JOHN: Well, Jim, now we're just getting under way with the real gold interviews for the program. We've obviously completed the first hour of the program, and now we'll get into what I call the Great Financial Sense Gold Show of 2007. And it's great because we did it.

JIM: We're doing something different this year, as we mentioned. Normally, I'd do this at the San Francisco Gold Show, but the technical difficulties, the noise background sort of interfered with the conversation. So what we're going to do in this segment, we're going to start out with what I call the experts in the roundtable. You're going to hear a roundtable discussion between myself and Dr. Leanne Baker. Leanne used to be the managing director of Salomon Brothers, their metals analyst. And of course, the great Dr. Keith Barron.

And then also something we did this year is I wanted to look at some newsletter writers and I wanted to pick a couple that I believe are some of the best in the business. They are not biased. They don't receive warrants. They don't receive money from companies, so they make their money simply by charging subscribers for the service they provide. So you're going to hear John Doody of the Gold Stock Analyst and then the Coffin brothers from Hard Rock Analyst.

And then we're going to complete this segment of this show with one of the main proponents for metals and sound money, and that is Republican congressman Ron Paul who is also a candidate for the US presidency.

So a great segment of the program as we look at the experts, as we discuss the issues of gold mining, picking gold mining stocks etc. [1:47]

JOHN: You're listening to the Financial Sense Newshour (www.financialsense.com). Let's move on to the first roundtable discussion as the Financial Sense Gold Show of 2007 continues right here at www.financialsense.com.

Roundtable Discussion

Dr. Leanne M. Baker, Managing Director, Investor Resources LLC
Dr. Keith Barron, Director, Aurelian Resources Inc.

JIM: Joining me this year for a roundtable discussion of the gold market and its prospects are Keith Barron, and Leanne Baker of Investor Resources.

I'd like to start out our discussion in terms of the gold environment and begin with just a few headlines from the day that we're speaking. And these are just some headlines off Bloomberg: Fed lowers 08 growth outlook; Freddie Mac shares plunge after mortgage company posts two billion dollar loss; US building permits fall to the lowest since 1993; Ericsson expects fourth quarter sales to be at the low end of forecast; Federated Investors bail out clients and money market fund; Countrywide debt risk soars on speculation; Crude oil rises a third day; and “at a sub prime survivor's conference it's too early to tell who is going to end up surviving.”

Why don't we begin with the macro environment with gold because I think it's never been more supportive of gold prices. Any comments?

LEANNE: I would agree with you, Jim. I think that although I expect that we're going to see a tremendous amount of volatility going forward because we seem to go from worries about inflation one day to worries about recession the next day, wondering whether the Fed will increase rates or decrease rates, and so we're likely to continue to see volatility. But within that, the underlying fundamentals for gold –whether you're looking at supply/demand or the reason for investor demand for gold –continue to be very supportive. [3:36]

KEITH: I would completely second that. I think the picture for gold looks just tremendous, but I think also we're looking at a backdrop not just of problems with subprime, which, you know, are really some of the biggest problems confronting the broad stock markets right now, but these amazing currency gyrations going on right now with the euro, with the Canadian dollar. And also, you see some kind of quirky things going on, headlines saying that people are jettisoning gold and gold shares because just there's been broad market dumping of equities and people are getting out of everything. I don't think that's actually true. I think gold is really coming through as a safe haven, especially in these times. [4:24]

JIM: I have a Bloomberg screen and one of the things I've seen this year is accelerated global money supply growth. In Russia, the money supply is growing over 40%; in India, it's over 20; and Australia, it's close to 19; in China, it's almost 19. I'm even looking at the BRIC countries: Brazil, 16%. And we did a study of growing money supply rates and a correlation with inflation, which is rising around the globe; and the other thing that we did is we took the major currencies and we showed them in terms of gold and all of them are depreciating. And that is one thing that I think gold is signaling in its recent rise is that gold is assuming its traditional role of moving from a commodity to real money.

LEANNE: I think that's exactly what we're seeing. And while the road will be bumpy getting there, that is what is going to propel gold, I believe, into the four digits. I'm not quite sure how soon, but I think it's just a matter of time before they get there. It's still early in this cycle, even though gold prices have gone from a low of 250-something dollars not that long ago to close to $800 now. But in all of the headlines that you brought up, there really have not been front page headlines about gold, gold prices and investor demand for gold. I think we're still in the very early stages of that part of the cycle. [5:56]

KEITH: I would say so too. We are very early in the cycle because gold hasn't become water-cooler chatter yet. Most of the people are not really familiar with the gold story. It's not on the news every day; it's not on the front pages every day. And I think it certainly will get there and that's only a matter of time. But, you know, with a back drop of an oil price in the $90s now – in the high 90s – how can there not be a massive inflation going forward, and not just inflation in America, but in all countries? This is going to be something universal because the oil price is something so fundamental to all commerce in the world. There was a very interesting article in the Wall Street Journal talking again about peak oil and how it looks like it will be...an executive from Total saying that the pumping that's going on now of some geological structures is actually damaging them so that it's really destroying their value going forward of being able to be fully exploited. So we're going to have maybe shortages of oil. We're certainly going to have higher prices and lots of higher inflation. [7:12]

JIM: I was reading from a headline out of the Financial Times and Ambrose Evans-Pritchard wrote a piece he calls the Perfect Storm For Gold As Mines Left Empty, and the opening sentence is: “The era of peak gold has arrived.” I want to talk about, you know, we know there is demand for gold obviously that's driving the price up in terms of where it is today, but let's talk about the supply side of it. And Keith, I'm going to ask you to weigh in on this because where are the major discoveries in terms of, you know, it's almost a similar path to oil –the last major discoveries were the North Sea and the North Slope of Alaska besides a field in Kazakhstan – but we haven't had any major real discoveries in other than let's say a company you started, Aurelian. Where are the 10, 15, 20 million ounce deposits that they’re finding? And I think of the Ralph Bullis story where he said, “there just aren't that many elephants out there.”

KEITH: Yes. I really do think that the low hanging fruit has been picked. You know, you alluded to the Aurelian story and Aurelian has found a deposit with an inferred resource of 13.7 million ounces of gold. Now, that's the largest that's showing up now between 15 and 20 years and really quite incredible that there haven't been more discoveries like that given that the gold price has become quite [robust]. There are a lot of people doing exploration in all of the countries in the world and yet they are not charting up these things, so what's the reason for this?

Well, the reason for this is these things are as scarce as hen’s teeth. You have to spend more money to find them, you have to go deeper, you have to buy techniques like geophysics and geochemistry to peer much deeper in the sub-surface in the earth. You don’t bump into these like the “miners, 49ers” did way back when. Case in point, the mines are getting much, much deeper and harder to sustain, harder to pump, you have to pump water to keep these mines free of water. And there has been a series of accidents, not just to gold mines but to pit mines, as well, in South Africa. At some point you almost reach a finite point of how deep you can pull on these things. So looking forward, we really do have a situation where the gold supply is going to be constrained by the lack of new discovery. [9:44]

LEANNE: And I'd like to point out something else as a sidelight to this. When I first started looking at gold companies and the gold industry in the late 1980s, a large gold company was one that was producing 300,000 ounces, on its way to 500,000, and then up to a million ounces. You know, today, nobody is satisfied until they have on their plate something that is going to be able to get them to that million ounce production status. And so they are looking for discoveries that just may not be possible. There just will not be enough 10 to 15 million ounce discoveries that are made. This week I was listening to a conference call by the new head of Newmont who is talking about that; that they are going to be looking not only at the big deposits but also looking at the most profitable deposits, and starting to go back and say, “well, perhaps we'll be looking at some smaller deposits for development but ones that will generate better cash flow.” And I think that's going to be a theme that we'll be hearing from other majors and intermediate producers as well, because the reality has been that getting up to becoming a big producer is a very, very difficult proposition for value creation for investors. [11:00]

JIM: You think, Leanne, what we're seeing here –and Keith weigh in on this as well – is I've heard talk over the last couple of years from the majors “we're not going to touch anything unless it's five million ounces.” Do you think we're going back to the 1980s model where, you know, if you could get 150-, 200,000 ounces deposit that you can mine economically that you'll not only see that at the major level, but you'll also see it from other companies, let's say the intermediates as well?

KEITH: I think we're going to see a return to that stuff. It's inevitable, but we're going to need much higher gold prices to sustain that kind of stuff. Now that the gold prices are approaching this all time high of 850 bucks, you see it all over the media saying “oh, yeah, well, 850 bucks in 1980 dollar terms it should be $2000.” Well, yeah, you know, there has been escalating costs in the gold business; the cost of getting an ounce of gold out of the ground has gone up commensurately with inflation since 1980. So even if the gold price is spiking through its all time high, it's going to have to go a considerable bit higher to be able to exploit a lot of those smaller deposits. That being said, I think that Leanne’s spot on with this. The mining companies are going to have to start going after quality ounces rather than just going for quantity. And there are a lot of scenarios around the world where there are some very, very high grade deposits that could be taken out quite lucratively, but the mining companies have tended not to look at these things because they say they are too small to affect their bottom line. Well, they might end up being the only things available to exploit. [12:48]

JIM: I want to bring up another obstacle in addition to the difficulty of finding these ounces. You take a look at political environments today whether it's Russia or Latin America, but also something that many companies didn't have to contend with in the 70s and that's environmental opposition. Let's assume that a company makes a discovery and it's a large deposit. That doesn't necessarily guarantee that they could bring it into production in three-to-five years. You may have environmental opposition that keeps you at bay for a long time. I'm thinking of, Keith, the Glamis deposit in California, which is what, going on 10 to 15 years now trying to get that permitted.

KEITH: Yeah. I don't even know if that's still on the radar. It might have just fallen completely away. Yeah. We've seen a number of things in the States; Canyon Resources had a project they wanted to get permitted in the state of Montana and because of the cyanide initiative it was shut down. Northgate wanted to put the Kerness North deposit in British Columbia into production and that shut down because of a dispute with the aboriginals. It may get back on track. Nobody knows at this point.

But, you know, personally in America, things can get very litigious. You can find yourself satisfying all of the requirements with your feasibility studies and all of the rest of it and having to wade through six or seven years of court actions to actually put a shovel in the ground. You know, my personal opinion – and I've done a lot of work in the Third World; as you know, I'm working extensively in Latin America right now – you have to go where the gold is. And I've never been a person to shy away from some of these jurisdictions just because of politics. If it's big enough, they usually find a way of making it work. That being said, there are certain places on my list like Venezuela I wouldn't touch right now. [14:48]

JIM: Yeah. Especially too there is a big mine down there, Crystallex and whether they will bring that into production; or if they do, whether it will be profitable for shareholders given what Chavez has done to the oil companies.

KEITH: Yeah. That's correct. And there has just been a press release recently their projected cost for that deposits have gone up quite considerably. Yeah, you have to weigh up all of these factors. Unfortunately we can't pick up the deposits and put them into a country jurisdiction that we like. So it's a fixed asset. You have to find a way to make it work. [15:26]

JIM: As the price of precious metals go up, governments tend to get more rapacious. You can see it in the oil industry going on in the Third Word right now. Even our own government is trying to renegotiate leases in the Gulf of Mexico. We've seen in Alberta renegotiations of the Canadian oil sands; and more recently, here in the United States. Comments from either of you on this mining law that they are trying to get passed where they would get an 8% royalty?

LEANNE: Right. No. That, I think, is always the case when you have a bull market or when you end up with a very successful property, that governments would like to come in and be able to renegotiate terms of the agreement, or else the law changes so that newer projects in the same jurisdictions have a lot more hurdles to overcome. You know, that's one reason why the companies would prefer to find very large deposits because then they know it will be worth their while to sort through all of the issues as they come up and deal with them –as they come up – in a way that hopefully remains win-win for both the companies and their shareholders, as well as the countries and localities where the mining is taking place.

And in that regard, I think a company like Freeport has been a role model. If you look at the fact that they got started with their first project in Indonesia in the 1960s, and then found a really big deposit in the late 1980s. And that's one that's going to be in production for a long time. They've been able to weather many, many storms and they've been through terrible bear markets and during bull markets and they've still managed through thick and thin to generate great shareholder returns and to make a lot of people in the country very happy with the fact that they’ve been in production. So that's what you would like.

That's not always the case. What you also find is that over time things change. And as Keith mentioned, if you're someone who sticks in a country and they know you're there even if there is a change of government or a change of legislation, if you maintain good relations with those people over long periods of time, you tend to be able to work things out. That's not always the case in countries like Venezuela, right now, for example; but in most countries in the world, I think you can still bring a mine into production if you make a successful discovery. [18:00]

JIM: I want to move on to something in this bull market and ask both of you to comment and contrast how this bull market stands to let's say the bull market in the 70s. One thing that comes to mind from my perspective is in the 70s, I think there were a lot more people that understood the root causes of inflation, which is excessive money creation. Today, you even have people like Bill Gross, who runs the largest bond fund, talking about government coming in and intervening, propping up mortgages. I think there is less of an understanding of monetary history or what causes inflation today. But comments from both of you.

KEITH: I would certainly say that there is a lot of folks out there that are 20-somethings who are in control of a lot of money. The subprime debacle, I just kind of sat back and did my armchair economics and saw this thing completely unfold. But it seemed to me just looking at the thing on the face of it that how could you give loans to people who can't make a declaration on their income? How can you give loans to people who don't have any equity in their houses, they don't have any money to put in? It's like an accident waiting to happen. And we're dealing now...the gold price hasn't been this high since 1980. Really, it's a brand new generation out there largely in the money markets, in the banks who are looking at this thing and haven't had to deal with it before. I can remember when the gold price spiked up back then. And in fact I even had a little gold – not too much. But yeah, it's been a long time coming. We've seen kind of a generational difference here and we're dealing with a bunch of people who’ve grown-up under the Clintons and haven't had to experience some hard times really. [19:54]

JIM: Leanne?

LEANNE: I would add to that. I totally agree with you that the level of economic ignorance is very high, both among politicians as well as the man on the street. And so people really don't understand the cause and effect of what is affecting their day-to-day economics. But what we do have going for us today that we haven't had in the past is the internet: The ability of people who want to try to figure this out who go to the sources of information where they can. And we also have a situation where gold is actually legal in almost every single country in the world right now. So anyone who makes the connection between excessive money supply growth among all these governments around the world, and the fact that gold has been a store value for millennia, they can make that connection and they can take action for themselves and their families to protect themselves over the long term.

Unfortunately, I believe we are not going to see the answers and the honesty coming from our elected officials and even our regulators. We don't see the testimony in front Congress by the Chairman of the Federal Reserve and others, you know, who really can sit there and explain what's going on, how difficult it's going to be for people when all of this unravels; and it is going to continue to unravel. But there are other ways of finding out that information and that is what I think ultimately will propel gold prices much higher because people can figure it out. They are figuring it out now, and it's going to be that much more obvious as we go forward. [21:34]

KEITH: I might add to Leanne, that what we're seeing now is a huge growth of the precious metals markets in both India and China. And a lot of economists and bankers and such have really disregarded the people in what they call the Third World saying that they are not very sophisticated investment-wise. But I think you're really going to see that these people are actually very, very super savvy and they are avoiding all of this great fallout in the subprime. [22:06]

JIM: I want to move onto something in this bull market. We all agree that we think gold prices are going higher and along with that will be gold mining shares, but I want to talk about the industry itself. And one thing that we have seen over the years, at least in the last three or four years, in terms of the financing cycle, a lot of companies tend to over-dilute, they are poorly financed; and if you look at shareholder returns, the mining industry is not known for delivering high return to shareholders. As the bull market took off, we saw a lot of miners that were overly hedged in their production, so as the price of gold escalated they didn't benefit from that. In fact, a lot of them have had to unwind their hedges. And very few companies...I mean you had Goldcorp, as the price of gold rose when Rob McEwen was running the company, he held back production and sat on it in inventory because he believed prices were [going] higher and that was a benefit to shareholders. You’ve had Silver Standard which accumulated assets when the price of silver was low, and felt it was not to the benefit of shareholders to mine it at a loss. Let's talk about the mining industry itself. Leanne?

LEANNE: The mining industry has always been very difficult, a very difficult one for investors to make money. And I've been following it now for about 20 years. And during bear markets, even when you are able to call the price of the metal correctly, you get bullish, you think prices are going to go up, you run your models assuming that prices are going to be higher, and no matter what kind of price escalation you put in for on the cost side of it, you still manage to over estimate just what these companies are going to earn in the way of margins. They, as a rule, tend to disappoint. And part of that is because in the gold sector, as we alluded to before, it's very, very expensive to continue to replace reserves. And as things start heating up, the company starts spending more on G&A. They start spending more on exploration. As we mentioned, taxes tend to go up and there may be new royalties that are added; labor costs go up; other input costs go up. And it's always a disappointment.

This has been a somewhat different cycle on the base metals side because base metals tended to rise so much above their previous peaks that for companies that were already in a production mode, they've been able to generate very strong cash returns. For the most part, that has not been the case with the gold companies unless the gold companies tend to have mines where they have significant byproducts credit. And that's just the way it is.

And now we're getting to a point in the cycle where I think some of the larger companies that have done a lot of leg work the last few years in terms of getting a handle on cost and getting their pipeline of projects put into place –and some intermediate companies that have done the same thing – if gold gets to $1000, $1500, $2000, the companies already in production are going to be generating very great cash flows and good returns for shareholders.

But what is also difficult at any point in the cycle is making investments in the exploration side of the business and that's where the concerns about over-dilution often come in because there are many managers of these companies that may be great geologists and very solid on the technical side, but they end up being vulnerable to the different financing mechanisms that are made available to them; and they can find themselves greatly diluted in a few years without even realizing what's going on. [26:02]

KEITH: I think going forward, the gold mining business is going to become more profitable. We've had a period here of quite a few years where the gold price has been artificially suppressed because of central bank sales and the gold carry trade. Now, the gold carry trade has pretty much come to an end, even though gold lease rates are quite low; but the risk of borrowing gold and selling it to invest in other securities and then being able to buy back that gold at a reasonable price is very high and this is what's killed the trade. Central banks are becoming a lot less reluctant to liquidate their gold holdings. I think you’re going to see more central bank buying, from countries like China, like Russia, to prop up their currencies and get a healthier currency; and you’re going to see some offloading of dollars from economies like Taiwan, South Korea and China and redirecting those dollars into gold purchases. So I think we're going to see healthier gold prices for that.

You've also seen pretty much an end to hedging; and this was where people would sell their production forward – in some cases for many, many years. It's a mechanism that was developed about 20 years ago – started by Barrick really to give you a guaranteed revenue stream. It's kind of rebounded back on people because in a lot of cases the gold prices moved higher than the hedge books, so the hedges are under water. The major mining companies have been busy trying to offload their hedge positions as quickly as they could, and that's pretty much done now. I think for those reasons you’re going to get more profit in gold mining going forward. [27:56]

JIM: What about upcoming trends? If you take a look at there has been a lot of money that's gone into exploration over the last five or six years, record amounts that have been raised. But if you look at industry, a lot of exploration work being done by the juniors, it's almost like there are too many juniors. What about the idea of consolidation of juniors, either at the late stage development level, or even intermediates; or let’s say, junior producers, merging together? Let’s say you have one producer whose production profile may be 50,000 ounces, they merge with another junior producer and the next thing you know, you have 100-, 150,000. What about consolidation of the industry? Do you think that's part of our future.

LEANNE: Well, it's already happening. Last week we saw a merger announced between Canyon Resources and Atna, two companies that have been doing a lot of work in Nevada and other areas of the US. And I think that consolidation, even at the level of smaller companies, is likely to continue in part because of the shortage of qualified manpower, if you will. It's very hard to find good people who can run your companies and run your exploration effort; and that could well be an impetus or a catalyst for continued consolidation among the juniors. [29:20]

KEITH: Yeah. I think we have a real shortage out there historically of mid-tier companies. There aren't really many of them around anymore. They've been taken out by the Barricks and by the Newmonts of this world. So I think there is a lot of space for that kind of stuff to happen, two companies merging or even three companies coming together. If there are synergies, if they are in the same part of the world, even in the same countries, it can often make a lot of good sense. [29:51]

LEANNE: And something else that I think we'll see going forward: A lot of exploration company effort is working towards the goal of finding something that’s big enough for a major company to become interested in, and buy from you –you know, take out the whole company. I think that...in fact, I've talked to some people in the industry who are thinking of, you know, in their next round of building companies to try and build companies that actually can bring a mine into production with the goal of replacing what had been the mid-tier level in the industry (the companies that are producing from 100,000 to 500,000 ounces of gold); and maybe be geographically targeted. So I think there will continue to be a lot of different trends that will start to take us back to where we were in the late 80s and early 90s as well. People are going to be trying different ways to make it all work and to make money for themselves and for the investors who invest in their companies. [30:56]

JIM: Yeah. It seemed to me that there is a great opportunity here at the intermediate level because if you look at...one time...the intermediate companies whether you're looking at Agnico which is going to be going over one million ounces of production, you had Goldcorp which is a multi-million ounce producer now, Glamis which got gobbled up, so it seems like there is a lot of room there for these smaller companies to move up to the intermediate level of 200-, 300- or maybe 500,000 ounces of production because there are not many of those companies left.

