRC over the past couple of
years. These include companies
such as Phelps Dodge, BHP Billiton,
AngloGold and First Quantum. This
demonstrates that the recent devel-
opments are very positive from an
investment point of view.
WSR: Perhaps you can give us a
better understanding for the level
of infrastructure in place. You men-
tioned that investment has increased
considerably in recent years, but
what is the infrastructure surround-
ing these plays?
COWLEY: The country has come
through difficult times, so for several
years the infrastructure has been
largely in disrepair. This is now be-
ginning to change. Where we are
in the eastern Congo, things are
certainly improving. We’re based
in Bukavu, the capital of South Kivu
province. We’ve seen a mini boom
going on in that city with new con-
struction throughout the city, new
jobs being created and a dramatic
increase in the numbers of cars and
motorcycles on the road. There are
also a number of new infrastructure
projects coming along, including
one that is very advantageous for
Banro. This is a new road, currently
under construction by the Chinese,
and funded by the World Bank. This
road, which will be over 200 kilome-
ters in length, will cut right through
companies are experiencing in the
current market is accessing rigs,
equipments, and indeed, skilled
field personnel. What is the situa-
tion within Congo at the moment
there?
COWLEY: There is an exploration
boom going on in the Congo. We
currently have four rigs on one of
our main properties, Twangiza.
We’ve got another two rigs on two
of the other properties. We’ve had
those for the last two years. It’s not
easy sourcing rigs, but we’ve man-
aged. In terms of personnel, we
have a very experienced explora-
tion group, which came with me
from my previous company, Ashanti
Goldfields. They’ve been with us for
almost three years. These are excit-
ing projects, and our field explora-
tion geologists are very pleased to
be working on them.
WSR: You made reference to your
own background. Perhaps you
could introduce us here in fact to
the Board and the current manage-
ment team.

SUMMARY: Banro (AMEX: BAA) is focused on developing the

mineral wealth of the Democratic Republic of Congo. The company
put together a commanding land position on one of the country’s
previously prolific gold belts before the local political situation im-
proved; today, it controls over 100 kilometers of strike. Total current
resource tops 11 million ounces of gold across four advanced proj-
ect areas. Feasibility work on two projects should progress through
the next year, after which point a mining call and potential produc-
tion as early as mid−2010 should follow. Initial annual production
could be in the 500,000−ounce range. Additional exploration and
land acquisition continue. Management notes that the investment
climate in the DRC has dramatically improved over the past year.

www.banro.com Phone: 416-366-2221

10 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W B anro • T S X /B A A
COWLEY: We have a very strong
Board with a great deal of experi-
ence in Africa and in gold. Our
Chairman, Simon Village, joined
the company in late 2004. Simon
is quite well known in the gold fra-
ternity, mainly because he was the
Managing Director of the World
Gold Council until he joined Banro,
and was also a principal of Ex-
change Traded Gold, the company
responsible for developing and
managing a series of direct gold in-
vestment projects, which have revo-
lutionized the dynamics of the gold
industry. Previous to that, he was
the Managing Director of Global
Mining at HSBC Bank. Clearly, he
has a lot of experience. I have over
35 years of experience, mainly in
Africa with a number of companies.
I have discovered and developed a
number of gold mines in Ghana,
Tanzania, Zimbabwe, and also as
things go, probably in the DRC as
well. Another person on the Board
is John Clarke who is President and
CEO of a Canadian junior compa-
ny called Nevsun Resources. They
have got pretty exciting exploration
and development projects in Mail
and Eritrea. Bernard van Rooyen,
a director of the Company, is also
very well known in the gold industry
and a director of a number of South
African based mining companies.
We have a very experienced Board
and a very experienced exploration
team on the ground in the Congo.
WSR: You mentioned earlier some
of the major players operating in
the region. Will Banro look to enter
into any joint ventures or partner-
ships now to further these plays?
COWLEY: Our strategy is to
maximize shareholder value, and
there are two ways we can do it.
We can develop these projects
ourselves. We certainly believe
we’ve got assets that can be de-
veloped into profitable gold mines.
However, we are mainly an ex-
ploration group and would need
to bring in new engineering and
technical skills to develop these
assets. We are looking into that.
A M E X /B A A
“In July, we announced the results of independent scoping stud-
ies for Twangiza and Namoya. Combined projects show an-
nual production of 512,000 ounces of gold at an average total
cost of $216 per ounce and a combined NPV of $715 million.”
However, one way of bringing in
new people and expertise is to do
some kind of joint venture or gain
the involvement of a major mining
company, which already has these
skills. With our assets, we have a
very large resource base by global
standards for a junior company
and there is considerable interest
in Banro by the majors. We’ve
already signed a number of confi-
dentiality agreements with some of
the majors; they’ve visited our sites,
and there is an ongoing dialogue.
We are keeping an open mind on
doing it ourselves, or, if we believe
there is better shareholder value,
we will pursue some sort of joint
venture.
WSR: As you mentioned, the po-
litical situation has changed, and
the variables are coming into align-
ment here for the company consid-
erably. Do you think the investment
community has yet to fully really
appreciate the potential now?
COWLEY: I think they are starting
to see it. It still has a way to go,
but as more major companies and
juniors come into the country and
the political, social and economic
climate improves, I think that the
investment view will change ac-
cordingly.
WSR: Looking ahead to the com-
pany’s strategic plans, maybe you
could just outline for us the major
objectives lying ahead over the
next 12 to 18 months.
COWLEY: We are currently com-
pleting scoping studies on two of
our projects. We will take those
then to pre –feasibility and feasibil-
ity studies. We hope to complete
the feasibility studies in just over a
year’s time, likely in the second half
of 2008. The development and
construction decision will prob-
ably come by the end of 2008.
Construction for the gold projects
would be at the order of 12 to 15
months. We are looking at the first
half of 2010 for initial production.
Our scoping studies are demon-
strating the production profile we
are dealing with. Between the two
projects, Namoya and Twangiza,
we are looking at over 500,000
ounces a year, and that is signifi-
cant. Meanwhile, we will continue
exploration and drilling on our
projects with the goal of increasing
the total resource base. Recently,
we completed an airborne mag-
netic and radiometric geophysical
survey of all four of our projects
– a total of 2,600 square kilome-
ters that will help us identify new
gold targets. In March 2007, we
were awarded over 3,130 square
kilometers of additional ground
contiguous to our current proper-
ties, which creates a whole new
set of exploration opportunities for
the Company.
WSR: Just before we conclude to-
day, perhaps in summary you could
give our listeners and indeed poten-
tial investors now looking forward
to play in this sector some of the
reasons as to why Banro represents
a good long−term investment.
COWLEY: I think there are a num-
ber of reasons. Firstl we have tre-
mendous assets, which we picked
up at a time when we had no
competition in the Democratic Re-
public of Congo. These are major
assets, which are only in the early
stages of exploration, and we are
confident that they will continue to
grow. However, we are not just sit-
ting on them, we are moving for-
ward with the necessary studies to
demonstrate their economic viabil-
ity. We also believe that there has
been a fundamental change in the
Democratic Republic of Congo in
that it will continue to stabilize and
become a rewarding country to in-
vest in, particularly in the mining
sector. Investors should also know
that Banro has put in place one of
the best Corporate Social Respon-
sibility programs in Africa. Among
other things, we’ve established
the Banro Foundation, which is
a registered charity committed to
improving education, health and
infrastructure in the communities
where we have our operations.
The Foundation has completed
a number of valuable projects
– building a new facility at a local
hospital, improving medical clin-
ics, providing educational equip-
ment to schools and constructing
much−needed roads and bridges
and so on. We are now talking to
leading NGOs who can partner
with us to bring a whole new level
of professionalism and progress to
local social and economic devel-
opment. We have also been suc-
cessful in creating jobs for almost
1000 Congolese nationals. Early
on, we put in place an advanced
and intensive industry training
program for our 32 young Con-
golese graduate geologists that is
now bearing fruit. Banro and its
people are very proud to be as-
sociated with all oh these initia-
tives. I think our assets, the new
climate in the Democratic Repub-
lic of Congo and out approach
to doing business bodes well for
Banro and its projects.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 11

T S X /G G N O T C B B/GY P H • G ryphon G old C orporation C E O I N T ER V I E W

Near-term gold production and

big extension potential
Gryphon Gold (TSX: GGN/OTCBB: GYPH) is a U.S.− based mine development
company whose principal asset is the 27.5 square−mile (1.33 million-ounce M&I
gold resource) Borealis property located in the Walker Lane gold belt of Western
Nevada.

WSR: Gryphon Gold Corporation. Per-

haps you could begin by bringing us up
to speed on the company’s project and
property portfolio.

KER: We have a property called the

Borealis property in Nevada. It’s about Gryphon Gold is mov-
a two−and−a−half hour drive south of ing into the financing
Reno, and it’s in the area consistent with stage on a Nevada
a lot of gold exploration and develop- project with a 1.8
ment properties called the Walker Lane. million– ounce gold
We have one of the largest properties resource and plenty
in that section with, I believe, one of of extension potential.
the largest potential areas to find more CEO Tony Ker tells us
about the property and
ounces. We already have measured
why recent drilling has
and indicated of 1.2 million ounces and
delivered such exciting
inferred of 600,000 ounces, which is a
results. (Interview of
substantial base for a junior mining com- June 27, 2007.)
pany. But, what we really believe is, we
have the opportunity to add to that with our exploration program on that property. The other things that we are
working on, because we are an exploration company in Nevada and have a very good compliment of geologists
very familiar with Nevada, is the ability to attract other properties to us. So, we are continually looking for new op-
portunities to increase our land base and ounces count in that part of the world. That’s a brief update on it. I can give
you a bit more, if you are looking for some more specifics.

WSR: Please expand a bit more, if you would, on the main plays here and give us a better feel for where you are
in terms of drilling, development, resources, etcetera.

KER: The Borealis property is one that was actually in production 15 years ago, and they mined 600,000 ounces.
But, the reason we were interested in going back to that property is because in the years past, like 15 or 20 years
ago, they only looked for oxide ounces near surface. A large part of this property was not explored. Most of the drill
holes never went below 300 feet. The resource we are currently developing is called the Graben deposit, you can
see it referenced on our Web site; it’s approximately a million ounces at this stage. We think we can expand that. But,
more importantly, we think we have the opportunity to add additional Graben type deposits that may in fact be big-
ger than a million ounces. We think the Graben could grow bigger than the million ounces. How big, we don’t know
at this stage. But, if you have a look at our news release that went out on the 26th of June, we added a couple of drill
holes, one in particular that was 75 meters of 3 grams. Now, this is over 400 feet away from the other nearest drill
hole in the Graben. So, we believe we have either the potential for an extension to the Graben, which means we’ll
get additional tons and grow the resource there, or more exciting, we have a potential for a parallel system. Now,
only additional drilling will help that, but it’s a pretty big step−out, over 400 feet. So, that’s an area we are pretty
excited about on the Graben. But, again, if you look at our Web site and you have a look at the maps, you’ll hear us
talk in our news release, and see on our Web site, the Central Pediment and Western Pediment, those are areas – the
Central Pediment is around 3 kilometers away from the Graben. We think that area has the potential to find another
12 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W G ryphon G old C orporation • T S X /G G N O T C B B/GY P H

deposit. Initial preliminary drilling we are looking for is deeper down company, we have a fairly excel-
in that area indicated a permis-
sible horizon of over 1,450 feet in
sulfide type. In Nevada at this
stage, most of the ore processed
lent Board. We have Albert Matter
and myself who started a company
“The Borealis
one drill hole with detectable gold. in Nevada is sulfide type ore in called National Gold. We bought property is one
Now, do we know exactly where the northeast section of Nevada. a property in Mexico and merged
the gold is? No; we know we’ve Historically, there wasn’t a method with another company after do- that was actu-
got gold in the system, we just have for processing it. Today, most of ing some development work. That
to find an area where it has con- the ore processed in Nevada is company today is producing over ally in production
centrated, sometimes into the areas sulfide ore. We acquired the prop- 100,000 ounces a year; it’s called
where there are fractures or faults, erty about three years ago, and Alamos. We have Rohan Hazelton 15 years ago
and those are the areas we are we’ve been stepping off from the who is the CFO for one of the larg-
trying to find through geophysical old areas where they had outcrops est gold companies in the world, and they mined
systems and through geophysical
analysis of the property. We do
and oxide ounces; we are doing
the exploration in areas that are
GoldCorp; he is on our Board. We
have Don Ranta who had a lot of
600,000 ounces.
geochem and we do down−hole a little bit more difficult. They are experience with Phelp Dodge and But, the reason
analysis of the holes to help deter- difficult because they are covered Echo Bay, finding resource deposits
mine what part of the system we with a few hundred feet of gravel, around the world; he has a lot of ex- we were interest-
are in. By the middle of July, we’ll so you can’t do what the old timers perience in exploration. We have
be back out drilling the Western did, which is look at that outcrop Richard Hughes who was involved ed in going back
Pediment. People should realize and drill around it. What we have with Hemlo, one of the largest gold
that although we have a very good to do is use newer technology, such mines found in Canada. Currently, to that property
exploration potential, this type of as geophysics, to try and identify he is on several other Boards of re-
property is going to take a fair potential deposits below the sur- ally topnotch exploration compa- is because in the
amount of time to develop to its full
extent. We may be lucky and get
face and then we go and drill to
validate it, that’s the process we are
nies. Richard, again, was with us
when we were at National Gold.
years past, they
some particularly good results right going through right now. I think the Don Gentry, another board mem- only looked for
away, but typically these types of geologists we have, on average, ber, is a mining engineer. He is a
properties take a series of many have around 30 years of experi- Professor Emeritus from Colorado oxide ounces
months to fully develop because it’s ence in that part of the world. So, School of Mines, and he has also
large a property, 27 square miles. they have a pretty good handle on been a Board member of Newmont near surface.”
So, in that end of things, the drilling the type of techniques we need to in Santa Fe. So, we have some very
is going well. We have cash in our do, but at the end of the day, the experienced Board members who
treasury. We will always be look- drill bit is the one that’s going to can give us the advice and direc-
ing, as an exploration company, at determine what kind of deposit we tion to help us build this company.
doing additional financings down have down there. On the other side of management,
the road. At this stage, we are well our CFO, Mike Longinotti, was with
set, and we can explore for a while WSR: What can you tell us about Cominco for 10 years, as their Sec-
longer. The interesting thing about this present Board and manage- retary and Treasurer. So, we have
why people in the past dropped ment team in place here at Gry- a composite of some experienced
this kind of property, and I alluded phon Gold? people for a company our size as
to it, is that they talked about near a junior.
surface oxide ounces, and what KER: I believe for a junior mining
WSR: Very briefly, in closing, let’s
just recap a bit. Why should inves-
tors consider Gryphon Gold as a
SUMMARY: Gryphon Gold (TSX: GGN) has completed feasibility
long-term investment opportunity?
work on its Nevada project and is now moving into the financing and
niors are pure exploration and don’t
construction phases. The property represents 27.5 square miles on the
KER: The first main reason is, I be- have any base on which to value the
highly prospective Walker Lane trend and produced 600,000 ounces
lieve, you are in the right cycle for company. We have a management
of gold in the 1980s before the previous owner shut it down due to low
gold. But, particularly you should that is experienced and are being
prices and corporate distress. About US$15.4 million is budgeted for
invest in Gryphon Gold because we presented with some very interest-
construction and initial production should come within 8 months of financ-
have the right location, which is a ing acquisition opportunities that
ing completion. Current resource is in the 1.8 million−ounce range and
very safe, well−positioned place for can grow the company on multiple
management believes the property has the potential to contain additional
a mining company to be, that’s in fronts. So, again, we have gold re-
million−ounce deposits. One new drill hole in particular may represent
Nevada. We, also, already have a sources in Nevada; we are in the
an entire new mineralization system. Sulfide potential at depth also exists.
base of close to 1.8 million ounces, right cycle for gold, and we have
1.2 million of measured and indicat- management talent that can get the
www.gryphongold.com Phone: 888-261-2229
ed, 600,000 of inferred. A lot of ju- most value out of that.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 13
N YS E/C L R • C ontinental R esources I nc . C E O I N T ER V I E W

A four-decade history of low-

cost production and growth
Continental Resources is an independent oil and natural gas exploration and pro-
duction company with operations in the Rocky Mountain, Mid–Continent and Gulf
Coast regions of the United States. The Company focuses its operations in large
new or developing plays where horizontal drilling, advanced fracture stimulation
and enhanced recovery technologies provide the means to economically develop
and produce oil and natural gas reserves from unconventional formations.
WSR: Continental Resources has very re-
cently been listed on the New York Stock
Exchange, but the company has a fairly
long and successful history. Perhaps you
can bring us up−to−date on the assets
and operations there?

CLR: Continental is an exploration and Continental Resources

production company. We were incorpo- is continuing a
rated in 1967 and will have been in busi- four–decade tradi-
ness 40 years in November. We have tion of growing its
a high−quality proved reserve base of hydrocarbon reserves
and production at
118.3 million barrels, primarily crude oil
an extremely low
concentrated, long−life production. We
cash cost. CEO Harold
have no oil or gas hedges in place. We’ve Hamm tells us how
got a long track record of growth at a very he’s keeping his
low cost with low−risk production growth company balanced
in the Red River units in North Dakota and between development
significant future production and reserve drilling and emerging
growth in two developing plays and about plays. (Interview of
1,500 unbooked locations. Our assets are June 14, 2007.)
essentially based in the Rocky Mountains.
We’re principally crude oil, about 83%
of our proved reserves are crude oil and
about 86% of those reserves are in the
Rocky Mountains, where we have two
very large unconventional development re-
source plays: the horizontal Red River units
and the Montana Bakken Shale play. We have significant unbooked locations in two emerging unconventional
plays, the North Dakota Bakken Shale and the Oklahoma Woodford Shale play in southeastern Oklahoma.

WSR: Perhaps we could take a closer look at the principal properties there. Where are you in terms of drilling,
production and so on?

CLR: Today our company has 18 drilling rigs running. Most of that operation activity is in Montana and North Da-
kota. We have four rigs running in the Montana Bakken Shale play. We have a 50% interest in three rigs operated
by ConocoPhillips and we have two company−operated rigs running in the Bakken Shale play in North Dakota.
Plus we have five rigs drilling increased density wells in the Red River units in North and South Dakota. We have
four rigs running in southeastern Oklahoma in the Woodford Shale project. We have a drilling budget this year of
$437 million. We project to drill about 275 wells. About half of our budget will be going to development plays,
14 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W C ontinental R esources I nc . • N YS E/C L R

“Last year, we grew production 25% through the drill bit.

We’re unlike any other company out there. We’re able to
grow our business organically, and if you can do that low-
cost, that’s much more attractive than trying to compete in
acquisitions.”

principally the Red River units and we depend on them, they depend had the equipment to do what we Dakota Bakken area. We have a
the Montana Bakken Shale. Most on us, and it works very well. Back needed to do. very large acreage position there,
of the balance will be going toward when rigs were tight, a lot of com- over 400,000 gross acres. We
the emerging plays, the North Da- panies went out and entered into WSR: Looking at each of the prin- started acquiring that position back
kota Bakken shale and the Okla- long−term contracts at really, really cipal plays you mentioned, per- in 2003 and recognized that we
homa Woodford shale. high prices. We were able to avoid haps you could give us a better were not going to be able to exploit
doing that because of our relation- understanding of the level of infra- that acreage very rapidly on our
WSR: One particular difficulty ships, and as a result today enjoy structure involved here? own, so we entered into a joint ven-
that many companies have in the in some of our plays, much lower ture with ConocoPhillips. We have
current market is securing sufficient rig day rates than our competi- CLR: We have a lot of infrastruc- a 50% interest in a certain part of
access to rigs and equipment and tion, which gives us a competitive ture in the Montana Bakken Shale our play with them, and they have
indeed skilled field personnel. advantage in terms of finding and field in eastern Montana. We’ve brought three rigs into the play to
Where exactly are you regarding development costs. been there now about four years, help us really explore in this emerg-
those particular assets? and that’s developed pretty nicely. ing area, adding reserves and
WSR: So would you say the We’re drilling a third well on some production more rapidly than we
CLR: We’ve been doing this a long company’s track record (spanning of those units and have pipelines could on our own. So that’s been
time and we’ve had very close re- some 40 years) is a really strong to gather the gas. We also have a very nice. We also have a joint
lationships with some drilling con- unique factor for the company that gathering system that gathers our venture with Samson Resources in
tractors in the Rockies and also differentiates you from some of the crude oil and takes it to market. another unconventional play called
here in Oklahoma. All the rigs are newer players? So, good infrastructure exists there. the Lewis Shale in the Green River
contracted from third parties, but, Our largest field, our Cedar Hills basin in Wyoming. We wanted
through the relationships, we’ve not CLR: There were a lot of people field in Bowman County, North Da- into that play; they saw what we
really had much difficulty secur- in start−ups in the last two or three kota also has good infrastructure. were doing in North Dakota Bak-
ing drilling rigs or other services. years that basically have just been Our company, in conjunction with ken and wanted into our play, and
We’ve built a long−term relation- left out when it came to the drilling Hiland Partners, has just built a new we essentially did a swap of some
ship with those people. They know rigs. Either they overpaid or they gas plant there that has just come acreage. Now we have a 40% in-
what we’re doing and we share had to wait an awfully long time online that’ll be serving that entire terest in their play, and they’ve got
the information with those people to get rigs. That hasn’t occurred field. In the Woodford Shale, which a 40% interest in a small portion of
about what we’re doing this year, here. We put off a location or two is one of the emerging plays, the in- our North Dakota Bakken play. All
next year and the year after. So now and then, but overall, we’ve frastructure is growing significantly. of this helps us really do quite a bit
There’s a lot of competition to get more quickly and also lowers our
SUMMARY: Continental Resources (NYSE: CLR) has built a four-de- in there and build gathering and risk through diversification.
cade track record of reserve and production growth, largely through processing systems. We’ve been
the drill bit. The company currently has 118.3 million barrels of reserves, bidding out some of our packages WSR: Perhaps we can change di-
83% weighted toward conventional oil. Operations are centered in of dedicated acreage and getting rection here and look to the leader-
the Rocky Mountains, with significant unconventional projects rang- some very attractive gathering and ship team in place. What can you
ing as far south as Oklahoma. The company is aggressively drilling processing rates because several tell us about the background of your
its inventory of over 1,700 well targets; production grew 25% in 2006 gathering and processing compa- board and management team?
and capex budget is increasing to continue the trend. Management nies want to have a foothold in one
attributes the company’s long-term reputation as a competitive fac- of the most exciting unconventional CLR: Our company has about 300
tor when it comes to contracting drilling equipment. Discovery cost is plays in the United States. employees. We have very strong
under $9 per barrel and total cash cost is under $11. Assets tend to technical and management teams
be long-life; several fields have yet to peak. Production is unhedged. WSR: What is your attitude toward with an average of 20+ years of
joint ventures and partnerships? experience on the job. Obviously,
www.contres.com Phone: 580-233-8955 we built this up over a long period
CLR: We have one in the North of time. We have a very strong ex-

ploration staff. When everyone else
was laying folks off in the 1980s,
we were picking those people up;
many have been with us from 15
to 20 years. That’s very important
in what we do. We have a very
knowledgeable board. We think
that our board helps us by giving a
lot of direction to what we do and
guides us in a manner such that
our company’s run very effectively.
H.R. Sanders, one of our board
members, was with Devon through
a lot of their most active growth
period. George Littell of Groppe,
Long & Littell is also on our Board.
His firm is highly noted for forecast-
ing commodity prices. Bob Grant,
retired audit partner with Deloitte &
Touche who headed up the Dallas
office for many years with that firm,
serves as chairman of our Audit
Committee. Lon McCain, who was
CFO of Westport Resources and
also was with Petrie Parkman for
a number of years, is also on our
Board. Some of those have been
on the company board since 2001,
when the company was private.
As far as the company’s executive
team, I (Harold Hamm) founded the
company 40 years ago. Mark Mon-
roe joined the company in October
2005 as President, but became as-
sociated with the company back in
2001 when he joined the board of
the company. He was the CEO of
Louis Dreyfus Natural Gas, a large
NYSE−traded E&P company that
merged with Dominion Resources
in 2001. Other senior members in-
clude: John Hart, who was an audit
member at Ernst & Young, joined
the company in November of 2005.
Jeff Hume, who has been with the
company for some 23 years, is a
N YS E/C L R • C ontinental R esources I nc . C E O I N T ER V I E W
petroleum engineer and heads up
our operations and drilling group
and has been with me for the bulk
of the growth of the company. Jack
Stark, who heads up the explora-
tion group, has been with the com-
pany for some 15 years and has
also been with the company for a
large part of its growth. We could
name a number of other people
who are key employees − we’ve
got a good strong, deep group of
experienced people.
WSR: As you mentioned ear-
lier, Continental Resources is now
publicly traded. What are the key
objectives of the company going
forward over the next 12 to 18
months?
CLR: Clearly number one is to get
the stock price up. Backing up from
that, how do we do that? That’s
to grow shareholder value, grow
reserves, grow production, grow
cash flow, EBITDA. We’re in a very
fine position for growth. Our larg-
est field is the Cedar Hills field.
There are very few companies that
can say that their largest field won’t
peak for another two years. At
our Cedar Hills field, we’re drilling
increased density wells to acceler-
ate and enhance sweep efficiency
– this field is under enhanced oil
recovery operations. The Cedar
Hills field and surrounding fields
comprising our Red River Units
will not peak until late 2008, early
2009 at about 19,000 barrels per
day. We’re just now starting in
the Woodford Shale to develop
our acreage over there. We have
about 45,000 undeveloped acres
within that play. We will soon have
A WALL STREET REPORTER PUBLICATION • Gold rush! • 15
five rigs operating in that play. So
I think that the best is yet to come
with our company. We’re proven oil
and gas finders. We have several
emerging plays that we’re looking
at as we speak that’s on the draw-
ing board that we can’t talk about
today but will be talking about in
the future.
WSR: Will you also look around
for acquisitions to help expand the
portfolio?
CLR: We’ve built this company
almost exclusively organically
through the drill bit, and it’s kind of
hard for us to shift gears and go into
an acquisition mode. We’re used to
finding oil at less than $9 a barrel,
and it’s kind of hard for us to think
about going out here and acquiring
oil at about $25 or $30 per barrel.
There’s just a lot of difference there
that we kind of find unnecessary.
Sure, if there was something – and
we have on occasion bought small
piecemeal acquisitions that were
very strategic to what we were do-
ing. We’ve done those, but right
now I don’t see us pursuing those
real heavily with what we have on
our plate. We’ve got an expanding
capex program in the future. This
year our capex budget will incrase
about 34% over last year. Last year,
we grew production 25% through
the drill bit. We’re unlike any other
company out there. We’re able to
grow our business organically, and
if you can do that low−cost, that’s
much more attractive than trying to
compete in acquisitions, which is
very competitive, particularly with
the advent of the master limited
partnerships. It’s very difficult in to-
day’s climate, in my view, to make
accretive acquisitions.
WSR: So Continental is really go-
ing to stick to the track record it’s
established to date?
CLR: That’s correct.
WSR: Perhaps in summary, we
could give our listeners just a few
of the key reasons why Continental
Resources represents a good long-
term investment?
CLR: I think they need to look back
at our track record, what we’ve
done historically and the growth
rate, both in production and also re-
serve growth. We’ve had 10%-12%
reserve growth historically, year af-
ter year. Sometimes if you’re drilling
all PUDs, you don’t have too much
growth at that point, but if you find
a new field you may have tremen-
dous growth that year. Over the
course of time we’ve added a great
deal of wealth through the drill bit.
I think that’s what they should look
at. The company is well positioned
with over 1,700 drilling locations
that have been identified and over
1,500 of those are unbooked as of
year−end. We’ve got a long−life,
high−quality reserve base, and
I think one thing we did not talk
about today is we’ve got one of the
highest operating margins in the in-
dustry. We’ve got a very low−cost
operation, both production costs
and G&A. Our cash costs per bar-
rel are under $11, which is one of
the lowest in our industry. With
crude oil in the $60 range, there’s
a lot of cash flow generated by this
company.
16 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W A lternate E nergy H oldings , I nc . • O T C/A E H I

Incubating a full range of

alternative power technologies
Alternate Energy Holdings develops and markets innovative clean energy sourc-
es to reduce dependence on foreign energy sources. Current projects include
nuclear construction, a fuel additive to reduce the cost of natural gas energy
production, lightning harvesting technology, carbon dioxide removal from gas
turbine exhaust and urban mini−reactors.

Alternate Energy
Holdings is incubating
a portfolio of clean
energy projects
ranging from
nuclear power to
emissions control and
a technology that
harnesses lightning.
Donald Gillispie, the
company’s president,
tells us alternative
energy is “here to
stay.” (Interview of
April 4, 2007.)

WSR: A few beginning questions − for instance, how large is the overall market you’re targeting, and
what is its potential growth?

AEHI: A little background first − the company was formed by a group of energy industry executives
with over 40 years in this business. These executives also make up my Board and principal leadership
team. We decided to do so when we thought about the energy issue going on, about energy prices go-
ing up, particularly money being sent to the people who wanted to do harm to us, and the fact that the
global warming issue was coming on the radar screen pretty strong. We thought we had some skill sets,
particularly running nuclear power plants that we could bring to the market and do something that most
people can’t do, which was to create a nuclear generating company. When we get this thing running,
we will be the only unregulated nuclear generating company in the country. The rest of the people that
sell power are mostly regulated utilities selling other things like coal power and natural gas as well; we
are unique in that respect.

WSR: Tell us about some of the company’s projects and product offerings.

AEHI: Like most alternate energy companies, we are capital– intensive upfront because you don’t start
up energy companies on a shoestring. When we started this company last fall and went public through a
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 17

O T C/A E H I • A lternate E nergy H oldings , I nc . C E O I N T ER V I E W

reverse merger, we decided we We believe we can use the ex- sion available – you can drive it them grow the business through
would name the company Alter- cess heat, to make ethanol at a around on a tractor trailer truck our lifetime of contacts that will
nate Energy Holdings and try to very competitive price, if not the – it produces a small amount of add to our success and help
broaden the alternate energy lowest price in the country. In power and a larger permanent them as well. Our short−term
idea beyond nuclear power, addition, there are some feed- version. It’s an innovative prod- growth strategy is through ac-
go into other alternate energy lots in the area where there is uct that may be very useful in quisition; there is quite a bit of
areas such as solar and wind a large amount of cattle, which third world countries, particular- interest because the experience
that we could help manage and produce waste; we believe we ly in the Southern Hemisphere of our management team. We
control to bring to the market- can also produce methane from where there’s quite a bit of light- are very optimistic about our
place. What we’re trying to do that waste. We are looking to ning activity. Those are some of ability to acquire these compa-
is garner a company that has produce three sources of energy the key projects we are working nies.
already started up and add to out of the plant, which has never on right now.
our holdings with the idea that been done anywhere in the Unit- WSR: What is so unique about
we will bring them professional ed States, let alone the world. WSR: What about your recent your company? What gives
expertise and management. That is our major project. We acquisition of Private Green En- your company competitive ad-
For the most part, they will be are also working on something ergy companies this past March? vantages within the energy
standalone entities. The big- that would remove carbon diox- Tell us a little bit about that. space?
gest project we have going on
right now is the Idaho Energy “If you started up an organization like ours and tried to go out and
Complex; over the past week,
we announced that we plan to actually hire people like we have, you would have a multi-million
build a nuclear power plant in
a state that does not have one, dollar tab just for the salaries alone. We decided that we’re not tak-
and because there is such a
shortage of power in that re- ing salaries because we want to get something up and growing.”
gion that most of the states are
importing half of their electric- ide from the emissions of both AEHI: We believe our strength AEHI: Just our team’s experi-
ity. We’re all aware of the re- coal−burning and gas−burning is in our management team. ence, and the fact that if you
cent Supreme Court ruling on plants. It’s a unique patent that We think we can help some of started up an organization like
the CO2 emission. We see both a scientist developed for us. We these smaller start– up compa- ours and tried to go out and ac-
coal and natural gas plants see that being useful to bring to nies that are in the alternative tually hire people like we have,
coming under strong regula- the market in light of the recent energy market. Those that have you would have a multi−million
tion to reduce CO2 emissions, changes that will require plants different products than we do dollar tab just for the salaries
which will make nuclear power to reduce their CO2 emissions. have more on the demand side alone. We decided that we’re
even more advantageous. In ad- We also have a fuel additive, like helping people save on not taking salaries because we
dition we want to use the excess which adds ethanol to natural their electric bills. We hope to want to get something up and
heat from the plant, which, to gas when you burn them in tur- acquire between five to 10 of growing. We are essentially
our knowledge, has not been bines, which will reduce the cost those smaller companies. We using stock. We all have some
done anywhere in the world, to of operating the gas turbine. have two companies that we’re stock in the company and want
produce ethanol from the local Also, we have a device that presently working with, that are to move the stock forward, but
agricultural sources. As we all captures electricity from light- ready to sign up; the idea is to we are all incentivized to do
know, the biggest cost in etha- ning. We can convert the strikes get standalone companies that that instead of taking large
nol is the energy that goes into into electricity and put it on the have a product and a service salaries from the company at
it, which is mostly natural gas. grid. There is a portable ver- in an area where we could help this stage. We think that our
skill set is to help these smaller
companies that have started up,
SUMMARY: Alternate Energy Holdings (OTC: AEHI) is developing a portfolio of clean energy projects and but have stalled in the growth
technologies. A team of extraordinarily seasoned industry executives founded the company as an incubator. area. This is a good marriage
Current activities include the construction of a proposed nuclear power complex in Idaho, which when com- of experienced personnel with
plete will incorporate ethanol and methane production. The company’s portfolio also includes a system for young folks with good ideas.
converting lightning into grid−capable electricity; a portable version of the device is already commercially They could not put together a
available. Additional technologies under development include a technique for adding ethanol to gas − and Board or a management team
coal−burning power plants to reduce emissions. Additional acquisitions are planned. Management notes like we have on their current
that given the recent Supreme Court ruling allowing the EPA to regulate carbon emissions, alternative energy cash flow.
“is here to stay.”
WSR: Tell us about the manage-
www.alternateenergyholdings.com Phone: 540-586-7470 ment team and some of their con-
tributions to the company?
18 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W A lternate E nergy H oldings , I nc . • O T C/A E H I

AEHI: I will start with myself. I
have been in this business 40
years as a Senior Executive; I
helped to operate a number of
nuclear plants, start them up,
and turn them around when they
were struggling. I helped start a
consultant business in Atlanta
called INPO – they are consul-
tants in the nuclear energy field.
I was also involved in the start-up
of a nuclear operating company
called Nuclear Management
Company in Hudson, Wisconsin
– the first such company in the
United States − which operates
six nuclear power plants. We
were given an award by Forbes
Magazine as best−in−class for in-
novation. Next is Greg Kane, one
of the best plant managers in the
history of the industry. He’s oper-
ated top plants around the United
States and has a consultant com-
pany that does quite well. He is
my Vice President of Operations
and in charge of operating our
new plant. Our Chairman of the
James Taylor is a past head of
the Nuclear Regulatory Commis-
sion. He was a senior executive
for President Bush as well as Presi-
dent Clinton. We have a couple
of other people, Ken Strahm and
Ralph Beedle, who have been in-
volved in running organizations
like INPO and NEI in Washington
and also have a wealth of experi-
ence and many political contacts.
We just added John Franz, who
has started up five new plants
through the construction phase.
He also has 40 years’ experience.
core business, and how do you
feel that the company can capital-
ize on these trends?
AEHI: We finally see people
beginning to understand nuclear
power. It is not dangerous, de-
spite some of the history dating
back to Three Mile Island. There
are 30 new nuclear plants on
our drawing board right now in
the United States and over 100 in
the world. If you look at the price
of uranium, it’s a good indication
of what’s going to happen. It has
native energy companies started
back in the ‘70s with the oil
embargo – after which most of
those were closed after oil prices
came back down. I don’t see that
happening this time. Alternative
energy is here to stay! We’re in
a good position to pull together
some of the better companies in
this business and have some long
term success.
WSR: Where do you see your
company in the next six to 12
months?
AEHI: Probably adding five to 10
more organizations underneath
us that are involved in the entire
spectrum of alternate energy
– solar, hydro, ethanol, and other
unique products we’re working on
like lightning to electricity. I be-
lieve that will give us a distinct ad-
vantage in the marketplace. There
are many companies starting up
in this business, but they all have
one thing in common − they aren’t
making a profit. Why? Because

“Alternative energy companies started back in the ‘70s with energy is capital intensive and it
takes time to develop, there will
the oil embargo – after which most of those were closed after be a lag. In fact, if you choose
wisely in this investment arena,
oil prices came back down. I don’t see that happening this time. you should still do very well.
Some of these companies are go-
Alternative energy is here to stay! We’re in a good position.” ing to make a lot of money.

Board, Leon Eliason, has been
the President of two nuclear util-
ity business units. He has man-
aged almost every part of the
business including nuclear power,
solar and hydro plants. There’s
not much he hasn’t done and/or
overseen in the energy world.
We look to add to this group as
we add holdings to get the right
people with the right background
to help direct the holding compa-
nies we acquire.
WSR: What are some of the ma-
jor trends you see affecting your
gone from USD$8 a pound to the
current price of USD$95 now. I
see it going up more. This is not
because there’s a shortage of ura-
nium, there’s plenty of it around;
it’s just a lot of mines and pro-
cessing plants were shut down
when nuclear power was kind of
stagnant. They are now trying to
play catch up, and so the price is
going up. It will turn over within
five to seven years and will prob-
ably fall back down, but that is a
strong indication. The recent Su-
preme Court ruling giving the EPA
rights to regulate CO2 will cause
a heavy blow to fossil fuel plants.
The world oil situation will make
all alternative energy attractive,
particularly in terms of ethanol
and other similar products. Alter-
WSR: In closing, why should Al-
ternate Energy be considered a
good long−term play?
AEHI: We have a very experi-
enced management team with
strong backgrounds. I think we
will filter through some of these
start-up companies and pick
the best ones; we will be doing
some of the investors’ homework
for them. When you pick us, we
have already done the home-
work, so you don’t have to do
it from scratch. It’s hard to do
something from scratch – these
companies generally do not have
a long track record. When we
put them in our group, we think
they have the potential to grow,
and we will help them.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 19

O T C B B/C T V W F • C ity V iew C orporation L imited C E O I N T ER V I E W

In the front row to develop

Angola’s onshore energy assets
CityView is an ASX-listed energy company which is also listed on the OTCBB.
The company has diverse interests in Indonesia, the Middle East and especially
Angola, where it has built up a potentially substantial portfolio of oil, uranium
and mineral opportunities.

CityView has refocused

its operations on the
untapped energy
resources of Angola.
CEO Mark Smyth tells
us his company has a
front−row seat to help
develop what he calls
a paradise for oil and
minerals exploration
and production.
(Interview of August 30,
2006.)

WSR: Bring us up to speed on the company’s assets and operations.

CTVWF: The company has three assets. First, it has two carried interests in Indonesian oil fields: one of
them, Konang–3, is being drilled right now. Second, it has a strategic investment in the Middle East; and
third, and most exciting of all, it has a large investment in Angola.

WSR: Expand on these plays and give us a better feel for where the company is in terms of drilling, devel-
opment, reserves, and so on.

CTVWF: In Angola, we have 30% of a major uranium project. This project is in conjunction with a group
called Petro-African, a large Black Economic Empowerment group based in South Africa. Within the project
area, we have three major target areas – Longonjo Carbonatite, Catabola and Caqueti. The fourth is the
Ucua beryllium project. Any one of those could end up becoming a mine.

WSR: Educate us in terms of the infrastructure as well as the political climate within these regions.

CTVWF: Angola is a most interesting country. Jim Rogers, the well–known fund manager, describes Angola
as low−hanging fruit in his book Adventure Capitalist. The reason for his comment is that it is an extremely
wealthy country devastated by war. The war ended three years ago, and the country is on the mend. Ango-
la’s economy is growing fast because the country has significant oil production; at the moment, it is pumping
1.5 million barrels a day and will soon rise to 2 million barrels a day. U.S. companies have a strong pres-
ence: Exxon is pumping over 400,000 barrels a day, and many of the other majors are in there as well. In
20 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W C ity V iew C orporation L imited • O T C B B/C T V W F

addition to oil, the country is min-

eral rich. CityView is concentrat-
ing on oil and uranium. Through
our contacts, we have been
promised an onshore oil field in
Angola. There have been to date
no onshore oil fields awarded in
Angola and when this occurs, we
will be in the front row.
WSR: How important are strate-
gic alliances and joint ventures
for this company moving for-
ward?
CTVWF: Absolutely essential. The
way to succeed in Africa these
days is to link up with powerful
Black Economic Empowerment
Groups and not work against
them – that is exactly what we
have done. We have linked up
with the Bongani Group who are
local Angolans. They are based
in Johannesburg, South Africa,
and they specialize in the provi-
sion of infrastructure. They are an
efficient group and provide the
backup so essential in a newly
developing country.
WSR: On the M&A side, will
the company look to additional
acquisitions in the near to mid-
term?
CTVWF: Very much so. Once we
have progressed a little further
down the road, we will be taking
on more projects through our part-
nership with Petro –African. They
are sitting in the box seat, and
“Angola is an oil and minerals paradise. It has just been
opened up. CityView is in the box seat, and any investor
coming in now is joining the play on the ground floor. I can
see no reason at all why we will not soon be granted an oil
field.”
they can’t handle all the projects pany Secretary. to what it was.
which will be coming through the
system. Everybody is trying to get WSR: Does the investment com- WSR: In closing, why should
into Angola. The Chinese have munity fully understand this com- investors consider CityView as
recently bid USD$1 billion dol- pany and the direction it’s going a long-term investment opportu-
lars for an offshore acreage. in? nity?
WSR: Tell us about the present CTVWF: No, not yet. CityView CTVWF: The real reason is
board and management team. went through a bad patch and I Angola. Angola is an oil and
was brought in earlier this year to minerals paradise. It has just
CTVWF: The board consists of fix it. I have turned the company been opened up. CityView is
three veteran executives. Start- around and got it refocused; the in the box seat, and any inves-
ing with myself, I have been in- general public is not aware of tor coming in now is joining
volved in the mining industry now what has happened. It is a very the play on the ground floor. I
for almost 40 years. I started off interesting company now be- can see no reason at all why
my career as Treasurer and Com- cause of the projects emerging in we will not soon be granted an
pany Secretary of Selection Trust Angola. The price now is about oil field. Once that happens,
Australia, now BP. CityView’s 4 cents US. CityView has had a the company will be complete-
Chairman, Mahmood Ansari, great history and it will get back ly re–rated.
runs Quest Energy in the Middle
East. He was educated in Michi-
gan and from there went into the
Abu Dhabi National Oil Com-
pany – he has lifetime of experi-
ence in the oil business. The third
member of the team John Jacoby,
comes from a mining area in the
north of Australia and has been
involved in mining all his life: he
is CityView’s Director and Com-

SUMMARY: CityView (ASX: CVI / OTCBB: CTVWF) is actively de-

veloping the natural resources of Angola as well as pursuing other op-
portunities in the global energy space. The company has a 30% stake
in a uranium project with three delineated target areas plus significant
beryllium; management believes any or all of these could become a
viable mine. Local connections are expected to translate into onshore
oil concessions. Angola is described as “an oil and minerals paradise”
and BEE partners are expert providers of infrastructure in the region.
Additional assets include Indonesian oil interests and a stake in a Mid-
dle Eastern developer of various energy projects. Board is extremely
well-versed in running resource operations and members have focused
to refocus the company.

www.cityviewcorp.com Phone: 011-61-8-9226-4788

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 21

O T C B/I XO G • I ndex O il & Gas C E O I N T ER V I E W

Building an impressive track

record for successful drilling
Index is a gas-based oil and gas exploration and production company, with
activities in Kansas, Texas, Alabama and Louisiana. It has offices in Houston,
Texas and Bath, England.

Index Oil & Gas has

distinguished itself by
building an impressive
track record of drilling
success. Daniel L.
Murphy, the company’s
chairman, gives us a
tour of his balanced
portfolio of exploitation
properties. (Interview of
January 25, 2007.)

WSR: Start with today’s announcement concerning the commercial discovery from the company’s Taffy Pro-
gram in Texas and bring us up to date on the details.

IXOG: We are pleased with Taffy’s results. This is a three-well back-to-back program with the Taffy 1 well
coming in as a commercial success. It could be put into production very soon because the pipelines shared in
the facilities are all on short-time delivery. We expect Taffy to be adding to our revenues in the second quarter
of this year.

WSR: Bring us up to date on the West 1 drilling program.

IXOG: We are excited about West 1, our most significant well to date. When we originally took our 15%
initial interest, it was all that was available. Subsequently, one of the partners was overcommitted elsewhere
and had to relinquish their interest; we were able to pick up the extra 5%. This was a very positive move on
our part, and we are looking to be drilling that well next quarter.

WSR: Give us a better understanding of the combined cumulative production from nearby fields.

IXOG: These are in the New Taiton area; the combined production to date has been 400 billion cubic feet of
gas, equivalent to 67 million barrels of oil. This production is from the Edwards limestone. This particular field
lies between two of the older existing fields, and if successful, it will lead to more well development programs.
In addition, in the leased area, there are similar structures of the same character and size. We see this as a
high– potential area.

WSR: Bring us up– to – date on the balance of the company’s portfolio, particularly in regard to the Stafford
22 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W I ndex O il & Gas • O T C B/I XO G

many wells in order to fully devel-

“The funds raised in 2006 are being employed to support the full op those areas. We are holding

development of the wells currently in progress. For example, the that money in reserve until we get
the results on these particular pro-
West 1 and Ilse projects are very successful. They require many grams. We have a few projects in
the pipeline. Typically, we review
wells in order to fully develop those areas.” between five and six projects per
week and will select one to two
every three or four weeks to invest
County and Barton County plays. wells in 2007. The West well will shareholders. in. We have a strong opportunity
be done shortly thereafter. We still pipeline we are constantly evalu-
IXOG: In Kansas, we have an have the Taffy 2 well to drill−there WSR: So the high demand we’ve ating. It’s going to take us time to
ongoing drilling program that has was a weather problem. The site seen for rigs, equipment, and per- invest this money, but we don’t
been annualizing. Toward the got too waterlogged, and we sonnel is not a limiting factor for want to overcommit ourselves.
end of 2006, we embarked on have to wait for it to dry out. We Index? We were forced to drop out of a
a six-well program, with three in are active on the drilling size. successful project. We are wait-
the Seward Project and three in IXOG: We’ve seen a bit of that. ing for the results on the West
the Katy Project. We have four WSR: Is the level of infrastructure We’ve had some delays in getting 1 and Ilse projects to see if they
wells that have been commer- within these regions highly devel- rigs to site; a lot of those delays have follow−on wells.
cially successful. Our success rate oped? have been just delays in programs
in Kansas is still high at 66.7%. being conducted in front of us. De- WSR: Can we expect to see ad-
Unfortunately, these results incre- IXOG: All the areas we are drill- mand last year was quite high. It’s ditional partnerships or joint ven-
mentally add to our revenues. We ing in are between fields. In the dropping off just a bit, which is tures in 2007?
have a modest 5% in Kansas; we Taffy area, there was a discovery okay with us, because all these
look at it as bread and butter, very north of it; the operator was lay- projects are multi– year projects. IXOG: We are continuously in-
low–risk, low – capital demand, ing in a pipeline we will tie into, What’s happening today is not vesting money; last week, we re-
but constantly adding income to which is fairly straightforward. In determining your success or fail- viewed six prospects − some of
our revenue. all the other fields, we have sub- ure or what’s going to happen them were with existing partners
stantial infrastructure already in over the next five years once you and some with new partners.
WSR: The company has a conser- place, and tie-in should be fairly make a discovery. If the price We are eager to continue work-
vative low−risk approach to these quick from discovery. Also impor- comes down, it doesn’t bother ing with the partners we’ve built
projects. tant, but previously unmentioned, us that much because it allows good relationships with, and we
is that our role is basically as a us to move our program out a bit are also interested in finding new
IXOG: Yes. Our risk profile is non-operating partner. We don’t faster. partners that are aligned with our
changing−the West and Ilse wells direct the work being carried out way of doing business.
are examples. Ilse is the well cur- in the exploration project or in WSR: Towards the end of 2006,
rently being drilled; it is well into operating the production prop- the company conducted several WSR: What differentiates Index
the drilling. We have a 10% erty. We just share in the benefit, rounds of fund raising. How have within the sector? What sets the
working interest, and that’s in a and we own our working interest these funds been deployed? company apart?
significant high-reserve potential percentage of the money invested
area. We are also finishing up the in facilities, leases and wells. We IXOG: The funds raised in 2006 IXOG: There are five points. One
drilling on the Vieman #1 project, don’t own any drill rigs − those are being employed to support is our team. We have seasoned
which we expect to make an an- are all leased in. Our role is to the full development of the wells oil industry professionals with
nouncement on within a matter of manage our investments using our currently in progress. For exam- proven track records. They have
days. We have either drilled or experience to influence the opera- ple, the West 1 and Ilse projects a significantly broad and compre-
are in the process of drilling ten tor to do things of benefit to our are very successful. They require hensive experience that doesn’t
overlap. Our top four executives
have a total of 120 years of ex-
SUMMARY: Index Oil & Gas (OTCBB: IXOG) has pursued an aggressive drilling program so far this year across perience. Secondly, our approach
its properties in Kansas and the Gulf Coast. The company’s Taffy wells are moving toward production and should to business as a non-operator is to
be shortly revenue-accretive. Additional Texas projects are in a region that has historically produced 400 BCF of build a balanced portfolio. We
gas total and management sees significant potential ahead. Although the company has enjoyed drilling success are risk-mitigation conscious, and
in Kansas, its stake in these wells is a relatively modest 5%. Substantial infrastructure is in place on all fields. Pro- we don’t want to expose the com-
ceeds from recent funding rounds are being held in reserve to support full development; strategy is to maintain a pany to any single critical event.
diversified risk profile. Graduation to a senior exchange is contemplated. We diversify our investments
across a wide range of opportuni-
www.indexoil.com Phone: 713-715-9275 ties. Thirdly, our opportunity net-
work is generating high−quality
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 23

O T C B/I XO G • I ndex O il & Gas C E O I N T ER V I E W

opportunities consistent with our

ability to invest, which appears
ongoing. Next is our track record.
Since January, we’ve participated
in eight wells, five of which have
been commercial, giving us a
62.5% success rate with one well
currently drilling and two more
wells to be drilled in the near fu-
ture. Over the past 12 months, we
have been very active, and we
have capital to continue to be ac-
tive.

WSR: Tell us about the Board and

executive team.

IXOG: I have 40 years experi-

ence in the energy industry, the
last seven−and−a−half years with
an independent oil company in
the North Sea called Intrepid En-
ergy; I was the Engineering Pro-
duction Director. One of the big
results we achieved was that we
invested in, explored, and discov-
ered a USD$500 million recover-
able oil field; I was part of that
development until the company
was sold. I’ve also worked for oth-
er major companies such as Shell
Oil, Occidental, and IIAPCO, an
independent out in Indonesia, as
well as contractors such as Santa
Fe International. Lyndon West has
26 years’ experience in the oil
and gas business. He was New
Venture Services Practice Director
and previously the CEO of IHC’s
International Division. IHC bought
a company that he co−founded
called IEDS Limited, and he was
the founder director of Intrepid.
Andy Boetius, Finance Director,
has 15 years’ experience with
Amerada Hess. He’s been a fi-
nance director for the U.K. oil
business and was a member of
the management team that sold
the gas division to the TXU group
several years back; he was also
the Founder Director. In August
2006, John Williams joined us
from ConocoPhillips. John is a sea-
soned professional with 31 years’
experience in global oil and gas
exploration. He has worked in
over 25 countries and conducted
“The results are well proven, whether that potential is justified or
not. We have a very strong track record, and we tell investors
what we are going to do and then we do that. We don’t deviate
very much off that path. We are a company that can be trusted.”
businesses in more than 10 coun- see what the results are. Our real WSR: So the company might
tries. In addition, we have several focus is to maintain a balanced consider the American Stock Ex-
non-executive directors, one of portfolio approach to our invest- change?
which is Dave Jenkins with 31 ments in respect to both risk and
years’ experience in global hydro- capital employed. Potentially, we IXOG: We’ve had discussions
carbon exploration. He is formerly are looking for acquisitions. We with them but haven’t come to any
of ConocoPhillips, involved in think with the price of oil coming decision yet.
ranking over 50 basins and 100 down somewhat, some of the po-
plays. Dave helped ConocoPhil- tential acquisitions are starting to WSR: Give potential investors
lips develop a focused exploration look more reasonable. We have some of the key pointers they
program before he left. He is also our eyes out for acquisitions com- should consider when looking to
a Founder Director of Index. Last patible with the company’s strat- Index.
but not least, we have Mike Scrut- egy and objectives and ones that
ton with 33 years’ experience in also make commercial sense. We IXOG: We are a relatively
the upstream petroleum business have raised some funds to invest new company. We are trading
and was formerly with Robertson in land plays, and we also have below our value range, espe-
Research. He served as the Direc- a number of opportunities under cially with some of the potential
tor of Robertson Research and sev- evaluation also, looking at de- significant prospects we have
eral of its subsidiaries until he left veloping some opportunities in such as West and Ilse. The re-
in 2004 and joined Index. conjunction with other partners. In sults are well proven, whether
2007, our focus is land play. We that potential is justified or not.
WSR: What are the major mile- are also doing some background We have a very strong track re-
stones we can expect to see for work and preparing the company cord, and we tell investors what
Index over the next 12 months? to graduate market so that when we are going to do and then we
it’s appropriate for us to do, we do that. We don’t deviate very
IXOG: We are looking forward will be ready and won’t get over- much off that path. We are a
to develop our West 1 and Ilse 1 whelmed by the regulatory burden company that can be trusted to
opportunities; we are waiting to that exists in doing that. do what it says.
24 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W B urleson E nergy L imited • A S X /B U R

Drilling in-fill wells other

explorers would love to chase
Burleson Energy is an Australian-based oil and gas exploration company. Bur-
leson Energy has the unique opportunity to be partnered with an experienced
Texan Oil family in drilling and potential development of hydrocarbon in one of
the most valuable energy provinces of America.

Burleson Energy
has minimized its
exploration risk by
concentrating on
in-fill development
wells with substantial
production potential.
Michael Sandy, the
company’s executive
director, tells us
about his initial
drilling plans.
(Interview of
January 11, 2007.)

WSR: Bring us up to speed on the company’s assets and operations.

BUR: Burleson listed with an IPO in the early part of 2006 and raised AUS$4 million (USD$3 million)
to be involved in its initial two wells in Burleson County, Onshore Texas. These are Austin chalk wells.
We have a 40% working interest in those wells. More recently, we’ve received shareholder approval for
another fundraising. Our U.S. partner, AKG Energy, a private company based in Austin, came up with
a new project that was just too good to pass up. We raised another AUS$12.3 million (approx USD$9
million) to enable Burleson to be involved in at least seven more wells, also in Austin Chalk but in other
counties onshore Texas. We have 40% working interest in the Burleson County wells and 17.5% equity in
the later wells. Should I go on and talk a little bit more about the second project?

WSR: Expand if you would.

BUR: The second project that came about was a bit unexpected from our point of view, but we already had
the relationship built with AKG Energy, which is owned by the Kugler Family, a private company based in
Austin. I’ve known the principal of that company for 30 years. When I was looking to set up an Australian
company, the obvious person to go to was Andy Kugler because he has a great deal of experience in the
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 25

A S X /B U R • B urleson E nergy L imited C E O I N T ER V I E W

“The wells we’re looking to drill are all Austin Chalk

Wells. The ones in Burleson County should produce
between 3 and 5 BCF and flow initially at 3 to 5
million cubic feet a day. Not that these are
development wells and not
exploration wells.”

Austin Chalk area. We raised at are drilling wells that are a AKG, and one other in Brazos WSR: Does the investment com-
the initial money and were pre- lot lower risk than rank explora- County. munity understand this company
paring to drill when another op- tion wells because we’re drilling and the direction it’s going in?
portunity came up that was too into existing producing chalk WSR: Tell us about the present
good to pass up. Marathon had fields. With the second project, Board and management team. BUR: We still feel we are a very
approached AKG Energy to as- we have a lower equity, but the young company. We only listed
sist them with drilling some wells wells are deeper and higher BUR: First, let’s talk about the (our IPO) in April/May 2006.
drilled because they had experi- pressure; some of the wells in the people on the ground, who as far We got the initial interest mainly
enced difficulties. AKG handed region have produced well over as I’m concerned, are the key el- from sophisticated private inves-
part of that project over to Bur- 15 BCF, but what we’re looking ements. By itself, Burleson could tors, mostly out of western Aus-
leson Energy. The reason for that at is averaging 4 to 5 BCF per not hope to compete in the very tralia. They were prepared to go
was the Kuglers are all significant well and hope there may be competitive Onshore Texas mar- along with us into these first two
shareholders in Burleson. If all some wells producing 8 BCF or ket, so we don’t pretend to be ex- wells, and there was a certain el-
goes well and all performance more. Some of these wells can perts. Although I’ve had consid- ement of patience involved. This
shares kick in, they should own also produce at very high ini- erable U.S. experience, little of new project then came up, which
over 20% of the company. Andy tial rates, with 10 million to 15 it has been on the ground. Andy still requires a bit of explaining to
Kugler, the principal, is one of million cubic feet a day being Kugler is the patriarch and is the market. We just recently got
the three Directors of Burleson. conceivable, and we’re hoping also on Burleson’s Board. Andy’s shareholder approval for this lat-
The wells we’re looking to drill we might see those kinds of re- three sons are all skilled oilmen est fundraising, where we raised
are all Austin Chalk Wells. The sults. Initially, these wells flow who worked for big companies the additional AUS$12.3 million.
ones in Burleson County should very strongly for a while, so you such as Marathon. A few years There is still a fair amount of
produce between 3 and 5 BCF recover costs extremely quickly, ago they all got together as AKG work to do to get the share mar-
and flow initially at 3 to 5 mil- but then drop off dramatically Energy. They’re all extremely ex- ket up to speed with what we’re
lion cubic feet a day. Note that and flow for many years at a perienced people on the ground doing. We’re hoping to drill our
these are development wells and much lower rate. We’re looking as shown by Marathon’s invi- first well very soon, hopefully
not exploration wells; you would to drill at least nine wells – two tation for AKG to operate the within the next couple of weeks.
find that some explorers would in Burleson County with most of drilling phase in the Champion We’re in the process of getting
love to be able to chase those the others in Grimes County in area (Grimes and Montgomery our story out in the market. Our
size targets−what we’re looking association with Marathon and Counties). In terms of the Board, share price has stayed relatively
our Chairman, John McAlwey, flat, which is okay considering
has a considerable amount of we haven’t had any drilling ac-
SUMMARY: Burleson Energy (ASX: BUR) is developing various hydro- resources experience. He is a tivity yet.
carbon interests in the Austin chalk of Texas. The company has a 40% c o m m e r c i a l – t y p e p e r s o n. A s
stake in an initial two-well drilling project in Burleson County with po- for myself, I most recently spent WSR: Where do you see Bur-
tential to produce 3-5 BCF in total at an initial rate of 3-5 MCF per day. ten years with Novus Petroleum. leson Energy two to three years
Land position of over 10,000 acres provides at least a dozen other drill I’m a geologist, but have mainly from now?
prospects. A second project area offers lower overall equity (17.5%) but held commercial roles like busi-
high potential production; management expects wells in the area to tap ness development. I spent much BUR: We started out as a two-
an average of 4-5 BCF apiece at relatively high flow rates. Initial plan is of 2003 running Novus’ U.S. op- well company, so we had an ini-
to drill seven wells in the near term. Counting additional prospects, the erations out of Houston. Andy Ku- tial shelf life of four to six months’
company could spend several years simply drilling current properties. gler is also a geologist and has activity. We have over 10,000
over 40 years’ experience. We acres in the Burleson area. We
www.burlesonenergyltd.com Phone: +61-8-9325-8888 first worked together many years also have at least a dozen other
ago in Papua, New Guinea. prospects in that area. With the
26 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W B urleson E nergy L imited • A S X /B U R
new project, we’ve gone from
having two firm wells to nine
firm wells, giving us at least 18
months of drilling. In both areas,
there are a lot of other prospects.
If all goes well, we’re probably
going to continue this program
that will go from three to five
years just with our current port-
folio; there are other possible
projects we could be looking
at as well. The beauty of what
we’re doing is that it is very low
risk with a very high chance of
getting some production and
early cash flow. Each well has
a very good chance of at least
recovering costs if not making
good money for the company
and its shareholders. So for the
next two years, we’ll continue
to review what we’re doing but
will not be adding any more to
the portfolio. We’ve got plenty
to keep us busy. We’re going
to be drilling wells, every two
months and might even get a
second rig in operation. I would
hope that we have good posi-
tive cash flow from the majority
of the wells we’ve drilled and
more commercial successes
than commercial failures.
WSR: In closing, why should
investors consider Burleson En-
ergy as a long-term investment
opportunity?
BUR: We have a firm program
of at least 18 months of drilling
with nine wells; and have up to
20 more prospects we could be
looking at drilling (assuming
success is along the way). In
that case, we could be looking “The thing that sets
at a three to five-year program
of drilling just within the compa-
us apart is that
ny’s current portfolio – without
looking at doing anything else.
we’re drilling tar-
There is going to be regular gets that have the
news flow, which is very im-
portant for share investors. You potential for levels
don’t want to have the company
sitting around doing nothing of production and
for six months. We’ll be having
news flow in terms of drilling reserves that a lot
results every couple of months,
and then as quarterly reporting
of explorers would
and half-yearly reporting comes
in, we’ll hopefully be able to re-
be keen on target-
port positive cash flow as well. ing, but we have
Again, we’re hoping that most
of the wells we drill will be out- taken out much of
standing commercial successes.
The thing that sets us apart is the risk of explora-
that we’re drilling targets that
have the potential for levels of tion drilling.”
production and reserves that a
lot of explorers would be keen
on targeting, but we have taken
out much of the risk of explora-
tion drilling. We have a large
portfolio of in-fill development
wells with an appraisal compo-
nent and a very high chance of a
positive commercial outcome.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 27

A S X /F L X • F elix R esources L imited C E O I N T ER V I E W

Building new coal mines to

unlock huge growth potential
Felix Resources Limited is an Australian resources company investing in, developing
and operating resource-related projects with a primary focus on coal. The company
has grown strongly since 2003 through expansion, new developments and acquisi-
tions.