LEANNE: That's absolutely right. You know, and that's not only happening among the North America-based companies but we're seeing it with Australia-based companies as well, you know, who tend to operate more in that part of the world. A company like Sino Gold, for example, which has its first gold mine in production and is looking to add to that. I think it's turning out to be a very successful model that other companies will try and emulate. [31:57]

KEITH: Yeah. I would agree. I think we're going to see a lot of growth of those kinds of stories going forward.

JIM: You know the one thing that kind of strikes me is, and this goes back to something that we were discussing earlier, taking a look at the macro environment today – whether we're talking about headlines, accelerating money growth, depreciating currencies – it's always surprising to me to see how the market reacts. You'll have on a day like today where you had all of these credit problems that are in the headlines, gold is up $16; but just as well, Leanne, as you refer to volatility, the gold market could have gone just the opposite. We had a day a while back where there was bad credit news and I kid you not, gold went down, oil went down, and people moved into the financials and bought Google. So I mean, you know, I still don't think that the vast majority of investors really get this story at this time.

LEANNE: No. And I think it's important, because if you don't really get it, if you're just looking for short term returns, you're likely to be disappointed. But I have been reading Richard Russell since the beginning of the cycle and he's just been so strong on the message of jumping into a bull market and holding on with both hands no matter how much bucking there is going on. And I think that's what, you know, if you believe in gold as an asset that's going to hold its value and whose value is going to go up relative to the alternative currencies out there, if you understand a bit about the underlying supply-demand fundamentals, then I think it's easier for you to hold on during the periods of volatility (or to step up to the plate and buy more if you've get a big correction when you're not really expecting it) than you will if you get disillusioned every time things go down when you don't understand all of the underlying liquidity drivers, for example, that can make that happen. And it's going to get worse because going from $800 to $1500 or $2000 or higher, it's likely to be very, very volatile for the shares especially as we move up to those kind of levels in the metal. [34:14]

KEITH: That's exactly what you can expect. In fact, Jim, you sent me a report the other day, a report by Cheuvreux in the UK, and it was entitled Remonetization of Gold: Start Hoarding. But it was dated January 2006, so, you know, you can't get into this market and just think that everything is going to happen in the next week and you're going to do very well. You've got to be in there for the long term. People have been talking about what we're seeing unfolding now, people have been expecting it for many, many years – five, six years now – and it's coming to pass now. It's not ended. We're going to see the gold prices, in my opinion, go a lot higher. But you have to have the stomach for it and you have to have the stamina and you can't act like a day trader. [35:06]

JIM: This is one reason why I think it's so important –as we've been discussing here – to understand the fundamentals of gold because as we have seen here, you can wake up one morning and see gold spike up $40 out of the blue. And I don't think that any technician could sit there and look at a gold chart and predict those kind of events; just as two weeks ago when on a Monday we saw gold drop nearly 30 bucks. Those are the kind of things that are just par for the course in this kind of market. But if you own this stuff, when you have those days and gold pops 40 bucks an ounce or we go over a thousand, I think Bill Murphy from GATA has a saying, “you've got to be in it to win it.” And I think probably the best kind of strategy, and I don't know if you would agree with this, is if you want to accumulate gold is to do it on a consistent basis: Dollar cost average, quit worrying about whether the price is 800 today or 850 or 750, but keep accumulating. You have people like James Turk that has said, you know what, “until gold hits 1500, keep buying.” [36:16]

LEANNE: I would agree with that strategy, certainly as it regards the metal itself. I think that’s a very wise way to accumulate either actual physical gold, or physical gold through an entity like GoldMoney, or even for some investors just buying the ETF, which do have an impact on physical gold hoarding and physical gold demand. I think as a strategy for buying shares, you're probably better off trying to maintain a discipline with the companies that you're interested in, and on the days when there is blood in the streets and it's a company that you like and maybe you own it at a higher price, you're willing to step up to the plate and say if I look like it and I believe in it maybe now is the time to add to the positions. [37:06]

KEITH: I would say so too. But I wouldn't go out buying a boat load of juniors as a proxy for buying gold. You have to examine the stories very critically and you have to be very prudent in your investments. I'm also a big believer in having at least some bullion, having some physical – either coins, bars or what have you. And it's got a lot easier to be able to make those kinds of purchases. But, you know, as it was said, you should be accumulating this stuff over time. Look on it as a nest egg, as emergency money, as something that's going to be there for if we see a real turmoil in the markets and the money markets and the banks. You know, if we had a situation with Northern Rock all over the place and bank runs like you saw in the UK recently, then precious metals is obviously the place to be. And a lot of bright people have been forecasting this kind of activity for a long time. We’ve seen it historically in the Weimar Republic, we've seen it in France in the French Revolution. You can name dozens and dozens of countries where the currency has ended up being worthless, and really the only thing that you had to put groceries on the table would be precious metals. [38:27]

JIM: And finally, if you were speaking before a group of investors, any parting comments or advice that you would give. Leanne?

LEANNE: Well, my parting advice would be to stay the course, understand as much as you can about the underlying fundamentals of the metals, to know that if you're buying gold you're buying it as an alternative to the fiat currencies that continue to decline; and if you are going to take the plunge into gold equities, make sure you're diversified and you are willing to hold for the longer term. [39:04]

JIM: Keith?

KEITH: Yeah. I would say as well, I would be skeptical of some of the things that you're going too hear on Bubblevision from some of the funds and the merchant banks. There are a lot of people out there who have talked down the gold story; and they have been talking it down all of the way up. You'll still hear people saying that gold is no good and it's a barbarous relic and so on and so on. I think you should also be very circumspect about what your politicians are saying as well. I love the message that Ron Paul gives out, and I hope he does get elected. I'm Canadian and I don't get to vote in the US elections. I wish I did, because I'd vote for the guy. Some of the comments coming out of the US Fed and from George Bush about strong dollar policy, well, all you've got to do is pick up a copy of the Wall Street Journal, open it up and take a look at US dollar value against a whole bunch of currencies there year-to-date and you'll see a lot of minuses. And I think the politicians have got a lot to answer for for that. It's a very, very sad state of affairs. Gold – that's the reason why gold and silver are up. It's not because there has suddenly been this huge, huge massive demand that's driven the price of gold and silver up. It's fundamentally because the value of the dollar against precious metals has gone down. And this is a very important thing to understand. You have to understand it perfectly because this is really our future. [40:41]

JIM: Well, listen, I would like to extend my thanks to both of you for joining us for this year's annual gold show and I want to wish Leanne a Happy Thanksgiving with your family; and Keith, all of the best to you as well.

John Doody, Editor Gold Stock Analyst

JIM: My next guest is familiar if you've been listening to this program, he often joins us in our Expert Series in the first hour of our radio broadcast. He's John Doody. He's editor of Gold Stock Analyst. And as pointed out the newsletter writers that I have invited on the show this year were based on track record, objectivity, and the fact that they do not take any payments from companies which keeps them objective.

John, let's talk about your newsletter. You cover about sixty companies, actually more today because you've added a silver component to the report. Talk about these companies, a lot of them are mainstream companies, up-and-coming producers, a few exploration plays or development play, talk about the companies that make your universe.

JOHN: All right. Well, let me tell you to start off with, Jim –and again, thanks for having me on the show –but let me start off by telling you how I got into the business because I think that that sort of leads into to the nature of how I write and do the research for the publication. And as you know, I was a professor of economics for about 20 years. I got interested in gold in the 80s, really, because of a distrust of politicians. I came to realize that the real business that politicians are in is to get reelected and that means that they are always trying to get nine slices out of an eight slice pizza. So they are always trying to get more, to promise more to voters and try to deliver, and that means you've got to spread the pizza pie around further than it really wants to go. And how do you do that in economics? You debase the money supply. And whether it's getting Federal Reserve governors appointed who are going to have loose monetary policies; you know, a little inflation is always good in economics to grease the economic wheel, so to speak, and deficit financing is essentially just a different way to print money. There is no difference between a thousand dollar Treasury bill and a thousand dollars worth of currency. And so whether it's fiscal or monetary policy, they are always going to be debasing the money supply and as you know, that's partly why gold is at $800. It's not that gold went up. It’s the dollar has gone down.

So I started playing around with gold stocks, as a way to protect my own personal investment monies, scarce as they were then as a college professor; and I had a hard time figuring out which ones to buy. I was never interested in the “stories stock” part of the business –and even though there are a lot of good exploration stories out there – because I'm not a geologist and I didn't have really any great intuition on which exploration stock was going to hit it, and which not. But I thought that the – there was a unique industry in that you had a bunch of producers then (and even more now) who produce exactly the same product. An ounce of gold is an ounce of gold. It doesn't matter whether Barrick got it and mined it or Newmont or anybody else. And I thought with that as a common denominator there ought to be ways to compare the valuations of one company versus another company to try to figure out whose ounces are overvalued and whose ounces are undervalued, then, to come up with market-wide industry wide valuation metrics. And it turned out there was a metric (I didn't invent it, but I think I probably popularized it) and that's the concept of market cap per ounce where you take a company's stock market capitalization – [the price of the shares] times the number of shares it has outstanding – and that's the total value of the company that the stock market assigns to it. And then you divide that by their forecast production for the year. So that gives you a market cap per ounce of production. And right now the average market cap per ounce of production is running around $5000 industry wide and you can also look at their reserves – their proven and probable reserves. These are the reserves that the SEC says companies can count because somebody – an independent engineering firm – has looked at the drill data and the information and says “yes, those ounces are probably there,” because, as you know, drills may be 50 feet or 25 feet apart, so you have to make an interpolation as to what the kind of grade is between those drill holes. So the closer the space the drilling is, the more confidence you have. That sort of gives rise to these whole different classifications of resource ounces: Mineralized ounces, indicated ounces, inferred ounces and so forth. The SEC says you've got to have close enough spacing to be quite confident the ounces are there, and either be in production with those ounces or have a feasibility study where somebody has run the economics on the deposit and said “yes, if you spend this amount of money, and you build a production facility and mine you're going to make money.”

So those are proven and probable reserves. And you can take those numbers, which companies report, and divide that into the market capitalization and you get an average valuation across the industry for reserve ounce. And right now the average value for an ounce of proven or probable reserves industry wise is about $260. So with those two metrics in hand, I could begin to start looking at who is overvalued and who is undervalued in the industry. And I still do that. And as you point out, I cover about 60 gold mining companies and about 15 silver mining companies.

The gold miners have evaluations that really run all over the board from as low as 50 bucks an ounce versus an industry average for an ounce of reserves of 260, to double that, $500 an ounce. So you have to begin to then look deeper in the company and figure out, well, are these valuations justified? Now, we know that some ounces are cheaper to produce because the grade is high and other factors, maybe the labor costs are low and so forth; other factors are important. And so an ounce that can be produced from maybe $150 cash cost is more valuable than an ounce that can be produced at $500 cash cost – even though at $800 gold would be profitable. So you begin to make subjective valuations or evaluations of the relative values of the ounces that a company produces and so forth. And once you understand the company and, you know, a lot of people have called me the Joe Friday of gold stocks, “nothing but the facts, ma'am, nothing but the facts” and as you know, the detailed analysis I go into about the company and its mines and so forth. So it sort of lets me in my own brain come up with some kind of a subjective evaluation and say, yeah, these ounces are undervalued or these ounces are overvalued. And overtime...in fact, since we started the newsletter in the beginning of 1995, the top 10 portfolio, and that what we end up with this analysis, of a list of the top ten. It's kind of like a personal mutual fund: The average of these top ten stocks through the end of last month through October has been an average gain – if you take the gain over the whole period and divide it by the length of the period – it’s average gain has been 37% a year.

And part of my whole philosophy in this is you can't simply identify one or two stocks. The risk of one or two stocks is just too high. You never know when there is going to be an underground mining problem or political problem or whatever, so you have to have a group of 10. And I suggest companies that people buy all ten of the stocks that I recommend and they all sell for well under their target prices. And we make as you know, three or four changes a year, or more if necessary to keep the, you know, when companies get closer to their targets or something happens that we don't like, we may take them off the list. And in a general sense, we're always focused on the whole industry, the whole sixty –roughly sixty – producers and that is almost all of the producers. When something happens to a stock, it falls out of bed or makes some kind of a – some kind of a deal that really changes the nature of the stock, we can be ready too add it to the buy list.

We made three changes this year that come to mind. One where the stock fell about 30% below where it had been trading in the prior past and had made a company changing move that let us put it on our top ten, and that's the company called Royal Gold (RGLD); it trades on the NASDAQ.

And then another company that made a dramatic move was Silver Wheaton where they have been buying royalty streams – income streams of silver – and they've been paying in the beginning mostly with shares. But they made a huge purchase of Penasquito (which is Goldcorp's new mine in Mexico that I visited and wrote about in the October issue) but they bought 25% of that silver production for debt, without needing to hedge it or anything. They borrowed the money and gave it to Goldcorp and they are now going to own roughly 7 million ounces a year of silver ounces and for that they are going to pay $4 an ounce and as you know, silver is around $10 an ounce now. And this is going to be a huge mine. It's got almost a billion ounces of silver reserves. And so Silver Wheaton bought 25% of those, or 250 million –and more ounces, I believe, to be discovered – and they'll be paying $4 an ounce for them and earning $10 minimum on a profit, and higher as silver goes up. So those are two companies we added to the top ten.

One company we took off the top ten, partly because we're a little confused by a move that they made and that's Yamana which has been a top ten stock from $2 when we started covering it in 2003, and we rode that all of the way up to around $12 a share. And we took it off because they made a deal and bought Northern Orion and Meridian at the same time. Now, the mines they bought aren't bad. What scared us was the shares that they issued. And we're still apprehensive when we think of the selling that may come by year end or early next year as people want to take their gains that own Meridian or Northern Orion and we think the gains which are now translated into the Yamana shares may drive Yamana back down in price and create a new buying opportunity. And I'll be visiting three of Yamana's mines by the end of this month and be writing about it in the December update. You know, we put out – we speak to, I call it speaking anyway – to subscribers twice a month and a major issue that comes out at the beginning of the month, 16 plus pages; and then an update that comes out sometime between the 10th and 20th and that's anywhere from two to six pages. We just put the November update and that was the six pages went up about – I guess it was last night on the website. [51:54]

JIM: So in the case of Yamana where it was on your top ten list, if a company either pursues a strategy that might be over-dilutive or, for example, it becomes overvalued, you're not afraid to take it off the list until –

JOHN: No. We're in this to make money. People often criticize me and say why don't you like this stock. And I mean people sometimes fall in love with stocks and this is a money making proposition. It's not a love affair. We like stocks. When we think we're not going to make any more money, we change. And if a stock falls back and we took Yamana off once before; and it fell back 30% and we put it back on. Goldcorp has been on the top 10 list three or four times over its life history and you know, it's always price driven and we don't hesitate to take profits. We know the stocks well enough and we know that nothing goes up forever and you have to take profits in this business to be able to really make money. [52:49]

JIM: So at its current price, what would make you interested in the company again, where would you look for...?

JOHN: In Yamana?

JIM: Yes.

JOHN: I'm going to know a lot more after my five days with the company and management in late November, early December, because I want to get a better handle on where it's going. They've got five or six mines to build over the next couple of years. It's a huge cash generator because it's a company-making mine, Chapada, that they have in Brazil. It's a terrific mine. But you know, I think back in the single-digit range Yamana is going to look very attractive. And we may...selling at the end of the year or early next year because of the nature of the owners of Northern Orion, certainly, which was an exploration-oriented company, not a production-oriented company. Those people are going to want to sell the shares they got from Yamana and probably go back into other exploration plays; and Meridian is probably a different subscriber base too to some extent. So if we get some price weakness, we'll put it back on and we'll be fresh up to date with everything going on in the company. I was at an analyst day meeting in October with the company in Toronto and, you know, we definitely...It's not that we don't like the company. We don't like the price at the moment. [54:06]

JIM: Well, John, if our listening audience would like to get more information about your newsletter, tell them your website and how they could find out more information.

JOHN: Sure. Well, you just have to let your fingers do the dialing and turn their computer to www.goldstockanalyst.com. It's all one word, www.goldstockanalyst.com, and they'll find on the site they will find information about the newsletter, sample issues; we post the front page of the last, three or four years on the site. You'll learn lots about it. You’ll get somewhat of a repeat of what I said earlier about how I got into the business. You'll find a very nice quote from a pretty well-known hedge fund guy, Bill Fleckenstein, who has been a big supporter of us over the years. And we have a pretty professional subscriber base of about 25% are money managers and professionals of one form or another from Fleckenstein to Fidelity to Tocqueville to US Global, all of the big funds subscribe. But there is a lot of very interested retail people who don't have the time and energy to figure out which stock to buy and they understand they need some help. As you know, there is not a lot of help available from the big brokerage firms anymore. So they need people like me or others to get information that's usable and not biased, because the most a company can do is subscribe. We're not – we don't take any options or payments or any of that kind of stuff that other people might. [55:44]

JIM: That's why you're on the show, John, and excellent work that you do.

David and Eric Coffin, Editors Hard Rock Analyst

Joining me next are two brothers, David Coffin and Eric Coffin. They are editors of the Hard Rock Analyst. Gentlemen, both of you guys grew up in a mining town and you were raised in the industry. David and Eric, why don't you tell our listeners a little bit about your background because it's a wonderful combination. One of you comes from the geology side and the other comes from the financial side.

DAVID: My background is in the exploration side of the business. I went to a mining school in Ontario and worked various places mainly in the western Cordillera of North America. The work evolved into a consulting firm that Eric ran with me; starting almost 20 years ago now and then into the newsletter almost 12 years ago now. [56:44]

JIM: Both of you come at the mining side – most of the companies that you cover on your list are juniors. Tell me why the junior sector versus, let's say, there are some newsletters out there that follow the gold sector, but they are mainly large cap companies. Why the junior sector?

ERIC: I think that one of the strengths that we have because of our background, we're used to and fairly experienced when it comes to looking at data off the projects. And we felt that gave us a leg up and would in turn give our readers a leg up in terms of following and finding stories early. I mean, like anyone else, we think management is obviously very important. And I usually look quite hard at how the companies are being put together in terms of financing and share structure, but if you can get a selection of stocks run by people who are capable of discoveries on projects that are permissive for it and make some of those discoveries, that's where a lot of the really large gains are. Although I would add that a number of discovery- and development-level stocks that we’ve followed have gone through to production. We don't have a huge number of producers on the list right now largely because so many companies we followed have been taken over in the last couple of years. [57:57]

JIM: When you guys are looking at a prospective company that you're going to list in your newsletter, take me through, what are the things that you like to see in a project?

DAVID: It basically does come to that – the leverage offered by exploration companies is that they grow from negligible (essentially, cash in the bank) assets to, when they’re successful, assets that can be worth in the hundreds of millions of dollars range; and in a few cases a billion dollar range. They have higher risk, but a higher potential gain. In a nutshell that's why we focus on that sector. That said, as indicated, if we see a producer that's looking undervalued on a cash flow basis we will talk about that as well. And early in a cycle we've been successful at doing that. At this point, after five years of a large bull run, we're somewhat more focused on the exploration stories, on the asset growth potential of the sector. [58:55]

JIM: Now, there has been a lot of money that's been poured into the resource sector, especially with exploration. You're seeing a lot more juniors out there, they are getting financed, there is a lot more exploration work that's being done. What do you like to see in a company? If you were to look at a new prospect name, if you would, some key characteristics that you would look for before they would get mentioned or let's say put on your recommended list.