Felix Resources is
boosting its growth
profile as an Austra-
lian coal producer.
Managing Director
Brian Flannery tells
us how his team is
working to open new
mines in order to
meet intense demand
WSR: Begin by bringing us up to speed on the company’s assets and operations. for his company’s
billion-ton assets.
FLX: Felix Resources is a relatively new listing. It’s basically two private coal companies. Their major sharehold- (Interview of
ers have been in the industry for 30 years in Australia and developed quite a lot of the large mines that are now September 21, 2006.)
owned by the major companies. These two groups came together under the banner of Felix Resources 18 months
ago. We have three operating open−cut coal mines in Queensland and New South Wales supplying the steel
industry, and the power generation industry. We have 20 customers worldwide. We are currently producing six
million tons of coal, of which just over four million is Felix’s equity tons the rest is in joint venture tons with a couple
of Japanese partners, and we are going to eight million tons next year and 15 million tons by 2010. We have
one underground longwall mine to come on next year in the Hunter Valley in New South Wales. The gate roads
are 60% completed, and the longwall is being shipped from Germany for commissioning in March 2007. Then
we have a large open-cut mine, which is coming on the year after in New South Wales. We’ve got a big growth
plan coming up, and we have achieved all our targets in the last 18 months quite comfortably.

WSR: Expand on some of the main plays and educate us in terms of where you are in that developmental phase
as well as the infrastructure in place within this region.

FLX: In Queensland, the coal being exported is from two open-cut mines; we have the Yarrabee mine, supply-
ing mainly PCI coal to Asia. We also supply some of that to America and some to Europe. That coal ships out of
Gladstone, which is in Central Queensland. Our other mine in that region that goes down the same rail track to
Gladstone is the Minerva mine. This is a joint venture with a Japanese group, Sojitz. They have 45% and we have
55%. That mine is producing mainly thermal coal, and we are selling 2.5 million tons a year of that coal to the
electricity generators in Japan and Korea. These two Queensland mines are running at 4.2 million tons per annum,
and we are selling that coal as fast as we are producing it. In New South Wales, we have an open-cut mine called
Ashton, which ships out of Newcastle. That mine is producing 1.6 million tons of metallurgical coal. It is semi-soft
coking coal going to steel mills in Asia, mainly Japan and Taiwan. We are expanding that mine because the
demand is strong as several steel mills are now looking to blend semi–soft with the higher priced hard coking coal
28 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W F elix R esources L imited • A S X /F L X

and hence reduce their overall cost
for blast furnace coke. This expan-
sion is by underground longwall.
When commissioned in March
2007, this mine will produce 2.4
million tons of metallurgical coal
to augment the open–cut coal giv-
ing total exports of four million tons
from Ashton. At Ashton, we have
60%, a Singapore–based group,
International Marine Corporation
has 30%, and the Japanese trad-
ing company Itochu has 10%.
WSR: What is unique about Felix
Resources that defines and differen-
tiates this company?
FLX: Our growth has been consid-
erable. There are only a few small
to medium sized players in the
Australian coal industry. The large
groups like BHP, Rio, Xstrata, Ang-
lo, and Peabody, who have recent-
ly expanded in Australia, account
for a large part of the export tons.
We have grown our profitability
from a bit over AUS$1 million three
years ago to AUS$30 million last
year. We are on target to expand
further this year with substantially-
increased tonnages. The key execu-
tives and directors have been in
the coal industry for plus 30 years
and have a detailed knowledge of
the industry and the export market
for coal. They also have a large
stake in the Company of around
70%. We are very hands on and
concentrate on our cost structure in
order to maintain our competitive
position.
WSR: Tell us about the present
board and management team.
FLX: Myself as the MD, I’ve been
involved for 33 years. I started with
Peabody in Central Queensland
when they first came to Australia in
the early ‘70s. I have been involved
in open-cut and underground min-
ing in Queensland, New South
Wales and India and developed
a number of other mines for our
previous group, called White In-
dustries Limited. Our Chairman,
Ian McCauley, spent a large part
of his career as a mining engineer
and mine manager with Shell Coal.
Our Deputy Chairman Travers Dun-
can, a civil engineer, has had forty
years experience in civil construc-
tion and coal mining. He and I
worked together for Peabody at
Moura in the early ‘70s. The other
directors have a wide experience
in mining and finance. Another di-
rector, John Kinghorn, established
a number of finance companies in
Australia such as Allco Leasing and
Rams Home Loans.
WSR: Does the investment commu-
nity understand this company and
the direction it’s going in?
FLX: I believe the investment com-
munity is now starting to understand
the potential of Felix. Eighteen
months ago, we had two medium–
sized operations, and by early next
year, we will have four significant “We are cur-
operating coal mines with diversi-
fied locations, ports and customers. rently producing
We also have a large exploration
acreage in Queensland and New
six million tons of
South Wales, and our current coal, of which just
drilling programs are proving up
expanded resources. Our total re- over four million
source base is well over one billion
tons. We will start construction in is Felix’s equity
March 2007 of our biggest mine,
which is the Moolarben open cut tons, the rest is in
in New South Wales. It is the best
undeveloped deposit of export joint venture tons
thermal coal in Australia, perhaps
even the world. This world class
with a couple of
asset of over three hundred million Japanese partners,
tons with a ratio starting at one–to
– one and averaging less than three and we are go-
– to – one over the life of the mine is
100% owned by Felix, and when it ing to eight million
comes on stream the second half of
2008, it will have sales of nine mil- tons next year and
lion tons per annum, making Felix
a significant exporter. In addition, 15 million tons by
Moolarben has 198 million tons
of underground coal. We are just
2010.”
starting to move around the invest-
ment world and explain to some of exporting coal worldwide with the
the investors and fund managers bulk going to an expanding Asian
our detailed plans. market. We have a huge poten-
tial to grow our profitability, and
WSR: In closing, why should inves- hence, our return to shareholders.
tors consider Felix Resources as a Collectively, the directors and key
long–term investment opportunity? executives have a large stake in the
Company and perhaps a strong in-
FLX: We are a mid-sized compa- centive to grow shareholder returns
ny with a substantial growth profile by dividends and capital growth.

SUMMARY: Felix Resources (ASX: FLX) combines the assets of two of Australia’s long-term coal suppliers. The company produced a gross six million
tons of coal (4 million tons net) from three open-cut mines in 2006; work is underway to bring production to 15 million tons by 2010 as additional mines
come online. Most customers are in Asia, although some PCI coal goes to North America and Europe. Demand for the company’s metallurgical coal
is intense. Profitability has increased from AUS$1 million in 2002 to AUS$30 million in fiscal 2005. Resource base is above one billion tons, includ-
ing 300 million tons of 100%-owned thermal coal. Exploration holdings are also extensive and the company is actively drilling to replace reserves.

www.felixresources.com.au Phone: 011-61-0-7-3211-7900

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 29

A S X /S G L • S ydney Gas Ltd C E O I N T ER V I E W

Perfectly placed to supply gas

to Australia’s biggest city
Sydney Gas is a major coal seam methane (CSM) producer in New South Wales.
Its tenements cover the major energy markets in NSW extending across the Wol-
longong, Sydney and Hunter Valley regions. The company’s key producing asset is
located at Camden.

WSR: Tell us where Sydney Gas

is today versus 2005.

SGL: A few small points first. I

only came into the Chief Executive
position six weeks ago today. I al-
ready believe it is perfectly clear
that things are changing for the
better. If we go back a year, the Sydney Gas is a
major Australian
company has been through a dif-
coal seam methane
ficult time, with a series of board
producer. Dr.
and senior management changes; Philip Moore, the
in fact, at one stage, the stock fell company’s recently
to USD$0.23 or USD$0.24. In installed CEO, tells us
the last six weeks since I joined, how he’s turned the
the stock is up approximately business around and
40%, about half of which is due how it’s ideally suited
to my efforts and half due to the to serve Australia’s
clear beginnings of consolidation biggest market.
in the East Coast gas sector. The first clear driver for investors is that our development plans are starting to move for- (Interview of October
12, 2006.)
ward. The second driver for investors looking at oil and gas stocks, particularly CSM stocks in Australia, is it is now
clear they have become respectable in a way they weren’t before. Seven years ago in this country, unlike the United
States, there was no CSM industry at all. It is now providing 15% of gas on the east coast of Australia.

WSR: Expand on the company’s assets and operations.

SGL: The company’s assets are all inside the state of New South Wales, the principal state by population, which is the
important issue from the point of view of Australian markets. Sydney is the main financial center as well as the largest
city in Australia. It consumes 140 petajoules a year, and the tenements in which Sydney Gas is currently developing,
will be supplying 10% of that volume. In terms of Sydney Gas’ tenements, we are in a joint venture with Australia’s
oldest company, AGL –The Australian Gas & Light Company. We are 50–50 in all of the tenements. The main project
under development at the moment is the Camden Gas (CSM) field, 60 kilometers (40 miles) to the south and west of
Sydney. The important thing about the Camden site is that it fits almost exactly on the main gas line to Sydney. It has
easy and immediate access to market. That project has gone through a pilot stage, which started five to seven years
ago. It’s now in the principal development stage, which is an ongoing exercise. The main ramp-up will be occurring
over the next two years. Of our other tenements, the most interesting one from the point of view of near–term explora-
tion and appraisal, is to the north and west of Sydney, in an area called the Hunter Valley; we are looking for the next
calendar year at drilling a number of core holes to assess that area for potential CSM reserves.

WSR: Will the company look to additional strategic alliances or joint ventures moving forward?

SGL: In all of the New South Wales tenements, we are in a powerful joint venture with AGL. AGL is a useful party
to have as a JVP because they are the largest domestic gas marketer in Australia. All of the gas from the Camden
30 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W S ydney Gas Ltd • A S X /S G L

area is sold to a different arm of the

AGL company. Looking further for-
ward in the nascent Hunter area, it’s
further away from gas infrastructure,
so I can’t stress this enough: An in-
telligent explorer or appraiser starts
thinking about markets from the very
beginning. In fact, Frank Sartor, the
Minister for Planning for New South
Wales, has just given a designation
of enhanced status for a pipeline com-
ing down from Queensland through
the area of Gunnedah through the
Hunter Valley to Newcastle, which
would potentially open up new di-
rect access links for the Hunter Val-
ley as we scope up gas there. In the
alternative, and the more likely case,
because there is already existing
electricity infrastructure, we would
convert gas reserves to electrons,
which is likely to mean combinations
of other parties in the joint venture,
owning or leasing electricity–gen-
erating plants. To that end, we’ve
just added two new members to our
Board from the well-known finance
company, Babcock & Brown, both
of whom have specific experience in
electricity generation.
WSR: What is unique about Syd-
ney Gas that defines and differenti-
ates this company?
SGL: It has some very nice features.
The first, potentially shocking to U.S.
stockholders, is that gas market pric-
ing in eastern Australia is very low
compared to U.S. domestic gas
prices. For example, when you are
looking at gas prices at the Henry
Hub of the order of 6 or 7 mcf or
higher, we are looking at equivalent
prices of 2 to 3.5, depending upon
where you are in eastern Australia.
The gas prices are all one-third to
one-half of what they are in the Unit-
ed States. You can imagine that in
“The company’s assets are all inside the state of New South
Wales, the principal state by population, which is the important
issue from the point of view of Australian markets. Sydney is the
main financial center as well as the largest city in Australia.”
the longer term, there has to be pres-
sure to raise prices. That’s an overall
position that applies to all of the east
coast producers. However, in the
specific case of Sydney Gas, we are
the closest party to Sydney, the main
gas market. For our Camden asset,
we are already receiving a premium
price, compared to any other CSM
producer in the country. As Cam-
den develops, that revenue will be
building. Overall, we are the larg-
est CSM company centered in New
South Wales, the major population
center of the country. All the other
large CSM companies are based in
Queensland, which has much less
population and less infrastructure.
WSR: Tell us about the present
Board and management team.
SGL: The Board has been complete-
ly turned over in the last 12 months.
The new Board is headed by Mr.
Raymond Schoer, the former head
of NCSC, the Australian equivalent
of the U.S. Securities and Exchange
Commission. I am the new MD; my
background is with Royal Dutch Shell
and BHP Billiton, both well– known
to investors. Other members of the
Board have specific interests, either
in electricity generation or project fi-
nance for major projects, specifically
tailored to infrastructure and utilities.
We are a small company in terms of
staff. An important change has oc-
curred in our major assets; although
we are quite influential on how it’s
being developed, we have become
a non-operating party. Essentially,
we are a small E&P company with
specific interests in geology and
reservoir engineering and project
management. Beyond that, we are
bringing in specific experts for new
reviews. Currently, I am reviewing
the potential for conventional gas in
the Sydney Basin within our own ten-
ements, which looks interesting.
WSR: Does the investment commu-
nity understand this company and
the direction it’s going in?
SGL: The current stock price is
40% more than the day I walked in
the door six weeks ago. There has
been both response and support.
I suspect the answer is not com-
pletely; the investment community
can be forgiven for that because
there have been a lot of structural
changes in the company in the
last two years or so. If I am say-
ing what’s new, what should they
be aware of? Well, essentially the
clear message is that Sydney Gas
is settling down to business. The
clear intention expressed by the
Board in our statement of strate-
gic intent just over one month ago
is, first, to get on with developing
Camden in the most cost–effective
manner, and second, getting on
with the exploration appraisal of
our Hunter tenements.
WSR: In closing, why should inves-
tors consider Sydney Gas as a long-
term investment opportunity?
SGL: In the long-term, gas prices in
east coast Australia are unsustain-
ably low. They are one-third to one
half of what they are in the United
States. The major new source of
gas anticipated to arise was com-
ing from the neighboring country of
Papua in New Guinea. The pipeline
that was going to deliver that has
been significantly postponed – for
how long, it is hard to tell; at least
five years, possibly ten, possibly
permanently. We can start to see
a good course while gas prices in
eastern Australia will be rising. The
traditional sources of conventional
gas to these markets has been com-
ing from central Australia, an area
called the Cooper Basin. That area
is now in long-term decline. In fact,
it is the nature of that decline that
has given rise to the opportunity for
the CSM or CBM industry, which
did not exist seven years ago. It has
been an astonishing transformation
that these new CSM companies
have come into business. For Syd-
ney Gas in particular, we are very
well placed geographically in close
proximity to the existing infrastruc-
ture for the city of Sydney, the major
domestic gas market in Australia.
We are close to where new infra-
structure, including pipelines, are
likely to be constructed.

SUMMARY: Sydney Gas (ASX: SGL) is an Australian coal seam methane producer operating in New South Wales. The company has partnered
with AGL, the country’s largest gas trader, to commercialize its assets; pilot work on its primary project (practically on the main Sydney gas line)
has succeeded and more aggressive development is underway. Exploration drilling elsewhere in the region is forecast for 2007. While follow-up
projects are further from pipe, management notes that a proposed extension would create direct access, and that in any event, output could be
used for generation purposes. The company enjoys premium pricing due to proximity to end markets. Currently low Australian gas prices are seen
as unsustainable given a dearth of new regional supply.
www.minefinders.com Phone: 604-687-6263
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 31

L S E /R E H • R enewable E nergy H oldings P L C C E O I N T ER V I E W

Wave power technology adds

upside to green Euro assets
Renewable Energy Holdings plc is an international company established to be an
operator of and undertake active investment in both proven and innovative renew-
able energy technologies.

Renewable Energy
Holdings combines a
portfolio of green
European energy assets
with a novel generation
technology that runs on
the kinetic energy of
seawater. CEO Michael
J. Proffitt fills us in on
his near-term expan-
sion plans. (Interview of
WSR: Give us an overview of Renewable Energy and the markets you are targeting.
February 13, 2007.)

REH: We are a company that’s almost two years old. We floated on the AIM stock market in February 2005
with the intention to invest proceeds raised in Renewable Energy technologies, primarily in Europe, where
there are some strong financial incentives for Renewable Energy technologies. At the same time, we invested
in a mid–stage technology we had found in Australia and brought on. It’s in the fairly late stage now. It’s a
wave energy device, and one we should be able to commercialize over the next 18 months.

WSR: I believe your projects are primarily in wave, wind and bio energy?

REH: Yes. We have a large wind asset in Germany, currently 32.5 megawatts but should grow to over 50
megawatts over the next 12 months. That’s in the German regime, which pays 85 Euros per megawatt–hour,
a very lucrative wind regime. We also have an asset in landfill gas methane recovery in the U.K., where we
are in the Rocks regime or the Renewable Energy certificate. In U.S. dollars, it would be close to $150 per
megawatt-hour. They are small investments but very lucrative.

WSR: I also see you are exploring another wind farm in Poland.

REH: Yes – we are in the late stage discussions with developers in Poland. We’ve reached commercial terms
and are now doing due diligence on our part and legals. We expect we will close on that project this year
with turbine commissioning in early 2008. It’s a wind farm, which is in a very good region of Europe. It’s in
southeast Poland in the mountains where the winds are quite high and is also a very good financial regime
put in place by the government.

WSR: With the wave energy project – is that what you call CETO? Tell us a little more about that technology.

REH: Yes – CETO is a technology that takes the kinetic energy of a wave and transfers it to a pump system,
32 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W R enewable E nergy H oldings P L C • L S E/R E H

which then transfers pressurized REH: Over that period, we in- munity understand Renewable En-
sea water from an offshore loca- tend to grow the megawatt ca- ergy Holdings and what you are
tion to an onshore location, using pacity of our balance sheet from trying to do? Are there any mis- “We have a
standard oil and gas pipe tech- where it is today (50 megawatts) conceptions affecting the value of
nology. Once onshore, we put it to over 250 megawatts. In ad- your stock? large wind as-
through a standard Pelton turbine
and generate electricity. In some
dition to that, we intend to fully
commercialize our wave energy REH: The investment community
set in Germany,
parts of the world, one of the key technology, which is not only an is beginning to engage in Renew- currently 32.5
benefits is that we also have de- electrical solution but is also a able Energy as a sector. Because
salination capability without car- drinking water solution in some they are only now beginning to megawatts but
bon footprints. We believe the parts of the world. engage, they are seeking the an-
CETO technology could also be swers to a number of questions. should grow to
rocket fuel. WSR: Tell us about the compa- They tend to be the obvious sort
ny’s board and senior manage- of thing for us that have been in over 50 mega-
WSR: Are there any other major ment and what’s driving Renew- the industry for a while, but to the
trends affecting the Renewable able Energy Holdings. newcomer, they need answer- watts over the
Energy business?
REH: Our Board starts with John
ing. For example, the financial
incentives created by Kyoto, will
next 12 months.
REH: I have just come back from Baker, our Chairman; he had they stay around? Will they be That’s in the Ger-
Australia, where if you open privatized the U.K.’s Electricity changed? Will they be changed
any newspaper, they are talking Generating Board back in the upwards or downwards? These man regime,
about climate change. Climate 1980s. He has also chaired the are critical questions underlying
change breaks into a number of World Energy Congress and is a the viability of a new company. which pays 85
areas. One, what can we do to well-known city player in energy We are set up to be profitable
slow or change climate change? stocks. I have been involved in beyond these existing incentives. Euros per mega-
Obviously, some of those things the electricity distribution indus- We believe that even if they did
are using Renewable Energy try, natural gas pipelines, and change downwards, we would watt-hour, a very
because of the clean emissions.
I believe there is a fundamental
various high grid interconnection
projects. I am an accountant by
be okay, but we think the commu-
nities around the world are going
lucrative wind
element people are missing – we training. We also have engineers to be more empathetic to these regime.”
have a finite amount of fossil fuel on the Board. Lastly, but by no incentives, and they are going to
and whether it’s going to last for means least, we have Alan Burns, increase them. The only other as-
another 150 or 200 years, it is the inventor of CETO. His proven pect of our company that is misun-
still finite; we need to start using track record over the years of suc- derstood is our CETO technology;
wind and solar and wave or tidal cessfully commercializing inven- I believe the misunderstanding is
as much as possible because it’s tions is a matter of record. We a simple one. I don’t believe the
free; and it just keeps on com- believe we have a Board that has investment community realizes
ing. commercial drive. It has a unique just how far down the road we
traditional strength in the sector are with the technology and how
WSR: What are some of your as well as an inventor style that close we are to commercializing
key goals and strategies over the allows us to be entrepreneurial. it. For that reason, I recently hired
next year or two? Parsons Brinckerhoff, the global
WSR: Does the investment com- energy engineering company,
to do a review and report on the
SUMMARY: Renewable Energy Holdings (LSE: REH) has assembled a CETO technology to give us the
diverse portfolio of non-traditional energy assets. The company operates confidence that we are where we
a German wind generation facility that currently delivers 32.5 megawatts think we are; that report is avail-
of electricity, expanding to over 50 megawatts by early 2008. A UK able on our Web site and indi-
landfill methane project brings biofuel into the mix; both assets benefit cates we got it right and should
from advantageous financial incentive regimes and are “very lucrative.” be on schedule for commercial- for investing in Renewable Ener-
Negotiations to build a wind farm in Poland are at an advanced stage. In- izing it within 18 months. When gy Holdings for the long term?
centives are not required for profitability. The company is also developing the investment community realizes
a wave-based technology that uses seawater to run turbines while poten- just what CETO is and what it can REH: We are undervalued at the
tially desalinizing it as well. Commercialization could begin by late 2008. do within this Renewable sector, moment. We have terrific medi-
Goal is to expand capacity to 250 megawatts over the next few years. our stock may show a more real- um-term growth potential. In the
istic reflection of our value. long-term, our CETO technology
www.reh-plc.com Phone: +44-0-1624-641199 gives us a global entry which
WSR: What are the best reasons could be very interesting.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 33

T S X /E S N . U N • E ssential E nergy S ervices T rust C E O I N T ER V I E W

Aggressive growth and insulation

from drilling downturns
Essential Energy Services Trust is an independent oilfield services organization
based in Calgary, Alberta. The company provides essential production services to
existing oil and gas wells in BC, Alberta and Saskatchewan.
Essential Energy Services
Trust is uniquely focused
on providing rigging and
truck services to fields
with existing oil and gas
production. CEO James
Burns tells us why a
downturn in drilling
can’t dent his company’s
growth. (Interview of
February 15, 2007.)

WSR: Bring us up to speed on the company’s assets and operations.

ESN.UN: Essential Energy Services Trust provides a range of production services to the oil and gas industry across
western Canada, from Saskatchewan through Alberta into British Columbia. We provide services in two main areas
– rigs and truck-based services. The rig services are things such as service rigs and coil tubing as well as rod and
swab rigs. On the trucking side, we provide vacuum trucks, pressure trucks, hydrovac steamers, hot oilers, and so
on. We have an increased presence providing tank truck services to move produced water and other fluids, and we
also do a small amount of chemical sales to the oil and gas industry.

WSR: As we look to these growing markets, tell us about the key drivers, the major trends you see affecting your
core business, and how Essential is favorably positioned.

ESN.UN: As most people are aware, there has been a downturn in the oil and gas industry, which has negatively
affected producers, due to low commodity prices; this is funneled through into lower capital spending. Capital spend-
ing drop– off mainly affects the areas of drilling and seismic — the more upstream part of the business. Our business
is focused on production services, or the maintenance and enhancement of existing production. Our revenue is de-
rived from oil and gas operating budgets, not from capital budgets. In that regard, our revenues are more stable than
service companies that focus on drilling. What we see in the oil and gas industry is that when drilling slows down,
producers find their production starts to fall off. They then start to look to production activities such as well re–comple-
tion, clean-outs, and other enhancements to maintain their base production. We are not affected by that slowdown
and, in fact, our business is very robust at the moment, even though the rest of the industry is in a bit of slowdown.

WSR: Will the company look to M&A activities as a catalyst towards continued growth?
34 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W E ssential E nergy S ervices T rust • T S X /E S N . U N

ESN.UN: We concluded the
acquisition of JaCar, a company
which provides truck–based servic-
es in southern Alberta, in Septem-
ber 2006. JaCar provides services
similar to those of our other truck-
based operations in the northern
part of western Canada. We are
seeing that with both the slowdown
in activity and the turmoil in the
trust sector, there are significant op-
portunities to acquire both private
and public companies at attractive
prices; we are presently evaluating
a number of opportunities.
WSR: What is so unique about
Essential Energy Services Trust that
defines and differentiates this com-
pany?
ESN.UN: I always have to keep
coming back to our focus on pro-
duction services and our very
conscious avoidance of getting
involved in drilling or any of the
activities that support drilling. Drill-
ing is a great business – for those
who specialize in it, but it tends to
be more volatile than the businesses
we focus on. We focus on provid-
ing stable, growing cash flows and
not look at the glamorous, volatile
side of the business, or drilling. That
differentiates us from every other
service company. There are very
few companies that have the relent-
less focus on production services
we have.
WSR: Tell us about the present
Board and management team.
ESN.UN: They haven’t changed
sine Essential’s spinout from Avenir,
which took place in May 2006.
We have five people on the Board,
two of which – Bill Gallagher, our slow process and a learning pro- WSR: In closing, why should in-
Chairman; and Gary Dundas, cess for a lot of people. vestors consider Essential Energy
both of whom are from Avenir and Services Trust as a long-term invest-
stayed on the Board for continu- WSR: Where do you see Essential ment opportunity?
ity purposes. In addition, we have Energy Services Trust two to three
Dennis Balderston, a retired Ernst years from now? ESN.UN: Several reasons. We
& Young audit partner, who chairs offer a unique window on a very
our audit committee. We also have ESN.UN: There is a high likeli- stable part of the oil and gas busi-
Neil MacKenzie and Jeff Scott, hood we will be in the same line ness. Most people have a positive
well–known in the western Ca- of business, only larger. I would long-term view on energy in North
nadian oil patch. This is a strong, like to see the company double America. We have shown we are
independent-thinking Board. The in size over the next two to three a business that can survive and
management team has been bol- years. We are constrained by the even prosper during lean times.
stered at the operational manager rules that the Canadian Govern- We have also shown we are ef-
level, but senior executives have not ment has put on us, but we are fective at acquiring and growing
changed. We have a small and fo- constrained to only double over the company and that we intend
cused team. For an enterprise our the next four years. We intend to to focus on those two items. We
“Drilling is a great business – for those who specialize in it, but
it tends to be more volatile than the businesses we focus on. We
focus on providing stable, growing cash flows and not look to
the glamorous, volatile side of the business, or drilling.”
size, we only have nine people in
head office and 600 people in the
field working for us. We are a lean
and focused organization.
WSR: Does the investment commu-
nity understand this company and
the direction it’s going in?
ESN.UN: They are starting to. We
are relatively young – having got-
ten started just last spring. We are
a new company, and people are use all of the space we can. We will fully use the four-year window,
starting to look at our numbers and will remain focused on our current which may be extended, for trusts
see that they are continuing to be lines of business and will not ex- to provide tax-advantaged distribu-
good. When our fourth quarter re- pand into other lines of business. tions. We are very opportunistic,
sults come out, most people should We are going to mostly focus on growth-oriented and entrepreneur-
be pleased, which would show the acquiring private companies and ial. We are a superior investment,
validity of our business plan. They consolidating them into the struc- and we plan to continue on that
are coming around, but it’s been a ture we have. trend.

SUMMARY: Essential Energy Services Trust (TSX: ESN.UN) provides a wide variety of rigging and truck services to Western Canada’s oil and gas
industry. The company is unique in its concentration on supporting fields with current production profiles; as such, its revenue derives from operating
budgets and is insulated from downswings in drilling activity. If anything, management says, as exploration slows, operators become more active
enhancing their existing wells in order to maintain levels of production. The company has engaged in some M&A and is presently evaluating addi-
tional opportunities to expand its current lines of business. Goal is to double in size before the tax advantages offered by the Canadian income trust
structure are scheduled to expire.

www.essentialenergy.ca Phone: 1-403-263-6778

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 35

T S X /PA R • P etro A ndina R esources I nc . C E O I N T ER V I E W

Applying Western Canadian

expertise to Argentine heavy oil
Petro Andina is engaged in the exploration for and development and production
of oil and natural gas in Argentina and, to a lesser extent, in Canada. The Corpo-
ration is continuing to develop its existing reserves and to conduct appraisal and
exploration drilling on its 457,000 acre (265,000 acre net) land position in the
Neuquén basin. Petro Andina is headquartered in Calgary, Canada.

Petro Andina
Resources is applying
Western Canada’s
heavy oil expertise to
the largely untapped
unconventional re-
sources of Argentina.
CEO Wayne Foo tells
us how his company
is boosting production
and building for the
future. (Interview of
June 1, 2007.)

WSR: Petro Andina has just very recently been listed on the Toronto Stock Exchange. However, the company was
formed back in 2003. Perhaps you can start out with a little bit of background on the formation of the company
and maybe an overview of the assets and operations?