DAVID: The geology and the targeting, which is a combination of geology plus usually geophysical and geochemical surveys, have to indicate that there is potential for a deposit of sufficient scale to develop it. That's point number one. There are two areas where you can do well as focuses. One is to look at companies that are working in established districts and who may be able to take a relatively small deposit and sell it to a company in the area that has infrastructure if they discover it. The other one (and the one that I personally like better, I suppose in part because of my background, but also because it has the bigger upside potential, though also the bigger risk) is companies that are working in areas where there has been very limited exploration in the past or at least very limited exploration in a modern sense, so that when they make a discovery, they are offering up to the market the potential to be in a new district rather than simply an asset gain. They have an ongoing blue sky potential. That type of story has been prevalent and a big part of the Canadian mining scene for the last hundred plus years. In this cycle, although there has certainly been several discoveries of that type, they are getting harder to find for the simple reason most of the potential belts in the world have had a look. [1:00:51]

JIM: What about political risk today? Certainly, you know, you make a major discovery, have a very rich deposit, but we're seeing resource nationalization or nationalism around the globe whether you're looking at Latin America or Asia. What are your views on that?

ERIC: The reality is something that we talked to readers about this really fairly early in the cycle was...you know, the good news, I guess you could say, was we think we're going into a super cycle for reasons we won’t bore people with during this particular interview, but the downside, if you will, of a long period of historical high prices is that there is going to be people in all sorts of jurisdictions that are going to want their pound of flesh, if you will. And that's certainly something that we've seen happening and it's not really that surprising.

The oil business went through the same thing in the 70s and 80s when the oil price went from a couple of dollars a barrel to 30 or 40; a lot of governments decided they wanted to re-do some deals and there has been some of that. And we expect, you know, there is going to be some continued uncertainty and it’s going to vary from place to place depending on where the industry and the government is in the process of negotiating new mining laws and mineral acts. We have found in the past that we can often do quite well for readers by picking the right uncomfortable area, because as Dave mentioned there hasn't been a huge number of real world-class discoveries this cycle. And that’s forcing companies –whether they want to or not, really – to go into a lot of areas that might have seemed a little bit too risky politically in the past. So I mean we’ve...some of those companies we have followed into those areas.

There are a few places – Russia is one – where we really don’t follow anything because we just don't feel there is... there is really no predictability to what is going to happen. And there are a number of jurisdictions where either we can’t identify any one as a government in the true sense of the word, or the government clearly allows people to expropriate legally or legally at will; and we stay away from areas like that. But in other areas that are a little bit dodgy, we do lay out the fact that they’re in that kind of your jurisdiction to readers. But sometimes that’s where the best deals are as long as you go in with your eyes open and you realize what you're up against. [1:03:11]

JIM: In your mind, what makes a company attractive as a take over candidate, let's say for a major or intermediate producer?

ERIC: There is really two or three things. One is a project that's capable of a high production rate. That’s usually going to be the most attractive thing to the really large companies. They are all having a great deal of trouble growing organically at the rate they'd like to, and most of them have and will continue to grow through acquisitions. They’re like anyone else, they'd rather not pick up twenty projects when they could pick up five and get the same increase in production. So the capability for a project that produced at a high scale is important. A low cash cost is also important. You know, we've seen a few things that look like they'll be expensive producers get picked up by companies because they have very large resources in the ground and those companies obviously want to add them to inventory. But I think really even though metal prices have gone up so much, and gold and silver are moving now, companies that are looking for acquisitions are always going to start at the top of the heap. They are always going to look for the top quartile ones in terms of potential return, and bottom quartile in terms of cash cost per ounce or per pound or whatever the unit is for a given deposit. So when you're looking at companies that are close to a feasibility study or are developing properties, you want to be looking for ones that have a combination of, say, ease of access, good infrastructure or a place where infrastructure is not going to be expensive to build out, high enough grades and good recovery so they can generate the metal at a low cost per unit, because those are the first ones to go.

Another set that the really big guys don't usually go for, but we think you’re going to see more and more medium and small companies going for, is the smaller deposits that are too small in terms of size for the really big guys, but which also have those attractive economics; especially ones where you have high grade resources that can produce at a really high profit. I think you’ll see a lot of mid-sized companies of which there are really fewer and fewer these days going after those. And we think if you can find companies that have those and can bring them along themselves where the capital cost isn’t that big, we’re expecting to see more and more situations where two or three or four of these small companies merge to sort of create a mid-size because there really isn't much of a mid-size in the mining business anymore. Most of it has been taken out. [1:05:32]

JIM: You know, one thing that we are seeing and certainly with gold prices over 800 and silver over 15, I would suspect, guys, we're going to see a lot more acquisitions because, you know, you take projects for example like Dolores with Minefinders that maybe three or four years ago when gold was around 300, the economics of the project might not have looked that attractive to an acquirer, but today when you take a look at $800 gold or $15 silver that certainly make it's more attractive. Do you expect to see more takeovers as the price heads higher?

DAVID: There will be. The issue for the precious metal producers has been that they’ve had difficulty with getting their own share prices up. The ratios, or the extent that they want to put into acquiring some of these producers – and Dolores is a good example – they haven't seen. When that changes is now. So I think, if you keep an eye on the bottom line of gold/silver producers who should have pretty strong Q4 for the most part this year (because the gold and silver price is finally rising faster than costs) you'll start to see more acquisitions early next year. The theme so far has been (as Eric pointed out) to acquire projects which are large rather than necessarily high quality. As these deposits go into production – and we have, I think, five on our list right now of companies that will go into production of various commodities, not just gold and silver, between now and the middle of next year – we're expecting those to become targets as they start to put out their first quarters of actual cash flow. At that point the final piece of analysis will be in the bank and they will start seeing offers based on their cash flow potential. [1:07:31]

JIM: I don't want to get into a lot of the fundamentals of the gold market, but one thing that stands out to me is number one, the companies are having a harder time replacing their reserves; there is almost a similarity that I see to the energy industry where you have the big behemoths – the Exxon Mobils, the Chevrons and Texacos – today, you have the Newmonts, the Barricks and others. But one thing that really stands out, and I'd like to hear your comments, is it's not just that, you know, good projects are getting harder to find, reserves are harder to replace, but you know, getting people, equipment – the human aspect of the money industry – is also in short supply. I mean, I don't know of development people who wanted to go to school to become a geologist in the 90s.

ERIC: That's still the case from people that I've talked to that are trying to hire people. I mean there has been some increase because I guess the guys in the MBA faculty are walking around slack-jawed when they find out what the people graduating in geology are getting offered out of the gate – well, they’re actually getting offered six to eight months before they graduate so the companies can tie them down. I mean, I don't know about David, I mean we get called individually, but I would say at least just in the last 10 days half a dozen of the companies I’ve talked to, put a bug in my ear and said, “if you know of anybody who can ride a drill rig or anybody who knows these kinds of rocks, let us know. We'll hire him or her in a heart beat.” It’s really tough. And that's going to be an ongoing problem.

And the human resource one, again, it's something we’ve talked about a few times over the last three or four years, that's something that we see as a real headache. It's going to be a really, really big problem especially on the exploration side, where you really need experienced people. Sure you've got a geology degree, but knowing how to actually find stuff in the field is very much a learned discipline that needs 5 to 10 years on top of university. A huge number of the people in that part of the sector are within five to 10 years of retirement age. And a lot of them are way, way up on their option packages. And I'm sure more than a few of them are saying, “you know, I can cash out right now, put a couple of million bucks in the bank off my options, and actually be able to see my kids from one week to the next.” It's going to be a really big problem. [1:09:50]

JIM: Well, guys as we close, why don't you tell our listeners about your newsletter. And secondly, if they would like to find out or get more information about the work that you both do, tell them how they can do so.

DAVID: We publish basically three publications. There’s a monthly newsletter, a sort of a mid-month publication that just has sort of updates in it, and an alert service that’ll go out 20 or 30 times a year – it’s basically event driven. We’re actually in our 13th year of publishing, now. If you want to get some details and get a pretty good idea of what our track record is and actually see what the publications look like, you can go to www.HRAadvisory.com or www.hardrockanalyst.com. Both of those end up in the same place. And there is contact information there if you want to get more info. And you can take a look at some of the free articles, and we have a free mailing list where we send out notifications and when we send articles on third-party publications and things like that. And there’ll probably be one about this interview. And that’s probably the simplest way to kind of get a look at what we do. [1:10:58]

JIM: I want to extend my congratulations to both of you for being chosen by Bob Bishop to take over his newsletter. That was quiet an honor and I want to congratulate both of you on achieving that.

ERIC: Thanks very much. It was.

JIM: I want to say another thing that in choosing you for this year's Annual Gold Show, when I was looking at newsletters, one thing that's very important to me is looking at a newsletter that is completely objective. In other words, they don't get paid by stock options or warrants with the companies they follow or they don't get a fee or retainer. And I might just add that hard rock analyst is strictly subscription[based. You do not take money from companies. You do not get paid in options and very honorable, I think.

DAVID: That's correct. I mean that's always the way we've done it. We get asked on a regular basis what do we have to do to show up on your newsletter and our answer is always: we have to like you. It's no mystery.

JIM: Well, listen, David and Eric, I'd like to thank you for joining us on this year's Gold Show. And once again if you'd like to find out more about David and Eric Coffin’s newsletter, you can simply do so by going to the web at www.HRAadvisory.com.

Ron Paul, Presidential Candidate

JIM: The presidential election in the United States is in full swing with every candidate out there promising everything from the moon to the stars with the exception of one of them. Joining me on the program is the Republican congressman from Texas, representing the 14th district, congressman Ron Paul.

Congressman, I want to begin our interview with a question: In a time when the US economy is slowing down, businesses are cutting back, why do we never hear in the debate about government cutting back?

RON PAUL: Well, the people running, excluding myself, have been born and bread with the idea with the idea that government is supposed to run everything: Run the people, run the economy and run the world. So that doesn't even cross their mind. And I think the media is about the same. So they never really ask the question. Now, there are times when they'll talk about cutting back but that's when they talk to a smaller crowd and trying to appeal to some of their instincts. There was a time when we were supposed to make government smaller and balance the budget. But most people that I'm talking to now that are sympathetic toward what I'm doing when they hear the candidates even pretend, they just don't come across as believable. [1:13:40]

JIM: Some of the candidates are talking about that it's time for Americans to make sacrifices. The one thing that strikes me Congressman is the government makes a mess of running things and then they turn around to the citizens and ask them to pay for the clean up. It just doesn't seem right.

JIM: Yes. You know, that is endless. And it sort of reminds me about the way they think property should be taken care of. They tell us we own the property, but if we use it, we have to ask permission and get all kinds of permits, and then we have to pay taxes on it; and then if they need it they take it from us through eminent domain. And yet they tell us that we own our property, but we really don't. So there is a lot of pretending that's going on there. But I just think there is more and more people starting to see through some of this. [1:14:27]

JIM: Another issue on the campaign trail this year is Social Security, and they are talking about fixing it. It seems like we're always fixing it. We had programs in 1984 with the Greenspan Commission to fix it; it was going to make it secure for a gazillion years. Here they are with some candidates talking about taking off the cap. Wouldn't it be better off if they just let the funds accumulate rather than spend them?

RON PAUL: That's been the fallacy of it all is the theory was they would take a little bit, save it up and then return it to the people in retirement. But they really spent it all. Even the fund that they claim is getting smaller really doesn't exist, because they are just holding a fiction, that they are holding a computerized Treasury bill – which is just another claim on the tax payers. So there is really no real money there. And I think the most important thing is that we admit the truth about this. And my plan isn't so much that we can all of a sudden have a lot more wealth, but I would like to change the whole system. I would like to let young people to get out of it and put the responsibility on them to do their own savings and that they have to take care of themselves. At the same time coming up with a plan where we don't have to quit making these payments to the elderly. And the only way we can do that is to change our foreign policy and save a lot of money elsewhere. If we don't, people say “well, that still sounds impossible, and harsh. And how are you going to change foreign policy?” If we don't do something what we’ll have is a financial crisis and no matter how much they send the elderly the money won't buy anything. And they realize this already. They claim that the cost of living last year was up just over 2%, so that's what they increased the benefits by. At the same time the real cost of living for most Americans was 10% or more. Unless we do something and strengthen our dollar in the real sense of the word by living within our means, there is no way we can help the elderly, or anyone else become dependent on government. [1:16:29]

JIM: You know, another issue coming up on the campaign trail is balancing the budget. And of course they are talking about raising taxes. Congressman, it seems for the last three decades we've been talking about balancing the budget and every time we talk about it, we're always talking about raising taxes, but the budget has never been balanced. Is this really making a lot of sense: to go to Americans and say, you know, we just can't control spending in Washington so in order to balance our books we want you to pay more taxes, but as we know, as we increase taxes, we still don't balance the books?

RON PAUL: There is still a lot of people that argue that. And I guess deep down in their hearts they believe it because they think they can get it maybe from 3 or 4 or 5 percent of the people. And the people who are voting for candidates like that might even believe “well, yeah, we'd better raise taxes on somebody else.” But the plain truth is that if we don't recognize it's not the taxes as much as the spending, and if we spend money and we don't have it and we print it and then people’s prices go up, that is a tax in itself. So the regressive tax is the inflation tax. This is why I concentrate on cutting spending and never trying to solve the problem by increasing taxes; or somebody will have a more convenient way of raising taxes. Some will say: “If we cut the tax rate. the economy is going to boom and government is going to get more money.” I don’t buy into that. If we cut rates and the government gets more money, that means we haven't cut taxes enough. Or some will say, “well, we need to get rid of the income tax” – which I agree with, but they want to replace it with a national sales tax, which I think is just opening up for disaster because we'll probably end up with an income tax and a sales tax. And so taxes are very important and we need to understand it and we can't solve our problems with more taxes. What we have to do is address the subject which is more difficult and that is the spending side of the equation. [1:18:28]

JIM: Congressman, one thing that I've always seen when we've had the Fed chairman on Capitol Hill and questions are given: You seem to be the only one that understands the inflation consequences of monetary policy. Are there any others like you in Congress that understand that and if there aren't, aren't we in big trouble?

RON PAUL: I think so and there aren't very many. And it’s not so much that my colleagues are enemies of sound money. They just really haven't thought that much about it. I mean they think about staying in office and if it requires spending here and there, yes, they are going to vote for it. They'll call themselves conservative but they'll cut something – some other program that doesn't affect their district. It's always one of those things. They easily rationalize. But from really studying the issue there is just not a whole lot of interest in it. And some who have studied it have a misunderstanding and they do not accept the point that I make continuously that inflation is really a monetary issue and doesn't have to do with business people making profits or unions demanding higher wages. Those are consequences, but that's not the cause of the inflation. Inflations and the bubbles all sounds from Federal Reserve monetary policy. [1:19:48]

JIM: And then a final question, Congressman, that I think is deeply disturbing and we've seen this progressively over the decades is more regulation coming in from government. And they seem to be moving in the direction of stripping away or doing away with the Bill of Rights, whether it’s having control over the property that you own, free speech. I mean you just go right down all of the elements of the Bill of Rights and it seems like they are doing an end run around it.

RON PAUL: It's endless and the Republicans didn't do a very good job in economic terms after the Enron scandal. They decided it came because they didn't have enough regulations. So the Republicans led the charge on Sarbanes-Oxley. And then when it came to 9/11, they said, “well, there must not be enough regulation on the American people and that's why that happened.” Instead of looking toward monetary policy and looking toward border security and a few other things, they said that what we need to do is make sure the American people aren't secure. And there had already been major attacks of 30 years on financial privacy. That's been expanded. Now they talk about national ID cards and warrantless searches and sneak-and-peak searches in our homes, and secret courts and the elimination of habeas corpus. There are so many things where – you’re exactly right – there has been a vicious, systematic attack on our civil liberties. And to me, civil liberties is the important point. And I think once you understand the true nature of civil liberties it means the right to own property and the right to keep your wealth. So civil liberties to me means personal privacy and personal liberty as well as a market economy. [1:21:31]

JIM: And one final question, I think that is a major concern as we look at oil prices at $95 a barrel, we had a discussion here a couple of weeks ago on political candidates and on their policy on energy. Congressman, what is your policy on energy?

RON PAUL: On energy, the first thing is when government gets involved and thinks they have the answers, you'd better watch out because part of our current energy policy is that they think we have to protect oil resources. They are sort of mercantilistic in that we have to go out and protect our natural resources and that's why we're in the Middle East. Even Alan Greenspan admitted that. And since we've been over to the Middle East, energy prices, oil, has tripled in price. Then they say, “well, the prices are going up and there is going to be a shortage, so we need an energy policy.” So then they collect billions of dollars of tax payers money and then they start handing that out for R&D to their special friends that develop alternative energy. We need to just get out of the way. We need to get the government out of the way from developing nuclear energy. I think as prices go up, there will be alternative fuels. But prices have to determine what kind of alternatives we have. Today we subsidize things like ethanol from corn and I think it's pretty clear that that’s not the most economic way to solve our energy crisis. [1:22:52]

JIM: Well, Congressman, if our listeners would like to follow your campaign or make contributions, I'm going to give out your website, if I may. It's www.RonPaul2008.com. And I just want to tell you, Congressman, I'd like to thank you for joining us on your program and you definitely have my vote and I would urge our listeners to give their vote to you as well.

RON PAUL: Thank you very much for having me on. [1:23:19]

JIM: You're welcome.

JOHN: So as the voice of Congressman Ron Paul fades into the distance, we conclude the second hour of the great Financial Sense Gold Show of 2007 with Jim Puplava. Coming up in the next hour, we'll look at voices such as William Pincus, Mark Bailey, Allen Ambrose, Keith Neumeyer, David Miller and Keith Barron. It's going to be an exciting two hours remaining here in the program. Don't forget you’re at www.financialsense.com. On behalf of Jim Puplava, I'm John Loeffler. We will be right back.

PART 2

Click a selection to jump to a segment of the show

William Pincus, CEO & Director Esperanza Silver Corp. (TSX-V: EPZ)
Mark H. Bailey, President & CEO Minefinders Corporation Ltd. (TSX: MFL | AMEX: MFN)
Yale Simpson, Chairman Exeter Resource Corp. TSX: XRC | AMEX: XRA)
Allen V. Ambrose, President & CEO Minera Andes Inc. (TSX: MAI)
Keith Neumeyer, President & CEO First Majestic Silver Corp. (TSX-V: FR)
David Miller, COO & Director Strathmore Minerals Corp. (TSX-V: STM)
Dr. Keith Barron, Director Aurelian Resources Inc. (TSX: ARU)

JOHN: And welcome back to hour three of the Great Financial Sense Gold Show of 2007. Now, just so people know, Jim, we've broken these hours up into theme sections. That's important to understand so as people listen to them online they can actually follow. What will be the theme of this hour?

JIM: Okay. In this hour we're going to take a look at some upcoming producers, some exploration companies and some late stage development companies themselves. And as many people know, I'm a big believer in juniors and up-and-coming producers, because the big monoliths –the Barricks, the Newmonts – these are the companies that are going to struggle to maintain production in a gold market. And that's what makes this bull market different than the bull market of the 70s.

Many of the companies in the 70s, you know, a 200-, 300,000 ounce producer was considered a major. Today a major is somebody that's producing several million ounces and these companies are going to be struggling. So that’s why I think the opportunities and especially in this pull back that we've seen and I said this during the summer in July and August where they were literally trashing a lot of these juniors; and I'm talking about companies where you can still buy gold in the ground at 20 to $25 an ounce. And a lot of these companies are going to be increasing the size of their deposit, they are going to make and enhance their existing discoveries. And so that's what we're going to do, actually in this segment and the next hour. We're also going to be looking at some upcoming companies. Some of them have actually gone into production and increasing their production. But listen to the story.

And as full disclosure, some of these companies we own personally in our portfolios for our clients, or I own individually; some of them we do not.

JOHN: And you're listening to the Financial Sense Newshour at www.financialsense.com as the Great Financial Sense Gold Show of 2007 continues.

William Pincus, CEO & Director

Esperanza Silver Corp. (TSX-V: EPZ)

JIM: My next guest joining me on this year's gold show is William Pincus, he’s CEO and Director of Esperanza Silver. Why don't we start out and talk about your company. I see you as an exploration company. Why don't you talk about the projects that you have and the company strategy.

WILLIAM PINCUS: Okay. Well, certainly up until now, we have positioned ourselves as an exploration company, although I think with our two principal projects we're now moving into feasibility levels or feasibility exercises, and that we see production in the mid term. And I'm talking probably 2009, possibly 2010 for at least production from San Luis. San Luis is our principal project and that's a joint venture with Silver Standard Resources. It's in Peru. It's a high-grade –bonanza-grade really – vein system, which is a brand new grass-roots discovery. We had worked with Silver Standard. Basically they grubstaked us to prospect in Peru, and we were fortunate enough to find this new area; and it's blossomed into a pretty significant project. Beyond the vein area where we've been doing quite a bit of work –and we'll have a resource out in the very near future – we've been doing a lot of other prospecting and we believe we're coming up with some pretty interesting stuff. So we think this is an area that will continue to yield exploration success for us, and together with our partner, Silver Standard. [3:48]

JIM: Bill, why don't you tell me how did you get hooked up with Bob Quartermain who is your principal shareholder. Tell us about that story. How did that begin?

WILLIAM: Well, it all started back in, I believe it was, 2001 when I met Bob Quartermain. I work for a company called Sunshine Mining and I sold him Pirquitas, which is of course the project that they are now building. This was a project that I had shepherded from exploration into feasibility; but the company I worked for decided to sell it off. Well, quite honestly, they got into financial trouble and had to sell it off. I met Bob and I showed him the project and they decided to buy it. And I remember sitting in a cafe in Jujuy, Argentina. It was clear to Bob that I was selling myself out of a job and he asked me, “well, what are you going to do next?” And I said, “well, gee, I've got this idea for putting together an exploration company dedicated to silver.”

He said, “well, when we get back to North America, let's get in touch, because there are some people I think you should meet.” And it just went from there. [4:57]

JIM: As I take a look at just the management of your company, I mean you have a very strong geological grouping that is with Esperanza Silver. Tell us a little bit about some of the geologists and the management of your company.

WILLIAM: Sure. The core group of people all came from Sunshine Mining. Many of us have worked together for over 10 years now. Bill Bond who is our vice president of exploration and was the chief geologist for Esperanza; we have two geologists down in Peru, Aristides Chavez and Julio Mendoza, who have been working with me since 1995. I used to live in both Peru and then later in Argentina and during that whole period, we worked together. We've added to the group; we’ve brought in a fellow named Steve Zuker who is an expert in geochemistry; and then Paul Bartos who is our chief geologist now, a long term ASARCO geologist. So we're very strong on the geologic talent and of course as an exploration company, that's the skill set that we need. But I think we also bring together a very practical approach to exploration. We're not interested in geologic successes, only economic successes. And sort of walking that line between science and commerce I think is where you find the successful exploration groups. And I think we have managed to, you know, find that correct balance. [6:32]

JIM: So you have two projects. You have the San Luis, Peru project which you're joint venturing with Silver Standard. Talk about the other project that you have going in Mexico.

WILLIAM: The principal project that we have in Mexico is Cerro Jumil, which is located in south of Mexico City or about 50 miles north of Goldcorp's Los Filos project and it's a similar type of geology. This is very different than San Luis. This will be an open-pit type project. Currently we're doing heap-leach testing. That's how we're viewing it. We own this project 100 percent by ourselves. And it's moving forward. We hope to have our first resource announcement by the first quarter of 2008. We've got about 20,000 meters of drilling now completed on it, so it's a fairly advanced project. One that has probably not gotten very much attention because of the, I guess, fairly sexy values we've been getting out of San Luis. It's a good project. We think it's got the potential to be a multi-million ounce deposit. But of course we have to prove that; and we're out there drilling right now trying to do just that. [7:50]

JIM: When I was speaking with you in Denver, you showed me a map and you showed me where the drill program was going on. Now, you were looking at this project originally as a silver deposit. You've been finding gold as well?

WILLIAM: I laughingly say we're a bipolar company. We certainly have set out and we explore for silver; as it's turned out our two principal projects Cerro Jumil has turned into a gold property. We originally drilled that for silver based on results from trenching on the surface. And in fact as we drilled, we found that the silver was just, you know, enriched near surface; but at depth we found significant values of gold. And so we kind of scratched our heads and said, well, this is not quite what we thought, but what is it? And we sort of back-tracked. We did a little bit more work and then we hit it back with another round of drilling and, you know, discovered a pretty significant gold deposit instead. [8:50]

JIM: So if we look at the company as it now stands, your two principal projects are the, is it the Jumil?

WILLIAM: Cerro Jumil in Mexico, and then San Luis in Peru.

JIM: And the San Luis Peru project production targets: 2009?

WILLIAM: Silver Standard, which has just recently taken over the control of the project has just announced that we're moving into feasibility this year, or early 2008. And they are looking at a late 09, early 2010, start of production. [9:24]

JIM: And then if we take a look at as you prove out and drill the Mexico project, if you were looking at a time frame to possibly prefease, is that too early to ask that question now, or –

WILLIAM:: No. I don't think it is at all. I mean honestly we've begun some of the prefeasibility type studies. We're doing the metallurgy. We'll be drilling through the end of January of 08 and then we'll be doing a resource estimate. That gives you the resource model, which is then what you use to start determining pit parameters and things like that. So 2008 we'll be moving it into prefeasibility/feasibility. And I would put, if all goes well, Cerro Jumil maybe a year behind San Luis in start of production. [10:14]

JIM: Do you have ambitions beyond these two projects? Do you see these as your two principal plays? Are you looking at anything else, or do you want to stay entirely focused on these two projects at the moment?

WILLIAM: Oh no. We are quite active beyond this. San Luis is being operated by Silver Standard and other than consulting, basically, we have no operational obligations there. Cerro Jumil, of course, we're working on, but we have 17 other exploration programs in both Mexico and Peru. And we will be...we started drilling on the first of what will be a probably seven or eight projects that get drilled out over the next 18 months. And I probably shouldn't say drilled out. These are the first round of drilling for all of these projects. I call it a round of discovery drilling. If it bears fruit, then of course we'll continue with the project. If it doesn't, we'll move on. But we're very active in looking at new projects and making new discovery. [11:17]

JIM: If you were standing before a group of investors today and you were to give them three reasons why they would want to invest in your company, and how you intend to make money for them, what would they be?

WILLIAM: Well, I think the first one is the strength of our geologic team. We have, since the start of Esperanza, we've made two significant discovers at San Luis and at Cerro Jumil. Prior to that, our group was involved working for other companies at a number of other significant discoveries, so we have a real record of discovery. And you know, we're very serious about this is what we do and we do it very well.

Number two would be unique for many exploration companies. You know, we have two projects that are now moving into feasibility with production in the two to four year timeframe. So we're a company that's looking at actually becoming a producer, albeit in the case of San Luis as the junior partner, but that will give us cash flow.

And then I think the third reason is, you know, clearly over the past, well, you know, the past few years but certainly over the past few months, we've seen that the gold market and the precious metal market has really taken off. And I've been doing this over 30 years now. I've been through a lot of different cycles. We are not just seeing a cyclical high here, but I think we're seeing a secular change in metals markets and I think that these higher prices will be sustained. And obviously that makes, you know, any sort of mining or exploration stock a better investment nowadays. [12:58]

JIM: All right. The name of the company is called Esperanza Silver. Its primary exchange is the Venture Exchange in Canada. Its ticker symbol is EPZ.

Mark H. Bailey, President & CEO

Minefinders Corporation Ltd. (TSX: MFL | AMEX: MFN)

JIM: My next guest has taken his company from exploration to development now into production. Joining me on the program is Mark Bailey. He's president and CEO of a company called Minefinders.

Mark, why don't we begin and tell us a bit about the Minefinders story from the early days of exploration, then to development; and then why Minefinders decided to go it alone versus, let's say, sell out to somebody bigger once you developed the project.

MARK BAILEY: Okay, Jim. Minefinders has been around for some time and my involvement has been with the company since 1994. We started doing exploration in Mexico at that time and started staking some properties and acquired an option on the Dolores property –some of the core claims –and then we staked a large claim block around that.

We started work in 1995 on the ground and liked what we saw; got some good initial surface samples of the property that had been mined back in 1906, but there had been no activity at Dolores since 1929. So it's a very real remote place, there had been no development for over 70 years. So it’s somewhat of a sleeper out in the middle of the Sierra Madre in Mexico.

We had good success with our exploration. We drilled our first hole on the property –the first one I ever drilled – in 1996. We had 102 meters of 2.5 grams of gold and basically it's been a race to production ever since. We've had to do a lot of work. We’ve drilled over 200,000 meters of drilling – most of that diamond core; a thousand drill holes to define the open-pit resource and some of the underground potential resource beneath the pit. We did all that work ourselves without any partners. We did all of the engineering, metallurgical test work, all of the geotechnical, everything it takes to bring a grassroots discovery –which is what this was – to production. We didn't buy an already drilled-out deposit.

That took some time. We lost about three years of development in the late 90s when the markets were so bad it wasn't –it didn't make sense to raise money. I didn't want to go out and dilute our shareholders by raising money at 50 cents. So we kind of curtailed exploration for about three years even though we knew we were on to a major deposit. And when the markets started coming back in 2001, we came back and raised sufficient funds to continue our drilling and bringing it to a production decision.

We started active construction on the property. On the mine site itself in November of last year, we worked on a road – a new mine road –the previous six months before that to give us good access because the existing road out there was pretty tough and not something you would be hauling equipment out on. So we’ve effectively been building the mines since November of 2006. And we're just wrapping up construction. We had hoped to be pouring by the end of this year our first doré but it will probably slip into the first quarter of 2008, simply because there is a lot of work to build a mine in a remote area. We had some setbacks in some of the platform or earthworks construction that was being done by our contractors who didn't do a good job. And we had to repair those before we could have wrecked some of the screening plant.

But all in all, it's been a steady progress forward and we are mining right now. We started mining in October. We are stock piling ore and using some of the waste rock to build some haul roads and we will hopefully be crushing ore at the end of this year when we commission our crushers and screen plants and be loading the pads, start leaching ore in January and make our first doré pour. And we expect to be in commercial production in the second quarter of 2008. [16:40]

JIM: I see on some recent announcement you're also considering a feasibility study in 2008 for the addition of a floatation mill to process your high grade ore from a pit and ore from potential underground mining too.

MARK: That's correct. We did a feasibility study, if you recall, a couple of years ago on a much bigger operation which included a mill. And we went down that path because we always knew we had very high grade ore in the deposit and we'd like to get that into a mill, as opposed to a heap leach, especially the high grade silver. But in that feasibility study, the scale of it and the cost of it was going to be prohibitive. I didn't feel as a junior company we should be trying to raise 250- to $300 million dollars to build our first mine, which is what the combination would be. So I downsized the mine plant from 25,000 tonnes a day open pit with a 4,000 tonne a day mill, to an 18,000 tonne a day open-pit heap leach; and took the mill out and decided that we would get the heap leach mine built first and add the mill back in. And of course the price of gold and silver has gone up substantially in the last couple of years, so that makes the mill even more practical. We do want to do it right, though, so we'll do a feasibility study now. We hope to be at a decision point late next summer and we can start ordering equipment, and construct the mill and get a mill operation by the end of 2009. And that does enhance our recoveries of our high grade ores from the pit substantially. Our heap bleach recoveries for gold are 74%, the mill are 95; and more importantly, the silver recoveries on the heap leach are usually not very well – we see they are typically around 50%. We're looking around 51% for ours. With the mill, we get 90%. So the mill is an important component and we'll be working as we go forward here to put that on the property. [18:25]

JIM: I noticed that when you're looking at your economic model going back in February 2006, it showed an internal rate of return of roughly 31%. I imagine those numbers get better when we look at silver prices today over 14, and even with this correction in gold, we're still close to $800 in the price of gold. I imagine that enhances the economics?

MARK: Substantially. We are doing a new economic model right now. We updated our resource model because all of the economics are based on our bankable feasibility study which is two years old and the resource that was in that was closed off at the end of 2004. We've done some drilling since then. And we updated our resource model last summer and had that audited in a 42-101 report prepared and put on SEDAR in July. And that added about 23% to our resource. So we're doing a new mine plan, mine schedule, and an updated reserve model and economic model. That will be done – it's supposed to be done at the end of this month, but because of the amount of work that most of these outside engineering firms have I'm giving – they promised at the end of the month – but I'm expecting to have it hopefully at the end of month but more likely the first or second week of December. If we do get those results back early enough in December, I'll put out a news release with our new economics, which should be very robust because we’ll have current prices in there and a much bigger resource. Otherwise if it gets too close to the Christmas holiday, I'll wait until January to put the news out because it will be lost in the holiday. [19:54]

JIM: I noticed at least your resources currently are around three and a quarter million ounces of gold and roughly about 155 million ounces of silver, 43-101. Talk about also in addition to taking Dolores into production, you also have a couple of other projects that you're doing exploration on.

MARK: We are. We are currently drilling on a property called Planchas de Plata over in Sonora. It's a silver base metal system. It’s mainly supergene silver, very high grades. We are developing a resource there based on the drilling we've done to date. We're trying to extend that through stepping out with our drilling. We have a very large claim block and we've been finding a fair amount of mineralization over in an area of two and a half to three kilometers in strike and about two kilometers in width. So it's a big area and we’re trying to figure out where all of the mineralization is coming from and we're drilling on that now, will be through the end of the year.

We have another property about 10 kilometers away called Real Viejo which is identical mineralization. It's also silver-rich base metal system and we've been drilling on that. We have six holes that we completed this fall and we’re waiting on assays. We haven't received the assays yet and those two properties are very similar metallurgically. So if we can develop the two of them and develop a large enough resource on each, we can put in a central processing plant and run both of those with one operation. A little farther to the west, we have our La Bolsa the property which is a slightly different, it's mainly gold, doesn't have the base metals or silver. It currently has a resource – indicated and inferred resource – of about 208,000 ounces of gold. We have not drilled on that property for about three years, so we need to get back and start doing some work on that.

And we've also acquired about 85,000 hectares of new concessions in the Sierra Madre of Mexico this last summer based on a reconnaissance program we've been doing for the last year. And we're pretty excited about some of the potential of those projects – some very good surface numbers and interesting systems. But they are a little more grassroots and we have to bring them to the drill stage. [21:56]

JIM: Mark, when you're up and running next year or on a calendar basis when you're fully up and running, what do you expect to be producing on an annual basis?

MARK: Well, the new economic model will give me a more accurate number. You know, the 2006 feasibility are the only numbers I have to work with because that’s the only life of mine schedule we have complete. That one we were looking at averaging about 130,000 ounces of gold a year on average, and about 4.5-, 4.7 million ounces of silver a year for the life of the mine which is 14 years. I think it fluctuates. We have some years where we have 200,000 ounces of gold and about two and a half million ounces of silver while we're in the more gold-rich portion. And there is a few years where we are up to 7 million ounces of silver and about 100,000 ounces of gold. So it depends on which part of the pit we're in on the ratio of those two commodities. We expect that to be slightly higher with the new resource and reserve model once it's completed here this fall; and that will be the mine plan that we'll work on. The recoveries with the mill will also have an impact on that. That's all based on the heap leach recoveries which are low – silver in particular, we’re only 51 percent of silver. So if we get the mill operational, that's again why we're doing the feasibility study on the mill because it will tell us what the additional incremental recoveries will add to the overall production on an annual basis. [23:14]

JIM: Why do you think you've delivered on promises that you've made to the marketplace, but yet if I look at your valuation in terms of enterprise value compared to other companies in the area, you're undervalued. Why do you think that's so?

MARK: It's been very frustrating as you might expect for us because we agree we're way undervalued for where we are. And we worked very hard not to dilute our shareholders with only 48 million shares out, and the amount of money we've been able to raise and build this mine – discover and build it – we thought we should be doing a lot better. We'll get there. It's just been disappointing. I think there is some perception that by our name being Minefinders but not “Mineoperators.” I'm never quite sure how people decide that the name of a company dictates what it is. I can certainly go into a long discourse on the name of some of these other companies that don't match what they do either. But anyway, we are Minefinders but we are a mine producer – 85, 90% complete and we’ve got $120 million of investment in the ground already just on the mine side. So I think we we’ll prove we are miners. That's been one thing I've heard from the market, “well, you guys aren't really going to build a mine, you're just explorers.” I don't know where they get that idea, we’ve never said that.

The other thing is I think there is a perception that it's taken us too long to get here. We made our discovery in 1996 and that's 11 years ago. But I do point out to people that we didn't work on the property for almost three years because of the market. That's why we only have 48 million shares out. I didn't raise a lot of money at low prices and dilute our shareholders. And so we lost three years of development. So in fact we really have only worked on the property from discovery to production has taken a little over seven years which is quite rapid in a normal worldwide development of any mining property. But the market seems to think it's taken us too long. I never knew it was a race. I always felt it more important to be thorough. We'll get our day in the sun here on our valuation. It is frustrating though because I hear these comments that “you're not miners.” Well, somebody is building a mine out there. But if it isn't us, I'd like to know who.

But we are miners and we have a very good mining team from our senior management in Mexico, Gregg Bush, who was a general manager of Zaldivar for Barrick, is our VP of operations. We have a talented team of professionals in the field who are miners. Granted, I am an exploration geologist by profession, but these other fellows are miners by profession and we’ll do quite well and it will be a very robust mine, and I guess at that point the market will have to find some other excuse. [25:41]

JIM: I want to compliment you because you've been very prudent with shareholder capital. As you mentioned, during the weak years, you didn't raise a lot of money and over dilute your shareholders when the market became stronger. I admire the way you've done your financing, which has minimized dilution when the stock place got way up there, you did the bulk of your financing and I think you've done well for shareholders. Mark, as we close, give us three reasons why investors should consider an investment in Minefinders.

MARK: I think most importantly is this undervalued nature that we are currently trading at. We are trading at a discount to our NAV and most companies that go into production once you get that rating and trade at a premium the average is probably somewhere between –depending on the company – somewhere between 1.6 to as high as two times their NAV. And we're trading at about 0.9-1.0 times ours. So I think that's an important consideration for an investor because we're going to get that rerating which is a pretty quick bump in our evaluation and our share price.

The second one is: We are entering production so we'll become a producing company which provides cash flow at these current prices of $800 gold and $15 silver, incredible cash flow. So I think that's going to be exciting for our shareholders going forward. And we are out trying to expand the company through growth strategies, to have a grassroots exploration and looking at other projects to develop to grow the company. So I think it's an exciting time for our shareholders on those three fronts. And the valuation has not yet been captured in our share price so I think there is an opportunity for investors still in Minefinders. [27:18]

JIM: All right. The name of the company is called Minefinders. Ticker symbol MFN on the American Exchange, MFL on the Canadian. And we've been talking with Mark Bailey, it’s president and CEO.

Yale Simpson, Chairman

Exeter Resource Corp. TSX: XRC | AMEX: XRA

JIM: My next guest is the Chairman of a company called Exeter Resources, Yale Simpson.

Yale, why don’t we begin our discussion by telling us a little bit about the company, how it originated and the personnel behind it.

YALE SIMPSON: Exeter was put together in early 2003. I'm the chairman of the company as you mentioned. The genesis of it was Bryce Roxburgh who is our Chief Executive Officer had done work in Argentina beginning in about 1992. He had formed relationships, he had done exploration there. And then in the late 1990s, of course, our business went really quiet with gold price as you would say tanking. And it wasn't until 2002 that he could see the opportunity to put together a whole new team of people and a property portfolio in Argentina which has really led to the success of the company. At the time that he started that, Bryce and I got together. Bryce Roxburgh and I got together in early 2003. At that time there were no employees. I think the company had a market capitalization, as I recall, of about $300,000; and today of course, it's a different story. And I think we have almost 90 employees and activities not only in Argentina but in Chile. [28:51]

JIM: What about the rest of the staff? You talked about the president. Do you have a strong geological staff? I wonder if you might just cover that briefly.

YALE: Well, it's interesting that you would mention it because that's really one of our big challenges today in the business is to put together a technical team. We did that largely because the chairman, you know, myself and Bryce Roxburgh were both technical. We have a history with major companies earlier in our careers and were capable to pull up those associations and put together the team we have. We’d run periodically, we run analysts from major investment houses down there; and we recently ran one down to Argentina and Chile. And the very broad comment was on how did we put together the team of people that we have? And like I said, it's taken some years and it hasn't been easy, but that is our success. And that bears out – and it may be a bit of a lead in or a segue into another question, but it does bear out in the relationships we have with some of the major companies in our business. Why did they chose Exeter? It’s because of the technical team that we have that's available to service these opportunities. [30:01]

JIM: Let's talk about that. You have a number of projects in Chile and Argentina. Let's talk about the projects first, beginning with Don Sixto.