PAR: Absolutely. The company was founded by five individuals, two of whom had experience with start-up com-
panies in Argentina in the 1990s and two (Bill Hogg and myself) who had been at a Canadian public company
called Archer Resources ten years ago. In the evolving frenzy in the Western Canada basin in the 2003–2004 pe-
riod, we made the observation that as crowded as this basin tends to get, there was likely to be a move to interna-
tional at some point in the next three years. We anticipated that, looked at the range of opportunities and decided
that it was worthwhile to fund a prospecting effort in Argentina. We went for about a year before we acquired our
core properties, which were two licenses in the Neuquén basin. The Neuquén basin in Argentina is about 20% of
the size of the Western Canada sedimentary basin and about 30% of the production of the Western Canada ba-
sin. Our initial concept was that we wanted to look at shallow gas and heavy oil accumulations, and in particular,
the heavy oil along the eastern flank of the Neuquén basin, and we were able to position with buying a company
that had formerly been Unocal’s company in Argentina. We acquired it by buying the offshore subsidiary, so we
had no issues with closing on title, and we closed that deal in March of 2004 and then commenced operations
in September of 2004, and we’ve been active ever since. The company is really an oil producer. We do not
intend to produce gas in Argentina other than for our own lease fields and for enhanced recovery. We see the
South American gas market as something that’s quite political and not an open market at this time, and we prefer
36 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W P etro A ndina R esources I nc . • T S X /PA R

the security of the oil markets. And the quarter end we’ll be making a of Rincón de los Sauces and the
the Canadian interest is largely release providing some indication other in the Medanito to Señal Pic-
non-operated production. It’s only of where we think that’s going. ada area near the town of Catriel. “In the evolv-
about 50 barrels a day, and that’s Petro Andina has positioned itself
largely for tax efficiency, to provide WSR: Now, perhaps you can give in a remote area just north of the ing frenzy in the
us with deductibility for our Cana- us a better understanding of the river that bounds the provinces of
dian head office expenses. kind of infrastructure in place in the Neuquén and Río Negro from the Western Canada
WSR: Looking at the company’s
Neuquén basin. provinces of La Pampa and Men-
doza to the north. The river was
basin in the
main activities in the Neuquén ba- PAR: Argentina is a country that a boundary to exploration activity 2003-2004 peri-
sin of Argentina, perhaps you can is about the same population, and and the area was very under ex-
give us a better understanding of a very similar sized economy to plored north of the river, so we’ve od, we made the
where you are in terms of sampling Canada. The population is about positioned to pick up that under
studies, drilling and so on. 37 million. The relationship be- explored area between a complex observation that
tween Argentina and Brazil is very at Puesto Hernández that has pro-
PAR: Up to this point, the compa- similar to the relationship between duced about a billion barrels and as crowded as
ny has drilled approximately 110 Canada and the United States: one the complex at Medanito that has
wells. We’re in development on is a resource-driven economy and produced about three quarters of a this basin tends
four oil pools, the largest of which,
El Corcobo Norte, is in the range
the other is driven by population
and industry. In Argentina, oil and
billion barrels. Our view is that if
you have a billion barrels at one
to get, there was
of 150 to 200 million barrels of gas production up until the 1990s end and a billion at the other end, likely to be a
oil in place, and half of that would was controlled by a state company, it’s not a bad place to look for an-
be net to Petro Andina’s account. YPF, which is now part of Repsol- other billion. move to interna-
The numbers that I’m quoting are YPF. The production in the country
what shows in our reserve report, peaked post-privatization of YPF WSR: Indeed. So essentially the tional at some
which has been done by GLJ Pe- at about 750,000 to 800,000 Petro Andina strategy is really to
troleum Engineers out of Calgary, barrels per day but that has de- transfer heavy oil expertise and point in the next
and that’s attached to our prospec- clined down into the 500,000 to technology from the mature West-
tus. It’s all filed for open disclosure. 600,000 barrel per day range. ern Canadian basin to the Neu- three years. We
The company has internal views,
but we always try to go back to
Refining is roughly the same ca-
pacity. Of that production, about
quén basin. Is that the case?
anticipated that.”
the regulator’s view. Of those 110 half comes from the Neuquén ba- PAR: That’s absolutely correct. The
wells, we currently have about 75 sin, so it’s a basin that produces in founders of the company, and in
on production and through the pe- the range of 250,000 barrels per particular Bill and myself, had a
riod of the IPO we’ve been produc- day of oil and about half of the career history in Western Canada
ing. We ended the first quarter at country’s gas production as well. where we looked at some of our
5,000 barrels per day net. We’re This is really the energy center of competitors who were developing
operating 10,000 -- our partner the country. Within the Neuquén heavy oil, and we stayed away
Repsol−YPF gets the other 5,000 basin, about two thirds to three from it. I spent an entire career think-
of that – and production has been quarters of the production comes ing of heavy oil as a dirty, gooey
growing through the last month from two complexes, one in the project that had high costs and low
and over the period leading up to Puesto Hernández area at the town margins. But through the 1980s
and 1990s, production in Western
Canada shifted from about 5−10%
SUMMARY: Petro Andina Resources (TSX: PAR) was founded to apply heavy oil to about 50−70% heavy
Western Canada’s heavy oil expertise to the largely untapped uncon- oil in terms of the conventional pro-
ventional hydrocarbon assets of Argentina. The company has amassed duction. Costs were brought down,
a 457,000-acre land portfolio in the highly productive Neuquén basin, the production rates were brought
sandwiched between two billion-barrel projects and offering substantial up, margins were improved con-
development upside. Reserves are currently about 16.8 million barrels siderably, and I’ve often reflected
and many of the 110 wells drilled so far have delivered “tremendous” that if I’d been smart enough to
initial production in the 300-500 bpd range. Net production is 5,000 recognize that potential 20 or 30
bpd. Water flood has been successful; trial steam program will start or even 50 years ago, there was
in September. Management is reviewing bids to build pipe to JV part- a lot of money to be made. When
ner YPF Repsol’s refinery. The company is bidding on additional blocks we went into the Neuquén basin,
as Argentina’s provincial governments take the lead in offering land. we recognized that in the 1930s
there had been a discovery on
www.petroandina.com Phone: 403-265-4800 the eastern flank of a giant heavy
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 37

T S X /PA R • P etro A ndina R esources I nc . C E O I N T ER V I E W

oil accumulation that really hadn’t

been followed up commercially. “The approach is low risk because we have very low costs
We found ourselves in a situation
where we really are working in an for exploratory and development activities. Our exploratory
environment that’s similar to West-
ern Canada 50 years ago. Our wells, dry and abandoned, are in the range of USD$250,000
staff works with the mission state-
ment that we want to transfer 50 to USD$300,000 gross and we have a 50% working interest
years of Canadian heavy oil learn-
ing to the Neuquén basin in a pe-
in those.”
riod of three to five years.

WSR: For investors, is that essen-

tially the message as to what dif-
ferentiates Petro Andina?

PAR: I think so. We believe that

we’ve found a considerable re-
source and that it just has not been
exploited in the past. The opportu-
nity for the investor is to take a very
low−risk and high−performance
approach and to see it overseen by
an experienced management team.
The approach is low risk because
we have very low costs for explor-
atory and development activities.
Our exploratory wells, dry and
abandoned, are in the range of
USD$250,000 to USD$300,000
gross and we have a 50% working
interest in those. We have a large
inventory of development locations
within the existing well control.
We have several hundred wells to
drill, which will keep rigs busy for
some time. The objectives are shal-
low. We’re the operator; we’re not
dependent on moving other par-
ties along. The performance of the
wells has been tremendous. We
went into this area thinking that we
might get something like Western
Canada rates, which are 50 to 75
barrels per day for good wells, and
within our initial development at El
Corcobo Norte, it’s not unusual for
wells to have initial production rates
between 300 and 500 barrels per
day. We’re now 18 months past
the discovery of El Corcobo Norte.
We have a battery facility that will
be commissioned in the next two
to three months that’s capable of
putting through 15,000 barrels per
day and expandable to 24,000,
and we’ve commenced work on an
export pipeline to link to our partner
Repsol’s refinery at the city of Men-
doza. That pipeline should be on-
line close to year−end or perhaps
middle of the first quarter ’08. That
pipeline has an initial takeaway
capacity of 25,000 barrels a day.
So we’ve been able to demonstrate
a rich resource and to develop the
infrastructure to produce it quickly,
and now we have the opportunity
to use that foundation of cash flow
to expand our operations within the
existing land and also moving onto
new lands in the trend and looking
at future growth opportunities.
WSR: You refer to the construction
of an 80 kilometer pipeline. What
will the company’s share of the ca-
pex be there?
PAR: Company share is 50%.
We’ve received bids on the pipe-
line construction for USD$37
million, which is in line with our
projections. We’ve also received
proposals from two parties to take
financing of that line off balance
sheet should we wish to and oper-
ate it as an outside common car-
rier. Our approach was that we
wanted to see the bids and drive
the process before we considered
allowing someone else to finance
it. We wanted to know the price
before we decided that someone
could finance it for us. So the net
cost on the balance sheet could be
high case USD$20 million to Petro
Andina; low case would be just a
tariff. Against the current reserve
of 16.8 million barrels proved
plus provable in the February 28,
2007, reserve report, pipeline cost
is about a dollar a barrel and that
should be diluted down as we add
additional reserves.
WSR: The company also has pro-
cured equipment for a thermal re-
covery project. When is the steam
injection scheduled to commence?
PAR: We have plans to drill the
initial two wells for a cyclic steam
project in September. The special-
ized equipment for that has been
ordered and is currently being de-
livered into Argentina. The scheme
there will involve steaming the
reservoir for a month and then pro-
ducing for a month, steaming for
a month, producing for a month,
steaming for a month and then pro-
ducing out, so we’ll get a pretty ear-
ly indication as to whether it works.
We should know whether that has
commercial potential sometime in
the second quarter of 2008.
WSR: You currently have three rigs
under contract with a fourth com-
ing online shortly. Any difficulty in
sourcing equipment or skilled per-
sonnel in the region?
PAR: Not recently. When we start-
ed, I often refer to some of the meet-
ings that we had where I invited
people to run a Dun & Bradstreet
on us. If they wanted to, they would
have found out that we had a few
thousand dollars in the bank and
some good references from people
that we’d worked with before.
When contractors recognized that
we really were going to have an
inventory of several hundred wells
for the next two or three years, it
became very easy to attract equip-
38 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W P etro A ndina R esources I nc . • T S X /PA R
ment. In the proposal for the last
drilling rig that we went out on,
we received six proposals from a
variety of North American, South
American and local Argentina con-
tractors, so the company is very well
regarded in the contractor commu-
nity. In terms of staff in the field,
we’ve built an operating office in
Buenos Aires now that has approxi-
mately 70 people, and we’re able
to bill off overhead to our partners
against the capital program. We’re
not bearing the full cost of that of-
fice. That staff oversees a contract
work force now that’s in the range
of 1,000 people as we complete
the central production facility and
as we start pipeline and as we start
running the rigs and service rigs
and other operations in the field.
It’s always difficult to compete for
people, but we’ve been successful
in that. We seem to be both an em-
ployer of choice and a customer of
choice in Argentina right now.
WSR: Petro Andina was also
recently awarded an additional
concession by the La Pampa gov-
ernment there. Do you find that
the overall political environment is
quite favorable?
PAR: We like to point out that in
North America, we tend to look at
everything south of Texas as being
a pretty homogenous Latin Ameri-
ca. The countries are very different.
Argentina is a very unusual place
even in the Latin American context.
It’s going through a political evolu-
tion now similar to what Canada
went through in the period from
the 1930s to about 1985. The
courts have awarded jurisdiction
of resources to the provinces from
the former federal control, so we’re
just now seeing the transition: the
passage of laws and the passage
of administration of resources into
provincial hands. This bid round in
La Pampa was the first offering of
land that they’d made. They actu-
ally had two offerings last year. The
process ran reasonably smoothly.
We’re comfortable with the title
that we’re receiving. We have a
very positive working relationship
with the government there. I think
that it’s comparable to what we
saw in Western Canada during
that period of transition. There’s un-
certainty about who does what, but
in the end, we get to an answer.
WSR: And do you see additional
acquisition opportunities being of-
fered by other provincial govern-
ments?
PAR: Absolutely. The government
of Mendoza has a program to of-
fer 13 blocks in total over the com-
ing two years. The first set of those
blocks will be up for bid on July 23.
Some of those are of interest to us.
We’re evaluating them now and
will determine whether we want to
take partners on those and how we
want to proceed.
WSR: Changing direction here
for a moment, you mentioned ear-
lier your own background. Perhaps
now you could introduce us to your
board and the rest of your manage-
ment team.
PAR: I’m a geologist by training.
I like to refer to myself as a “re-
covering” geologist, so our board
complements that to some extent.
Our chairman is Norm McIntyre.
Norm was formerly the president of
Petro−Canada and he was respon-
sible for taking Petro−Canada inter-
national with the purchase of Veba
shortly before his retirement. Norm
jointed Petro−Canada in the 1980s
and participated in the growth of
that company to its current size of
500,000 barrels a day. He also sits
on the board of Canadian Natural
Resources, which is one of the top
three producers based in Western
Canada. As part of Norm’s plan-
ning for the board, he involved Alf
Peneycad, who had been his Chief
Counsel at Petro−Canada. Alf is a
lawyer by training whereas Norm
was a petroleum engineer, and in
2004 − 2005, Alf was recognized
by our National Post newspaper
in Canada as the Governance Of-
ficer of the year. He had been the
Chief Compliance Officer at Petro-
Canada, and bringing Alf onto the
board was part of the steps we took
to prepare the company for operat-
ing in the public market. Another
director is David Holm; David is
the Chief Financial Officer of Provi-
dent Energy Trust. David was our
counsel to Bill and me when we
ran Archer Resources and after we
sold it to Dominion Resources out
of Richmond, Virginia. We have a
10−year working association with
David, a very talented individual
who’s gone from a career as a law-
yer to an investment banker and
now a chief financial officer; a very
diverse experience. And then the
other two directors, Curtis Bartlett
and Ron Miller, were the venture
capitalists who through their fund,
Morrissey Hawthorne Inc. provided
the seed capital for the initial ex-
pansion of the company from part-
nership to corporate entity in the
2003−04 period.
WSR: Perhaps you could outline
for potential investors the key rea-
sons why Petro Andina represents
a good long-term investment op-
portunity?
PAR: If there’s anything we’d like
to highlight, it’s the scale of what
we’re doing. The land position
that we’ve assembled in the Neu-
quén heavy oil trend represents
something in the range of 10% of
the conventional heavy oil area
in Western Canada. There’s basi-
cally three elements to the story.
The first is that with what we have
in hand, we’ve only worked the
initial four discoveries. We’re go-
ing to expand our resource through
additional drilling on the lands that
we have. There’s no doubt that on
the first three or four seismic lines
we have not found all the oil on this
block. The second aspect is that
we’ve put in place the programs to
demonstrate higher recoveries of oil
from the resource that we have. We
now have a two−year history with
a water flood and our independent
engineers have recognized the
success of that water flood, and
“Net cost on the
balance sheet
could be high
case USD$20
million to Petro
Andina; low case
would be just a
tariff. Against the
current reserve
of 16.8 million
barrels proved
plus provable in
the February 28,
2007 reserve re-
port, pipeline cost
is about a dollar a
barrel.”
we’ll be piloting thermal recovery
as well. So there’s a coupon clip-
ping aspect, just to wait and see the
higher recovery factors recognized
with performance of these initial dis-
coveries. And then the third basis is
that we’ve built a company that has
shown the ability to position in the
right place and to put the logistics
in place, to execute, and we’re not
planning to stop at this point. We
see additional opportunities, both
within Argentina and outside, to
continue. We’ve been very success-
ful in understanding what we do
and finding where to apply it, and
we’re looking for more of those. I
think that’s basically the story. It’s
low risk; it’s high performance;
and it’s an experienced interna-
tional management team with a
proven track record of value ac-
cretion.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 39

T S X-V/AT R • A nterra C orporation C E O I N T ER V I E W

Balancing high-impact prospects

against proven production
Anterra Corporation ("Anterra") is an emerging energy company with a focus on the
exploration and exploitation of oil and gas reserves, and the development of the
associated fee-based projects in western Canada.

Anterra combines
multi-million-BOE
exploration potential
with proven production
and processing capacity.
CEO Owen C. Pinnell tells
us how he’s pursuing
“remarkable” upside
while efficiently
exploiting lower-risk
assets. (Interview of
February 21, 2007.)

WSR: Bring us up to speed on the company’s assets and operations.

ATR: Anterra is a Calgary−based energy company focused on the exploitation and development of oil and
gas properties. What’s unique about us is that we also exploit the associated infrastructure for midstream pro-
cessing, and we are also in a search for high−impact Devonian Swan Hill reefs in Western Canada. Our model
combines the exploitation of low-risk oil, and gas reserves as well as processing facilities with the selective
pursuit of higher−risk, high−impact exploration projects. The company currently produces 300 barrels a day,
primarily from its main producing property, Breton in Alberta and has three high−impact exploration projects
it’s pursuing in 2007.

WSR: Expand on the main plays, and give us a feel for where you are in terms of production levels, reserves,
and so on.

ATR: In terms of the producing property, there are two areas where the company is producing a total of 300
barrels a day. Anterra has a 100% working interest and is the operator in nine sections of land at Breton in
Alberta, currently produces oil and natural gas from two different zones, and operates a midstream processing
facility at the same location. Since 2004, Anterra has completed an extensive technical assessment of the pool,
re−completed several wells, and drilled one development well. Current production from Breton is 250 barrels
a day, comprised of 150 barrels a day of oil and 600,000 cubic feet a day of gas. The company has plans to
drill four development wells during 2007 and to further exploit the large remaining resource in the Belly River
sands. There is an enhanced water flood program that will also be implemented during 2007.
40 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W A nterra C orporation • T S X-V/AT R

WSR: Will the company look to
strategic alliances, joint ventures,
or farm-in opportunities moving
forward?
ATR: Yes. The company has a
joint venture with one company in
two different areas. In Judy Creek,
Alberta, one of the high-impact
exploration projects Anterra oper-
ates, the company controls seven
sections of land, has a re-entry
planned for this summer, is about
to commence running a CDN$1
million 3−D seismic program in
early March, and drill two explo-
ration wells on the same property.
Anterra is targeting gross reserves
of over three million barrels from
the Judy Creek prospect, and this
is a high-impact Swan Hills Devo-
nian reef complex. With the same
partner, Anterra holds a 26.25%
working interest in the MacLeod
prospect. The MacLeod prospect
is again a Swan Hills Devonian
reef prospect; there is a re−entry
planned for the summer of 2007,
when the company will deepen an
existing well from 2,450 meters to
3,200 meters. The partners have
3−D seismic over the MacLeod
prospect and have identified an
analog to the Rosevear ‘A’ and ‘B’
pools, which have produced 160
Bcf each, and these pools are six
miles to the south. The target is
gross reserves of up to 160 Bcf
of natural gas from the Swan Hills
Devonian reef complex. The com-
pany is also pursuing a third De-
vonian reef prospect with its joint
venture partner and has a 50% in-
terest in what’s called the Crooked
Lake prospect; this is a very early
stage prospect, but the company is
targeting one−quarter of a Tcf of
natural gas from the Crooked Lake
prospect. 3−D seismic is planned
for the prospect in 2007.
WSR: Tell us about the present
Board and management team.
ATR: I am an engineer as well as
Chairman and CEO. Our Executive
Vice President and General Man-
ager is Bob McCuaig, a 25−year
oil and gas engineer. We have
Douglas Wine as our Chief Geolo-
gist, and he has over 25 years’ ex-
perience in Devonian reef explora-
tion in western Canada. Our CFO,
Giles Parker, is a CA. The Board is
made up of a high-profile group −
Jim Coleman, partner of Macleod
Dixon, an international law firm
with offices in Moscow, Toronto,
Caracas, and Calgary; Ronald
Woods, a retired investment bank-
er from Toronto; Jake Haldorson
and John Read, both partners of
Colt Engineering, recently sold to
an Australian engineering compa-
ny for CDN$1.2 billion, and John
McGilvary, another director who
is a professional geologist. In other
words, a very high-profile Board.
WSR: Does the investment com-
munity understand this company,
and the direction it’s going in?
ATR: Everyone says their compa-
ny is undervalued, and Anterra is
definitely an out−of−favor story. It
has a very attractive market valua-
tion of CDN$0.25, and the com-
pany is trading at less than 50% of
its net asset value of CDN$0.63.
But the real story is not the fact that
it’s out of favor or that it’s underval-
ued, but it lies in the remarkable
upside potential of the company’s
exploration projects.
“The company
WSR: Is the company making any
is also pursuing
additional efforts to get this mes- a third Devonian
sage out, relative to where you are
at this stage, what you have here, reef prospect
and so on?
with its joint
ATR: We have done a poor job on
our Investor Relations up until now, venture part-
but with the new projects only re-
cently acquired during the last four
ner and has a
to five months, beginning in March,
we will be embarking on an ex-
50% interest in
tensive Investor Relations program, what’s called the
which involves hiring an Investor
Relations company to help get our Crooked Lake
story out, going on the road, putting
on luncheons, and meeting with in- prospect; this
vestment banks throughout Canada
and New York and Boston. is a very early
WSR: In closing, why should inves-
stage prospect,
tors consider Anterra as a long−term
investment opportunity?
but the company
is targeting one-
ATR: The company combines the pur-
suit of these high−risk, high−impact quarter of a Tcf
Devonian reef projects with the ex-
ploitation of its low−risk oil and gas of natural gas.”
properties and the associated pro-
cessing facilities. This changes the
risk profile of a company. Although
we are pursuing high−impact,
high−risk exploration projects, the
value of the company is underpinned
by proven producing reserves. The
balance sheet is in reasonable con-
dition. The remarkable upside lies in
the potential of the exploration proj-
ects, and that’s what an investor’s
buying; the downside is covered
by the reserves the company owns
on its producing properties.

SUMMARY: Anterra (TSX-V: ATR) combines high-impact exploration potential with proven reserves, production and processing capacity. The com-
pany is currently producing around 300 BOE a day from two projects in western Canada. Over the last few years, the company has recompleted
several wells and now plans to drill another four development wells in 2007 in order to further exploit the large resource. Exploration projects target
Devonian reef oil and gas reservoirs in the 3-40 million BOE range; two are at the 3−D seismic stage and work to deepen a well on a third will begin
over the summer. The company also owns various treatment, terminalling and disposal facilities and will cooperatively develop additional projects
on a third-party basis.

www.anterra.org Phone: 403-215-3280

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 41

T S X-V/DJ E • D ejour E nterprises Ltd. C E O I N T ER V I E W

Tremendous prospects and the

capital to see them through
Dejour is a Canadian energy company devoted to finding uranium, oil and gas.
They are leveraging the opportunities that exist as a result of the global market’s
decreasing conventional supply and increasing demand for energy.

WSR: Give us a progress report

and update on the Drake play.

DJE: The Drake play is one of part

of Dejour’s three major focus areas.
We have our interest in the Atha-
basca Basin uranium and in the
Piceance Basin in natural gas prop- Dejour Enterprises
erties, but the Drake Play is our first recently farmed out
discovery in the Peace Arch area of its Athabasca uranium
northwestern Alberta and northeast- assets for CDN$50
ern BC. The Drake Play is the first of million and is now
seven significant properties we are focused on developing
its gas properties. CEO
going to be drilling with the excess
Robert L. Hodgkinson
capital we had left on the Canadian
tells us to expect drilling
side of the company, following our
to generate near-term
transactions with Titan Uranium re- results. (Interview of
garding our Athabasca Basin plays. April 10, 2007.)
The Drake play is a field extension to
over 210 wells, drilled by Canadian
Natural Resources known as the
Drake field, and we have had signifi-
cant success with it. We have drilled
and tested these wells. They will produce to pipe it at better than a million and a half, possibly as much as two
million cubic feet of gas a day. We have at least two offsets. I would propose that after the road bands are
taken off this area due to a spring break-up, we would hook these wells up for production by mid−summer. The
key to this particular play for us isn’t the size or volume of the gas wells, but the fact we own 100% of them.
All of that revenue accrues to Dejour until payout.

WSR: Expand on the company’s asset and interest portfolio.

DJE: We are currently trading at CDN$2.70 per share on the TSX Venture Exchange. We have 64 million
shares outstanding. That’s a market cap of CDN$170 million. We have three major areas of strategic focus
in the energy patch. The first is uranium − we got involved in Athabasca Basin with a million acres of explora-
tion land in 2004. Uranium was CDN$18 a pound; it is now CDN$113 a pound. In the meantime, we spent
CDN$7 million on an advanced geophysics and turned that play to publicly−traded Titan Uranium for what is
now valued at CDN$50 million in securities and another CDN$5 million to CDN$7 million in carried interests.
The second area we have gone into was oil and gas − bear in mind that Dejour’s key executives come from an
oil and gas background. We made a CDN$25 million investment in 300,000 acres of exploration lands in the
Piceance and Uinta Basins of western Colorado and eastern Utah. This area, not unlike the Athabasca Basin
as is to uranium being that the world’s number one address, the Piceance Basins, is one of North America’s
largest accumulations of natural gas. As a matter of fact, the Rocky Mountain basins produce more gas than
the Gulf of Mexico does. In fact, every major oil company is drilling thousands of wells there every year, and
it is projected that they will drill 43,000 wells in the next five years and spend over CDN$25 billion in their
42 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W D ejour E nterprises Ltd. • A S X /M A L
continued search to extract natu-
ral gas for the North American
market. This is a very key area.
We expect our first drill permits
on some of these 300,000 acres
to be issued in May; we are just
now opening our offices in Den-
ver, and we will be very active do-
ing the same kind of deals to twist
returns out of these lands prior to
making sizable discoveries. That’s
all part of the value−add we bring
to the program. The third area is
the Peace Arch Area of northern
BC and northern Alberta. This
area was discovered by Imperial,
just before the turn of the century
in 1997 and the giant Ladyfern
Gas Discovery. What happened
is that through a combination of
a rapid drop in natural gas prices
last year, the tax fiasco with the
Canadian Investment Oil Trusts,
the fact that land tenders in Can-
ada have five−year terms, and a
significant amount of expiries are
happening, there are tremendous
opportunities to get into good-
quality exploitation and explora-
tion plays in this particular area.
We have taken on seven of them
where we currently have opera-
tions proceeding on five of them.
The Drake was the first discovery,
and we will be able to comment
on the balance of these other
plays probably before the end of
June.
WSR: In addition to these stra-
tegic alliances, will the company
look to M&A activities as a catalyst
towards this continued growth?
DJE: Absolutely − part of our plan
in the Piceance Basin is maybe
to acquire a private operator. If
things persist in Alberta the way
we see them, there are a num-
ber of juniors, whose production
would be very accretive to our
particular purposes. These are the
things we are constantly consider-
ing.
WSR: Have there been any
changes on the Board and man-
agement team?
DJE: We haven’t changed the continue. We see 2007 this way cle is in a strong cycle, and we are
Board or management team, but − for the first time, we are drill- going to see much higher prices.
just re-organized the way things ing in all sectors; we are drilling It’s incumbent on every investor
work internally. We have set De- on the uranium properties; we’ll to have significant investments in
jour USA up as an independent be drilling in the Piceance Basin; the energy sector − number one to
profit center, but it’s the same and we’re actively drilling in the reap the capital benefits, but num-
people. We are increasing the Peace Arch area. This would be ber two, to protect their wealth as
number of personnel. We have the first year we can show a sig- prices begin to rise, and the cost of
reorganized some of our uranium nificant growth in production rev- energy becomes more expensive.
experts to work directly with Titan enues. Of course, on the horizon Dejour is one of those companies
for at least a period of time. As at the bottom of every drill hole that has a focused strategy about
“We have had significant success with it. We have drilled and
tested these wells. They will produce to pipe it at better than a
million and a half, possibly as much as 2 million cubic feet of gas
a day. We have at least two offsets.”
a result of that, we have brought is the advent of a very significant how to create wealth in the energy
down Dejour’s overhead from a discovery. That’s what we are in sector. We have shown how we
management and contractor point this game for. do it on the uranium exploration
of view. As we increase our pro- side. We are in a position to be
file and pursue senior listings on WSR: Does the investment com- able to show that in the Piceance
the various exchanges available munity understand this company, Basin and in northern Alberta.
to us, you might just see some and the direction it’s going in? The sense of timing to get into
changes to the Board. these deals at the proper time in
DJE: I believe the investment com- the cycle is very important. That’s
WSR: Where do you see Dejour munity is beginning to understand. the first part. The main fact is that
two to three years out? That’s as much a condition of our we have been incubating these
ability to tell that particular story. lands for a two−year period, and
DJE: We have been incubating We are making those efforts, and that drilling for the advent of a
this company since fall 2004. I am pleased with the response big discovery is now happening.
That’s two-and-a-half years of put- we are getting. I believe that in We are trading at CDN$2.70 a
ting the lands together, getting the 2007, we will get more publicity share, and we have over CDN$2
personnel, getting the strategies, as some of these discoveries be- a share in cash, liquid securities,
and making sure that the timing come known. and land values, barring the valu-
for entrance into the natural gas ation of any discovery. The premi-
markets, which back in 2004 WSR: In closing, why should in- um being paid for the opportunity
were way too high, was appropri- vestors add Dejour to their long- to have a piece of some of these
ate. The uranium market speaks term portfolio? large discoveries is extremely
for itself, it’s been a one−way small, yet we have the capital to
street, and it looks like it’s going to DJE: I believe that the energy cy- see the projects through.
SUMMARY: Dejour Enterprises (TSX-V: DJE) recently farmed out its uranium exploration properties in the
Athabasca Basin for CDN$50 million and is now concentrating on its oil and gas assets. Drilling to extend
the company’s portfolio of 210, 100%−owned gas wells on its 49,000−acre Peace River land base has
produced at least two viable offsets with the potential to produce 1.5 Mcf or more a day when hooked up to
pipeline. The company also paid CDN$25 million for 300,000 acres of the Piceance Basin along the Colo-
rado-Utah border; drill permits have since been granted. An operating partner or partners may be pursued.
Uranium assets are now held by Titan Uranium, in which the company is now a major shareholder.
www.dejour.com Phone: 403-266-3825
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 43

T S X-V/R O R • R un of R iver P ower I nc . C E O I N T ER V I E W

Emerging BC hydro producer

meets the need for green power
Run of River Power completed its first full year of operations in 2006. With its
first project in operation at Brandywine Creek, it is looking forward to continued
growth as its development projects are completed.

Run of River Power is

developing the
hydroelectric potential
of British Columbia.
CEO Jako Krushnisky
tells us why the
province is “the
Saudi Arabia of
green renewable
hydroelectricity.”
(Interview of February
27, 2007.)

WSR: Give us a progress report and update on the Pitt River project.

ROR: The Pitt River project is actually a cluster of projects. There are eight streams totaling 161 megawatts
of potential installed capacity. When completed, these projects will produce power for 55,000 homes
or 550 gigawatt hours of energy output. We recently submitted the project to what’s referred to as an
Environmental Assessment review through the British Columbia Environmental Assessment Office, which
will provide the company fixed timelines by which we can expect to have our projects reviewed by all
stakeholders leading up to the granting of an environmental certificate. Achieving this milestone will allow
us to proceed with the development of the projects.

WSR: Expand on this play as well as the balance of the company’s project and interest.