YALE: Don Sixto is a project that we have spent in the order of $17 million on to take it to the stage what it is. So it's essentially drilled off. We've done engineering on it. We've done scoping studies. The total resource – and I'm going to use the Canadian terminology – and the total resource is 1.2 million ounces. And the property we haven't done any drilling now there for almost eight months because it moved into a different mode as we moved from exploration on to evaluation. The property, we're not drilling there now. In fact, we're not doing a lot of work now, and back in June of this year in the lead up to the national elections, which you may have followed because they were on October the 28th, there had been some real strong, anti-mining sentiment and legislation in that particular province of Argentina being Mendoza province which is known internationally for its wine. It's kind of like the California of Argentina. The government in the run up to the election was promoting the agricultural industry as against mining and then enacted legislation that would really prohibit us from mining the way we would choose to.

The elections were held on October the 28th. A new governor came in who within in a week announced he was in favor of mining and wanted to encourage companies to proceed with mine development. So we’ve seen a reversal of that trend and we look forward to that very early in the New Year. So like I said, that's something that affects that particular province but certainly hasn't affected what we're doing else where in the country because it's a very diverse country. [31:47]

JIM: Let's go on to Cerro Moro.

YALE: Cerro Moro is one of those remarkable properties where we were very fortunate in that, first of all, we developed a relationship or an agreement with AngloGold Ashanti. It's one of the top mining companies in the world as you well know. And they have a mine to the west of us. It's a gold mine that produces about 220,000 ounces of gold a year and the order of about two million ounces of silver a year. A small mine for AngloGold by the way. It would be a good producer for a mid-tier, but as a big company, it's a relatively small mine for them. But anyway it's a big deposit in terms of the total ounces they have; and when they realize that they really couldn't scale up that discovery that they made to the size that suits a major company. They agreed with Exeter to take up a whole number of properties outside of the mine area where they had some indications of gold but basically didn't feel it was going to exceed the expectations that they have. So we spent two years on a property called Cerro Moro.

Between us and AngloGold drilled I think up to hole number 64, and on number 65 is when we announced the discovery. The discovery being gold and silver at a grade that's established that discovery as one of the highest grade discoveries in south America. We did it from underneath the nose of AngloGold. We own 100 percent of the property subject to a royalty. And today we have three drills on that property continuing its evaluation. It's a remarkable discovery in that it is very high grade. We're looking at surface mine, not an underground mine, but at gold grades of better than half an ounce –often in the ounces of gold per tonne. It has the potential to be one of the lowest cost producers in the world should we get the total number of ounces we need to make it a mine. We're still drilling it off with three drills today. [33:46]

JIM: I know Cerro Moro is in a mining district. Why don't you speak to that for a moment.

YALE: It's probably appropriate to do that because I mentioned the issues we're dealing with on Don Sixto which is a province well to the north where Cerro Moro property is. Cerro Moro is east of a mine being operated by AngloGold as I mentioned. But there are other companies that are operating there that are some of the name companies of the business. There is a silver company called Pan American Silver, they are building a silver mine. Minera Andes is building; they have just finished construction on a mine. There has been a discovery by another company called Minera Andes. Hothschild of Peru are operating there. So it's an established mining district. It's kind of like a mini Nevada if you like in Argentina. And most of those deposits by the way in terms of size on gold equivalent terms would be in the order of two million ounces; with the biggest one so far being Cerro Vanguardia which I think is about 6 million ounces. So you can see, given the size of the deposits around us, we think it's a pretty good shot that with continued exploration that we could perhaps get up Cerro Moro up into those ranks. What would make us very different would be that our deposit is significantly higher grade than any of the other deposits that have been found yet in Argentina as a whole, let alone in that district in particular. [35:13]

JIM: What about Caspiche?

YALE: Caspiche is interesting. It is really a different beast entirely. Chile is known for what we call the gold porphyries. Porphyries simply means large, low grades; and the deposits that have been discovered – and there have been a whole series of them discovered by major companies; the most active company there was Anglo American, which sold its interest years ago to the likes of Kinross mining and recently that area made the news and predictably became of interest to Exeter because Barrick Gold just took over a junior company who made a discovery south of us – very strategically located where we are. It's in the high Andes; the elevation is typically about 14,000 feet, yet they are mining there; Kinross mines just north of us. They are mining a deposit called Refugio. And to the south of us ten miles is what they call the giant Cerro Casale deposit that Barrick just bought control of. Big low grade deposits; low grade I mean in terms of ounces per tonne. They run about 0.026 ounce of gold per tonne and you say well, what's that worth? This rock is typically worth about $20 a tonne. But the fact is they find huge volumes. Cerro Casale is a billion tonne deposit. These are giant deposits by world standards and we announced a discovery back in May on our property, called Caspiche, right between these two other major deposits. And we will be starting to drill that very early in the New Year with two drills, just the opposite of what Cerro Moro is. Cerro Moro is high grade, extraordinary high grade. Caspiche is low grade, but you're looking at a multi, multi million ounce resource of the sort that the likes of Barrick buy and develop routinely to satisfy their corporate requirements. [37:17]

JIM: Let me ask you a question. Why are the big guys teaming up with you? Explain that. Is it the exploration expertise that you've developed and the team you've put together?

YALE: Principally it's a combination of two factors. One is the people. We have a large technical team in that part of the world. If you look at the number of capability of AngloGold in Argentina, they would have a handful of geologists, and yet we have 18. So we have the technical capability. But also, the major corporations today are buying many more deposits than they are discovering. When you look at the total amount of money being spent in Argentina by all of the junior companies I would say there is probably being about $50 million spent a year in Argentina. Even a company the size of AngloGold does not have the amount of money to put $50 million into every country in South America. So they have looked at that Cerro Moro property, similarly Anglo American in Chile had looked at Caspiche and had a first pass and at that time made a decision, “will it be big enough, won't it be big enough, where are we spending our money internationally?” And quite often they will choose a junior company whose threshold for development is much smaller and where they like to maintain an association. Like I said, typically, it's easier for the big company to take over a junior and have the juniors collectively in the business take the risk than for them try to be everywhere doing everything. [38:46]

JIM: Yale, where do you see your company going? Do you want to stay mainly in the exploration space and development, or would some day you'd like to go into production? Where are you heading with this company?

YALE: Our current space is very much in the exploration side of the business. However, I did mention at Don Sixto it’s moved into evaluation ahead of potential mining decisions. Certainly Cerro Moro is going the same way. We boosted our team this year by in August we announced that we hired a chief operating officer out of a major corporation. He's a mining engineer. His background is in building mines and in contract negotiation. We also have our vice-president of exploration, I should say development, he’s a metallurgist. So we started to put together the team to take these projects forward. You know, it's really interesting that to get full value for a company, exploration isn't enough. You need to take a property from exploration, get it permitted, get all of the environmental clearances you need and then you build that second tier of value. There is clearly a lot of excitement in the discovery phase and you're seeing that in Exeter. You can see our share price reacts very, very quickly to discovery. But, you know, when I look at my career and the CEOs and COOs where do we want to go with the company, I want you to be talking to me about production and our first pouring of bars of gold and those things. And it’s not today, but let's have that discussion in eight or nine months and I'd like to be talking about those things. [40:27]

JIM: Yale, if you were to speak before a group of investors, give them three reasons why they would want to own your stock today.

YALE: The principal reason would be growth in the gold-silver business, people look for growth. They are driven by that. They can talk about gold prices what have you, but it's really growth. And probably the second reason you’d want to own Exeter is because of growth. Growth is what drives our sector. And the third reason probably relates to growth! If you look at the growth we've had in a year on the company of what our market capitalization is today, and I think with continued success that growth will be reflected in for the investors. It's about growth and growth and growth! [41:04 ]

JIM: I’d probably throw out a fourth reason which would be the management team and the exploration team that you've put together as a company.

YALE: I do take considerable pride in that and you'll see a lot of research coming out by various firms who are following us, and analysts are very, very complimentary on the team of people. And I think point well taken: I'm proud of who we put together. It's been a great few years, but I'm really looking forward really to the next three to six months. I think it will be profoundly exciting for Exeter. [41:38]

JIM: The name of the company is Exeter Resources. It's listed on the AMEX with the ticker symbol XRA, on the TSX under XRC. And on the Frankfurt Exchange under EXB.

Allen V. Ambrose, President & CEO

Minera Andes Inc. (TSX: MAI)

JIM: Joining me on the program is Allen Ambrose. He's president and director of a company called Minera Andes.

Allen, as we begin, why don't you give us a brief profile of your company, your objectives and the projects that you're involved in.

ALLEN AMBROSE: Minera Andes is a company that’s been exploring down in Argentina for the last decade. We have now transitioned into the production phase, so we're kind of a hybrid company, a lot of exploration background and then transitioning right now in to production with our San Jose project, which is a joint venture with Mauricio Hochschild’s company that recently went public over in London. So we're really focusing on gold and silver in Argentina. And we also have a copper discovery in the San Jose project, primarily silver with some gold. So that's our main flag ship project. [42:52]

JIM: And tell us a little bit about the individuals involved with the company, their background, their exploration expertise.

ALLEN: The company is really founded by exploration geologists, myself and Brian Gavin, VP of exploration who really recognized Argentina early on as being a land of opportunity where we could get to a discovery over a short period of time; and the San Jose project that we just mentioned became our first discovery back in 1997. And we are just now entering in to production through this joint venture with Hochschild. The project itself will be producing about 3.2 million ounces of silver at full production, and about 60,000 ounces of gold. We own 49% of that. So a good technical management team. The board is also rounded out with several people in the engineering and geologic field and a good solid background there in management and the board. [43:57]

JIM: Let's begin with your biggest project, the one you're in the process of taking into production. You just announced a $10 million bank financing. Tell us what's going on there, how it's proceeding and what you expect to see from that in the future?

ALLEN: The project itself, we're in a commissioning phase. We announced in the third quarter inauguration of the mine. There are about 450 people working. It's a high grade underground vein system, so very similar to like an El Piñon that Meridian has – these high grade narrow veins. They are very – due to the nature of the veins they tend to be very low cost operations because of the high grade nature. You don't move a lot of the material, but the material that you are moving contains a lot of gold and silver. So this particular mine, it runs about half ounce of gold equivalent. And they are anticipating production costs...this third quarter we're in the commissioning phase. They've had a small amount of production and just ramping up which takes a few quarters to ramp it up to get to full production on that operation. So we're excited about that because of the high grade nature; the cash costs are typically 200 or under in these type of operations. And very profitable with these gold prices.

JIM: What about your other project at Los Azules?

ALLEN: That's an area where we're operating on a project with Xstrata and we've had some very good success up in the high Andes and we'll be entering into the drilling season there in the Argentinean summer, which is starting up (seasons being reversed), so we'll be up there in a few weeks and start drilling that project. In the past, we've had some phenomenal copper holes we drilled. The best hole to date is 221 meters of 1.62% copper. So your typical copper mine, you know, the grades maybe half a percent or so. So this is like three times – this area we found a very high grade three times the normal grade. So we're looking forward to getting in there and that's a venture with Xstrata, which is one of the top ten copper producers in the world. [46:26]

JIM: I also noticed that looking at your shareholder base, you have a strong institutional base that stands behind the company. Tell us about Rob McEwen, which he owns almost 28% of you. Tell me about that relationship and where that's going.

ALLEN: I met Rob a couple of years ago and he became very interested. He understands these high grade vein systems very well, obviously taking Goldcorp from a $50 million company to a multi-billion dollar company, he recognized the opportunity there and made the investment in Minera and became a very large shareholder because he really liked our assets (our property base). The thing I didn't mention about San Jose is they are moving that into production. They have also announced doubling of production – Hochschild, our JV partner. So it would move up from a 750 tonnes a day to 1500 tonnes a day and they are estimating by the end of next year they could have production doubled. So you would have about 6,000,000 ounces of silver production and 120,000 ounces of gold out of that operation at full production. And then the other really interesting thing about that project is the fact that it’s got multiple vein systems. Right now they've only developed about three, three and a half kilometers of vein that they’re going into production on. And then they have another 30 plus kilometers of veins out there to drill and work on, so they've got a lot of other targets. So everybody has recognized the blue sky potential for this project to get a lot bigger. [48:14]

JIM: Now, I'm just looking and I think it's the San Jose project where you own, what is it, close to 40,000 hectares of land?

ALLEN: That's correct. Huge areas and that was one of the things that attracted us as geologists to Argentina. It’s very under explored, underdeveloped and it really just hadn't had any modern exploration like the neighboring Chile, which is one of the large copper producing regions of the world. Argentina similar geology but just very under explored, underdeveloped; mainly due to the mining regulations. And back in the early 90s they modernized their system to really attract foreign investments and that's when we got in there and started exploring – so very interesting area. We've also, as you mentioned institutional shareholders. We've got John Embry with Sprott and some of the larger gold, I guess, investors in Canada that have followed us and like this type of story. [49:17]

JIM: As you go forward, do you see more exploration? Are you interested in acquiring other properties? If you were looking five years out, where do you see your company going?

ALLEN: Our main goal is we always want to maintain the exploration focus, and our business plan is really to move a project along, bring in a partner, like Hochschild, that’s an operator to develop that asset and then we share in the profits and develop it. And they run the mine and we get our percentage of profits and go out and do it again and find the next project. We think the Los Azules project is the next one that we will be focusing on – this copper thing; and then in the background, we always have anywhere from 10 to 15 other projects that we're working on that we bring up as they gain success. They go through our various filters to get to the next level. So we're always looking for that next deposit to bring along and develop and create shareholder value in the company. [50:23]

JIM: Allen, if you were sitting in front of a group of investors today, give me three reasons why an investor would want to invest in your company right now. How do you intend to make money for shareholders?

ALLEN: Well, one, I think the real solid foundation for us is that production story with the expanding mine in Argentina in this gold environment and this metals market. These types of systems end up being very profitable. So we've got that cash flow base that we can use to grow the company further using our – so that's first. And using our exploration expertise to really bring these thing along and attract other value within the company. Because of the exploration and our track record and our knowledge within Argentina, we think we can kind of short circuit that process to get to discovery; just as the first discovery took us about three years to make. Typically on a global scale, mining companies, it takes them 5 to 10 years to make a discovery, so I think by being in Argentina we short circuit that and create more value using our knowledge down there. [51:41]

JIM: All right. Well, listen, Allen, I want to thank you for joining us on the Financial Sense Newshour and this year's Gold Show. The name of the company is called Minera Andes. Its ticker symbol is MAI and it's listed on the Canadian exchange the TSX Venture.

Keith Neumeyer, President & CEO

First Majestic Silver Corp. (TSX-V: FR)

JIM: My next guest joining me on the program is president and CEO of a company called First Majestic, an up-and-coming silver producer. His name is Keith Neumeyer. Keith, for our listeners who might not be familiar with your company, why don't you describe its genesis, your main focus, where your projects are and where you see the company going in the future. Let's begin with that.

KEITH NEUMEYER: Okay, Jim. Well, thanks for the opportunity to introduce First Majestic silver to your audience. We're focused on silver in Mexico. We actually have three producing silver mines, all of which are located in Mexico. And last year we produced 1.6 million ounces of silver and this year we'll produce about 3.5 to 3.7 million ounces; and next year we expect to produce around 5 million to 5.5 million ounces of silver. Presently we have just under 1200 employees spread throughout the corporation and we've been growing like crazy over the last couple of years. [53:00]

JIM: Now, currently you had three producing mines, but you have other projects that are in the works. Let's talk about this.

KEITH: Sure. We've got three other projects, exploration projects, one is the Quitaboca silver project which we just put a news release out on and that's a development project where there is a series of silver veins that were underground developed trying to develop a resource. It looks like it's pretty interesting. Another one is the Jalisco group of properties which is complete grassroots exploration, early stage and really not worth talking about that at this time. The Chalchihuites group properties contains two very high grade ancient silver mines, one called La Perseverancia silver mine, one called the San Juan silver mine. Both are being developed underground. We're actually extracting ore from both of those mines on a very small scale right now; and we're shipping the ore to the Parrilla silver mine, which is about 25 kilometers away. We're mixing that ore with the ore that's coming out of the Parrilla mine. [54:07]

JIM: Now, your strategy has been to acquire advanced silver assets and turn them into producers. So do you see the company going forward with more acquisitions as cash flow increases with production?

KEITH: I would say yes. I also would answer your question by saying, you know, not immediately. What we've done over the last two years, we've launched a very aggressive campaign of growth through acquisition. We've been very successful in making the acquisitions we've made to date and we've grown very dramatically over that period. I'm sure being in business yourself that you would be managing that type of growth is challenging in itself; and going from maybe five employees to almost 1200 employees in less than two years has caused a number of things within the organization that needs to be managed very carefully. So even though there is potential to make other acquisitions, I wouldn't say that there is anything that would be happening immediately.

But we've got our eyes on some pretty interesting projects and I would expect that possibly the next four to six months you might see an addition to our portfolio. But you have to understand or realize that these three mines are just at their infancy of their growth at almost 4 million ounces of silver production this year. These three operations are capable of producing a lot more silver. The resource which we can recover as well is very large and it's being developed very quickly. We're only limited by the size of our mills and we really want to focus on these three operations and continue to expand them into much larger operations. So any addition to our portfolio would have to add substantial value to our business for us to make a decision on an acquisition. [55:41]

JIM: Now, roughly at this time your total measured indicated silver ounces?

KEITH: The San Martin is at 44 million ounces, the La Parrilla is at 53 million ounces and the La Encantada is at 31 million ounces for a total in all categories of 128 million ounces of 43-101 compliant silver. Now, we're updating two of those reports before Christmas. The La Parrilla and La Encantada we expect to hit somewhere around 180 to 190 million ounces 43-101 compliant silver by Christmas; then we’ll be putting out a new report on the San Martin sometime late January, early February; and at that point, we expect to be about 210 million ounces of 43-101 compliant silver in the ground. We actually are expecting to hit 300 million ounces by the end of 2008. [56:27]

JIM: What are your cash costs?

KEITH: Dropping. This second quarter we did 6.69 per ounce. In the second quarter we produced 850,000 ounces. In the first quarter we produced 750,000 ounces with a cost of about 8.50; and in the second quarter we produced about 850,000 ounces with a cost of 6.69; and the third quarter which will be news released in about two weeks we produced 950,000 ounces and I can't tell you what cash costs are at this point, but I can say they were lower than they were in the second quarter. We expect to end the year about 6.50 and we expect to end 2008 at about 5.50 per ounce. [57:06]

JIM: So with silver prices currently over 14 dollars, that's a nice profit margin?

KEITH: Oh it's a very good business. Absolutely.

JIM: You know, Keith, if you were to look at the silver sector five or six years ago, there were a handful of companies in the sector. You've seen a lot more companies come into the space and especially in Mexico, which is a very prolific silver belt. What would you say are the advantages of First Majestic over, let's say, some of your peers today?

KEITH: Well, there aren't very many peers. We were the first really part of this cycle going down to Mexico. We first went down in 2002 to start looking at people and assets to put together our team and our portfolio. As I said, we were the first down there. Since then, hundreds of companies have joined us; I think there are 220 Canadian mining companies active in Mexico right now. But quite frankly, there is a lot of promotion going on. We walked the ground of several companies that are active in Mexico to see what they are doing and we stay very active on our due diligence of these other companies of what they are doing in Mexico. And really, we stand apart quite dramatically from the pack. Four million ounces or close to four million ounces of production this year approaching 5 to 5.5 next year, really only Hecla at 6 million ounces would be the next one in the peer group that even comes close. Actually, if you look out a year from now on an annualized basis, we'll be producing more silver than Hecla does today, so it's pretty exciting. Now, if you look at the other companies active in Mexico, there is really no one there in this category of producers. There is a handful of companies that are producing between 500,000 and 2 million ounces, but we're really not part of that group. [58:58]

JIM: What would you say if you were looking out three-to-five years from now, where do you see your company going? What are the goals for the future?

KEITH: As I said earlier, we're limited by mill capacity. Each of our mills and each of our mines have a capacity of 800 tonnes a day. The La Parrilla was just expanded and it was commissioned in May of this year. And it's becoming fully operational. And we’re still expecting improvements in head grade and throughputs and so on this quarter which is going to give us more ounces. But we really need to go through our entire portfolio of mines and start upgrading the other ones. So our next one that we have on our list of upgrades is La Encantada. It's presently an 800 tonne per day operation. We're looking to take it to take it to a 2000 tonne a day operation next year. And we're actually doing permitting right now for that. We hope to break ground January of this coming year. And we hope to have the cyanidization circuit in place by June of next year to commence throughput of that circuit in July. So that's where we get the bump up from the current production to the 5.5 million for next year is through the expansion of the La Encantada. Then we'll expand the San Martin towards the end of next year which is also 800 tonne a day facility. And then we'll go back to the La Parrilla in 2009 to reexpand that operation. Because when you have as many ounces of silver that we do in the ground, it's kind of silly to be producing at the rates that we're producing, so we might as well expand these operations. But we want to do it on a cash flow, and we want to do it systematically through out each of our operations. So assuming that we do on time expand each of these operations, as we are attempting to do as part of our business plan, we'll produce 7.5 million ounces of silver in 2009, 10 million ounces of silver in 2010, and by 2011, we'll be producing between 12 and 14 million ounces of silver. [1:00:51]

JIM: That's quite an ambitious goal and a lot of that, as you pointed out, with your resource base you can do internally.

KEITH: Uh-huh.

JIM: Why do you think, you've had substantial growth, you've delivered on the promises you've made to the marketplace, but if I take a look at your stock price this year, it hasn't done as well as let's say the price of silver or the price of gold?

KEITH: Yeah. I think First Majestic has under performed not only the price of silver but also underperformed some of the other companies in the sector. And I think that, you know, that creates opportunity for investors that want to look at exposing themselves to a silver investment. But the only easy explanation I can come up with is the fact that we've done so much dilution in the last year. We did three financings over a period of 12 months; we raised $70 million over those three financings to finance the growth. And when you have to do as many financings as we did, it's just disruptive to the share price and creates dilution.

Unfortunately, you get a lot of shareholders in your stock that may not be the best shareholders, you know, hedge funds and so on and so forth, and these kinds of things happen. I wouldn't turn the clock back. I think we did the right thing in financing when we did. We got reasonable prices for the shares that we sold as part of the financings. Unfortunately, it's been a little bit tough on shareholders but fortunately now, we don't need to finance anymore, we're self sufficient for cash, our operations are all growing and the silver is coming out of the ground. So I think going forward, I would expect the share price to start to look a lot better once we start coming out with new resource numbers and new production numbers in the coming quarters. [1:02:33]

JIM: Finally, Keith, if you were talking to a group of investors, give them three reasons why they would want to own your stock right now.

KEITH: I think the first reason is management. The thing that I focused on when I put businesses together is the people, and like in the case of First Quantum, my predecessor company that I founded, the team was put together first and the assets came in after. I wanted to focus on putting the best team possible I could in Mexico to build this business to become one of the largest silver producers in North America. I think I’ve put together the best team there is out of any peer group companies or any of the companies that you would potentially want to measure us against. Our management team is a comparable team to groups such as Peñoles or Grupo Mexico. We've got most of our senior management or all of our senior management have come from much larger companies like, like Grupo, like Peñoles, like Luisman, Goldcorp and a variety of other companies that I'm sure you've heard of. We've been able to get people; and they've been attracted to us because of our chief operating officer, Ramon Davila, who is a very well known and very sophisticated operator in Mexico –probably the most well known. He sits on the board of the Chamber of Mines and very active in politics and very plugged in to all levels of government – all the way up to the president, all of the way down to the local community. So we're very, very strong when it comes to our on the ground skill set in Mexico. So that's first off.

Secondly, the assets, I think, you know, we've got three really good silver assets that are predominantly silver. These are not base metals mines or silver credits, these are actually silver mines with primary silver revenues and so on. And they are just at beginning of their growth cycle, each of these operations can be expanded dramatically over the next few years of which we're planning on doing.

And I think thirdly is our share structure which is still, even though the shares have been volatile at 60 some odd million shares outstanding with a market cap of less than $300 million, I think it has great value and enormous leverage to the price of silver. If you look at our market cap of 300 million and Hecla’s market cap of 1.3 billion, you know, there is a bit of a disconnect in what we're doing fundamentally to the share price.

So I think those three elements are pretty compelling for an investor to look at First Majestic as a potential investment. [1:05:01]

JIM: All right, Keith, I want to thank you for joining us on this year's Gold Show. The name of the company is called First Majestic. Its ticker symbol is FR and it's listed on the TSX Venture Exchange.

David Miller, COO & Director

Strathmore Minerals Corp. (TSX-V: STM)

JIM: Well, you can't pick up a magazine or a newspaper today without hearing the story about the renaissance in nuclear energy as more countries have to face problems of increasing electricity to grow their economies. And of course, if you're talking about nuclear energy, well, it consumes uranium.

Joining me on the program is David Miller. He's president and chief operating officer of Strathmore Minerals. David, good to have you back on the program. And I guess there has been a lot of things happening to your company since the last time we spoke. But why don't we begin and talk about Strathmore's strategy. What are you trying to achieve with your company?

DAVID MILLER: Jim, thanks for having me on again. It's pretty much the same strategy we've had since we got back in the business in late 2003. We wanted to get big in the known uranium deposits in the US. And your listeners may ask: why the US? Well, why the US? The US was the largest uranium producer in the world in the 20th Century. The two largest districts in the US were Grants, New Mexico and Gas Hills, Wyoming, number one and number two. And that's where the majority of all of our properties are in the US.

And so we focused initially back in 2004 and 2005 on permitting several projects in New Mexico and we're still continuing on those. In fact, just really three months ago or so, we did a joint venture. We gave a 40% interest to one of the top 50 companies in the world, Sumitomo corporation out of Japan, who are a large marketing firm. They joined with us for a 40% interest in our Roca Honda project down in the eastern part of the Grants, New Mexico uranium belt.

Concurrently, we're up here in Wyoming in the Gas Hills district. The Gas Hills is the number two uranium district in the country. It produced over 100 million pounds by themselves. Just recently we've completed another deal on that. Our property holdings go to about 32,000 acres in that area, so we're sitting very well. We have a number of surface shallow open pittable mines that we’re in the process of permitting right now. To go along with that, we have to also either look at a heap leach facility or a mill site in the Gas Hills or negotiate a favorable meeting with the Sweetwater mill in the nearby Red Desert.

So our strategy in the US was to acquire advanced properties to get into production in the short term. And again, when we say short term back in 2004 when we said we were going to permitting –we actually started permitting in 2005 – we said it would take six years to get permits. And frankly I think we'll have a permit and start producing ore in that time frame. We've kind of gotten punished for calling it like it is. We said it would take six years for permitting. You can't do it in two years. And I think we're seeing that with a lot of these other companies out there that continually have to come back and say they are not going to meet their projections. So we're trying to avoid that. We tell you up front what we're doing, we've got some of the best assets in the US. That was one of our prongs in our two prong strategy.

The other prong was get big in the Athabasca Basin in Canada. That was the number one, and is the number one, uranium district in the world, very high grade deposit, difficult to mine as we see at Cigar Lake and Cameco. But we put together the largest portfolio of exploration projects in the Athabasca Basin because of the confusion within Strathmore of whether we're an exploration company or a development company. Frankly, we were both. We were looking to the short term future with advanced US properties and we were looking to the long term with the low cost Canadian Athabasca properties. But because of the confusion in the marketplace, we took the Canadian assets out of Strathmore and spun out a new company called Fission Energy and all of the assets of Canada went into Fission Energy. So all of the assets that Strathmore had in Canada are now in Fission Energy. And so if you were a shareholder of Strathmore before you were dividended a share –it was a three for one. For every three shares of Strathmore, you got a new share of this new company called Fission, which is developing our great Athabasca properties led by our Waterbury project, which we just announced a joint venture on with KEPCO out of South Korea. And also our great Davy Lake project which is the largest anomaly thus found in the Athabasca Basin. It’s 51 kilometers long and it's yet to be drilled.

So that's a brief on where Strathmore has come from. Our strategy has pretty much been the same. We've been diligently working on permitting for going on three years now. It's not a fun process. It's not a sexy process for investors. But frankly, I think we're right on track. We're doing the heavy lifting. Everyone here is doing the work to get the job done. [1:10:27]

JIM: David, aside from the strategy, there are a lot of uranium companies out there today. And especially with the price of spot uranium somewhere around $84, what makes you guys different from, let's say, the other uranium companies out there?

DAVID: I think the big difference is, you know, none of this is rocket science. You know, we were in the Grants, New Mexico district. We were the first ones there this time around. There were a couple of companies that still held some properties from a long time ago, but we were the first generation of new companies in Grants, New Mexico. When we elected the first state of New Mexico leases to go up for auction, we had no competition. No one else showed up at the auction. We elected 15 leases. We got every lease we wanted in that first auction because no one else showed up. It's not until the later auction other new companies started showing up. And the same thing in Wyoming. We had the choice of all of the available property in Wyoming. Cameco and AREVA were both still active in Wyoming. We got the very next best project in Wyoming called the Reno Creek-Pine Tree area that was almost fully permitted before. We’ve recently joint ventured that out with another company called American Uranium. And then the Gas Hills district, which is the premiere uranium district in Wyoming. We kind of got lucky on that one because again it was previously held by AREVA and Cameco. And as luck has it, Cameco made a corporate decision a few years ago and they decided to draw up all of the properties in the Gas Hills that were not in situ recoverable. That means they can't – they wanted to use water wells to mine the uranium in place, so when you do that, your ore body has to be below the water table. You have to have at least a 100 feet of water above the formation you're trying to mine in. So everything that was high and dry above the water table or on the surface, they dropped. And we were the first ones to recognize that. We staked them all and we have them; and that will easily be our first production here in Wyoming. [1:12:28]

JIM: What is amazing about this is to take a look at your management. Let's talk about the experience in your company on the exploration side there is yourself; and Robert Quartermain?

DAVID: Well, Bob Quartermain was on our board. He stepped down from the board a few years ago and he's on our advisory board now. Again, he's done a great job in the silver business. We pretty much followed that model in uranium, to get out there and acquire as many quality uranium projects as we could. And frankly, we could have picked up a lot more uranium projects. A lot of these uranium projects you're reading about that are the key properties in other companies, we stepped over. Number one, we already had dozens and dozens of property. It wouldn't have done us any good to get more. We just chose the one we thought had the lowest production cost and we acquired those. And that's what we've been doing ever since.

I know exploration, I know mining also because I’ve worked at operating mines. Bob Quartermain, Dieter Krewedl, Hans von Michaelis, there is just a great group of people that understand exploration. We hit it hard early; we added staff early for the acquisition parts of our Landman – some other geologists. We got out there and got the property.

But three years ago we went to the permitting sites. I told our board of directors that we've got a great portfolio properties, the next thing we have to go into is the permitting and mining stage. We have to add quality people and that's what we started doing three years ago. And I'll put our people up against anyone, you know, even the big companies. I think we probably could have figured out how to get Cigar Lake going better than Cameco has right now. Frankly, we internally here think they'll have to open pit that thing eventually because they’ve probably messed it up too much for underground mining.

But the bottom line is we know what we're doing, we meet with the regulatory people, we meet with the legislators in Mexico; I was in the governor's office in New Mexico a couple of weeks ago. We're doing everything we have to do. You can't just stand back and hope things work. You've got to be proactive. We've got people wanting to join in with us or asking us why don't you do a joint mill down in New Mexico. We're game, but other people aren't willing to spend the quarter million dollars a month that we're spending on making those efforts to get those permits, to get the permission and to get the regulatory people all on board for what we wanted to do. We're doing it. [1:14:57]

JIM: David, I know that –the President –currently in Washington they are getting a little bit more focused on energy, especially as we look at oil prices over $90 a barrel. Are they making it easier on the permit process. When we were talking last year, you talked about five to six years in the permitting process. I think you were three or four years into the process at the time. Is it getting any easier to permit properties today?

DAVID: The answer is no. And again, with Strathmore, we chose jurisdictions that actually allow uranium mining. There are jurisdictions that don't allow uranium mining. The state of Virginia is one of those. We also avoided Western Australia and Queensland, Australia. We also avoided areas where the political leadership can change overnight and change the rules of mining; ie, Kazakhstan and Mongolia, maybe some of the Africans. We chose jurisdictions that actually allowed uranium mining. So we've been doing that ever since. We've been pushing forward, trying to get these permits and jurisdictions that actually allow it. Those people that aren't in jurisdictions that allow it, they actually have to change the laws before they can even start the permitting process. So again your question is: Is it getting easier? No.

Are we getting some encouragement? And the answer is yes. We're working well here in Wyoming with the regulatory people. Wyoming did a great thing back in the uranium depression in the 1980s and 1990s. They forgave their severance taxes on uranium mining in order to encourage at least a little bit of the industry to survive. That's when I survived in uranium back in the 80s and 90s. The industry survived. And more importantly, the regulators survived. They actually know how to regulate uranium and uranium mining here in Wyoming because we never had a break in production. It's been continuous since the 1950s. In New Mexico, we've had a big break in production. Some of the other states we've had a break in production; and around the world, of course uranium is a totally new subject to most regulatory jurisdictions. [1:17:00]

JIM: You have a graph on your website which is, I think, a phenomenal graph if people were to look at it. And it's on United States uranium production and consumption since 1980. In 1980, in comparison to what we were producing and what we were consuming, we were producing almost four times the amount that we're consuming. You take and fast forward that as you show on your graph and take a look at what we're producing today compared to what we're consuming, boy, talk about a complete turn around in the opposite direction.

DAVID: It really is. In 1980, we were the largest uranium producer in the world here in the United States. Again, in the 20th Century, the US produced more uranium than any other country in the world. We were the world leader, but we only consumed a small part then. And that's one of the problems why the industry disappeared totally is in the 1970s, the nuclear utilities order 250 nuclear power plants, but only 104 of those are operating right now. So 160 of those were not built, and they had all contracted for the delivery of uranium. That's why we were mining so much uranium in 1980 to fill the need for those 250 nuclear power plants. We only have a 104, so all of those 146 that are extra, those utilities became sellers of uranium into the marketplace. That's why the market collapsed in the 1980s and 1990s. Utilities were dumping the uranium they had contracted to take delivery of. I'd like to make a stab at the anti-nuclear movement while I'm talking about that this. In 1970, we burned 500 million tons of coal in this country per year. We ordered 250 nuclear plants in the 1970s. We weren't going to build anymore coal-fired plants, but instead the nuclear, anti-nuclear movement in the late 1970s got those extra 150 nuclear power plants shut down. So they had to be replaced so they replaced them with coal plants. Right now, here in America, we burn 1.3 billion tons of coal per year, more than double what we burned in 1970. And frankly, I think you can point the finger right at anti-nuclear movement for all of that increased air pollution in the air. We went to coal instead of going nuclear like France did. [1:19:21]

JIM: You know, this is the thing that surprises me today that we have not advanced like you said. We used to be the largest producer of uranium. We were cutting edge on nuclear technology and as you look around the world, with the last energy crisis, I think France learned, “look, we don't want to be that dependent.” They moved to nuclear power. I think it’s 75 to 80%. You're seeing China move in that direction, Japan move in that direction, India move in that direction. David, why do you think there has never been anyone killed overseas from a nuclear accident compared to let's say accidents in refineries or the oil and gas business? Why does it work overseas and it doesn't work here?

DAVID: You know, that's a great question and frankly I trust the American people when they have all of the facts. Now, if they had all of the facts of what it truly cost in human life to produce the energy society requires. You know, if you look at cost of human life for the coal mining accident. There has been some headline press accident in coal mining over the last couple of years. The last one was just a few months ago in Utah. Before that it was in West Virginia. In China they kill at least 5,000 people a year in their coal mining accidents. The natural gas accidents, the propane accidents, these tractor trailers blowing up, the oil field accidents. We kill hundreds of people a year in all of those areas. But yet, they don't get near the press as something – as anything related to the nuclear cycle. It's just the real boogeyman.

And it makes as much sense to associate like nuclear with bombs as it does electric with chair. And that's where we are in societal acceptance of nuclear power right now. Nuclear power is the future. You know, people that don't like, I tell them to go outside and look at that yellow orb that's up in the sky. That's a huge nuclear reactor and that is essentially unlimited energy, and that's where we're headed in the energy cycle. Right now, fission nuclear will see us through the 21st century, but at the end of the 21st century, I think nuclear, both fission and maybe fusion by then, will be the leading energy components of society going forward. [1:21:35]

JIM: I want to talk about methods of mining. Why ISR mining? Why don't you explain number one, what it is, and compare it to conventional mining.

DAVID: Jim, I've done all three types of mining. I worked in exploration most of my career. During the low years I always received assignments out to our operating mines when they had problems with. Basically, it was always grade. I call it grade control. And you have a conflict between the people that run the mill and the people that run the mine. The mill always wants more feed, more feed, more feed. I'd rather have a mill that's too small than too big, because a mill that's too small, you can feed it your best ore. If your mill is too big, you're going to be feeding it a bunch of junk just to meet the capacity of the mill. But the bottom line is it’s grade control, it’s very selective and you have to pay attention.

But the type of mining I have been involved with is underground mining which is similar to any other underground mining. It's not bulk mining. It's very selective mining. It’s almost like gold mining where you find the gold vein, you get on it, you stay on it and you follow it wherever it goes. Sometimes your drift that you're mining on is only, you know, 6 or 10 feet wide. That would be typical. So you get on that and you follow it around to mine it. You haul it to your shaft and then you hoist it to the surface, then you take the ore to the mill for processing.

The second type of mining is open pit mining where the ore body is close enough to the surface where we can strip; which when you strip, you're removing the over burden that's not mineralized down to the ore zone. And when you're in the ore zone, we just bring a backhoe in; like if people are familiar with backhoes, they’re rather large backhoes. But we dig into the ore, we check the grade and put it into an ore truck. And again that truck drives it to the million for processing. The underground and open processing is exactly the same.

Now, the type of mining that everybody is reading a lot about is the in situ recovery. It frankly isn't new mining. The company that I came out of and about five others in the company came out of here, a company called Utah International started this process back in the early 1960s here in Wyoming at a place called Shirley Basin. It's a really neat process. You drill holes from the surface. You straddle the ore body with the drill holes; and now the technology is we put basically water with the composition of Perrier, we add oxygen to it down one hole. It goes in the formation and gets pushed to the mineralization, the uranium mineralization. It actually dissolves. The oxygen actually mobilizes the uranium to where it's in liquid form now and then it goes to just a submersible pump. The same type you would have if you lived out in a rural area near any city. If you have a water well, the pumps you use there are the same pumps we use in in situ recovery.

So we recover it in a submersible pump and then we pump it to the surface and then we run it to a bunch of tanks at the processing plant. It's a small processing plant that's basically a giant water softener; except the beads we have in the steel column are Dow resin beads that have an affinity for uranium. So the uranium precipitates out on those beads. It goes back, we refortify the water, we remake up the Perrier and add oxygen to it and then we reinject it into the ground. It goes through the formation again, it counters the uranium, picks up the uranium, goes to the submersible pump and then it gets pumped to the surface again. You do this 30 pour volumes, basically in a circle using in the same water over and over again and you can recover 75 or 80% of the uranium present. And again, this only works in certain types of ore bodies. We have them here in Wyoming. We have them in New Mexico and Texas also; but Wyoming is the current leader in in situ recovery in the US. [1:25:35]

JIM: It was amazing. You give an example in a presentation where if you take conventional mining it takes 500 workers required to produce one million pounds of uranium versus ISR mining it only takes 75 workers required to produce one million pounds of uranium, so it's certainly more cost efficient.

David, what's next for Strathmore?

DAVID: Our next strategy right now is we're just here working on getting our permits. Gas Hills will be our first production. We actually are looking at uranium contracts as we speak. We have a number of them. Utilities actually know a lot about Strathmore. They know us as individuals. They actually know our uranium properties. They are familiar with the Grants, New Mexico area. They are familiar with the Gas Hills or Lucky Mac here in Wyoming. They are comfortable from where we're saying we're going to produce uranium and they are sending us contracts to – the latest one I've seen was for one company was from production from 2012 to 2017. So we're looking at those.