ROR: The Company has developed Brandywine Creek near Whistler, BC. It currently produces 40 giga-
watt hours of power, providing electricity to 4,000 homes. It was submitted to an earlier BC Hydro call and
has been in operation since August 2005. At that time, we identified three projects in the Mamquam wa-
tershed, located close to one of our neighbors, Canadian Hydro Developers, another TSX venture−traded
44 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W R un of R iver P ower I nc . • T S X-V/R O R

company. Those three projects,
which total approximately 35
megawatts of installed capacity,
which when combined with the
161 megawatts, we’ve identified
and are pursuing in the Pitt River
area, represents 194 megawatts
of installed capacity or energy
for 65,000 homes.
WSR: Talk about the key drivers
in place, the major trends you
see affecting your core business,
and how Run of River Power is
favorably positioned.
ROR: The North American mar-
ketplace is focused on green
alternative energy as a way to
reduce its carbon footprint and
to improve the environment we
live in. In this regard, we be-
lieve we are in a tremendous
growth industry, and in Canada,
we think we are probably in a
marketplace that’s still not fully
realized the potential of renew-
ables. The need for new sources
of energy is a reoccurring theme
across North America. Here in
British Columbia the utility, BC
Hydro, has indicated that it will
need to import 15% more ener-
gy to meet domestic usage this
year, and if no new power proj-
ects are developed by the year
2020, the province would need
to import as much as 40% more
energy to meet domestic needs.
I believe that this story is be-
ing told across North America.
Another key driver is that there
is an overwhelming preference
for green renewable energy.
I might add that in the USA,
there are many states now en-
acting legislation that requires
utilities in those states to derive a
portion of their portfolio of ener-
gy from green sources. Califor-
nia is a good example. PG&E,
the utility in California, has just
received approval from the Utili-
ties Commission of California to
spend CDN$14 million to study
how they can move green en-
ergy from the province of British
“The company has developed Brandywine
Creek near Whistler, BC. It currently pro-
duces 40 gigawatt-hours of power, provid-
ing electricity to 4,000 homes. It was sub-
mitted to an earlier BC Hydro call and has
been in operation since August 2005”
Columbia to California. These
key drivers are creating a favor-
able environment for green re-
newable energy projects and for
Run of River Power.
WSR: Tell us about the present
Board and management team.
ROR: We have one of the best
teams in the province in which
covers project design, field
work, public company and man-
agement expertise. We have a
35−year veteran of British Co-
lumbia Hydro who was involved
in every major power line built
in the province and has prob-
ably walked 200 streams. Our
Chief Financial Officer was pre-
viously overseeing the energy
resources of a large utility, in-
cluding run of river hydro and
wind power.
WSR: Does the investment com-
munity understand this company
and the direction it’s going in?
ROR: I would say we are an un-
dervalued story and that in the
weeks and months to come, you
are going to see more aware-
ness of the sector and Run of
River Power.
WSR: In closing, why should
investors consider Run of River
Power as a long−term invest-
ment opportunity?
ROR: Green renewable energy
has a strong future. We are
creating energy that provides
a solid alternative to how we
currently power our homes.
Our projects are considered to
be some of the best and are lo-
cated in close proximity to Van-
couver. The province is blessed
with tremendous hydroelectric
potential; steep glacier−fed
mountainous terrain combined
with a lot of rain truly makes
British Columbia the Saudi
Arabia of green renewable
hydroelectricity.

SUMMARY: Run of River Power (TSX-V: ROR) is developing the hydroelectric potential of British Columbia. The company’s initial project on Bran-
dywine Creek currently produces 40 gigawatt-hours of power for 4,000 homes. An additional three projects have been identified in the Mamquam
watershed; these would represent another 35 megawatts of capacity. Finally, the company has submitted paperwork to develop a cluster of projects
on Pitt River that would generate another 550 gigawatt-hours of power. Management is profoundly experienced in the renewable energy field and
notes that demand for “green” power is expanding throughout North America. Furthermore, in British Columbia alone, demand for power is rising so
robustly that local utilities will need to generate or import 40% more power by 2020.

www.runofriverpower.com Phone: 604-946-9232

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 45

O M X / W S I B • W est S iberian R esources Ltd C E O I N T ER V I E W

Independent Russian producer

on an accelerated growth track
West Siberian Resources Ltd. (WSR) is an independent oil company that produces oil,
develops oil fields and conducts oil exploration in Russia. WSR’s main assets are the
Middle Nyurola, Kluchevskoye, Puglalymskoye and Khvoinoye oil fields located in the
Tomsk region of Western Siberia.

West Siberian Resources

is on a dramatic growth
trajectory. Managing
Director Maxim Barski
tells us how recent M&A
and successful explora-
tion of existing fields
boosted his company’s
production 170% last
year. (Interview of
March 12, 2007.)

WSR: Bring us up to speed on the company’s assets and operations.

WSIB: The company is currently in three Russian main oil provinces. We are producing oil in West Siberia in the
Tomsk region, in the Timano−Pechora region, and also in the Samara region.

WSR: Expand on some of the main plays, and give us a feel for where you are in terms of drilling, development,
production, reserves, and so on.

WSIB: In 2005, the company produced 2.9 million barrels of oil. In 2006, we produced 8 million barrels, or an
increase in growth of 170%, compared to the 114% growth rate from the development of existing fields. Basically,
through our development and drilling program, we doubled our production from existing assets. We have also had
a huge increase in our reserves. We have 307 million barrels of reserves, an 80% increase over 2005 – this was
mainly done through the acquisition we finalized in the Timano−Pechora region, where we acquired Kolvinskoye,
as well as through the organic growth of our reserves due to our exploration program. For the exploration program,
we have increased our reserves by 12%. Our financial results also experienced some record growth. Our revenue
increased more than 200%, or an average of EUR$225 million. Our EBITDA amounted to EUR$82 million, or a
200% increase from 2006, and our net income was EUR$30 million versus just below EUR$1 million in 2005.

WSR: Educate us in terms of infrastructure as well as the political climate within these regions as it relates to re-
source development, production, and so on.
46 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W W est S iberian R esources Ltd • O M X / W S I B

WSIB: We have our own infra- nity understand this company and
“For the last seven years, Russia’s political situa-
structure in all regions. In Timano- the direction it’s going in?
Pechora, it’s a 50−kilometer pipe- tion has been stable. Being a foreign company,
line; in the Tomsk region, it’s a WSIB: Yes − I believe we are pres-
120−kilometer pipeline connecting we haven’t seen any different relationships to ently trading at very low multiples.
us to the Transneft. As soon as you We are trading only at EUR$3.25
us than to any other Russian company. I believe
are in Transneft, then you can sell a barrel. Taking into account our
domestically, and you can sell to that is because we have Russian management.” growth, I consider that a very
the export market. We sold domes- low number. We are trading at
tically 60% of our crude, and we EUR$125 to production, the low-
export 40% of our crude. In terms of est numbers among all Russian
political stability, we don’t see any Independents. We doubled our
changes. For the last seven years, production in 2006. We almost
Russia’s political situation has been doubled our reserves with an 80%
stable. Being a foreign company, increase, but our market cap hasn’t
we haven’t seen any different re- increased. Currently, we are trad-
lationships to us than to any other ing at EUR$1 billion, the same mar-
Russian company. I believe that is ket cap we had last year. We feel
because we have Russian manage- that we’re very much undervalued,
ment and key Russian shareholders and certainly that’s the case if you
within our shareholder structure. will look at what our plan is. Our
plan for 2007 is to reach produc-
WSR: Will the company look to ad- tion of 40,000 barrels and produce
ditional M&A activities as a catalyst a total of 12 million barrels, or a
towards this continued growth? 50% increase from 2006. We are
looking forward to substantially in-
WSIB: Yes. At the beginning of We found two oil fields with good 11 wells, and the results on those creasing our reserves from our ex-
2006, we conducted a very suc- flow rates of more than 2,000 bar- are showing good potential. Some ploration program. So from looking
cessful acquisition of a company rels a day from each well. In terms of the wells have been producing at the history, the perspectives, and
called Saneco from the Samara of the other acquisition – in Novem- as much as 2,500 barrels a day. the multiples, I believe we are the
region. At the time of our acquisi- ber 2006, we acquired a company We are currently conducting a field most undervalued among all Rus-
tion, the company was producing called Nortoil at a very good price. development plan and exploration sian Independents.
4,500 barrels per day. By the end Nortoil contains a license to explore program on our newly-acquired
of 2006, Saneco was producing and develop Kolvinskoye field, and field. WSR: In closing, why should in-
11,000 barrels a day. We have al- this field has been shown by in- vestors consider West Siberian Re-
most tripled production from that as- dependent appraisal DeGolyer & WSR: Tell us about the present sources as a long−term investment
set and are delighted with its devel- McNaughton’s to have 122 million Board and management team. opportunity?
opment. We have also found two barrels of 2P reserves. We paid
new oil fields in the same region. EUR$150 million for that acquisi- WSIB: I believe we have the most WSIB: West Siberian Resources
We have 14 exploration licenses in tion, or a little bit below EUR$1 per professional team among all inde- has reserves for the next 30 years.
Samara; we drilled out two of them, barrel of 2P reserves. We feel it’s pendent oil companies. There are We are going to show a substan-
both of which were very successful. a great success. The field contains many companies listed in differ- tial increase in our production.
ent exchanges, but none of them Our deep production we estimate
have shown the kind of production at 75,000 barrels, compared to
SUMMARY: West Siberian Resources (STX: WSIB) continues to en- growth dynamic that our team has the current 30,000 level, which
hance its profile as an independent E&P within its eponymous region shown. We have the full support of means more than double in the
of operation. In 2006, production jumped 170% to 8 million barrels our Board, which consists of two in- coming three or four years. West
of oil through both development of existing fields and M&A. Reserves dependent Swedish directors, one Siberian has shown a good track
climbed 80% to 307 barrels, again through a combination of explora- American independent director; record of aggressive M&A and
tion and acquisitions. About 60% of all production is sold domesti- two representatives from among consolidation strategies, along with
cally, with the rest exported via Transneft. Management is Russian and Russian shareholders, which are aggressive development, opera-
characterizes the local political situation as stable. Recent M&A been myself and another Russian share- tions, and controls. West Siberian
accretive, with a November 2006 acquisition in particular closing for holder, Mr. Fomenko; and we Resources has a strategic partner,
about €1 per barrel of verified reserves in the ground. Future deals are have a representative of Repsol, Repsol, which is showing the qual-
likely. Goal is to boost production to 12 million barrels in 2007. Mr. Fernandez−Cuesta, who is the ity of the reserves and management
Head of Repsol E&P. team. Taking into account current
www.westsiberian.com Phone: +7-095-723-0718 levels, I believe West Siberian is a
WSR: Does the investment commu- good long−term bet.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 47

N YS/P C U • S outhern C opper C orporation C E O I N T ER V I E W

Mining the world’s biggest

copper reserves at a low cost
Southern Copper Corp. engages in mining and processing as well as produces
copper, molybdenum, zinc, silver, gold and lead.

WSR: Bring us up to speed on the

company’s assets and operations.

PCU: In terms of assets and opera-

tions, we are in three countries. We
have similar operations in both Mex-
ico and Peru and exploration activi-
ties in Chile. We have two open−pit Southern Copper has
mines in Peru, Toquepala and Cua- the largest copper
jone; in Mexico, our two open−pit reserves of any publicly
mines are Caridad and Cananea. traded company and
In Mexico, we also have five poly- some of the lowest cash
metallic underground mines. In both costs in the industry.
countries, we have metallurgical CEO Oscar Gonzalez
complexes with smelter, refineries, Rocha tells us to expect
and precious metals plants; we also near-term growth to
support his company’s
have a rod plant in Mexico that we
truly long-term business.
don’t have in Peru. In addition, we
(Interview of March 12,
have a metallurgical complex in 2007.)
Mexico that is for zinc and copper
production.

WSR: Give us a feel for where you

are in terms of production levels, re-
serves, and so on.

PCU: In production, we are at

700,000 metric tons per year. Over
95% of these are sold as refined copper, smelted and refined in our own metallurgical complexes. In
Mexico, we produced 340,000 tons of refined copper and in Peru, 360,000 tons; with the increase of
ore grade in Cananea in the next years we will be even. For the coming future, we are planning expan-
sions in Cananea and new projects in Peru that we will continue on that basis with a 15% production
increase forecasted for 2009. Our sales in 2006 were USD$5.5 billion and EBITDA of USD$3.3 billion,
which together represent 61% of EBITDA margin. 76% of our revenues are copper, and the remaining
24% is in zinc, silver, and molybdenum, with Peru’s 3.9 million ounces of silver and 6,000 metric tons
of molybdenum. In Mexico, we have similar sales for molybdenum, but with a higher production of
silver and a small amount of gold. We also have some mining concessions in Chile, in the exploratory
stage.

WSR: Will the company look to M&A activities as a catalyst towards continued growth?

PCU: We have looked into several possibilities in the international markets for mergers and acquisitions.
Basically, we believe we have to find opportunities that cover three conditions. The first one is that they
have to be accretive from day one for our shareholders. The idea is that we will not go ahead unless
this is a good deal for our shareholders. The second condition is that it has to enhance our copper asset
portfolio. The third one is that it has to be a low-cost operation that fits fine with our current operations.
48 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W S outhern C opper C orporation • N YS/P C U

The reason for this last condition
is that one of the key character-
istics of Southern Copper is that
it is a very low-cost operation
with a strong reserve base. In
2006 our cash cost per pound
of copper was USD$ 0.15. This
figure compares with a copper
price of approximately USD$
3.00, twenty times higher.
Since we can operate at the
current production rate for over
50 years, we don’t have pres-
sure in acquiring new reserves.
Our reserve base is excellent.
WSR: Tell us about the present
Board and management team.
PCU: The company is controlled
by Grupo Mexico, with a 75%
interest; the remaining 25% of
shares are mostly with institu-
tional investors from all over
the world. We have more than
30,000 investors in Peru, Mexi-
co, Europe, and North America.
The senior management of our
company is composed by a high
quality staff from our operations
in Mexico and Peru. They have
a strong mining background and
have been running this same as-
set for more than 30 years. They
know our mining operations and
metallurgical plants very well.
We believe we are prepared
for the expansions we are think-
ing in Peru and Mexico with the
same people; we may only hire
some additional personnel to
support the technicians we al-
ready have in place.
WSR: Does the investment com-
munity understand this company
and the direction it’s going in?
PCU: The investor community
is beginning to realize that we
have significant value to offer
them; since the beginning of the
year, our stock price has appre-
ciated over 40%, a clear indi-
cation that we are being more
closely looked at by our inves-
tors. One of the reasons inves-
tors mention is that we have
a very high dividend yield.
The current price of our stock
is in the range of USD$70 per
share, with our dividend yield
at about 7%. This has been an
aggressive policy the company
has recently implemented.
“In Mexico, we produced 340,000 tons of
WSR: In closing, why should in-
refined copper and in Peru, 360,000 tons; vestors consider Southern Cop-
per as a long−term investment
with the increase of ore grade in Cananea opportunity?
in the next years we will be even. For the PCU: We have the highest cop-
per reserve of any listed cor-
coming future we are planning expansions poration; in addition, our cash
in Cananea and new projects in Peru.” costs are very low, 15 cents per
pound for 2006. We are well−
diversified in assets and proj-
ects and have shown signifi-
cant organic growth. We are
heading towards 15% growth
by the end of 2009, and anoth-
er 20% increase by 2012. 95%
of our production is sold com-
pletely refined, allowing us to
have a good income because
of the premiums obtained on
top of the market prices. We
believe that all these attributes
make Southern Copper one
of the best pure copper play-
ers for the investment com-
munit y.

SUMMARY: Southern Copper (NYSE: PCU) produces a wide range of base and precious metals from various properties throughout Latin America.
Annual copper production is around 700,000 tons, roughly split between operations in Mexico and Peru. Work to expand in both regions is expected
to boost production 15% by 2009 and another 20% by 2012. Almost all ore is refined in company−owned facilities Copper accounts for 76% of
the company’s $5.5 billion in revenue, with zinc, silver and molybdenum driving much of the remainder; EBITDA is $3.3 billion. Management notes
that as existing reserves should support another 50 years of mining at existing levels, pressure to acquire new assets is relatively low. Dividend yield
is a high 7%.

www.southernperu.com Phone: 602-494-5328

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 49

A S X /A G M • A llegiance M ining N L C E O I N T ER V I E W

Nothing but nickel miner aims

for a 2007 production start
Allegiance Mining NL is a Sydney-based, Australian Stock Exchange-listed, junior
concentrating on exploration for and mining of nickel sulphides in Tasmania.
WSR: Tell us about the recent
Saxon nickel discovery.

AGM: The Saxon nickel discov-

ery is a potentially major devel-
opment for both the company
and the Avebury Nickel Project
in Tasmania, Australia. It’s the
first time we have been able to Allegiance Mining is
set our sights wider than nor- going full speed ahead
mal. We have been focusing to start producing
on bringing our mine into pro- nickel by late 2007.
duction and have mainly been CEO Ian Levy tells us
how his “nothing but
looking at the ore reserves with
nickel” focus could pay
our drilling. We have stepped
off in the face of tight
up and looked a bit broader
global supply the metal
than just the mine, and we be- and high demand.
lieve our exploration techniques (Interview of August
have turned up what could be 11, 2006.)
our second mine in what we
think is a nickel sulphide prov-
ince.

WSR: Could you expand on

that and also give us an update
on the Avery project?

AGM: The Avery project is in full swing construction mode with a view to getting into production and selling nickel
concentrate into China starting in the third quarter of 2007. The critical long-lead items have all been ordered and
have received favorable delivery schedules; to date, the project has been on budget and on time, but one can never
know how things are going to pan out in the future, given the constraints of the global construction market. So far,
things are looking very positive.

WSR: How important are strategic alliances, partnerships, or joint ventures for this company moving forward?

AGM: The company is an emerging nickel miner, and we have been given wonderful support from the Australian
capital market. We don’t critically need strategic alliances or strategic partners right now, but we have greatly ben-
efited from a strategic alliance in the past with Jinchuan Nickel of China. They provide 90% of China’s nickel, and
Jinchuan is our single off−take partner. They will buy all of the nickel we can produce, and they will pay spot market
prices on a cash basis; they also have very favorable off−take terms. That’s the main strategic alliance to date.

WSR: What is unique about Allegiance Mining that defines and differentiates this company from its competitors?

AGM: It’s the first new nickel province in the world to get into production, and it is also located in a major mining
province on the West Coast of Tasmania, which has existing mills that can process this ore. We are able to be a lot
more flexible than most of the newly emerging operations. We are investigating a potential opportunity to process
our ore through the nearby Renison Mill, which may go into production by January or February 2007. We have
50 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W A llegiance M ining N L • A S X /A G M

a lot of opportunities ahead of us, product, a very high grade concen-

and we hope to capitalize on that
and build shareholder value.
WSR: Tell us about the Board and
management team.
AGM: We’ve got a Board that has
taken the company through the ex-
ploration stage, the high−risk tough
stage of mining. They have done a
superb job in bringing the Avery
nickel discovery into being. We
strengthened our Board a couple of
years ago by putting a well−known
industry project manager, Barry
Sullivan, as a Non−Executive
Director. Our Chairman, Tony
Howland-Rose, is a 40−year−old
professional in the Australian min-
ing scene and is a great explorer.
David Deitz, our CFO/Company
Secretary/Executive Director, was
the founder of the modern mining
company and is our driving influ-
ence. We also have Eddie Lee, a
well-known capital market player.
We have all the bases covered, but
the Board will evolve over time.
WSR: Does the investment commu-
nity understand this company and
the direction it’s going in?
AGM: The investment community
has been very good to Allegiance.
We have no complaints and be-
lieve we are being fairly treated
in the capital market. One of our
problems is getting wider publicity
and to start appearing on the global
radar screens in the nickel industry.
We are “nothing but nickel,” and
we produce a remarkable nickel
trate, second to none; this product
will become known as nothing but
nickel, generically speaking, over
the next few years.
WSR: Where do you see Alle-
giance two to three years from
now?
AGM: I’m hoping Allegiance will
be in the top three Australian nickel
producers, probably from two and
three mines. I’m also hoping we
are feeding into a much larger
mill than the one we’re building.
We are building a 900,000−ton
a year mill. I would like to see us
“We are nothing but nickel and we
expand that by another 600,000 produce a remarkable nickel prod-
tons over the next few years. I want
to see this company as a growth uct, a very high grade concentrate,
stock for a few years to come.
second to none; this product will
WSR: In closing, why should inves-
tors consider Allegiance Mining become known as nothing but nickel
as a long-term investment opportu-
nity?
generically speaking over the next
AGM: Nickel is a terrific base met-
few years.”
al; right now, the global supply of
nickel is very constrained, and it’s
unlikely we will get any major ex-
pansion in the production sources
for nickel. Meanwhile, global eco-
nomic demand is booming, and
nickel is a leading indicator of eco-
nomic growth because it is used in
the manufacture of stainless steel,
an extremely modern alloy for both
modern and emerging economies.
We are also fully exposed in China
and the industrial miracle that’s go-
ing on, and that’s where our market
niche lies.

SUMMARY: Allegiance Mining (ASX: AGM) is in the full swing of constructing a

Tasmanian nickel mine to get into production by late 2007. A second discovery in the
district could turn into another mine, creating the first new nickel sulphide province
to emerge in some time. The company has entered a strategic alliance with Chinese
nickel supplier Jinchuan Nickel, which has agreed to pay spot market prices in cash
for all nickel concentrate produced. No other partnerships are necessary at this time.
Management is investigating local processing options while the company builds a
900,000−ton mill; additional capacity may be necessary. The company’s sole fo-
cus is on nickel and product will be exceptionally pure, effectively nothing but nickel.

www.allegiance-mining.com.au Phone: +61-2-9397-7777

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 51

O T C B B/H P M E F • H omeland P recious M etals C orp. C E O I N T ER V I E W

Proven minefinders set up at

the heart of the Eureka Trend
Homeland Precious Metals Corp. is a resource exploration company with the ob-
jective of finding and developing high-grade, economical precious metal assets.

WSR: Give us a progress report

and update on the Water Can-
yon play.

HPMEF: The Water Canyon

play is our flagship property, a
significant feather in our cap.
Several other companies tried Homeland Pre-
to get this property and failed, cious Metals has
but we were happy to acquire it, successfully added
and are ecstatic about doing so. a property at the
We completed the acquisition heart of Nevada’s
agreement in February 2007, highly prospective
after a long process of negotia- Eureka Trend to its
tion with Newmont. The proper- exploration portfolio.
CEO Bruce Johnstone
ty is approximately four square
tells us how his
miles in size and located in the
expert team plans to
Battle Mountain−Eureka Trend
unlock its potential.
area. We are surrounded on (Interview of April 19,
all sides by multi−million ounce 2007.)
gold mines and are right in the
middle of the gold mine district.
We have Barrick’s Strike Gold
Mine, the Newmont Gold Quar-
ry Mine, as well as Newmont’s Mule Canyon and Carlin Area Gold Mine – most of which are multimillion
ounce gold mines.

WSR: Expand on this play as well as the balance of the company’s project and property portfolio.

HPMEF: We believe the piece of property we have has exceptional potential because of the area. We are on
trend with the other mines and deposits. We also have two other properties as well, Bell Flat and Montgomery
Pass, which we have been working since 2005. These two properties are in the Walker Lane Trend area of
western Nevada. One of the nice things about all of our properties is that they sit alongside of major highways,
so we have great properties in the sense that, aside from the geology, we are able to work them easily without
the huge costs involved in putting road systems in.
52 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W H omeland P recious M etals C orp. • O T C B B/H P M E F

WSR: Will the company then
look to strategic alliances or
joint ventures moving forward?
HPMEF: We are always looking
at that and are also looking at new
opportunities. We have Newmont
as a strategic alliance partner with
the Water Canyon Project, with
joint venture back−end ability for
them, once we find a gold strike
in central British Columbia. He also
worked with the Petaquilla District
in Panama, where they found an im-
mense gold and copper resource.
Those are some of the great peo-
ple we have on our Board. On our
“One of the advantages of having New-
mont as a partner is the fact that their Mule
30−year−old veteran CA, MBA,
and management consultant.
Again, the right people to do the
right job.
WSR: Does the investment com-
WSR: Is the company making any
additional efforts to get this mes-
sage out there loud and clear?
HPMEF: Yes − through various
print and electronic media. We
are just starting to get the ball roll-
ing on that. Our Web site, in par-
ticular, is full of information useful
for the investors.

or a viable ore body. One of the
advantages of having Newmont
as a partner is the fact that their
Mule Canyon mine is only two
miles away and Mule Canyon has
an existing mine infrastructure; so
if the ore body is found, the cost of
working Water Canyon becomes
considerably less than if we had to
develop a full−blown mine.
WSR: What is it that defines and
differentiates this company from
others in the industry?
HPMEF: Our people. Our Board
of Directors, our Advisory Board
– it’s the people that make up
our company. Our geology team
is headed by George Eliopulos,
who has over 30 years of explo-
ration experience in Nevada. He
is a proven mine finder. He has
assisted in developing the Illipah
gold mine, the Borealis gold mine,
and the Manhattan gold mine, all
of which are in Nevada. He was
also responsible for a lot of the
deep−drilling at the Barrick Bull-
frog mine, which produced over
3.5 million ounces of gold. An-
other Board member, Dave Mallo,
has over 25 years of exploration
experience. He helped to find the
Eskay Creek gold and silver mine
Canyon mine is only two miles away and WSR: Where do you see Home-
land Precious Metals two to three
Mule Canyon has an existing mine infra- years out?
structure; so if the ore body is found, the HPMEF: Mining and metals is
a risky business; we could find a
cost of working Water Canyon becomes deposit, or not − it’s hard to say.
However, we believe that with
c o n s i d e r a b l y less.” both the properties and the man-
agement team we have, we have
very good potential.
Advisory Board, munity understand this company
we have Doug and the direction it’s going in? WSR: In closing, why should inves-
Turnbull, a tors consider Homeland Precious
professional HPMEF: Yes, I do. The mo- Metals as a long-term investment
geoscien- tivation remains the opportunity?
tist. He is same as it did 50
a hands-on years ago. We HPMEF: Exploration and mine
exploration are just us- building is a long-term commit-
expert, a ing different ment, there is no doubt about
proven mine methods. We that. It takes several years to find
finder. We are using the a deposit and longer to turn it
have Ian Mar- most up-to-date into a viable mine if such a de-
shall, who worked for exploration tech- posit is found. We have a great
Placer Dome for over niques to find an opportunity with Newmont as a
20 years. Ian is now ore body. From partner, with their mine infrastruc-
essentially retired and an investor’s ture only two miles away. We
acting as a con- prospective, we have a great management team,
sultant, but when are a fledgling and we have good properties,
working for Placer company; how- one of which is located right in
Dome, he was the ever, people are going to start the middle of the Battle Mountain
associate Coun- to realize who we are, and area. With Barrick and Newmont
sel General for the where we are working. literally having four mines around
company. We have We should then start to that area, I believe we are in a
Gerry Humphries, a see dramatic changes. good position.

SUMMARY: Homeland Precious Metals (OTCBB: HPMEF) has successfully acquired the hotly pursued Water Canyon property at the
heart of Nevada’s eminently prospective Eureka Trend. The property is four square miles in extent and is bracketed by several multi-mil-
lion-ounce gold mines owned by some of the world’s largest producers. Newmont Mining, the project’s previous owner, remains onboard
as a strategic partner; the relationship opens up access to production infrastructure in place nearby at Newmont’s Mule Canyon mine.
The company also has two properties on the Walker Lane Trend. The Management team brings together substantial experience in find-
ing and developing large gold resources. The goal is to apply the most technologically sophisticated exploration methods to the acreage.

www.homelandpreciousmetals.com Phone: 604-922-6663

 A WALL STREET REPORTER PUBLICATION • Gold rush! • 53

A S X /A R U • A rafura R esources Ltd C E O I N T ER V I E W

A solid rare earths opportunity

with byproduct potential
Arafura listed on the Australian Stock Exchange on November 5, 2003, but the
company’s history spans over a period of 20 years. In 1984, it first commenced
acquiring ground in the Northern Territory.

Arafura Resources
aims to become one
of the world’s most
significant producers
of rare earth metals.
CEO Alistair James
Stephens tells us
about his project and
why he expects it to
generate a 9,990%
return on explora-
tion investment.
(Interview of March
8, 2007.)

WSR: Tell us about the pending NuPower listing, and what it means for the company going forward.

ARU: Last year Arafura’s Board agreed to transfer our uranium assets and cash into a new company
specifically looking at a strategic, growth−oriented, uranium−focused company. We undertook a non-
renounceable rights issue within Arafura and raised enough funds for a compliance listing of NuPower
Resources Ltd. That rights issue was completed in December 2006. This enabled us to undertake an in-
specie distribution to all our shareholders and option holders into NuPower. We then issued the prospec-
tus for the listing of NuPower with the record date for eligibility for an in−specie distribution in February
2007. We have now received confirmation that holding statements to NuPower shareholders have been
posted and receipted. Option holders will receive holding statements when NuPower has been officially
listed on the ASX in the very near future. We will inform shareholders of NuPower’s (ASX: NUP) listing
as soon as we get confirmation from the ASX.

WSR: Bring us up to speed on the company’s assets and operations.

ARU: Arafura’s flagship asset is the Nolans phosphate hosted rare earths and uranium project. The
project is located about 135 km from Alice Springs in Australia’s Northern Territory. The increased con-
fidence in the test work for the recovery of rare earths, phosphate and uranium from Nolans provided us
with the opportunity to focus on the development of the Nolans resource, allowing NuPower to grow ura-
nium. The Nolans deposit contains at least 18.6 million tonnes of rare earths, phosphate, and uranium.
We project a mine life of at least 20 years, and the drilling we have undertaken last year has identified
54 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W A rafura R esources Ltd • A S X /A R U

year before going into engineer-

ing and design work in 2008.
“The Nolans deposit contains at least 18.6 million tonnes of On the basis that we receive
rare earths, phosphate, and uranium. We project a mine life regulatory approval to proceed
with development, we hope to
of at least 20 years, and the drilling we have undertaken construct in 2009 and be pro-
ducing in 2010. In addition to
last year has identified additional mineralization outside the the Nolans project, Arafura will
retain 10% of NuPower, ensur-
resource categories.” ing the company has an inter-
est in uranium assets. We also
have a number of joint ventures
and iron ore royalties to flow in
2008. We have a nickel joint
venture with a company called
Mithril Resources, on our Ham-
mer Hill project. In addition, we
are still looking to realize our Mt
Porter’s gold resource located at
Pine creek, now that GBS Gold,
a Toronto-listed organization,
has recommenced operating
the Pine Creek gold mill. We
will continue exploration at our
Kurinelli gold project near Ten-
nant Creek. A new project we
have on the books is the Jervois
vanadium project located north-
east of Alice Springs. The initial
drill results look very promising
with drill intercept of magnetite
mineralization up to 48 metres
in thickness over an area 6 ki-
lometres in diameter. Assay re-
sults from this drilling are due
very soon.