We like the direction that uranium prices are going again. As you know, uranium prices popped up to $135. They fell back to 75. And now I think we're up somewhere around 90 or over again. And with the recent bad news coming out of several of the new producers, they are not meeting their production goals. And frankly the big producer Cameco is getting some bad news from Russia about being able to bring over that downblended uranium to fulfill some of their needs. So there is tremendous upward pressure on the market place again. And we just want to do things diligently. We want to perform what we say we're going to do. Again, when we started the permitting process we said it would take six years. We didn't say it would take two years. Frankly, the market beat us up for it because we didn't say two years. But, you know, we're sticking to our guns. We think being as up front as we possibly can in the long run we'll reap rewards for our shareholders. [1:27:34]

JIM: Well, David, if you were talking to a group of investors and were to give them three reasons why they would want to own Strathmore, I'd like you to list those three reasons. One that just pops out with me, if I take a look at the market cap per pound of uranium, you're probably the cheapest priced uranium company out there, at least in the exploration and operation development stage. And secondly, that you're closer to moving towards production and monetizing those assets. So those are two things that stand out, but David?

DAVID: That's really important. You've noticed one thing: We're the cheapest per pound of the companies out there. And the other part of that to remember is we were in the business before those other companies that are in that list that have a higher market cap per pound. Now, who has the better pound? We were there first. Like I explained the story in New Mexico, no one else was even at the auction for the first round of leases we elected. We were the first company in 15 years to elect any state land in New Mexico to go to auction for any mineral, including copper and gold. We were the first ones and we were the only ones at that first auction. The same thing here in Wyoming, we were a step ahead of everyone and we got some of the very best assets available. So when you compare our pounds to other companies’ pounds, especially here in the US, I think our pounds are far superior. So again, at our market cap, per pound is on the low end. There is only one direction, in comparison to our peer group, that it can go. So that's one reason is the quality of our assets.

The number two reason is the quality of the people we've brought on board. Here in Wyoming we're continually adding staff. We've added a Lucky Mac Gas Hills engineer with 32 years experience in the Gas Hills. He's going to be our vice president of Wyoming operations. That's just one example. We have John DeJoia, Juan Velasquez in New Mexico, Tom Powell, we just hired another new engineer that used to work in the Gas Hills years ago. The quality of our people. And in the Gas Hills uranium district where we have 32,000 acres, right now, we have people on board that have worked physically in the Gas Hills for over 100 years cumulatively. So we have people that have done it before, have put rocks in the box and know how to put rocks in the box again. So number two is our people, number one our properties, number two our people.

And number three is our US base. The US is the largest uranium market in the world with 104 operating nuclear power plants. With the dollar getting weaker if your uranium source is coming from overseas, that's not good for those companies. Here in the US, it doesn't hurt us. We're a US based company. Everything we do is based in US dollars. So we are very comfortable with our US origin property, supplying US utilities, the largest utility group in the world. And frankly these utilities want a US component in their nuclear feed mix. They are worried about security of supply. So they are only willing to buy so much from Russia, so much from South Africa, so much from Niger. They want a percentage of this from the US. Before in 1980 like you pointed out, 100 percent came from the US.

Right now, we're mining four and five million pounds per year and we consume sixty million pounds a year in the US. We're not even mining 10% of what we consume in the US right now. With our property base, we can get up there and we can become a reliable US supplier to not only the US utilities, but again with our joint venture partner in Japan. We have another joint venture with Fission in Canada, with Korean Power. Again, it is a worldwide market. We're in the US and those are the three reasons: properties; people and the US base. [1:31:37]

JIM: You know, another thing I would add too is you have a good strong institutional support, Sprott Asset Management is a major shareholder of your company. There are some other institutions, so you do have that support. The name of the company is called Strathmore Minerals. Its ticker symbol is STM and it trades on the TSX venture exchange.

Dr. Keith Barron, Director

Aurelian Resources Inc. (TSX: ARU)

JIM: It's been hailed as one of the largest gold discoveries made in the world by a junior in 15 years. Joining me on the program is one of the original founders of a company called Aurelian, Keith Barron.

Keith, I want to begin our discussion today and talk about the early days of Aurelian because I can remember talking to you and Patrick Anderson, I think what was it in the year 2000 or 2001 when you were getting seed capital for this company. I wonder if you might just address for the moment some of the hard times in getting exploration going for a junior, because back when you guys started, gold was somewhere around 255 and nobody was even thinking of gold.

KEITH BARRON: That's very true, Jim. In fact, a lot of people basically said I was nuts. They said gold was never coming back and it was dead and people were pretty much interested in things like internet stocks back in those days. So I knocked on a lot of doors and pounded a lot of pavement and got a lot of rejection letters, so it was tough. You know, Patrick and I, we went through a lot of sacrifice back in those days and we did a lot of the field work ourselves, which is not what these companies generally do, and expended a lot of shoe leather, a lot of boot leather. So that's how we got started. [1:33:28]

JIM: I can remember, Keith, and when we got involved with the company when we did a financing in 2004 and you guys at that time had the exploration program up and going, you had your first resource estimate. But it seemed to me it didn't matter what you did, whether you had resource estimates, whether you had great drill holes, the stock took a major, major tumble. It went on a pre-split basis from about 2.50 and over the next two years, Keith, it got all of the way down to what was it, the beginning of March of 2006 where the shares of Aurelian got down to 40 cents. How do you explain that?

KEITH: Well, we got down I think as low as 46 if memory serves me right. Well, you know, geology is a special thing. You don't know what the Good Lord has put under the ground until you actually go and do the work and sample it. And we followed up a lot of targets. It looked very good on the surface. We saw people –artisanal miners –who were extracting gold. But some of these things when we drilled them and did more work on them, they didn't come up to the expectations that we had, so we moved on. We tried to cover as many bases as we could in those early days with a limited amount of funds, so we were trying to hit the high points.

The discovery that eventually came about a considerable amount of time later is what we call a blind discovery. In fact, it doesn't come to surface, though there are indications on the surface that it's there at the depth and that's how the geologists found it, but it's not something that was immediately apparent. It's not something that any artisanal miners or local miners had been aware of, had been digging on. We had a lot of information and a lot of stuff to jump start the company and get working. And we had some pretty decent assets to start with in the early days. We had nine meters of 51 grams in one drill hole. You know, there are lots of sniffs usually around –sometimes around –these bigger systems and we were probably just looking at on the edges on the periphery of this thing. [1:35:42]

JIM: Well, today Aurelian has $1.1 billion market value. You've proven your first major resource estimate close to 14 million ounces of gold. Let me bring up a question that some people have, and of course when we see things going on in Venezuela and other parts of Latin America, there is some political fears about Ecuador. I wonder if you would address that.

KEITH: I think a lot of the political fears were actually played up by the media. The country has been producing oil with foreign companies for many, many years; and those foreign companies, including American companies, have been successfully repatriating their profits. The country doesn't have a modern mining industry, and so there has been a few hurdles that have had to be crossed just because there hasn't been the existing familiarity with the mining business. But things are coming a long and the government is – I know that they are looking at the situations in Peru, in Chile, and how those countries deal with their mining legislation and how they deal with the actual operating mines. Most of the mines in Ecuador to this date have really been artisanal operations. And by that, we mean miners mining typically by pick and shovell very, very low tech operations and producing almost no gold. One of the other things is that those types of operations tend to be things that produce gold that goes to the black market and only part of it ends up declared to the authorities. You know, in our case, of course, we're going to be completely transparent. We've got predominant work force of Ecuadorians. Everyone can see what we've got. You know, it's really bringing the mining business into the country of Ecuador up to a standard as you would have in US or Canada, or any other of the really developed countries in the world. [1:37:50]

JIM: Well, let's talk about what's in the future for Aurelian right now, of course, Fruta Del Norte, the large major deposit where most of the resource estimate is. You also have an ongoing exploration: six diamond drills, on-site targeting. I wonder if you would talk, let's say, the blue sky, where do you go from here?

KEITH: I believe there are six drills on the property. I think one of them has been deployed in regional exploration. The other one still needs to sit on for Fruta Del Norte and keep firming up the resource. Fruta Del Norte is not finished yet. We haven't found the ends of it, especially in the southern end; and there is a lot of potential, I believe, at depth in the deposit. There are also some areas where there are some faulted offsets that need to be explored. We really have been focusing all of our attentions and resources on Fruta Del Norte. And why not, when you've got such a great looking ore system and such a very dynamic hydrothermal system. You want to keep running with it and see how far it goes. But we control 95,000 hectares of ground and it's up and down the Cordillera in that part of the country. We've got a lot of gold showings that we've discovered. We've got a lot of stream sediments and soil sampling anomalies that still really need to be followed up and tested. And Fruta Del Norte sits on a structure called a pull-apart basin and that basin extends for nine kilometers north-south.

Now, considering that Fruta Del Norte is a blind discovery, meaning it doesn't come to surface, you really want to throw a real witches brew of geological, geophysical and geochemical techniques at this thing. And even though it may not be apparent and things may not be coming to surface, I believe there is a good chance to find other things in that area. Nobody is going to say that they are going to be as robust as Fruta Del Norte, but when you have an epithermal system, it's the old adage in the mining business, the best place to look for an ore deposit is near an existing ore deposit. So we're certainly going to be channeling a lot of energy towards following that structure both northwards and southwards and see what we get. [1:40:19]

JIM: In your latest presentation you talk about 30 gold targets that you've identified and 20 copper targets. So this in essence I think what you're saying, Keith, this deposit has the potential to be much bigger than what it's currently being portrayed as, as it currently stands?

KEITH: I'm not going to say that the deposit is going to get a lot bigger. I think there is potential to find other deposits on the property. I will say that. But it's very early days. And you know, we're treating a lot of these areas much like back in the days before Fruta Del Norte was discovered. You know, Del Norte was discovered, the guy...the kudos should go to Steve Leary who is a geologist working for the company. He's a New Zealander. He's familiar with a lot of epithermals and he's seen a lot of hot spring deposits in the North Island of New Zealand where he's done a lot of work before. And the Del Norte thing, while it doesn't come to surface, it does manifest itself in some ways as kind of a...[it] sniffs of a hot spring system. And he was smart enough to recognize that. And I've always said in the mining business, if you get good people with good experience and good observational skills and you put them into a very good piece of real estate, a prospective piece of real estate, then things can really happen. And that's what happened in this case, I believe. And you know, we're going to be applying a lot of the tried-and-true methodology that we’ve used to date on Fruta Del Norte to other areas and see what we come up with. But it is early days and as I have said, we have been focusing a lot of our time and energy on Fruta Del Norte itself and with the gold and silver prices being robust, hell, why not? [1:42:18]

JIM: All right, Keith, if were to summarize if you were standing before a group of investors, give me three reasons why I should buy Aurelian.

KEITH: Well, as you've seen from the presentations on our website, a lot of work is going ahead. Fairly recently we hired George Bee as our chief operating officer. We hired him away from Barrick. He's a gentleman who has a lot of experience putting mines in production and he's working very diligently with his team towards thinking about how one would go about actually getting this thing actually up and running and completing the various tasks that need to get done to get there, like permitting, environmental permits and getting engineering studies done, and all of that stuff that needs to be put together. So that's one thing. So there is a lot of progress, a lot of things going ahead.

The blue sky of course is I think is incredible. Epithermal deposits tend to cluster. There is a good chance that there is going to be something else and I believe we're looking at a mineralized district here, not just a couple of occurrences or one deposit. It's certainly not a one off thing. We've got documented gold on other properties, not owned by Aurelian, but adjacent properties both to the north where there is both gold and copper, and to the south where there is predominately gold. We're dealing with a mineralized belt that's at least 90 to 100 kilometers long and we've got the lion's share of it. That's a second positive thing. The company is well financed. It's well supported in the market place. There is a very large number of funds that were brought into the thing and it's got good liquidity and good volume each day. So I think it's a good opportunity for anyone. [1:44:14]

JIM: All right, Keith. I want to thank you for joining us here on this year's Gold Show. The name of the company is called Aurelian resources. Ticker symbol ARU.

JOHN: The Great Financial Sense Gold Show of 2007 continues right here at www.financialsense.com. And we have a lot coming up in the final hour of the program. Bob Quartermain, Sean Boyd, Lorne Waldman, Bradford Cooke, Robert Archer, J. Richard Whittington and Ross Hanson will all be here as part of the program with Jim Puplava. Financialsense.com. I'm John Loeffler. We'll be back. We promise.

PART 3

Robert Quartermain, Pres. & Director, Silver Standard Resources Inc. (TSX: SSO | NASDAQ: SSRI)
Sean Boyd, Vice Chairman & CEO Agnico-Eagle Mines Ltd. (TSX: AEM)
Lorne Waldman, Corporate Secretary Silvercorp Metals Inc. (TSX: SVM)
Bradford Cooke, Chairman & CEO Endeavour Silvercorp. (TSX: EDR | AMEX: EXK)
Robert A. Archer, CEO & President Great Panther Resources Ltd. TSX: GPR
J. Richard Whittington, Pres. & CEO Farallon Resources Ltd. (TSX: FAN | OTCBB: FRLLF)

Ross Hansen, Founder Northwest Territorial Mint

JOHN: Welcome back into the fourth hour, the last hour of the Great Financial Sense Gold Show of 2007. Jim, as we said at the beginning of the last hour, we have sort of grouped all of these interviews thematically. So here we are down to the last hour. Four hours of programming today! I think we're almost coming close to a record

JIM: But this is exciting because in this segment, you're going to hear an interview with Silver Standard. This was a development company that accumulated silver in the ground when silver was at 4 to 5 dollars an ounce. Now they are actually going to become a producer. And right out of the gate Bob Quartermain’s Silver Standard is going to become a major silver producer right from the get-go.

You're also going to hear from Sean Boyd of Agnico-Eagle. Here is a company on its way to becoming a major producer.

You're going to hear from Silvercorp, a company that is in production with profit margins as high as 80 percent. They just declared their first dividend.

And then you're going to hear about a couple of upcoming silver producers.

And then also we're going to talk about accumulating bullion in this hour.

So we're going to round out the program with some up-and-coming producers; one company moving on its way to becoming a silver producer; and another one which was a gold producer and silver producer that is working its way to becoming a major. So a lot of great stuff coming up in this hour. [1:29]

JOHN: As the Financial Sense Gold Show of 2007 continues right here at www.financialsense.com.

Robert Quartermain, Pres. & Director

Silver Standard Resources Inc. (TSX: SSO | NASDAQ: SSRI)

JIM: It's been called the largest in-ground silver resource of any publicly traded silver company, and it's poised to become a leading primary silver producer. Joining here on the program is Bob Quartermain. He's President and CEO of Silver Standard.

And, Bob, let's talk about your consistent growth in resources. As I look at a chart of where Silver Standard was in, let's say, the year 2000 and where we are today with 1.4 billion silver resources, I mean that's an incredible growth rate of almost close to 30% a year.

BOB QUARTERMAIN: Yes, it is, Jim. And I think it's a function of two things. One, of course, you know, four to five years ago there weren't as many people out competing for silver projects, and it allowed us at that time to get some core and key projects for us which others had spent money on such as the Candelaria mine in the United States or the Shafter mine in the United States, which both had large in-ground resources. And then in the last couple of years as people have been competing for those projects and have put our cost of acquisition up, we decided to go back to doing the true and tried method in the mining business of doing grassroots exploration again. And that certainly rewarded us with the discovery of our project of Pitarrilla in Mexico. We took a grab sample of that, it ran five ounces of silver per ton and here we are four years later with well over 300 drill holes in that property; and we just made a resource update of it last week and we now have over close to 400 million ounces in measured and indicated on it and another 190 million ounces or so of inferred.

So it's been two methodologies: Acquiring known material when the prices were down; and with the raised, elevated silver prices getting out and doing exploration. And as you point out, our success each year using the drill bit has allowed us to see that growth of almost 30% year over year for the last six or seven years. [3:33]

JIM: You know, the other thing too is I look at the properties. You're pretty well diverse. I mean 39% of your holdings are in Mexico, 13% in the US, 13% in Canada, Argentina, Peru, Chile and Australia. So you're pretty well diverse in your portfolio in terms of geographical location.

BOB: That's true. I've now been in the resource business over 30 years. I started my career back in 1976 looking for uranium up in the Northwest Territories of Canada. And of course, during that time period you have seen the political landscape change both on the provincial level here in Canada and of course globally. And I think that's one thing we tried to do systematically was insure that our shareholders had good geopolitical distribution, so in case there was an issue that would occur in one region, it wouldn't impact all of their resources. So we were careful not to just have one project and focus on in one environment. You know, case in point was the issue that came up last year with Bolivia and potential taxes there and those who were exposed to Bolivia certainly saw some erosion of shareholder equity, because the uncertainty that the political regime brought in. And so we find, by that distribution which you talk about, we've been able to have our own political insurance – perhaps we could phrase it that way – for our shareholders. [4:55]

JIM: You know what is amazing despite your explosive growth in terms of building your reserves as a company and also the success of your stock –I mean I'm looking year to date despite this pull back we've seen in the last couple of days, your stock is up 32%; I mean that's an impressive gain – yet as I look at the market cap per reserves, Silver Standard still has a lot of value to offer investors in comparison to your peers.

BOB: Yes. I think that's one of the aspects about Silver Standard. When people look at it as a potential investment opportunity is on a per ounce basis in the ground that we don't have the same levels as our peers. And when you look at our peers most of them are in production. And as a result of that, companies which cash flow will be rewarded in the marketplace with a slightly higher valuation. So that was one of the justifications we looked at in determining that it was necessary for Silver Standard to move to production on a project like Pirquitas. So getting in production, we would hope to be able to capture an additional value in our share price reflecting cash flow when we are able to achieve that. And so it's an opportunity for shareholders if they were able to buy the stock and we’re able to execute on that plan –and we have the finances in which to execute it – then there is potential upside in the share price by merely moving the company into production at Pirquitas as we have talked about. [6:19]

JIM: I remember talking to you, Bob, in the early days when you were acquiring property. You had made a decision as a company that it wasn't economic to mine silver at five or six dollars an ounce and you were just going to accumulate it in the ground. Since then, even with the pull back, we're looking at silver prices close to $15 an ounce. Let's talk about Silver Standard's strategy for growth now that the markets have changed.

BOB: Yes. Going forward with this higher silver price, as you pointed out, our projects at five to six dollars would have been cash neutral at best and perhaps losing. And a few years ago, some of the key primary silver producers, and those that label themselves that way, even with silver prices around $7 an ounce, we're only starting to see a profit at that point. So it said to us that $7 is a good benchmark. And so we then did a feasibility study update on our Pirquitas project and in doing that update it showed at the then current silver prices in that 13 to 14 dollar range, and with costs in 2005 dollars of the project of sub-five dollars, the project would have a positive rate of return. And we then made the decision as a company to go forward and put it into production.

Having done that of course, we don't want to just have one mine and of course with our strategy over the last number of years of buying assets and exploring for them, we have 17 projects around the world; and so what we're able to do is go through those projects, look at them, determine which would be the best ones to then follow on to allow us to grow Silver Standard into a long term silver mining company. And so Pirquitas is the first project which we're currently under construction on and we are planning to have commissioned by the fourth quarter of 2008. We'll then follow after it with the San Luis project, which is a joint venture we have with Esperanza Silver. It's a very high grade gold-silver project, which is located in Peru. It's perhaps a smaller project, but it is high grade and it will be very profitable. We're just in the process of doing a resource calculation on it. And then we have our Pitarrilla where we are getting good silver results as well as good base metal results. And we are planning on going underground on that to look a little more detail on the geology underground and then we'll move into scoping and prefeasibility and on to feasibility. So it would follow in order after Pirquitas and San Luis. So the nice thing again about that is that we have a strategy of growth of moving into production using our own asset base; so it means we won't be diluting our shareholders by taking on new acquisitions. We can do it with the projects which we have in house currently. [8:51]

JIM: You know, I want to talk about that. Because of the massive amount of silver reserves that you have, I want to come back to Pirquitas for a minute. Right out of the block, you're projecting annual production at 9.6 million ounces. So from the perspective of your peers, that puts you in a group of majors as a silver producer. But what I found remarkable is the internal rate of return on this project at different silver prices. At $15, the internal rate of return on this is 59%. I mean that's highly profitable.

BOB: Yes. And that was the reason for moving forward. And the nice thing about the Pirquitas project is it does have some byproduct credits to it. About 70% of the value, as we currently know it, comes from the silver component in the property. There is also tin. And as you know, tin prices have moved up dramatically of late because of projects which have been shutting down in the southeast of Asia. We also have zinc. And of course, zinc has continued to be strong because of the demand coming out of China. And then the other interesting component which we have there, which is in our cash flow model, is Indium. And Indium is used in all of the flat screen panel TVs you see now and its price has gone from 150 to $200 a kilo up to maybe $800 to $900 a kilo. And we will recover Indium in our silver concentrate, so we're currently looking at negotiating around it. So all of those factors of course help to give the high rate of return.