WSR: In addition to these strate-

additional mineralization out-
side the resource categories,
which gives us confidence that
we have a significantly large
resource that will sustain either
a longer mine life or increased
production rates. The opera-
tion will have multiple revenue
streams. Initially, the project will
be focused on rare earth oxides
as well as phosphoric acid, but
will also produce by−products
of calcium chloride and small
amounts of uranium. There is
a major market opportunity for
us with the Nolans project, and
this year, our target is to under-
take or complete our metallurgi-
cal test work by the end of the
first half, leading to a pilot plant
study in the second half of the
gic alliances, will the company
look to M&A activities as a cata-
lyst towards continued growth?
ARU: We are entertaining a
potential partner for the Nolans
project, either through equity,
a joint venture partnership or
a combination of both. We’re
specifically looking at a partner

SUMMARY: Arafura Resources (ASX: ARU) has spun out its purely uranium-oriented assets and is now primarily focused on a rare earth project with
substantial byproduct potential. Located in the Alice Springs region, the property is being groomed to initially produce 10,000 tons of rare earths (includ-
ing high-value materials like neodymium and europium) a year, but may scale to double that level of activity. The project will also throw off commercial
amounts of phosphoric acid, calcium chloride and uranium. Mine life is in the 20-year range. Revenue opportunity is estimated at $9 billion. The com-
pany retains 10% of its uranium spinoff, expects to start booking iron royalties in 2008 and is developing nickel, gold and vanadium projects as well.

www.arafuraresources.com.au Phone: +61-8-9221-7666


that can bring in technology that
will help us fast−track the proj-
ect. Outside of that, mergers
and acquisitions are broadly on
our radar but are not a specific
focus for us. We are going to fo-
cus our resources to the develop-
ment and production of Nolans
project; however, if there was
an opportunity for synergies
on M&As, we would certainly
closely look at that prospect.
WSR: What is so unique about
Arafura that defines and differ-
entiates this company?
ARU: The differentiator for Ara-
fura is that Nolans contains high
quantities of high value rare
earths like neodymium and euro-
pium, along with additional rev-
enue streams from a co-product
of phosphoric acid and by-prod-
ucts of calcium chloride and
uranium. We are initially look-
ing to produce 10,000 tonnes
of rare earths but assessing the
market opportunity to upscale to
20,000 tonnes per annum. This
would make us a major produc-
er of rare earths with potentially
10% to 15% of market share in
2010. Significant growth in the
demand for rare earths will pro-
vide considerable opportunities
for Arafura. At 20,000 tonnes of
rare earths per annum, the proj-
ect will produce about 150,000
tpa phosphoric acid, 500,000
tonnes of calcium chloride and
maybe 200 tonnes per annum
of uranium oxide. Ironically, we
are likely to be the next urani-
um producing mine in Australia
but as a by−product. However,
rare earths are our focus. China
produced a little over 95% the
world’s rare earths in 2006. But
China wants to focus on its own
development rather than be a
raw material supplier to the re-
mainder of the world. I believe
the signals that China sent out
last year in terms of the restriction
of export quotas, the imposition
of a 10% tariff, and the shutting
down of some rare earths opera-
A S X /A R U • A rafura R esources Ltd L C E O I N T ER V I E W
tions because of environmental
non−compliance indicates that
China wants to improve its envi-
ronmental care, and use its own
resources for its own develop-
ment and not be a raw material
supplier for the rest of the world.
Arafura is positioning itself to be
a supplier of rare earth materi-
als outside China. Rare earths
are a strategic mineral for new
technologies; some are used for
petroleum catalysts, especially
in the U.S., others use automo-
tive catalysts, rechargeable bat-
teries, powerful permanent mag-
nets, and phosphors for plasma
and LCD screens. Rare earths
are a key commodity in new hy-
brid car technology or electric
car technology that has major
environmental benefits. The use
of rare earths in the electronics
industry and energy industry re-
sults in these materials being the
key to environmental abatement
strategies. Products that use rare
earths can reduce fuel consump-
tion, decrease greenhouse gas
emissions, and provide alterna-
tive sources of efficient energy.
They are a key commodity in the
reduction of CO2 emissions.
WSR: Tell us about the present
Board and management team.
ARU: Peter Walker recently
stepped down as Chairman for
personal reasons. As a result,
Mick Muir, Arafura’s founding
Managing Director and pres-
ently a non-executive director,
has stepped into the Chair role.
Ian Kowalick remains on the
Board, and we are looking to
appoint other Board members
who bring a range of skills that
are complementary to Arafura’s
new direction, in particular
as we progress our engineer-
ing and feasibility studies for
Nolans. We are considering
several new Board members
with a background in chemical
engineering, metallurgy or proj-
ect management, and another
with finance and/or marketing
A WALL STREET REPORTER PUBLICATION • Gold rush! • 55
skills. The Board changes will
also reflect Arafura’s changing
organizational structure as we
approach engineering design
and production phases.
WSR: Does the investment com-
munity understand this company
and the direction it’s going in?
ARU: The rare earth story is dif-
ficult to understand, given that
they are a range of minerals with
very unique applications. It’s a
niche market but a high−value
market with priceless outcomes
in environmental abatement
strategies. The degree of sophis-
tication to the rare earths story is
different around the globe with
solid understanding in eastern
Australia, Asia and Europe. We
are seeing an increase in the
awareness and interest in rare
earths in the U.S.A., and we are
looking for opportunities on how
we can potentially raise Arafu-
ra’s profile within the United
States. The U.S.A. is a potential
market for our products, and we
have to carefully consider an
engagement strategy with the
investment market and customer
markets in the U.S.A. There is a
lot of value that we can extract
out of Nolans, and, therefore,
the Arafura share price.
WSR: In closing, why should
investors consider Arafura Re-
sources as a long−term invest-
ment opportunity?
ARU: The Nolans project will
be a long−term 20−year plus
operation with multiple revenue
streams in rare earths, phos-
phoric acid, calcium chloride
and potentially uranium. There
is significant growth and upside
to our share price that can be
achieved through the project’s
development and the company’s
production plans. Our desktop
studies, which will be proofed
during our pilot and feasibility
studies in 2007, indicate that
there is significant commercial
“There is $9
billion worth of
revenue to be
extracted over
a 20−year mine
life. We aim
to demonstrate
the project’s net
present value
will be superior
to many opera-
tions across the
globe. Turning
$9 million into
$9 billion will
be an amazing
outcome.”
value to be identified from our
Nolans Project. By the end of
2007, we will have spent about
$9 million on exploration and
metallurgical testwork. Through
our feasibility studies, I expect
to demonstrate that there is $9
billion dollars worth of revenue
to be extracted over a 20 years
mine life. We aim to demon-
strate the project’s net present
value will be superior to many
operations across the globe.
Turning $9 million into $9 Bil-
lion will be an amazing out-
come. In addition, we will be
looking for other growth oppor-
tunities beyond Nolans so that
we grow the company beyond
the rare earth story, while in-
creasing our rare earth produc-
tion platform.
56 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W M onarch G old M ining C ompany L imited • A S X /M O N

Veteran Australian miners gear

up to start pouring gold
Monarch Gold Mining Company is an independent Australian resources com-
pany with a vision to become a substantial mid-tier gold production and explora-
tion company.

Monarch Gold Mining

is on the cusp of be-
coming a significant
producer. Michael
Kiernan, executive
chairman, tells us how
his experienced min-
ing team started their
new company on the
fast track to pouring
gold. (Interview of
August 24, 2006.)
WSR: Bring us up to speed on the company’s assets and operations.

MON: Monarch Gold Mining Company Limited is a newly formed group with a collection of directors and senior
management that worked with me in previous companies. We simply formed the company to acquire several
gold assets within western Australia to build a mid−tier gold mining producer. Our first target is to produce some
500,000 ounces of gold annually. To that end, we have acquired two assets from smaller companies, and we are in
the process of proving up a significant amount of ounces; once we’ve done that, we anticipate we will start produc-
ing from one area, north of Kalgoorlie, in the first half of 2007, and we will start producing from the second area in
the second half of 2007, 500 kilometers east of a port called Geraldton. These two production centers will produce
175,000 ounces annually; we are in the process of discussing with other groups to merge or make acquisitions,
so we will ultimately reach our goal in the next 36 months of being a 500,000 ounce gold producer from several
locations within western Australia.

WSR: Expand on some of the main plays; also, educate us in terms of the infrastructure in place within these re-
gions.

MON: There are many junior gold explorers and producers that don’t have the access to capital to adequately carry
out exploration. To that end, our first acquisition was a location 100 kilometers north of Kalgoorlie, the gold mining
center of western Australia. It’s a place called Davyhurst, which has 2,000 square kilometers of tenements. It has his-
torically been held by groups of smaller producers/smaller explorers. It is the first time all these tenements have come
together. We are now the largest landholder north of Kalgoorlie. We have a processing plant, a 1.2 million ton per
annum processing plant, full accommodations for 100 people on site, administrative centers, the replacement value
of the infrastructure, some AUS$50 million to AUS$60 million. We have all our infrastructure in place and that’s on
care and maintenance. We are commencing to undertake region exploration, taking in a view of the 2,600 kilome-
ters we have identified, some 30 previously untested drill sites. In the southern part of our tenements, we did some
preliminary drilling and got outstanding results in the area. We’ve currently got in the ground 2.4 million ounces
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 57

A S X /M O N • M onarch G old M ining C ompany L imited C E O I N T ER V I E W

of gold; we would like to build that scratch, and it is now in the ASX MON: It’s still in the early days,
up so that we’ve got a three to four- S&P 200, the Top 200 companies very preliminary. We have accumu-
year continuous production horizon in Australia. Prior to us moving, it lated large land tracks of tenements. “Our first target is
in front of us. At that time, we will was capitalized at some AUS$700 We are now exploring and carry-
start producing; we will commence million or AUS$800 million. It is a ing out drilling in those areas. It’s an to produce some
the processing plant, and we will diverse miner with operations in educational process. We basically
conduct exploration into the future manganese, nickel, chrome, iron launched Monarch’s at the recent 500,000 ounces
to keep our three to four−year hori-
zon. We anticipate spending in the
ore, copper, and zinc. We could
see there was going to be a strong
Diggers & Dealers conference in
Kalgoorlie, and the investment com-
of gold annually.
neighborhood of AUS$10 million demand for gold. We recognized a munity in Australia is becoming To that end, we
to AUS$12 million exploring in the couple of years ago that the Chinese aware of quite an aggressive gold
Davyhurst area over the next 12 to are starting to buy gold. Historically, explorer and ultimately producer. have acquired
15 months. It’s a significant explo- the Chinese have been purchasing We will be doing road shows in
ration, which will focus on deeper one−third or one−quarter of what the United Kingdom. We intend to two assets from
drilling. Most of the drilling by the the other Asians do. We consider list Monarch on the AIM market in
juniors has not been done below 50 that with the growing middle class London. My role over the next six smaller compa-
meters. Historically, one of the large in affluence and wealth in China, months is to introduce and inform the
mining companies had a deeper there is a significant demand pool investing marketplace that Monarch nies, and we are
mine at about 800 meters; it was
underground. We will be focusing
for gold. It’s now being translated
into a very strong gold price. Each
is in the early stages of its growth.
If one looks at why investors would
in the process of
our drilling from 80 meters down to year, over 30 million people in In- become involved with Monarch proving up a sig-
150 meters, and the early indica- dia are classified as millionaires, − once we start production, in the
tion is that there is quite a substan- and their disposable income is first six months of next year, we will nificant amount
tial volume of gold deposits in those growing. When we all decided we be producing at 100,000 ounces,
areas. would like to step down from Con- which will contribute to AUS$20 mil- of ounces; once
solidated Minerals and hand it over lion after-tax profit, which equates to
WSR: Tell us about the present to a more youthful management to AUS$0.07 or AUS$0.08 earnings we’ve done that,
Board and management team. drive the company into the future, per share. Once the group gets into
we then focused on gold. Gold production, historically, the value we anticipate
MON: Previously, our management
team was at another Australian-di-
mining is very simple; there is no
marketing. With all those previous
curve shows this is the lowest that
the share price would be, and as
we will start
versified producer, Consolidated commodities, there is a demand for we move up the development curve producing.”
Minerals. We started Consolidated significant marketing effort. Gold is and production curve, there will be
Minerals as a group some eight to sold through a central bank here. strong capital growth in our stock
nine years ago. I was the MD. Colin It focuses on exploration and pro- within the next 12 months. For any
Smith, our Chairman, is an astute duction, which we are comfortable investor considering investment,
mining engineer. Allan Quadrio, with. people always like to get in on the
one of our Directors, was the Op- ground floor. There are two types of
erations Director for Consolidated WSR: Does the investment commu- business, one that will sit and watch
Minerals. We also had David Ma- nity fully understand this company and see it go up the value curve,
coboy, our Finance Director. We and the direction it’s going in? and the second group will be people
built Consolidated Minerals from that will invest in our stock and see a
healthy capital return as we did with
Consolidated Minerals some eight
years ago. There were people that
SUMMARY: Monarch Gold Mining (ASX: MON) has established a sat on the sidelines and watched us
large land position north of Australia’s historic Kalgoorlie gold district.
go from AUS$0.20 share to AUS$4
The company is on the verge of producing from the area, which had share. The Monarch shares at the
previously been held by a fragmented assortment of small players. Over
moment are between AUS$0.24
AUS$50 million in infrastructure, including a 1.2 million-ton processing
and AUS$0.25. Once we hit pro-
plant, is in place. Experienced management team expects to spend an- duction, particularly when we start
other AUS$12 million or more drilling below the shallow historical works; producing 500,000 ounces, which
early indications of “quite a substantial” resource have been good. A
indicates a AUS$100 million profit
second project should come online in late 2007, bringing total production
after-tax, or AUS$0.50 a share earn-
to around 175,000 ounces a year. Middle-term goal is to pursue M&A ings. As we bring it into production
in order to bring annual production to 500,000 ounces by mid-2009. and increase our production profile,
the capital growth in our stock would
www.monarchgold.com.au Phone: 011-61-8-9481-6422 be quite significant.
58 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W R ange R esources Ltd. • A S X /R R S

Geopolitical misconceptions
cloud 5 billion-BOE potential
The company’s principal activity is directed toward finding and delineating natural
resources in the oil, gas and mineral sectors in Puntland, Somalia.
WSR: Tell us about the Puntland PSAs,
and what this means for the company
going forward.

RRS: In January, the company had two

PSAs for its two onshore basins in north-
ern Somalia, unanimously approved by
the Puntland Parliament and Range in
Range Resources is
conjunction with its joint venture part-
developing the
ner, Canmex Minerals Corporation out
geological wealth of
Somalia’s autonomous of Canada, on the TSX−V, and have
Puntland region, now committed to a ASX$45 million dol-
starting with some lar farm−in agreement with the Puntland
potentially huge oil government, which will see a minimum
fields. Executive Director of four wells drilled on the two basins,
Peter Landau tells us a very significant step in Puntland be-
it’s a long way from cause those basins have the potential
Puntland to Mogadishu. to host up to five billion barrels as their
(Interview of February analysis to the Yemen basin directly to
28, 2007.)
the North; for Puntland itself, it means
the first significant exploration activ-
ity in Puntland since Conoco left in the
early ‘90s.

WSR: Expand on this play as well as

the balance of the company’s asset and
interest portfolio.

RRS: Range is committed to Puntland. It has access as part of the contract at work with the Puntland
government, all mineral rights in Puntland, and the two main onshore basins in addition to the offshore
rights to Puntland, which is an area of 200,000 square kilometers. Range’s focus is the JV on the on-
shore basins, but there are also some significant lead zinc provinces with delays in the north, which we
will be exploring and then also developing the offshore assets, while nowhere near as advanced as
the onshore, given that over USD$150 million dollars was spent on the onshore oil and gas exploration
efforts in the ‘80s and early ‘90s. We will be looking at commencing a two-day seismic program on
the offshore and looking for further joint venture partners.

WSR: Educate us in terms of the infrastructure in place within this region.

RRS: For us, it has always been difficult. Not only with Somalia but with the chaos in Mogadishu. What
is important to understand is the Puntland is the true horn of Africa. The northeastern part of Somalia and
Somalia are segregated strongly on tribal grounds. A lot of the warlord problems in the south have not
extended into Puntland, which has been stable for at least the last five to seven years; the recent prob-
lems with the Islamic courts in southern Somalia were restricted to southern Somalia. It didn’t move into
either Puntland or Somalia lands to the west of Puntland. Puntland has been an autonomous state within
Somalia that had democratic elections. With their most recent runs in January 2005, they had their own
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 59

A S X /R R S • R ange R esources Ltd. C E O I N T ER V I E W

constitution; infrastructure−wise, amount of seismic and interpre-

they have at least a democratic
process and parliamentary in-
frastructure in place to service
what we are doing with our ex-
ploration efforts.
WSR: Tell us about the present
board and management team.
RRS: We have a mixed board.
Our Chairman, Sir Sam Jonah,
is quite well known around the
world. He was Chairman of An-
gloGold Ashanti, a New York
Stock Exchange−listed compa-
ny, and has been involved with
the Anglo−American Group for
a long time. Sam is involved
with a number of African coun-
tries, including Ghana, but he
also advises to the presidents
of Nigeria − Mbeki of South
Africa as well as our own Presi-
dent Hersi of Puntland. Sir Sam
has an active interest. Michael
Povey, our Managing Director,
has 30 years’ experience in
the mining industries as a min-
ing engineer and has worked
throughout Africa and North
America and Australia with
majors Rio and AngloGold.
Another member of our board,
Mr. Liban Bogor, is considered
our Puntland representative.
Liban’s family is originally from
the Puntland region. He is a
Canadian−born, educated
citizen, but he is out−linking to
Puntland and has strong links
not only with the President, but
with the members of Cabinet
too. Liban enables us to deal
directly with all levels of gov-
ernment. We also have Marcus
Edwards-Jones, a member of a
“The size of the play, given the work
undertaken by Conoco and others in
the ‘80s and ‘90s, is not disputed.
No one disputes that we have basins,
which are totally analogous to Yemen,
and they have the potential to have on-
shore the size of five billion barrels.”
boutique capital−raising firm.
WSR: Does the investment com-
munity understand this company
and the direction it’s going in?
RRS: We never wanted to take
this overseas until we had se-
cured the PSAs and a joint ven-
ture partner. However, within
the Australian investment com-
munity, the Puntland play is
well understood. What is not
well understood is the political
situation in northern Somalia;
the ‘higher risk, higher reward’
scenario is one we aim to ad-
dress in the coming months. The
size of the play, given the work
undertaken by Conoco and oth-
ers in the ‘80s and ‘90s, is not
disputed. No one disputes that
we have basins which are to-
tally analogous to Yemen, and
they have the potential to have
onshore the size of five billion
barrels, which make them some
of the biggest onshore basins
in the world if we prove them
up. What I guess everyone will
always track against Range is
Somalia’s political risk, and it is
only in the last six months that
we have been able to demon-
strate that the transitional fed-
eral government (TFG), and the
Puntland government are com-
mitted to range in its joint ven-
ture partners. Hopefully, now
with the PSA in that joint ven-
ture proceeding, we think the
investment community will start
to get a better understanding of
what we are trying to achieve.
WSR: Where do you see Range
Resources two or three years
from now?
RRS: For us, short−term is 6−12
months and the biggest issue
for the Puntland government,
its people, and for ourselves is
that there has to be activity on
the ground because that is go-
ing to generate wealth creation
for both the country and for our
shareholders. Our short−term
vision is that we have to get the
holes into the ground. Our joint
venture partner, Canmex, is cur-
rently processing a significant
tation data, and hopefully, we
will see the manganese drilling
this year because drilling the
holes is the only way we are go-
ing to establish the oil and gas
potential, and to sell short−term
manganese is to drill successful
onshore wells in the region.
WSR: In closing, why should
investors consider Range Re-
sources as a long−term invest-
ment opportunity?
RRS: We are headed with a
current capital raising institu-
tional funds out of both London
and New York; we need to work
on a capital structure which
caps the company at USD$150
million. For us, we see it as a
long−term investment for share-
holders. You are looking at a
shareholder being exposed to a
company with a live market cap,
but has the potential to have an
attributable billion barrels of oil
attributable to it. The period of
time is significant; remember
that it is northern Somalia, and
that there is an education pro-
cess regarding political efficacy
and stability going on; however,
for someone who wants expo-
sure to an upside that is unpar-
alleled with a lot of other stocks
given that the basins are there,
and it is simply approving the
sales to establish that size, we
believe that from a long-term
shareholder’s perspective, 85%
risk, the multiples and the returns
on the investment at the current
market capitalization of the
company is extremely impres-
sive and significant.

SUMMARY: Range Resources (ASX: RRS) is uncovering the natural wealth of Somalia’s autonomous Puntland region. In cooperation with its joint
venture partner Canmex Resources, the company recently agreed to drill at least four onshore oil wells within Puntland; the basins in question could
contain 5 billion BOE based on comparisons to nearby Yemen. Conoco historically spent US$150 million to explore the area, which management
characterizes as politically stable with full governmental apparatus in place. Virtually independent of Mogadishu and the Islamic courts to the south,
the area has its own Parliament and constitution. Further out, the company essentially has access to all the region’s mineral rights, including less ad-
vanced offshore oil projects and some potentially significant lead and zinc opportunities.

www.homelandpreciousmetals.com Phone: 604-922-6663

60 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W D iamond C orp plc • A I M /D C P

Mining start looms for start-up

South African diamond play
DiamondCorp plc is a United Kingdom-based diamond producer. The company’s
Lace project is located 20 kilometers from Kroonstad in the Free State Province of
South Africa.
DiamondCorp is on the WSR: Tell us about the recent AIM listing, and what it means for the
verge of mining South company going forward.
Africa’s biggest non-De
Beers kimberlite. CEO DCP: For the last two years, DiamondCorp was a private company;
Paul R. Loudon tells us
over that time, we raised 9.5 million pounds of private money, largely
that while last-minute
from institutions to develop the Lace Mine in South Africa. We had
delays may emerge,
given those institutions an indication that, at some point, we would
his company should be
throwing off significant be taking the company public. We chose to take it public on the AIM
cash by June. (Interview market in February 2007, and we raised another 2 million pounds of
of March 20, 2007.) extra working capital on the way. This gave all of their shareholders
a public quotation for our stock; the London AIM market is one where
there are a lot of diamond production companies listed.

WSR: Expand on the company’s project and property portfolio.

DCP: We chose or looked at lots of diamond projects to acquire

over the last few years, and we settled on buying the Lace project in
South Africa. The Lace Mine is the largest diamondiferrous kimberlite
in South Africa outside of the De Beers Group, and we chose that project as one we wanted to acquire because of
its long−life mine potential and its ability to throw out a lot of cash over its life. We worked for 12 months to put to-
gether a Black Economic Empowerment Group with some of the leading South African black groups in order to go
and acquire that project, and that is what we did. We were successful in that acquisition. The Lace Mine contains 14
million carats. It has been drilled off to a depth of 900 meters, and we know we have a 25−year mine life there.

WSR: Educate us in terms of the infrastructure in place as well as the political climate within this region as it relates
to resource development, production, and so on.

DCP: South Africa is a highly developed mining country. It has many mineral resources. The world knows about its
gold capabilities, but it also has huge coal reserves and diamonds. Over a long period of time, you have a highly
sophisticated and developed mining infrastructure. As a diamond miner, we chose South Africa as our base largely
because of that, because of the infrastructure, because in diamonds, unlike many other commodities, they are so
rare to come across a production pipe; you can’t be too choosy about the countries in which you have to go and
operate. Usually, if you are not dealing in South Africa, you are looking at the Democratic Republic of the Congo
or Angola. Political risk as well as operating costs and risks get increasingly higher as you go throughout northern
Africa. South Africa is an easy country in which to operate. From a political risk point of view, we believe that
South Africa as a country is going through a strong growth phase; I have worked and operated mining operations
in South Africa over many years. Both the climate and the economy are slowly improving. The government has
challenges there in terms of creating new jobs. You can slowly see the livelihood of the average worker is getting
better. We find it a safe climate in which to operate. Compared to some of those other countries in southern Africa
where you have to go to find diamonds, South Africa is better and safer than any of them.

WSR: Will the company look to strategic alliances, partnerships, or joint ventures moving forward?

DCP: We have two strategic partners in South Africa, and we do that to comply with the black economic empower-
ment legislation down there. Our black partner is Shanduka Resources, led by Mr. Cyril Ramaphosa, very well−known
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 61

A I M /D C P • D iamond C orp plc C E O I N T ER V I E W

in the international community and mondCorp two to three years from

a former General Secretary of the
ANC. Our other partner is Sphere
Holdings, less well−known outside
of South Africa, but is a diversified
investment and fund management
group put together by some bright,
young, fund managers who came
out of Merrill Lynch. Both of those
partners are backed by big banks
– Shanduka (Cyril Ramaphosa’s
group) is backed by Standard Bank
and Investec; Sphere is backed by
Nedbank and the Rand Merchant
Bank. They are very well−funded
groups; they are our strategic part-
ners within South Africa, and are
paying a combined 26% equity in
our project.
WSR: Tell us about the present
board and management team.
DCP: I myself have over 25 years in
the resources sector, both in corpo-
rate financing and management of
mining companies. Our Chairman
is Euan Worthington, the former
Chief Mining Analyst for SG War-
burg in London and is well-known
and experienced in the London
mining sector. A key person on the
ground in South Africa is Alistair
Holmes, our Operations Director.
Before joining us, Alistair was Op-
erations Director at Sonop Delwray,
the largest private diamond mining
group in South Africa; as a private
company under Alistair’s control,
they move over 250 million tons a
year. Alongside him is Gerry Rob-
bertze, formerly Anglovaal’s Chief
Mining Engineer in South Africa.
Gerry has put mines into operation
all over southern Africa. We have
a very experienced operational
Board, and that is what this compa-
“We will be producing in excess of now?
400,000 carats of diamonds a year. DCP: By that time, we will have
completed Phase I of our mining
That will give us revenues of USD$50 operations, an initial re-treatment
of 3.6 million tons of tailings, and
million within three years, and we ex- we will be re-commencing opera-
pect gross margins of 50% on that rev- tions from the underground mine
at Lace; that mine will run for the
enue. We would be looking at cash flow next 20 or so years. We will be
treating 1.6 million tons a year of
in excess of USD$25 million a year.” kimberlite material, and we will be
producing in excess of 400,000
carats of diamonds a year. That
will give us revenues of USD$50
million within three years, and
we expect gross margins of 50%
on that revenue. We would be
looking at cash flow in excess of
USD$25 million a year.
WSR: In closing, why should in-
vestors consider DiamondCorp
as a long-term investment oppor-
tunity?
ny is about. We are more of a min- to sit flat or be discounted to their DCP: DiamondCorp provides
ing company than an exploration true worth because most investors investors with a pure entry into
company. We are focused on proj- would expect companies to en- the diamond market; diamond is
ects that can generate significant counter some startup or operation- a commodity where the funda-
amounts of cash for the company. al problems, typical in the mining mentals are very strong. Even on
Moving forward, our strategy is industry. Unfortunately, mining is projections of modest economic
how we harness that cash flow to one of those sectors where if some- growth, the world will be consum-
grow the company and maximize thing can go wrong, it does go ing more diamonds than mines are
shareholder value. wrong. Therefore, until such time producing. The world is in a short
as we demonstrate to the market at the moment, and that short sup-
WSR: Does the investment commu- that we have de−risked our startup ply is expected to continue. Dia-
nity understand this company and (should be by the end of May or mondCorp is focused only on dia-
the direction it’s going in? beginning of June), and start hitting monds. It is a diamond producer,
our targets in terms of cash flow, and it has a long−term asset, which
DCP: We quietly debuted on the which we expect to do by the end is highly cash−generative. The
AIM market last month, and we are of June, at that stage we would ex- company is managed by a man-
in the quiet zone at the moment, pect our stock to get a significant agement team that will take that
prior to going into production. His- re−raising. cash flow and grow the company,
torically prior to production, stock focused on increasing shareholder
prices for mining companies tend WSR: Where do you see Dia- value.

SUMMARY: DiamondCorp (AIM: DCP) is on the verge of commercializing the biggest diamond-bearing kimberlite in South Africa outside the
De Beers sphere of influence. Project contains about 14 million carats, which should support 25 years of mining at production levels of 400,000
carats per year. At a 50% margin, this should translate into annual cash flow of USD$25 million. Mining should be underway by early June. The
company has successfully created a Black Economic Empowerment Group with well-funded and well-connected local interests. An experienced
management team notes that while diamonds are in short supply, diamond-producing countries beyond South Africa tend to represent elevated
political risk. Strategy is to use free cash flow to pursue additional growth opportunities.

www.diamondcorp.plc.uk Phone: +44-0-20-7256-2651

62 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W C andorado O perating C ompany Ltd. • T S X /C D O

Targeting big porphyries on a

1.3 million-acre territory
Candorado is one of British Columbia’s largest mineral rights land holders with
copper and gold porphyry targets within the Quesnel Trough, the Serb Creek
molybdenum deposit, the Eldorado property next to BC Metal’s Red Chris copper
porphyry deposit and the Pitt Island VMS prospect.
WSR: Tell us about the company’s business model; also, bring us up to date on the asset portfolio.

CDO: Candorado is a company which has traded on the Toronto Stock Exchange for the last 15 years. Since I took
over the company three years ago, Candorado has been on an aggressive approach, acquiring properties in both
British Columbia and Ontario. Right now, we have a VMS property and a massive sulfite property in Coastal BC.
We have a large property next to the Red Chris Mine Development in northern British Columbia, and molybdenum
deposits at Serb Creek, a historic resource. Our main focus is on an area in central British Columbia called the Ques-
nel Trough, which is home to several producing and past-producing copper mines such as Highland Valley Copper,
Candorado has built the
Mount Polly, and The Kemess Mine in the northern part of the Trough. Candorado has taken a land position in excess
biggest mineral acreage
of 1.3 million acres by staking, optioning, and joint venturing, and we’re planning on an aggressive exploration ap-
position in British
Columbia’s history. proach to unlock the mineral value on these properties.
CEO Rene Bernard tells
us how he’s taking an WSR: In terms of each of these properties, tell us where you are as far as sampling studies, drilling, and so on.
intelligent and aggres-
sive approach to CDO: Candorado undertook large-scale airborne surveys in 2006. As we go through the interpretation of these
searching 1.3 million surveys, several key areas are highlighted here, showing a signature of the potassium high and a potassium and
acres for gold/copper thorium low and also the right magnetic features. Why is this important? In the discovery of copper porphyries, potas-
porphyry targets. sium is important because copper, gold, and molybdenum have been brought up by hot springs in the past, and they
(Interview of March 2,
carry the potassium with it. The potassium and thorium ratio will allow you to differentiate the natural occurrence of
2007.)
potassium and also the alteration. The altered rock is the one we are interested in. These surveys have been helpful
in pinpointing areas of interest for Candorado, which will be followed by ground exploration, induced polarization,
regional geochem programs, and ultimately, by drilling.

WSR: The company has announced a drilling program commencing in April.

CDO: Yes. We will be drilling in southern British Columbia starting in the first or second week of April. This is
planned as a 26-hole drill program, testing a known copper and gold porphyry system. This particular property is
under option from Bearclaw Capital Corporation, and it has historic drill holes with the best hole so far creating 200
meters of 0.3 copper and 0.3 gold. This hole was just part of a seven-hole drill program. The property is fairly large.
Induced polarization (IP) surveys have been conducted on the property, and the company is planning to test a better

target in this 26-hole drill program,
again, starting in the second week
of April.
WSR: Does Candorado have the
financing in place to fully develop
these plays?
CDO: Candorado did three financ-
ings in January and has a cash po-
sition in excess of CDN$1.5 million.
As the market allows and as we
carry on to these programs, Can-
dorado will look at the markets to
raise more funds as needed, but we
are confident that with no debts on
the book, we will be able to get this
substantial program started on our
properties and carry this through-
out both 2006 and 2007.
WSR: Give us an understanding of
the level of infrastructure in place.
CDO: The infrastructure couldn’t
be better. We’re in an area that en-
ables us to work 12 months a year.
We are not restricted by the need
for using helicopters or by weather
restrictions in more northerly and re-
mote areas. Most of our properties
lie within kilometers of main high-
ways with a pine beetle infestation
that has plagued British Columbia
“The government of British Columbia is supportive of our ef-
forts in assuring that even with the pine beetle infestation, that
enough resources will be made available to explore these ar-
eas and maybe down the road replace some of the shops lost
in the forestry industry.”
T S X /C D O • C andorado O perating C ompany Ltd. C E O I N T ER V I E W
over the last three or four years.
Thousands of kilometers of new log-
ging roads have been driven into
areas where we hold our mineral
rights. With the pine beetles, it’s a
race against the clock to salvage as
much of the timber as possible. This
couldn’t have been better because
if we deal in an area of heavy for-
estry, it is hard to see through. To
the logging, the ground has been
disturbed, several new showings
have been unearthed, and from an
infrastructure point, it couldn’t be
better. We are also looking forward
to development of any deposits that
Candorado might define over the
next few years. We will have an ex-
cellent infrastructure of power and
communication. Everything is in
place as you would have expected
on the outside of a city.
WSR: Do you have sufficient ac-
cess to field equipment and skilled
field personnel?
CDO: We’ve taken steps to assure
ourselves that we have the drilling
contractor available to us for the
whole year. We are in discussions
with several geological contractors
who have assured us they will have
the geologists and the resources
A WALL STREET REPORTER PUBLICATION • Gold rush! • 63
available that Candorado will need
to conduct a meaningful program
in 2007. When I say meaningful
program, that’s defined as planned
large-scale airborne programs,
gamma-ray total field magnetic
programs over three large blocks of
Candorado, and regional geochem
programs. Again, it is important to
understand that the government of
British Columbia is supportive of our
efforts in assuring that even with the
pine beetle infestation, that enough
resources will be made available
to explore these areas and maybe
down the road replace some of the
shops lost in the forestry industry to
new shops in newly discovered min-
ing projects.
WSR: Update us on the political
environment within British Colum-
bia, which hasn’t always been fa-
vorable towards mining activity.
CDO: You like to see a government
which supports mining. Over the last
two years, the government of British
Columbia has been extremely sup-
portive in helping two new resource
companies in many ways − finan-
cially, through supporting grants
and joint exploration programs,
as well as on the public perception
side, being a very strong supporter
of the mining industry and helping
in the discovery of new deposits.
WSR: As the company moves for-
ward with its drilling program, will
you look to enter into additional
joint ventures or partnerships?
CDO: In the last two months, we
have entered into partnerships with
two companies. One is Georgia
Ventures on our molybdenum de-
posit called the Serb Creek, which
is located near Smithers, British Co-
lumbia. Georgia Ventures has tak-
en a 60% interest and will spend
significant funds, freeing up capital
for Candorado to apply to other
properties the company owns. We
also recently announced an option
of property to Gravity West. That
property is next to the Red Chris
Mine Development, and again, it’s
the same case. Gravity West will
apply their own resources to work
these properties. As Candorado
goes forward and as we define
more targets from our large air-
borne and regional programs, we
will look for other junior explora-
tion companies to joint venture with
to allow us to move as fast as we
can in exploring the entire property
package.
WSR: For potential investors who
are looking for companies in this
sector, what should they under-
stand about Candorado that dis-
tinguishes the company? What
separates you from some of the
other players?
64 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W C andorado O perating C ompany Ltd. • T S X /C D O

CDO: Candorado has taken an

“The average porphyry in British Columbia, which is eco-
aggressive approach in British Co-
lumbia. We are different from other nomically viable, is a 300 million to 400 million ton resource.
companies in that we have chosen
to stay within Canada and that we There are several of these deposits existing in the area Can-
see the tremendous potential for
new discoveries. In British Columbia, dorado is exploring. We also have several gold targets.”
over the last 10 to 15 years, very
little has happened on the explora- company experience includes be- months, Candorado has made the system or a sediment gold deposit
tion side. Again, if you look back at ing a Director as well as President aggressive move in acquiring the on our properties. We need to be
the history of British Columbia with and CEO of several companies. I land position it now holds. Further- intelligent about the way we go
its numerous mines operating in ar- also have much experience in pri- more, in going back to the political about it. We fully understand that
eas where Candorado has taken vate industries like real estate and environment in Canada and what’s a large land package needs large-
a land position, chances are very manufacturing. On the geological happening there, the market is only scale exploration programs. We’re
good. We have a political environ- side, Candorado recently put to- now starting to understand the po- going to use extensive airborne
ment that supports the exploration gether a high−quality geological litical stability when it comes down gamma-ray total field magnetic air-
activities Candorado is undertak- consulting committee, which assures to not only finding mineral depos- borne surveys and regional ground
ing, and Candorado has acquired us that we can do justice to both the its, but also the ability to develop geochem systems to narrow down
a land position of 1.3 million acres. land position and our exploration and ultimately own it, is such that the target, which will then be fol-
Never in the history of British Co- targets. The gentlemen who have a country like Canada will pro- lowed up by on-ground surveys in-
lumbia has one single company agreed to join Candorado’s geo- vide that security. Candorado is cluding induced polarization, more
owned this amount of minerals, and logical advisory committee are Dr. in the process of matching up the geochem sampling, and basal till
Candorado is going to be aggres- Nick Carter, Dr. Vittorio Preto, and necessary funds and designing the samplings − whatever it takes to de-
sive moving forward, not only to be Dr. Rodney Kirkham, all of whom programs necessary to unlock the fine drill targets for our programs.
the landholder, but also be one of are the foremost copper porphyry value on a land package. We also The company’s objective is to also
the most active exploration compa- experts in this particular area within recently had several discoveries in have enough money available and
nies in British Columbia. British Columbia, and the Quesnel the area−Serengeti in the northern to raise enough money in a timely
Trough, in which the company is ac- part of the Quesnel Trough; GWR fashion to execute this business
WSR: Tell us about your Board and tive. All of them have worked with Resources, in the same area we’re plan.
senior executive team. either the Geological Survey of operating, had some very interest-
Canada in a research capacity or ing holes as well; Westar Resourc- WSR: In closing, why do you be-
CDO: All of Candorado’s directors with the British Columbia Ministry es, further down in the southern lieve Candorado represents a good
have both past and present pub- of Mines and are intimately familiar part of the Quesnel Trough, has long-term investment opportunity?
lic company experience. Mr. Kirk with the properties covered. They announced a 52-meter hole creat-
Reed is based in Calgary. He has will be providing guidance for the ing over 1 gram of gold and also CDO: We have recently seen
been with the company as a Di- company in terms of exploration ac- has some good copper numbers metal prices going up significantly
rector for several years. Mr. Reed tivities going forward. in some of their drill holes, again over historic values. Candorado is
has been Director and President of in a porphyry setting and adjacent mainly a copper and gold explora-
numerous public companies in the WSR: As the company moves from to ground Candorado holds to the tion company. Porphyries are the
past. Mr. Mark Naylor is currently a large mineral tenure holder into south, the west, and the north. targets that are large in size. The
the chairman of Kootenay Energy. an aggressive exploration compa- average porphyry in British Colum-
He has been a Director of Candora- ny, do you feel that this transition is WSR: Tell us the company’s major bia, which is economically−viable,
do for the last two-and-a-half years, not yet fully understood by the in- strategic objectives over the next 12 is a 300−million to 400−million
a successful, Calgary-based busi- vestment community? to 18 months. ton resource. There are several of
nessman who has been helpful in these deposits existing in the area
providing direction for the company CDO: I believe the audience has CDO: The major objective is to Candorado is exploring. We also
moving forward. My own public to appreciate that over the last 18 find a copper and gold porphyry have several gold targets, which
have the potential for hundreds
of thousands or even millions of
SUMMARY: Candorado (TSX: CDO) has assembled 1.3 million acres of mineral properties in British Co- ounces of gold. Candorado is in a
lumbia as well as Ontario. Initial focus is on the Quesnel trough, a prolific copper and gold and copper politically stable environment and
porphyry region. Historic drilling on the company’s lead property demonstrated values as high as 0.3 in both is very well-financed. Candorado
gold and copper; a new 26-hole drill program is on the horizon. Aggressive airborne survey, geomagnetic will go forward in an aggressive
and geochemical work is planned. Given a recent insect infestation in the area, the provincial government manner, and over the next 12 to
is very supportive of mineral development as a replacement for lost logging revenue. The company has 18 months, we hope that we will
also farmed out various projects to free up capital, including a significant molybdenum deposit. Cash re- start to define porphyry deposits
serve is over CDN$1.5 million and has no debt. www.candorado.com Phone: 250-979-2595 or a gold deposit and get into the
definition drilling.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 65

T S X /D M • D uluth M etals L imited C E O I N T ER V I E W

High grades add sizzle to

potentially big base metals play
Duluth Metals Limited was founded to acquire, explore and develop copper,
nickel and platinum group metal (PGM) deposits in North America. Duluth’s prin-
cipal property is the Maturi Extension Property located within the rapidly emerg-
ing Duluth Complex mining camp in northeastern Minnesota.

Duluth Metals could

be looking at a 200
million ton ore body
on its Minnesota
property. CEO Rick
Sandri tells us how
the project could
produce copper,
nickel, cobalt, PGM
and even gold and
silver over the long
term. (Interview of
October 13, 2006.)

WSR: Start by giving us some background on the company and its operations.

DM: Duluth Metals is a copper, nickel and platinum group metal advanced-stage exploration company in North
America. We are not an early stage exploration company, primarily because of the fact we have a very ad-
vanced stage property in Duluth Complex in Minnesota. We have over 21 holes in the property. Of the 21, all
of them have hit mineralization. The Toronto Stock Exchange looked at our data and determined that we were
advanced in our development program. In fact, as we go in to our fall and spring drilling program, we are going
to be drilling 35 new holes over 100,000 feet in the property. We hope to take our property to resource clas-
sification, which is one of the reasons we are considered an advanced-stage company.

WSR: The company was essentially formed to manage the Minnesota assets of Wallbridge mining. Is that cor-
rect?

DM: Wallbridge was spinning off various assets, including its Minnesota assets into subsidiary companies.
100% of the U.S. assets in Minnesota spun out into Duluth Metals. We became a brand new company internally
on November 15, 2005, and we’ve been trading on the Toronto Stock Exchange for three days.

WSR: Expand on the Maturi Extension Property and bring us up to speed on where the company is in terms of
sampling, studies, drilling, and so on.
66 • Gold rush! • A WALL STREET REPORTER PUBLICATION
C E O I N T ER V I E W D uluth M etals L imited • T S X /D M
DM: We have a series of historic
holes on the Maturi Extension
Property, in the northern portion of
Minnesota in the Duluth Complex.
It is adjacent to Franconia’s Maturi
property; in fact, they are our imme-
diate neighbor, and the extension
goes from west to east, where we
are 1,500 feet in depth on the west
before we hit mineralization; on the
east, we are 3,500 feet. Our prop-
erty extends 5 kilometers in length
by 1.5 kilometers in width. Historic
drilling on the property was done
by Inco Limited, the Duval Copper
Corporation, Kennecott Copper
Corporation, and U.S. Steel Corpo-
ration. Last spring, we put six holes
in the property as well. All 21 holes
intercepted what would be classi-
fied as ore grade mineralization;
this spring, we will complete our
next round of drilling.
WSR: What level of infrastructure
is in place at the Duluth Complex?
DM: The Duluth Complex abuts
against the famous iron ranges of
Minnesota, which still produces
80% of the iron consumed in the
United States. With that, we have
phenomenal mining and industrial
infrastructure in the area. There is
power, water, rail lines, road lines,
and communication systems. It’s
not like picking a spot in central
Africa or central South America.
We’re in an extremely industrial
area familiar with mining. We have
community support. We have local
support. Both area miners and the
local government have put money
forth for the development and di-
versification into other materials.
It’s hard to pick a spot better than
this at this point in time.
WSR: Will Duluth look to strategic
alliances or joint venture partner-
ships to enhance its development?
DM: We will look to whatever we
can in terms of our own property
as well as what we can assist other
people on in the area and take
advantage. For example, PolyMet
picked up the Hoyt Lakes mill from
Cleveland Cliffs. PolyMet has hand in terms of their development. market conditions. Do you attribute
stated that they may have excess All of the companies in the area this to the global demand within
capacity in their mill, and in the have been very friendly with each the sector? Also, tell us what your
future, would like to initiate some other and are working in associa- outlook is for the industry.
discussions with them to see if tion with each other even though
DM: We attributed our success
partially to the global demand in
“There are a couple of things we can the sector. Part of the pricing and
the success of the IPO was when
look at within the sector. First of all, people looked at our specific stock
and what we were doing on our
we are in three base metals -- copper, project and its advanced stage.
That’s part of the reason. The oth-
nickel, and cobalt; we’re also in pre- er part of the reason is that there
is interest in the mining sectors,
cious metals. We will be able to even- specifically in copper and nickel
mineralization. If you take a look
tually supply all six platinum group at what’s happening globally, es-
metals as well as gold and silver.” pecially in China, Pakistan, India,
and Brazil, the demand for copper
and nickel is high. In the next few
years, we believe the demand for
these metals will increase signifi-
cantly; while there will be ups and
downs in the marketplace, you will
see short-term adjustments in price.
Over the long−term, we are in a
nickel and copper deficit until and
unless new developments and new
projects come on stream. There’s
no way we can meet current global
demand and growth with the mines
presently out there.
WSR: For potential investors, tell
us what separates Duluth from the
other players in the sector.
DM: There are a couple of things
we can look at within the sector.
First of all, we are in three base
metals -- copper, nickel, and co-
balt; we’re also in precious metals.
We will be able to eventually sup-
ply all six platinum group metals
as well as gold and silver from our
property. The second thing is that
we are in the United States, con-
sidered by some to be a little bit
that excess capacity may fit some we’re on our own projects. The insecure, but more politically stable
of our requirements. Some of the camp is big enough to support all in terms of pricing and operations.
other players in the area have also of the projects in the area; in fact, But if you’re going to operate in a
spoken to us about a joint effort we believe it will be the next major big market, this is the place to be.
dealing with environmental stud- copper and nickel area to be de- We’re a strategic source of sup-
ies and permitting activity so that veloped worldwide. ply in the United States for mate-
a uniform system is applied for all rials principally imported into the
of the companies in the area. No- WSR: The company’s recent IPO United States. Not many investors
body wants to be dealt a second was very successful despite difficult are aware that the United States
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 67

T S X /D M • D uluth M etals L imited C E O I N T ER V I E W

is a net importer of nickel, cobalt

and platinum group metals. The “We anticipate some rapid growth in development of our proj-
third thing is that in the camp we’re
in, we have some of the highest ect and properties. We look to be a long-term player; we are
grades, at least from the holes we
have intercepted at this point. We not in this for a year or two or even five years, but we’re look-
are targeting a 200 million-plus
ton target for development. We ing for a 30−to−50−year deposit. We anticipate being here
anticipate that this spring, with our
current drilling program, we hope
for the long haul.”
to achieve numbers in that range,
which would make it a sizable ore very experienced management cause we have a very good idea adjust and grow commensurate
body with very high grades in the team as well. what’s there, with the eastern be- with the developments we will be
United States. We’re looking at ing the sizzle. We have some of achieving and telling the public.
30 to 50 years’ development and WSR: What are the company’s the highest grades we’ve seen in
operation, making us an attractive major objectives over the next 12 the entire camp in the eastern por- WSR: In conclusion, give potential
stock. to 18 months? tion; it is open to the north, to the investors a few of the things they
east, and to the south on that por- should bear in mind when looking
WSR: Tell us about the back- DM: We have some very simple tion of the property. We have blue at Duluth Metals.
ground and experience of the man- objectives at this point. We are tak- sky in the east, and we will have
agement team. ing the funds we have raised, and confirmed resources when the drill- DM: The things they need to keep
we’re going to be doing confirma- ing is complete in the spring on the in mind are that we are a North
DM: We are composed almost tion drilling on the western area of west. That’s our program for the American play, and that we are
exclusively of mining personnel, our property at the Maturi Exten- next 18 months. in the United States. Both of these
many of which have come from fi- sion. We are going to be taking are very important in terms of se-
nance and investment backgrounds the western area once we get the WSR: Do investors fully appreci- curity of supply and security of
as well as operations, including drilling completed, which will be ate the company’s potential? What operations. Secondly, what you’re
geology, mining and metallurgy. I in spring 2007 and moving that about your neighbors Frankonia looking at in the United States and
was formerly with Inco. We have portion of the property into quali- and Polymers, who are working in fact North America are some of
a Board member who is ex-Fal- fied resource, and then initiate our the project as well? the highest-grade materials identi-
conbridge and Teck/Cominco. scoping studies for that portion of fied in the Duluth camp. We have
We have other senior officers from the property. Hopefully, by the end DM: The investment community a very large land package that is
Wallbridge Mining Company, the of 2007, we will be initiating our has been watching what’s happen- open in a number of directions, so
company we spun off from Collec- pre-feasibility for that portion of the ing in Minnesota. I am not sure that we have a lot of blue sky with our
tively, senior management has put property. At the same time, we will people fully recognize the size and property. Our target is to achieve
an estimated 20 mines into opera- be drilling the eastern portion of potential of this camp and where 200 million tons of ore grade ma-
tion worldwide, and that is not ex- our property. Our property is split it will actually go. The actual size terial in a resource category by
perience you get in a lot of junior west and east. The eastern portion of the Duluth complex is well in ex- 2007. We anticipate some rapid
companies. Again, we’re coming of our property is, you can almost cess of 4 billion tons of mineralized growth in development of our proj-
into this with not only an advanced say, the sizzle with the steak. The material for copper and nickel that ect and properties. We look to be
exploration-stage project, but a steak is the western portion be- has been estimated by the State a long-term player; we are not in
of Minnesota. This ranks the entire this for a year or two or even five
size of the deposits up there in the years, but we’re looking for a 30
range of the third largest nickel to 50-year deposit. We anticipate
SUMMARY: Duluth Metals (TSX: DM) was founded in late 2005 to deposit in the world and the fourth being here for the long haul. This
commercialize the U.S. assets of Wallbridge Mining. Drilling on the largest pure platinum deposit in project is for the type of investor
company’s Minnesota property has demonstrated significant quan- the world. This is significant. With who likes the metal sector, likes
tities of copper, nickel and all six platinum group metals; 21 holes the development of the other play- price growth in companies be-
on the property have all hit mineralization. Ore body is estimated ers and the advancement of their cause they are achieving goals,
as being potentially 200 million tons in size at “very” high grades, projects, you’ve easily seen the likes a secure supply situation in-
supporting a mining life of 30 to 50 years, and is open in several advancement of their stock prices stead of being in central Africa or
directions. A more extensive drilling program aims to define the re- and how they have been moving somewhere else, and likes the cur-
source on a more formal basis. Local infrastructure is “phenomenal” forward with their projects. We an- rent metal combination we have.
and management has cultivated amiable relations with other com- ticipate doing the same thing. We We are a very attractive invest-
panies in the region. Goal is to move to pre-feasibility by late 2007. are going to take our project to re- ment. I believe we’re underpriced
source status, go to scoping study, at this point in the marketplace.
www.duluthmetals.com Phone: 416-369-1500 and complete a pre-feasibility. We We’re only 10% of PolyMet’s val-
651-389-9993 anticipate that our stock price will ue, and I believe we’re attractive.
68 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W K han R esources I nc . • T S X /K R I

Getting a Soviet-era Mongolian

uranium mine back online
Khan Resources is a Canadian mining company with experienced and capable
management. Khan controls advanced uranium properties in Mongolia with pro-
jected low unit costs of production.
WSR: Begin with the
recent Toronto listing
and what this means
for the company going
forward.

KRI: We were delight-

ed to become listed on
Khan Resources is the big board of the
redeveloping a Toronto Exchange. We
Soviet-era uranium have been anticipating
mine in Mongolia. this for quite some time,
CEO Martin Quick tells as have our sharehold-
us that the project ers, and we are now
offers USD$150 able to move forward
million in extant
more diligently with the development of our assets in Mongolia, particularly the Dornod Uranium mine. We are
infrastructure as
now set to put this mine back into production within the next four years or so.
well as a confirmed
40 million pounds
of uranium oxide in WSR: Expand a bit more on the company’s assets and operations.
place. (Interview of
August 18, 2006.) KRI: The Dornod mine was discovered and developed by the previous Russian owners in the ’80s, when they
developed an open−pit operation, and they also did a tremendous amount of drilling in the area. The Dornod
deposit is an advanced development project with over USD$150 million already invested by the former Russian
owners. This amount includes the construction of the town of Mardai, and the drilling of other deposits outside the
immediate Dornod area. As well as the open−pit, they developed an underground mine; although, they didn’t
produce ore from underground, they developed the deposit, and with that and the open−pit, it now constitutes a
resource of over 40.1 million pounds of U3O8, which is 43-101 compliant. There is a high potential to increase
this through further exploration and definition drilling from both surface and underground. At the moment, over
700 diamond drill holes have been drilled in the deposit, and there are approximately 20,000 meters of drifts
and cross-cuts, plus three concrete−lined shafts. That is why we believe we can put this deposit back into produc-
tion in a short period of time. We conducted late last year and earlier this year, a 20−hole confirmation drilling
program to verify the Russian data. This program not only verified the data, but in the underground deposit, the
results we achieved were 40% greater than the Russian data. Through our resource consultants Scott Wilson
Roscoe Postle Associates, we have been able to upgrade the resources from inferred to indicated, and we plan
on further drilling work this fall and into next spring. We anticipate that in early spring 2007, we will begin to
dewater the mine and take a bulk sample from the underground mineralized zone, which will be a key step in
the feasibility study process.

WSR: Educate us in terms of the infrastructure as well as the political climate within this region as it relates to
resource development, production, and so on.

KRI: Let’s look at the political situation in Mongolia. There was a fair degree of uncertainty earlier this year, after
the Mongolian parliament decided to introduce a windfall profits tax on gold and copper. They didn’t bring it
in on uranium, but it did send a negative message to the investment community. They have now come out with
revised Minerals and Tax Laws, neither of which adversely affect us. We believe the political situation in Mon-
golia has now become more settled, and that it is the right time for us to move forward with the development of
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 69

T S X /K R I • K han R esources I nc . C E O I N T ER V I E W

the project. However, we will first
be negotiating with the Mongolian
government for a stability agree-
ment or an investment contract,
as it is now called, before we start
spending large amounts of capital
on the project.
WSR: How important are strategic
alliances, joint ventures, and part-
ners for this company working in
this region?
KRI: We are confident we will be
able to go forward by ourselves or
with a joint venture partner to de-
velop the mine. We know that our
U308 product will be readily sold
in the marketplace. We have our
neighbor to the immediate south of
us, China, which is going ahead
with a huge expansion of their
nuclear power industry, and they
will need large quantities of ura-
nium from outside of China. There
is simply insufficient U308 supply
to satisfy demand from existing
and new nuclear power plants.
The spot price has gone from a
low of USD$7 a pound in 2000,
to a current price of $48.00 per
pound, and we expect it to exceed
USD$50 by the end of 2006, and
USD$60 by the end of 2007. We
are in a very buoyant uranium mar-
ket at the moment where demand
will exceed supply for many years
to come.
WSR: Tell us about the present
Board and management team.
KRI: We have an excellent man-
agement team. We have just hired
an experienced Controller, Paul
Caldwell, who has been in the
mining industry for many years.
We have as Chief Operations Of-
ficer Donald Arsenault, who has
been not only in the mining indus-
try for many years, but is also very
familiar with the uranium business.
Don and I used to work in Elliott
Lake uranium camp in Northern
Ontario. We both have extensive
experience in the uranium industry.
We have a first−class Board of Di-
rectors led by our Chairman, Mr.
Jim Doak, who has had over 25
years’ experience as an economist
and Chartered Financial Analyst.
We have a fine Director in Mur-
ray Lynch, our corporate lawyer
working out of Washington, D.C.,
and Mongolia. His knowledge
of, and connections in Mongolia,
have proven to be a major asset to
Khan. We have two well technical-
ly qualified directors, Peter Hooper
and Jean-Pierre Chauvin, who are
long−term mining executives. We
also have our former Chairman
and CEO, Ken Murton, who has
extensive experience in the invest-
ment banking business.
WSR: Does the investment com-
munity understand this company
and the direction it’s going in, par-
ticularly with regard to the recent
IPO?
KRI: No, I don’t believe they do.
Investors do not yet realize what
this company’s potential is, and
how quickly we can develop our
prized asset. We have to get out
and talk to more potential inves-
tors, fund managers, and analysts,
to let people know more about the
excellent prospects for the com-
pany. We have been held back “The Dornod mine
from going public for various inter-
nal reasons; we have now come was discovered
on−stream in a market less buoy-
ant than it was a few months ago.
and developed
I believe that our adjusted market by the previous
cap per pound, compared to sev-
eral other companies, is at a huge Russian owners
discount. Our adjusted market cap
per pound now, with our stock in the ’80s, when
price at CDN$1.20, is CDN$1.72
a pound, whereas other companies
they developed
like Laramide, Paladin, SXR, and an open-pit opera-
UR-Energy are up in the CDN$5
to CDN$7 range, and producers, tion, and they also
of course, are even higher than
that. International Uranium is over did a tremendous
CDN$10 per pound. We feel we
should be trading at least in the
amount of drilling
area of USD$3 to USD$4, rather in the area. The
than the range we are currently in.
Dornod deposit
WSR: In closing, why should inves-
tors consider Khan Resources as a is an advanced
long-term investment opportunity?
development
KRI: There are several reasons. project with over
First, we have an excellent asset.
We have a former uranium pro- USD$150 million
ducing mine; it is well−developed,
and we can bring it back into already invested.”
production in a relatively short pe-
riod of time. We have a uranium
price which continues to increase. in Mongolia. They have settled the
Supply cannot keep up with de- issues of the Minerals Law and the
mand. The spot price is sitting at Tax Law. We haven’t been caught
USD$48.00, and it is likely we will up in any windfall profits tax is-
see the price rise substantially in sues. We are confident we will be
the next few years. We have a first- able to work with the government
class management team in place to secure an investment contract
to move the company forward and (stability agreement) and work
to develop and bring the mine into with them for the long−term benefit
production. Coupled with that, we of both the company and the peo-
now have a stable political regime ple of Mongolia.

SUMMARY: Khan Resources (TSX: KRI) is developing uranium opportunities in Mongolia. The com-
pany’s lead project was mined and extensively drilled in the Soviet era and represents USD$150 mil-
lion in onsite infrastructure (including a never-used underground mine) and previous exploration work.
On a 43-101 standard, known resource represents 40.1 million pounds of U3O8 with “high” extension
potential. New drilling has confirmed and exceeded the Soviet results. Management discounts per-
ceptions of Mongolia as hostile to mining interests and notes that uranium is exempt from that country’s
windfall mining tax. China is seen as a ready market for uranium. At time of interview, next steps were
to dewater the site and conduct fresh bulk sampling. Production could be underway by mid-2010.

www.khanresources.com Phone: 416-360-3405

70 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W S kye R esources I nc . • T S X /S K R

On the fast track to becoming a

world-class nickel producer
Skye is focused on becoming a mid−tier nickel producer. Skye has assembled a
seasoned, technically sophisticated management team and acquired the rights to
an established lateritic nickel project (the Fenix project) in Guatemala.

Skye Resources has

reported a nickel
laterite reserve of 40
million tons of ore
and is now on the
fast track to starting
production in the next
few years. CEO Ian
G. Austin tells us how
his company’s next
major task is simply a
matter of upgrading
what’s already in WSR: Give us a progress report and update on the Fenix play.
place. (Interview of
March 8, 2007.) SKR: Our Fenix project is a ferro−nickel project we are developing in Guatemala. We acquired our interest in
that property from Inco in late 2004. Since then, we have been working on advancing the feasibility study, which
we completed late last year. We are getting ready to move into the financing mode for a 50 million pound ferro-
nickel producer, using conventional technology in Guatemala. Our production target date is late 2009, and we are
excited about being able to take advantage of the very strong conditions in the nickel market.

WSR: Expand on this project, and give us a feel for where you are in terms of drilling, development, resources,
and so on.

SKR: The project was originally developed by Inco in the 1970s. They built it, spent a quarter of a billion dollars
building it, and closed it down in 1980 because of high oil prices. We are refurbishing and expanding Inco’s
project, which they kept on care and maintenance since 1980. We are going to be doubling the throughput; to
avoid the problems with oil prices, we are converting all of the energy sources to coal or petroleum coke. Because
Inco operated there, there is a well−established resource, and with the completion of our feasibility study last year,
we were able to report a reserve of almost 40 million tons of 1.63% nickel, enough for a 30−year project. We
know in our resource categories that we have enough additional materials to at least double that mine life. We
have a proven project using technologies that have already worked. We have a proven resource, and our major
task is to refurbish the existing plant.

WSR: Educate us in terms of the infrastructure in place within this region.

SKR: The plant was originally built by Inco on the shores of Lake Izabal in eastern Guatemala. There is port access
to the Atlantic Coast, 100 kilometers away. We will be accessing our plant primarily by road transport, and we
are within good shipping distance to the European markets for our product. If we need to go into the Asian mar-
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 71

T S X /S K R • S kye R esources I nc . C E O I N T ER V I E W

kets, we ship it to the other side of nickel companies in the world. understanding through North Amer-
Guatemala and send it across the ica. We also have a significant in- “We were able
Pacific. The project is well−located. WSR: Tell us about the present vestor base in New York. We have
The existing plant has been well- Board and management team. a large New York hedge fund. to report a re-
maintained. The plant consists of Amber Capital is our largest inves-
a 64−megawatt power plant, a SKR: Early last year, we restruc- tor. So the story is beginning to get serve of almost
smelter, and all the associated infra- tured our Board; we have a small, out there. However, I think we still
structure. We will be upgrading the yet strong Board. We have Terry Ly- have a long way to go to convince 40 million tons
environmental controls, upgrading
the control systems, and doubling
ons on our Board, who has good,
broad business experience. We
people that we will be in production
in late 2009.
of 1.63% nickel,
the throughput. We have a real
running start on this, and because it
also have two people who used to
work at Inco and know the nickel WSR: Where do you see Skye
enough for a
is a brownfield project, the permit- business very well, Gord Bacon Resources two to three years from 30-year project.
ting process is moving along much and Bob Horn, both of whom are now?
faster than it would be if we were well-respected in the nickel indus- We know in our
starting on a greenfield site. try. The management team is also SKR: Two to three years from now,
a very seasoned team, consisting we will be in production, produc- resource catego-
WSR: What is so unique about of experienced mining personnel. I ing nickel in Guatemala from our
Skye Resources that defines and started with Inco in the 1970s, on ferro−nickel plant. We will be ries that we have
differentiates this company from its
competitors?
both the business and finance side.
Dave Huggins, my Chief Operating
ramping production up toward the
50 to 60 million pound level, which
enough addition-
SKR: There are a number of fac-
Officer, started with Inco, worked
on their engineering and metal-
we anticipate achieving in the early
years of the project life. At the same
al materials to at
tors. We are the best undeveloped lurgic side, and ended up running time, we will be undertaking our en- least double that
nickel laterite project out there that BHP’s nickel business before the gineering studies and getting ready
could get into production very merger with Billiton. We have a for construction of the second phase mine life. We
quickly, because we have near- very seasoned group of senior min- of the project, another 50−million
term production opportunities that ing people who have been able to pounds of production using leach- have a proven
put us in a greater position to take advance this project very rapidly ing technology. I also anticipate that
advantage of the current strength in since we acquired it in late 2004. by that time, we will have acquired project.”
the nickel market. We have a large We have clearly demonstrated that interests in other exploration−type
resource. We potentially expect to having this much experience and properties elsewhere in the world.
have between 200 million and 300 depth pays off. Our objective is to identify other
million tons of high−grade nickel nickel laterite areas where we can
resources. Again, that is a major WSR: Does the investment commu- apply our expertise to develop ad-
differentiating factor. We have the nity understand this company and ditional production.
potential to increase our production the direction it’s going in?
to 100 million pounds. We have WSR: In closing, why should inves-
done engineering work to explore SKR: I believe we are making tors consider Skye Resources as a
further expansion to 100 million very good headway. It wasn’t a long−term investment opportunity?
pounds of production. Again, that well−known or well−understood
will make us one of the larger junior story. We are getting a broader SKR: I believe the first and fore-
most thing is the strength of the
nickel markets. The nickel markets
SUMMARY: Skye Resources (TSX: SKR) has completed feasibility work are very strong, and by all mea-
on a substantial ferro-nickel project in Guatemala and is now moving into sures look as if they will be strong
the financing phase. Initial annual production target is in the 50 million- for many years to come. We have
pound range but could be doubled; current reserve approaches 40 mil- an excellent commodity we are pro-
lion tons of ore at 1.83% nickel and known resource could at least double ducing. We have a well−proven
mine life. Management estimates that the mineralization may represent project. It will be in production in
up to 300 million tons of ore. Inco spent about $250 million on the project the next couple of years and will
in the 1970s, building a power plant, smelter and other well-maintained be a low−cost nickel producer
infrastructure. Formerly oil-based power sources are being converted with great expansion capacity.
to run on coal or petroleum coke. Location allows relatively straight- We have a strong management
forward shipping to markets across either the Pacific or the Atlantic. team, which has already proven
its mettle. In combination, I believe
www.skyeresources.com Phone: 604-602-9500 we have an exciting investment
story.
72 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W B ra z auro R esources • T S X-V/BZO

Enormous upside surrounds

2 million-ounce gold resource
Brazauro Resources Corporation qualifies for immediate attention by virtue of two key
factors that are always essential to gold exploration success. The first is the evident
strong success record of the company’s management. The second is the evident merit
of its unique gold exploration projects in Brazil.

Brazauro Resources
has defended its claim
to a 2 million-ounce
gold project in the
Amazon with
WSR: Give us a progress report and updates on the Tocantinzinho play.
enormous
additional potential.
Senior management BZO: We are just now resuming our exploration program at Tocantinzinho after an interruption lasting more
tells us that the than a year. As you know, in January of 2006, we had the title challenge; it took us a year, but we successfully
company has put the defended ourselves and now have full title. With that behind us we started in January 2007 with a compre-
recent “temporary hensive exploration program that will include drilling on the main ore body at TZ as well as testing additional
hiccup” behind it and anomalies. Because of the title issues, we stopped the exploration more than a year ago just at a time we had
renewed exploration outlined an ore body of 650 meters strike length, 100−150 meters wide with continuous mineralization over
is underway. distances up to 280 meters with average grades of 1.5 to 2.5 grams material. We were on the verge of calcu-
(Interview of Febru- lating a reserve base, and we had to stop all of that. On top of that, just before the title issue came up, we had
ary 15, 2007.)
completed a low−flying airborne magnetic and radiometric survey over the area. We came up with airborne
geophysical anomalies that were very similar to what we were drilling into, and we realized we had some tar-
gets that needed a lot of follow−up work. Because of the legal issues at that time, we couldn’t do that. We are
extremely pleased that we have the title in hand and that we can continue following up on the earlier results.

WSR: Expand on this play as well as the balance of the company’s project and property portfolio.

BZO: We started in this area in 2004; we mainly chose the area because the Tapajos region in the Para State
of Brazil saw such a huge gold rush in the mid−1900s and had seen official gold production of 10 million
ounces by garimpeiros, very simple miners that operate with pick and shovel. Government officials as well as
the literature indicate that this number most likely will be 30 million to 50 million ounces as these operators only
report minimum amounts for obvious tax reasons. We were intrigued by that as there is not one single modern
mine in the area and as it appeared that very little up−to−date exploration was ever carried out. When we had
the opportunity to get the rights to the Tocantinzinho deposit in early 2003, we quickly moved. Solitario Re-
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 73

T S X-V/BZ O • B ra z auro R esources C E O I N T ER V I E W

sources, who had the property in
the late ‘90s, already had done
some surface exploration, such
as soil, channel and deep auger
sampling. We had enough infor-
mation to start drilling immedi-
ately. In our first 20 drill holes, 19
detected mineralization with sev-
eral holes intercepting hundreds
of meters (as opposed to feet) of
between 1 and 2.5 gram material
with some zones of 40 meters at
8 gram material. This encouraged
us enough to drill another 26 holes
into the deposit and prepare it for
a resource calculation. After the
title was secured and the govern-
ment announced this in their gov-
ernment gazette, we announced
in December the CNI 43-101 re-
source estimates by Pincock, Allen
& Holt of 1.626 million ounces at
a grade of 1.4 g/t Au of inferred
and indicated resources, calcu-
lated using a block model method
and an inferred estimate of 2.04
million ounces at a grade of 1.4
g/t Au, using a sectional method.
WSR: Educate us in terms of the
infrastructure as well as the politi-
cal climate within this region as it
relates to resource exploration, de-
velopment, and so on.
BZO: We are in the Amazon re-
gion, a definite issue in terms of
infrastructure; however, over the
last few years, the infrastructure
has dramatically improved, and
they started tarring the Cuiaba
road from the North. This is also
called the Amazon Highway from
Santarem at the Amazon River all
the way to the State Mato Grosso; “There are very few
that road is passing by at a dis-
tance of 40 km from our site. At exploration companies
the same time, they are laying a
power line along the same road, that can say they have
starting in the South. This has al-
ready reached to within 40 km 43-101 compliance re-
from Tocantinzinho. Power and
road access are becoming easier,
source estimates of 2
and the current logging in the area
has brought logging roads down
million ounces in their
to thirteen kilometers from our site. hands. A lot of junior
At the moment, the site is being
approached by small airplanes. companies are trying
We have two airstrips on site as
well as a river coming through. to find such deposits.
We transported all our supplies
by river. We found it. We need
WSR: Will the company look to
to find more of it.”
strategic alliances, partnerships,
or joint ventures moving forward?
BZO: Our modus operandi as
a company is exploration. Our
charge is to find commercial gold
as cheaply as possible and get it
to a point where either major com-
panies or other people with infra-
structure can take it from there;
that has usually been a good
formula for us. If you take typi-
cal finding costs of USD$10 an
ounce and the average purchase
price of USD$100 an ounce on
the ground then you are successful
in your exploration play, and you
can see the leverage in that. We

SUMMARY: Brazauro Resources (TSX-V: BZO) has successfully de-

fended its title to its lead gold property in Brazil and is now resum-
ing exploration. Primary ore body represents an inferred resource of
around 2 million ounces of gold and management describes exten- have discussions with majors. We ration companies that can say
sion potential as “enormous,” with strike open to the southeast and at are open−minded, but our major they have 43−101 compliance re-
depth. Sampling and wildcat drilling in the area could point to com- effort is to maximize shareholder source estimates of 2 million ounc-
parable deposits elsewhere on the property. The region historically value, which will dictate when we es in their hands. A lot of junior
produced up to 50 million ounces through artisanal activity but has do a strategic alliance and/or sell companies are trying to find such
never been mined (or adequately explored) with modern methods. the company. deposits. We found it. We need to
Roadway has approached the site and power is following; however, find more of it, and we need to ex-
additional resources will need to be identified to make sure that de- WSR: What is so unique about tend the size of our current discov-
velopment in the insfrastructure-challenged region is economical. Brazauro that defines and differ- ery because there is still enormous
entiates this company? potential. It’s wide open with depth
www.brazauroresources.com Phone: 281-579-3400 and to the southeast. We have an
BZO: There are very few explo- enormous advantage above most
74 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W B ra z auro R esources • T S X-V/BZ O

out while we were negotiating title
“We are going issues. However, once our title
was secured, we came out with
to follow up on this report prepared by Pincock,
Allen & Holt (independent). This
that intercept confirmed exactly what we had
always told the market.
because we feel
would be valued in the USD$80
to USD$100 range, depending
on how far they are along with
their ounces. I believe we are an
undervalued company; I think that
translation will occur this year as
people realize we are once more
doing positive things. Everybody
tor looked at because those are
the ones that will have to go up,
given majors will have to come in
and acquire them. In that way, I
believe we’re in excellent shape.
We’re starting out with 2 million
ounces and a huge land position
with many opportunities. I be-

there is a good WSR: Tell us about the present

Board and management team.
likelihood we are
BZO: We have a very seasoned
dealing with the Board and an outstanding man-
agement team. Let me talk about
parallel system of Len. Len was a top executive with
Newmont for a number of years
mineralized veins until 2001. I was fortunate in get-
ting him, and I believe he is largely
and disseminated responsible for the geological suc-
understood exactly what we were
doing. We hit a snag about the
title. One thing about the new dis-
coveries and title problems is that
you never see a title problem aris-
ing if the discovery is not a seri-
ous discovery. There are always
a lot of people who try to sneak
into something good. That hap-
pened to us. From the moment of
discovery, we significantly raised
lieve we are extraordinarily un-
dervalued. This is where we are
going at the moment. We have
outlined resources of 46 million
tons at 1.4 gram for a total of 2
million ounces. We are continu-
ally drilling that deposit because
it is open through the southeast
and with depth. At the moment,
we are following up on two mag-
netic anomalies that have the ex-

granite we have cess the company has had. Since

seen at TZ. We
are actively con-
tinuing the explo-
ration program.”
other companies in that we have
a resource in hand that we discov-
ered ourselves and have brought
to this 401 compliance number
over the last three years. It took
us a while to bring that across be-
cause we didn’t want that number
we are an exploration company,
our primary focus is geology, and
we have other men in the company
with strong backgrounds; the man
in Brazil who works and handles
our project has worked for many
major companies. In terms of man-
agement infrastructure, I believe
our company is in an excellent
position.Elton Pereira, our man in
Brazil, had been working for Rio
Tinto until we hired him over two
years ago. He has worked in the
Tapajos for the last 15 years. You
can’t get a better man who knows
the geology and the problems of
working in these kinds of isolated
areas. He contributes enormously
to our company simply by running
our day-to-day operations.
WSR: Does the investment com-
munity understand this company
and the direction it’s going in?
BZO: Right now, what’s happen-
ing is that we are having to trans-
late our story to the investment
public because of our 2006 slow-
down due to our land debate. We
are selling at an extreme discount
from what companies typically
sell for at this stage. The company
is being valued at USD$30 an
ounce on the ground, which in
the most conservative of cases, is
at least USD$30 under the lowest
valuations of USD$60; typically, it
our share price. We started in the
order of CDN$0.40. We went all
the way up to CDN$2.50. When
this hit us, we had to drop back
a little bit; we were quiet for a bit
longer than one year. For that rea-
son, at the moment, we are active-
ly talking to all of our backers and
to people involved in the process
to make sure they again under-
stand that this was just a tempo-
rary hiccup, that we are continu-
ing with the program as before,
and that there is an enormous
potential to increase this resource
to a size that is economic for this
type of infrastructure−challenged
environment.
WSR: In closing, why should
investors consider Brazauro Re-
sources as a long-term investment
opportunity?
BZO: The major mining compa-
nies are continuing to replace
huge amounts of production ev-
ery year, which in some cases
is larger than 5 million ounces
a year; it’s hard to find 5 million
new ounces every year. There will
be a continuing issue with major
companies to replace produced
ounces; in recent years, their ex-
ploration records have not sup-
ported their production. In that
regard, I believe valuations of
companies with emerging com-
mercial deposits will be the sec-
act similar signatures as the ones
over the Tocantinzinho deposit.
We are busy with soil sampling
surveys over these anomalies
and are planning to drill those
in a few months time. We have
found another old garimpo in the
area, in which we have samples.
We have come up with values
from 1 to 300 grams at surface
in the weathered rock, and we’re
busy with the team doing a sur-
vey over that area to see if this
is a duplicate of the TZ deposit.
It’s three miles away from where
we are. On top of that, we had
done some wildcat drilling in the
Tocantinzinho area; within a ki-
lometer from Tocantinzinho, we
intercepted one drill hole with 15
meters at 1.5 gram. We never
followed that up because we
have been fighting our title and
delineating the deposit. We have
brought a drill rig in, and we are
going to follow up on that intercept
because we feel there is a good
likelihood we are dealing with
the parallel system of mineralized
veins and disseminated granite
we have seen at TZ. We are ac-
tively continuing the exploration
program on some targets that
have been lying in wait for a long
time. We hope that in the com-
ing two or three months, all soil
sampling will be done, and that
we will have started exploration
drilling on these three projects.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 75

T S X-V/F R P • F rontier Pacific M ining C orporation C E O I N T ER V I E W

Million-ounce gold project

could become a company maker
Frontier Pacific Mining is a mineral exploration and development company based
in Vancouver. The company’s primary asset is the Perama Hill gold project in
northeastern Greece. Drill programs are being carried out on a uranium property
in Peru and a gold property in Nevada’s prolific Carlin Trend.

WSR: Bring us up to speed on the compa-

ny’s project and property portfolio.

FRP: We are involved in three continents

in the world. We have an advanced proj-
ect in northern Greece, which we bought
from Newmont a couple of years ago. We
are presently bringing that to a permitting
status and hope to put it into production Frontier Pacific Mining
within the next year. We have another expects to graduate
project in southern Peru, a uranium proj- into the ranks of gold
ect which we have spent a fair amount of producers by the end
money on. We own a very big ground po- of 2007. CEO Peter
sition there, and we have done some drill- F. Tegart takes us on
a tour of his flagship
ing which has been getting some interest-
project, which he
ing results. It could be one of the bigger
essentially bought at
uranium resource potentials in the world $10 an ounce. (Inter-
-- we are very excited about it. That’s the view of September 5,
second project. The third project is that we 2006.)
are currently drilling in the Carlin Trend
in Nevada, in the south end. We have a
deep hole going down there. Its location is
14 kilometers south of the Newmont Rain
Mine. That’s our focus within the company
and where we are active. Our premiere
project is presently the one in Greece.

WSR: Expand on the main play, describing the infrastructure in place within this region.

FRP: The Greek project is on the northern shore of the Aegean Sea near Alexandroupolis, a city of 150,000
people. It’s a port city, we are about a 35 or 40−minute drive out of Alexandroupolis. It’s a deposit that
contains 1.4 million ounces of gold near the surface. It has a mining configuration on it that was worked
on by Kvaerner Engineering; as a matter of fact, they completed a feasibility study. The deposit was found
by Normandy Mining, and when they were taken over by Newmont, Newmont acquired the project. They
determined it was a bit small for them, and they put it up for auction a couple of years ago. We bid on it.
We paid them USD$12 million for that deposit in cash, which we raised through equity financing in Van-
couver. Effectively, we paid USD$10 an ounce for that gold resource in the ground. It contains 11 million
tons of almost 4 grams per ton oxide resource and has a 0.4 to 1 waste−to−ore strip ratio. It’s based on
the feasibility work Kvaerner carried out. We can produce gold for USD$170 an ounce life of mine. As a
matter of fact, in the first three years of production, we can produce 170,000 ounces per year at a cash cost
of USD$135 per ounce of gold. It’s a very robust project, the type of project that is a company−maker for a
small company like ours, and we have the expertise and the background to put these types of projects into
production. We are quite excited about it.
76 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W F rontier Pacific M ining C orporation • T S X-V/F R P

WSR: Will the company look to involved in projects with economic CEO of Dundee Precious Metals.
additional strategic alliances or viability. The Greek project is the He has been instrumental in sev- “In the first three
joint ventures moving forward? type of project that we like. We eral mine developments and is in-
recognize value at an early stage, volved in several other companies. years of produc-
FRP: We haven’t looked at that. and we get involved in those types He brings a wealth of experience
We have been approached with of projects we believe are economi- to us in the form of financial man- tion, we can pro-
that kind of resource. The econom- cally viable because at the end of agement and production oversight.
ics on the project is very attrac- the day, you have to make money Brian Lock, our Executive Vice duce 170,000
tive for mid-tier producers. People
that are producing 300,000 to
at this game and the only way you
really make money is putting these
President, has been involved in the
construction of no less than half a
ounces per year
500,000 ounces per year are look- things into production, and we dozen gold mines and mines in his at a cash cost
ing at us in terms of acquiring this have got a production history in career in an engineering company.
project, joint venturing with us, or our group. We have a very strong He has joined me in bringing the of USD$135 per
trying to get their hands on it one Board of Directors with a past pro- Perama project on board and bring
way or another. Our strategy at duction history, and that’s what it into production in Greece. I have ounce of gold.
this point in time is not to entertain makes us unique in the mining busi- been in the business for 40 years.
anything like that simply because ness. We have got a couple of chartered It’s a very robust
we are in the middle of the permit- accountants on our Board, and we
ting procedure. As a matter of fact, WSR: Tell us about the present have the background and manage- project, the type
I’m going to Greece next week to
meet with the ministers over there
Board and management team. ment skills to bring projects into
production and that’s our objective
of project that
to get approval of our environmen- FRP: The Directors and the man- in the Company. is a company-
tal terms of reference, the approval agement in this company are a
process for the environmental im- highly experienced group of peo- WSR: Does the investment commu- maker for a small
pact assessment; once we have ple. Most have been in the business nity fully understand this company
that, we will turn the corner on this for over 30 years and have devel- and the direction it’s going in? company like
project in terms of launching it into oped mines along their paths on
production. It’s not the time to be many occasions. Premiere in this FRP: I don’t believe the investment ours, and we
talking until we do have the permits group is Stu Blusson, the finder of community totally understands, but
in place. the Ekati diamond mine, along with that’s not for the lack of what we have the exper-
WSR: What is unique about Fron-
Chuck Fipke up north, who was
instrumental in bringing that mine
haven’t put out there. We are a little
bit weak on investor relations. Our
tise and the back-
tier that defines and differentiates into production with BHP. He is on main objective as far as the com- ground.”
this company from others in the their management committee. He is pany was concerned was to put
industry? highly familiar with mine develop- the correct assets into the company.
ment and those types of scenarios Initially, we have been focused on
FRP: What makes us unique is that connected with mine development. that, and with the acquisition of
we have focused on asset base; in He would, therefore, be a key per- Perama, the focus is on uranium ex-
other words, we have gone into son. The other key person on the ploration in southern Peru, and drill-
projects, we have all been in the Board is Jonathan Goodman, a ing in a premier gold district in the
business for 30 years or more, and member of the Goodman family in Carlin district in Nevada. We’ve
we have really highlighted getting Toronto, as well as President and really focused on the asset base.
The asset base in Perama alone is
SUMMARY: Frontier Pacific Mining Corp. (TSX-V: FRP) antici- probably worth 10 times the current
pates starting gold production by the end of 2007. The company’s capital value of the company. There
lead project (in Greece) is at the permit stage and contains roughly is opportunity for the investor. What
1.4 million ounces of gold; the project was acquired for $12 mil- we’re trying to do now is get the
lion and will cost about $170 per ounce over its lifetime to mine. message out that the asset base is
While would−be partners are showing interest, management is there, and eventually it’ll come to
delaying discussions until after mining permits are granted. An fruition. That asset base will show
exploration−stage project in Peru has delivered potentially world−class up and be reflected in the capi-
uranium drilling results. A Carlin Trend gold property (near the Rain tal value of the company at some
mine) represents additional upside. Management is experienced point. That’s dependent on timing
at developing viable metal extraction operations and acknowl- of production in Perama, and the
edges that production is the only way you really make money. recognition of the uranium resourc-
es in Peru. When that comes to frui-
www.frontierpacific.com Phone: 604-717-6488 tion, that’s the message we have to
try to get out to the investor.
 A WALL STREET REPORTER PUBLICATION • Gold rush! • 77

T S X-V/N YG • N ayarit G old I nc . C E O I N T ER V I E W

Aggressive exploration yields

some of Mexico’s best targets
Nayarit Gold Inc. is a Toronto−based junior resource company dedicated to gold
exploration in the proven precious metal districts of Mexico. Management’s goal
is to rapidly build a profitable resource company and maximize shareholder value
through successful exploration and aggressive testing of high-quality targets.

WSR: Tell us about the recent

placements and what they mean
for the company going forward.

NYG: This allows us to maintain

the rapid pace of exploration
we have enjoyed for the past
year−and−a−half. We have com- Nayarit Gold is
pleted three drill campaigns in aggressively drilling
Mexico plus the acquisition of over a substantial portfolio
of precious metals tar-
10 new projects, grassroots ex-
gets. CEO Michael A.
ploration from prospecting, trench
Dehn tells us that his
sampling, and backwoods sam-
company keeps find-
pling right up to drilling. ing interesting high-
grade mineralization,
WSR: Expand on the company’s including some of the
project and property portfolio. best targets in Mexico.
(Interview of January
NYG: We are active in Mexico 18, 2007.)
State, an hour−and−a−half out of
Mexico City on a project called
Dorosa, a high-grade silver proj-
ect we acquired in September
2006. Since its acquisition, we
have found eight additional vein
systems where each vein system
varies in strike length from 500
meters to 2 kilometers. This leaves
a lot of room where you could hide
a couple of mines on each one of
these systems, and we are aggres-
sively drilling these. In Nayarit
State, we are completing acquisi-
tion of a few more key pieces of
land. We are going to be com-
mencing a drill program within the
next week−and−a−half and con-
tinuing our aggressive exploration
package. That package is a little
larger than the size of Hong Kong,
a huge land package, and we have to start with the highest−priority targets and work our way down the list.
Fortunately, we have not found anything we don’t like on the property. We keep finding interesting high−grade
systems. Some of the results are the best in Mexico. We continue to be aggressive in that exploration.
78 • Gold rush! • A WALL STREET REPORTER PUBLICATION

C E O I N T ER V I E W N ayarit G old I nc . • T S X-V/N YG

WSR: Educate us about the in- value for our shareholders.

frastructure in place within this
region. “We have to start with the highest- WSR: What is so unique about

NYG: We are fortunate that in

all the projects we’re active on,
we can drive a car right onto the
drill set−ups. In Nayarit State, our
property concessions run paral-
lel to the Pacific Highway, which
transacts our claims. There is the
new toll highway running from
Mazatlan to Puerto Vallarta that
cuts through our properties. We
have a good rail system running
through the property as well as a
few high−tension power lines that
come from the highest hydrodam
in the world, located in Nayarit
State. Nayarit State’s infrastructure
is phenomenal. We have our base
of operations in Mexico; in the
middle of our property holdings
in Acaponeta, we have a commu-
nity of 30,000 people. Along our
property holdings, there are anoth-
er 20 small communities with 20
to 50 families where we can get
local help to work on the project.
In Mexico State, we are in the his-
toric Taxco mining district where
millions of ounces of high-grade
silver have come out. By high
−grade, we are talking between
30 and 100 ounces per ton silver.
In that area, both the road systems
and hydro systems are very well
developed as are the communica-
tion systems, being in one of the
more densely-populated areas of
Mexico where we are fortunate
that we are a little off the beaten
highway with a private road into
the project. We have a couple of
farmers who are near the project,
but there is no community, so we
have to have heat over community
agreements with all historic mining
priority targets and work our way
down the list. Fortunately, we have not
found anything we don’t like on the
property. We keep finding interest-
ing high-grade systems. Some of the
results are the best in Mexico.”
claims. Their land is only dealt with
the government there.
WSR: Will the company look to
strategic alliances, partnerships, or
joint ventures moving forward?
NYG: Definitely. We always look
at wherever the opportunity is best
for our shareholders. We have had
an attempted joint venture on one
of our projects, but our partner had
some difficulties with the market to
raise equity to continue on with the
project. We ended up retaining
that project 100%. We have been
in contact with several of the Mexi-
can majors as well as other silver
producers in the United States who
have shown interest in our projects.
We are not by any means looking
for a fire sale on anything. We are
looking for good technical and
financial partners to come in and
add value to the projects; if they
turn out to be the ones who can
help us get the project into produc-
tion quicker, that might be the best
Nayarit Gold that defines and dif-
ferentiates this company?
NYG: One of our strengths is its
management and Board with a
level of experience rarely seen in
any junior company on the mar-
ket. Our Board of Directors is very
diverse and experienced, includ-
ing Senator Eyton, who is on our
Board and heads up our Auditing
Committee. He is a corporate gov-
ernance expert in the industry and
is on Coca-Cola’s Board down in
Atlanta. He also chairs Ivernia, a
lead producer in Australia. He is
one of the heads of a Canadian/
Mexican trade organization en-
couraging trade within Mexico,
and he also works with the Con-
servative Party of Canada. Sena-
tor Eyton is a good man to have
on our Board, and even with his
schedule, he still makes time to do
any paper we have to send his
way. He always finds time to get
it done, and he always has great
comments and feedback for us. Jer-
ry Shefsky, Board Chairman, has
financed construction projects inter-
nationally for many years. He has
put in the largest shopping centers
in Europe and North America, has
owned and built casinos in both Las
Vegas and London, and currently
has a fun project where he gets
to design and build large aquari-
ums people run through. Some of
his new projects could be seen at
some of the nicer destinations in
the United States and Canada over
the next few years. Dale Hendrick
has been in the mining industry
longer than any of us on either our
Board or management team. He’s

SUMMARY: Nayarit Gold (TSX-V: NYG) has concentrated its attention on Mexico’s known precious metal regions. The company has built a
diverse portfolio of projects at various stages and has completed three drilling programs so far. Significant discoveries include eight new vein
systems (some of which run for kilometers) on its high−grade silver project; as management notes, each could easily constitute multiple mines in
itself and aggressive drilling will follow. Another land package is larger than Hong Kong, forcing the company to prioritize among a number of
interesting high−grade targets. Roadway and other infrastructure elements are in place. Board has expertise in construction, finance and corpo-
rate governance, as well as mining. Truly accretive partnerships or M&A will be considered.

www.nayaritgold.com Phone: 647-477-6264


put several mines into production;
the most recent feather in his cap is
that he’s on the Board of Gammon
Lake Resources, who have just hit
their target of 400,000 ounces per
year in gold and gold equivalent
production. John Ryan, President
and CEO of Spruce Ridge Resourc-
es, is a chartered accountant who
makes sure that the company’s
books are properly audited. If you
want to try something a little dif-
ferent, John always has a critical
opinion that helps make sure we’re
heading in the right direction or if
he thinks it’s something that might
be a little too confusing for the in-
vestment community to understand.
John has a good investor’s eye on
his head. We have a good, well-
educated Board. In terms of our
management team − I was with
Goldcorp for 11 years working out
of head office with Rob McEwen. I
took care of a lot of the regional
exploration, and in later years,
worked with Rob in marketing. He
was definitely the head behind the
investment community while I was
behind the technical community.
Talking to other mining companies
or at trade shows where the mining
industry was prevalent was part of
my job. Rob would take care of the
brokers, the analysts, and the insti-
tutions. Just spend five minutes with
Rob and see what he has to say
about the industry and the price of
gold going forward. Marius Marei
is a new member of our manage-
ment team. He joined in the sum-
mer as our VP in charge of explo-
ration. He came from Placer Dome
where he was running exploration
in Africa. Prior to that, he was in
northwestern Ontario, and he has
experience in Mexico as well as
internationally. He also has a resi-
dence in Mexico very close to our
project as well as one in Toronto.
It’s easier for us to convince him
to spend more time in Mexico
where we need him to take care
of the guys because he has a bit
of a home down there as well.
Dennis Waddington, our CFO, is
a key projects guy. He’s been in
the industry for over 30 years. He
A WALL STREET REPORTER PUBLICATION • Gold rush! • 79
T S X-V/N YG • N ayarit G old I nc . C E O I N T ER V I E W
investors that drive the share price.
“Nayarit Gold has been successful in We have some great new investors
who’ve picked up nearly a million
exploration. We have been acquiring shares in the market, and those are
the kind of guys who really buy,
high-quality projects and examining the hold and believe in the story; you
best targets in our project portfolio. We only need two or three of them to in-
fluence your share price and market
put the money in the ground where it cap. For now, every little thousand
shareholder we have in the United
is most needed, and we will continue States and Canada makes a big
with this focus in Mexico for the future.” impact. We are methodically telling
the story and are not over-promo-
tional by any means. We are very
conservative. Until you see a large
43−101 resource in the company,
the institutions have shied away
from us, and I don’t expect too
many institutions to come in. In the
last financing, we picked up three
new institutional buyers, one from
the United States, and two from Eu-
rope. Over the last year, we have
kept building on that success, and
by the end of this month, I believe
we’ll be 10% owned by institutions
and 90% owned by retail, a signifi-
cant growth from a year ago when
we had no institutional investors.
WSR: In closing, why should in-
vestors consider Nayarit Gold as a
long−term investment opportunity?
NYG: Nayarit Gold has been suc-
cessful in exploration. We have
been acquiring high−quality proj-
ects and examining the best targets
in our project portfolio. We put the
money in the ground where it is
most needed, and we will continue
with this focus in Mexico for the
future. We are always looking for
the right opportunities. If there is
a good cheap acquisition we feel
has a MBA and knows corporate NYG: I would say that the people will be of value to our sharehold-
governance better than anyone who know us and have invested in ers, we’ll take it, and if we see an
I’ve met. He’s the company’s con- our company are aware of what opportunity for a partner to come
science and the voice of reason, we are doing and where we are in and add value to both our proj-
as well as one of the best sound- going. Our biggest difficulty to date ects and our share price, we’ll do
ing boards I have, and we work has been getting new eyes on the that. We might be looking at merg-
very together. We are diverse story. The number of sharehold- ers, acquisitions or takeovers or
and complement each other’s ers we are adding on a weekly just continue on at the pace we’re
skills extremely well. or monthly basis is increasing. But going with the high−quality proj-
for the first time, it’s hard to get the ects we have in Mexico. We’re
WSR: Does the investment commu- right people to see the story. We’re always looking at what is best for
nity understand this company and always looking for new investors our shareholders, and we keep
the direction it’s going in? to join the company, and it is new that foremost in our mind.
Wall Street Reporter Magazine, Inc.
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