Now, the only comment I make on that is we did the feasibility study update two years ago –that was in 2005 – and it was based on capital cost and operating cost at that time. We have over the last year been updating those figures, of course, due to the fact that that there has been upward pressure in all commodities: With the higher oil price; there have been higher commodity prices in construction and steel and cement. So we're going through and working on those numbers, and so the kind of rate of return that we saw on the project a few years ago, I suspect may not be quite as high. But with the kind of silver prices we're seeing and other byproduct prices, we're sure the project is going to be very robust and that's the reason we get close to 40 to 50 million dollars already into it. And we’ll be spending substantial more monies over the rest of this year on the property because, as you point out, of it's attractive robust economics. [11:05]

JIM: If you take a look at some of your cash operating cost projections with byproduct credits, it's somewhere around 240, 250 an ounce on silver, so at either 12 to 15 dollars silver, these numbers work out quite nicely.

BOB: Yes. That's true. And again, Jim, the rationale for making the decision to move forward and allow our shareholders to be able to benefit from that. I mean one of the other courses we looked at is whether you sell the asset or have someone else come in and develop it. But because of the long potential pipeline of projects we have that can keep a long term silver producing company going like Silver Standard, we felt it's best to develop these for our own account and let our shareholders capture that upside that we're seeing in projects like Pirquitas.

JIM: Well, as I take a look at your strategy for growth, Pirquitas comes online in the fourth quarter of 2008, you have San Luis and Pitarrilla; but also in terms of advancing other projects –Diablillos, a Snowfield. And let's talk about monetizing non-core assets and redeploying capital. What does that involve?

BOB: Sure. As I pointed out, we've got 17 projects here in the company and we can't develop them all. Some of the projects which would be developed perhaps at a much future date after, you point out, we developed Pirquitas, San Luis, follow that with perhaps Diablillos, with possibly Snowfields, some of these projects will just be on the shelf for a while longer. Whereas right now, the market is as attractive with the high prices of silver, so some of these projects which we paid pennies an ounce for six or seven years ago (in a case in point, we had a project that we paid less than a million dollars for and we've had offers of many tens of millions of dollars for it), so in order to manage dilution for shareholders (and that's always been an important aspect of our shareholders is they don't like to see too much dilution) we can then take these assets that we paid a little bit of cash for a number of years ago, sell them now in a current market where there is still a desire for those projects and with the smaller project that's we would normally develop; i.e., they'll produce maybe one-and-a-half to two to three million ounces a year versus the nine to ten we're going to be producing at Pirquitas, then we can sell those assets (they wouldn't be giving us a lot of value anyways), and we can take the present value that we're getting paid for that and put it back for the development of our Pirquitas project as well as San Luis and Pitarrilla. And that avoids us diluting shareholders by going back either to the equity markets or even taking debt on; and we can use internal cash in order to grow the company organically. [13:30]

JIM: As you take a look over the next three-to-five years as Pirquitas comes online, San Luis and Pitarrilla, at that point, do you just become a major silver producer and using cash flow maybe to expand operations or acquire other properties?

BOB: Yes. I think that's exactly how we would see the company growing, Jim, you know, we would take those assets you talk about, build the cash flowing. We've shown we've had very good success during exploration –and of course, myself, I'm an exploration geologist by heart – and I think by putting those monies in the ground when others weren't has allowed us to come up with some good assets. And I still think there is some other opportunities out there. So you're quite true, we become what we hope to become: A significant silver producer. And we'll be one that will continue to add value for shareholders and we can then take the cash flow, which we generate from operations, and either bring other projects online to production or as you point out, there may be some good acquisitions out there at the time which we could then look at. We’ve always wanted to make sure that we add value for our shareholders. I think we've shown that we've done that. And that will be the strategy going forward, which is how best to deploy the capital which is being generated by the projects to add further value. And sometimes if you can't, then I don't think it hurts to always be able to give some money back to shareholders because, ultimately, they are the true owners of the company. [14:45]

JIM: Bob, what do you attribute the success in terms of minimal dilution given the fact that you've really been a junior exploration company? Today going into production, you have 62 million shares, how are you able to minimize that dilution along the way?

BOB: I think by focusing on it. I think you have to recognize that you want to always be adding value for shareholders and that's an attitude that we have here at management and it's allowed us to be disciplined in our choice. We've been presented opportunities, you know, some at perhaps higher prices than we'd be willing to pay and we’ve said “no, we will go look for them rather than pay the price up.” And it's strictly a board and a management philosophy of focusing on the owners of the company, which are the shareholders, and trying to ensure that we do the best job for them. And one of that of course, is to manage equity.

And it's also having a good group of technical individuals. We have many strong board members who are miners and engineers and geologists. Gordon Davis has been on our board. He's our lead director. He's been around many years. Peter Tomsett, of course, has joined us as the past CEO of Placer Dome and is currently on our board. In management group here, we have a number of geologists on site, so we're able to look at assets very quickly, assess what their value may be, but more importantly, assess what the upside might be. And then we can make our choices to go and invest in projects and add value to it such as we did with the Berenguela project and such as we did with the Candelaria project, which is located in the United States. So we're able to get in quickly, put the drill on, add value for shareholders and then in some cases sell our asset.

Manantial Espejo is a case in point. We entered into that project in early days back in the late 1990s. We became partners with Pan American Silver. We did drilling. We added value to the project and ultimately, we ended up selling our interest to Pan American for between two and three times what we paid for it. We then redeployed that back in the balance sheet. So a great way to avoid dilution for shareholders and as you say, manage dilution. [16:48]

JIM: Finally, Bob, if you were talking to a group of new investors who have not heard of your company before and were looking to invest in it, give them three reasons why they should own Silver Standard.

BOB: I think the three key reasons, Jim, are first and foremost how you started off the conversation which is exposure to silver. We have the largest in-ground silver resources of any publicly traded silver company. We even these projects, most of them outright, and as a result we can develop them going forward.

The second is we have a good balance sheet. We have cash on hand. We have silver assets. We have long term investments and we have no appreciable debt at all. So as a result of that, we can use our balance sheet to develop these projects going forward.

And then the third is the management team and group, which are focused on delivering value for shareholders both by doing quality exploration as technical individuals. But also, looking at the business side and ensuring that we recognize our shareholders as owners of the company and we want to manage the dilution as we continue to grow this business on their behalf. [17:48]

JIM: Well, Bob, as always, I want to thank you for joining us here on this year's gold show. The name of the stock is called Silver Standard. Its ticker symbol is SSRI. It trades on the NASDAQ and most major exchanges.

Sean Boyd, Vice Chairman & CEO

Agnico-Eagle Mines Ltd. (TSX: AEM)

JIM: My next guest heads up a company that is about to enter the ranks of becoming a major producer. Joining me is Sean Boyd. He's vice-chairman and CEO of Agnico-Eagle. Sean, I want to start our discussion with a conversation that you and I had over lunch one day and you said: “Mines are made. They are not found.” Why don't you describe what you mean by that for our listeners and how that applies to Agnico.

SEAN BOYD: Absolutely. And we've been in the mining business for several decades and I've been with Agnico for 22 years and we found being in the mine-building business that it's not an easy business. And generally, geology can be difficult. You're dealing with nature and you have to be persistent. And generally, if you have the right people with the right skills and put together some creative thinking, you can turn what may appear to be something that is not economic into something that could be economic over many, many years.

And one of the great examples that we have as a company is that we've been involved with the Goldex project since 1971; and that was a project that is well located in a mining direct in northwestern Quebec. But for many, many years, it presented a challenge for us because it was on the low grade side for an underground mine, and we were looking at it from many, many different directions and we finally (about four years ago) after spending about 30 years trying to figure it out came up with the idea that we should be going at it in a much different direction: Going large tonnage, taking the entire structure out. And we’ve reengineered the project and it is now will be our first new mine. It starts production in April of 2008. So we've been very patient over 30 years with that.

But our founder Paul Penna, who started Agnico-Eagle back in the early 1960s he always said about Goldex: “The gold doesn't rot, it doesn't eat, it just sits there underground waiting for higher prices or waiting for someone to come up with a better idea to get it out.” And that certainly has been the case with Goldex and we are looking forward to starting that mine after over three decades of trying to figure out how that thing would work for us. [20:23]

JIM: Now, one thing that makes Agnico-Eagle rather unique is you've seen the good times as we're experiencing now, but you were also there and operating during a period of what was probably the worse gold market that we've seen in decades and that was the 80s and – late 80s and 90s. Talk about the management team because I look at it, your team has been together for quite some time now.

SEAN: I think that's one of our key strengths is that together the core team has been together for over 20 years. Our chief operating officer started when I started back in 1985, and the vice president of exploration, vice president of project development, vice president of metallurgy, vice president of operations have all been with us for over 20 years. So that certainly has been one of the key strengths for our company is to maintain that group and what that allows you to do is stay focused even when things get difficult. And what made our challenges even more acute is we have been one of the few companies that have never ever sold an ounce forward. So when gold hit 250 in the late 90s we didn't have the luxury of falling back on a hedge book. We were operating in a 250 golden environment and we just became more focused and we came through there in very, very good shape and that has allowed us to put together several project that we're building right now. [21:48]

JIM: One thing that you point out in the mining business, it's risky, prices can change, they can drop as they did in 2001 down into the 250 range or you can run into problems with the production of your mine. Now, several years ago, you had problems with your main mine. What did you learn from that experience? And take us forward in terms of where Agnico is going in the future.

SEAN: Well, sure. That was a – it's a very big deposit. We're currently mining at depths below 7,000 thousand feet. It's Canada's largest gold deposit. What we had in 2003, we were opening up an entire new mining horizon at depth in that deposit. We had some ground slippage in one of our mining blocks. We decided that it made sense to back off, regroup and alter the mining plan. And what we knew during that phase and what we came to learn is our employees did not sort of quit. They continued to work hard and as a result of those challenges in 2003, we came out of there with a record 2004, a record 2005, a record 2006 in terms of production and cash flow. So I think we learned that we have a very skilled employee base. And it's that foundation and those technical skills that we were forced to develop at that project that puts us in a position to carry out our growth program which is under way now where we're building five new gold mines and those will be in production over the next three years. [23:16]

JIM: As I take a look at your growth strategy and you have several. One is to produce more gold. You're targeting going from roughly 250,000 ounces to 1.2 million ounces by 2010. You also want to grow your reserves in mining friendly regions. And I want to point that out: mining friendly. You roughly have about 16 million ounces now. You're targeting 18 to 20 million ounces within the next year and a half, and also you have a strategy of “acquire small, think big,” so you create value through these acquisitions and also maintaining your position in the industry as being one of the low cost producers of gold. So let's talk about that strategy, what it envelops and what are the plans to carry it forward. [24:04]

SEAN: It can be a difficult business and our view has always been to try to make it as simple as possible because when you look at the underlying metal, it doesn't get as simple as gold. So what we've tried to do is eliminate a lot of the business risks that come with mining. And certainly one of those is political risk. And we've only chosen to be in those jurisdictions where you can describe them as mining friendly. Mining is hard enough, we don't need the distractions of having permitting issues or other issues as far as opposition, so we've chosen that strategy as what works for us.

Certainly on the overall strategy of growing, “acquire small, think big” that's certainly been a big part of our philosophy to look at bolt-on acquisitions where we can use our skill set developed at building and operating that big deposit in Quebec using those skills to get involved in early situations where we can extract that value through mine building expertise, but also a very focused approach on exploration. And we've been very successful over many, many years finding a lot of gold in these different deposits that we’ve got involved with. So what we've tried to do is overall our philosophy is keep the divisor low. Don't issue a lot of paper. We haven't done that over many years –which is not the norm in this industry, there is a lot of shares being issued over the last few years. We've kept our float down. We've increased our shareholders’ exposure to reserves per share over many, many years.

And we think that's what it's all about: Is give investors exposure to as much gold in the ground as you can –gold is going to go up; and eliminate the risks as much as possible as far as operational risks, technical risks, political risks, financial risks. And when you have low costs, when you have deposits in the right parts of the world, when you're generating good cash flow, you eliminate those risks. And one of the other things we're proud of as part of that strategy is we’ve paid a dividend for 25 consecutive years and that's very unusual in a business with the cyclicality of the price over the last 25 years, so we're proud of that and we hope as we go forward our strategy will allow us to increase that dividend to our shareholders. [26:16]

JIM: I’m just looking at some of your production growth, next year you're targeting 400,000 ounces of production; over 600 in 2009; 2010, you're roughly at a million two and roughly about one million three with Meadowbank 2011. So right now you've got five mines that are in the process of coming to production, Goldex, Lapa, Kattila, Pinos Altos and Meadowbank. How much of this has come from organic growth? How much of this has come from acquisitions? I know Meadowbank was an acquisition.

SEAN: The bulk of it is acquisition. We started with our regional base in LaRonde. The first step in our diversification plan was to reengineer Goldex and that's the project we talked about when we talked about mines being made not found. And then we decided to move forward on Lapa, which is 11 kilometers east of LaRonde. That was our discovery, so we took things that we owned as the first step out as we're close to home. That's our backyard. And then in 2005, we looked to branch out internationally, and the first project that we took outside of our traditional area of operation was the Kittila project in Finland which was by acquisition. That's in northern Finland. It's a large deposit. It continues to expand based on drilling and that will be in production in third quarter of 2008.

The second transaction was Pinos Altos transaction which is in the Sierra Madre belt in Mexico. That's a very prolific region. There is an awful lot of mining activity going on and mine building activity, exploration activity. We're fortunate to own that project. That project continues to get bigger. We've identified an entirely new area outside of the expanded reserve and resource that's under construction right now. So we think that we have the potential to expand that district. And that as you mentioned, Jim, Meadowbank was something that we acquired earlier this year through an acquisition of Cumberland Resources. And that's in the Canadian Arctic which is an area that's starting to get more mining activity. That will be our biggest gold producer when that's producing in 2010; and we've had some good exploration results early on there. I was just up there last week. It's a bit cold, but we've done a good job getting off to a great start there since taking it over in April of this year. [28:44]

JIM: And finally, Sean, as investors are looking for ideas, if you were speaking to a group of investors today, give them three reasons why they should own Agnico stock.

SEAN: Underlying a gold investment is certainly the commodity. And we certainly feel very bullish on the gold price. And as we mentioned, we’ve never ever sold away the investors upside to the price of gold. But when you look at it absent the gold price, it's the company that provides the best growth profile in the business, it's the company that cannot only grow gold production but is also growing gold reserves which I think underpins the valuation. And if you do some quick underlying math, when you look at the last two major deals in the gold sector, the average price paid in those acquisition transactions was $700 per reserve ounce in the ground. The market is currently paying Agnico-Eagle less than $400 for each reserve ounce in the ground and Agnico is going to grow their reserves. And as we build our mines, we feel the market will pay us more for those ounces and that’s going to drive the stock price up because we haven't issued a lot of stock in the last several years. [29:51]

JIM: The name of the company is called Agnico-Eagle. It's listed on the New York Stock Exchange. It's a member of all of the major indexes from the Philadelphia Gold and Silver to the AMEX Gold Index. The ticker symbol is AEM and we've been talking to Sean Boyd vice chairman and CEO.

Lorne Waldman, Corporate Secretary

Silvercorp Metals Inc. (TSX: SVM)

JIM: Joining me on the program is corporate secretary of a company whose exclusive, sole focus is on China as a silver producer. Joining me at the moment is Lorne Waldman. He is corporate secretary for a company called Silvercorp. Lorne, why don't you begin and tell us about the company, how it got started, its focus, what you're doing now and what you see in the future.

LORNE WALDMAN: Thanks for giving me the opportunity to tell you about Silvercorp. I'll give you a quick overview. Silvercorp is a very young company. It's strategic focus of bringing Chinese silver mines into production quickly and profitably. Again, in 2004. With the commencement of the now very successful Ying Silver Project in the Henan province of China. Today, we're China's largest silver producer. We have three mines in operation. This year our silver production is projected to almost double to 3.8 million ounces of silver, plus over 40 million pounds of lead and 18 million pounds of zinc. At the same time as we were focusing on increasing our production, we have continued to be successful growing our resources. In fact, in September we filed our most recent NI 43-101 technical report showing a 30% increase in resources since the last report.

Most importantly, our resources are very high grade. This allows us to be the lowest cost producer among our peers. In fact, in our latest quarter, our production cost per ounce of silver including byproduct credits from lead and zinc was negative $13.62 per ounce. This is one of the reasons why Silvercorp has industry leading margins with a gross profit margin of 80%. Now, what makes Silvercorp unique is that it's the only North American listed silver producer with a sole focus in China. Our directors and our management, many of whom are Chinese, collectively have over 70 years experience in the mining business in China. They have an excellent understanding of China's legal framework and business environment and they understand the advantages of operating a mine in China. Everybody knows there are lots of cost advantages to operating in China, but it's more than just the low cost labor for operation. In addition, your capital expenditure costs are significantly lower in China and with shorter lead times.

For example, we recently brought on a new thousand ton(ne) per day mill. It cost us only $4 million and was completed in a six month timeframe. In North America, it would cost over $25 million and probably take closer to two years. Many people are not aware that China has many world class silver deposits. And in fact China is the third largest producer of silver in the world. It's not recognized because many of the mines in China are very small and the market is highly fragmented. In terms of growing, Silvercorp is planning to leverage on the success of its three operating mine to grow through acquisition of new mining projects under China's mine consolidation management. And also to grow through exploration and development.

In terms of growth through consolidation starting from our foothold in Henan province, we’ve recently announced an acquisition of a mine called the LM mine. We're also negotiating to purchase another mine nearby called TLP which has produced over 150 million ounces of silver in the past.

On the exploration side, we recently signed a joint venture agreement with the Qinghai Geological Survey for two exciting projects in an area that has recently been made accessible by the railway to Tibet. Also we have a team of geologists in China looking for and evaluating new prospects.

So in short, though Silvercorp is a young company, but it has delivered results to its shareholders. That includes that we're now paying a dividend, but we're not going to rest on our success. We're continuing to work hard to grow the company and become the preeminent Chinese silver producer. [34:21]

JIM: Lorne, what is the relationship with Silvercorp and another company that you own a 24% interest in which is New Pacific metals?

LORNE: New Pacific Metals, as you mentioned, we own 24% of that company. And many of the management team members are the same. For example, the chairman of Silvercorp is on the management team of New Pacific. New Pacific's focus however is more on the gold side, so it's separate from Silvercorp in terms of the metals it's focusing on.

JIM: So the main difference in base metals is byproduct credits which is why your cost structure is negative, but it's mainly focused on silver. So New Pacific will be a gold focus for the company?

LORNE: New Pacific, its focus is on gold.

JIM: All right. And that is at the exploration stage right now for New Pacific.

LORNE: That's correct.

JIM: You mention some same management in both companies. Is there any cross over work between geologists or is that separate?

LORNE: That would be separate. What is similar is the strategic approach. Silvercorp's approach is to bring a mine into production very quickly after initial discovery is made and they don't wait to drill off the full potential of a mine. And that's also the strategy that New Pacific has taken. And there are a number of reasons why you want to do this in China. Normally, a Canadian company would spend three-to-five years doing a drilling and feasibility program. But in China, you'll be on somebody's land during that period of time and that may not work. By bringing a mine into production quickly, you are employing people either way, so the local people benefit and they become supporters of the project. In addition, you start generating tax dollars right away, so the government will start to support your project. And finally by bringing a mine into production quickly, you're generating cash flows from the mining operations, which you can then use to finance further exploration and expansion of mine operations, so there is less dilution of your shareholders. That's the strategic approach of Silvercorp; and New Pacific is also following that type of strategic approach. [36:42]

JIM: Lorne, what has been your relationship with the Chinese government?

LORNE: Silvercorp has excellent relationship with the local government. In fact, we’re one of the largest tax payers in the county; and we believe that maintaining that type of relationship is, you know, one of the keys to our success. You do that not only through paying taxes but also by operating a mine with a high regard to safety and a big concern for environmental issues, so that's the focus for Silvercorp.

JIM: What's amazing, you're a fairly new company, but if you look at your competitors who are producing similar amounts of silver, your earnings per share are much higher than your competitors. Your market capitalization is much lower. Your cash cost per ounce is lower and your net profit margins are much higher. So that's quite a bit of an achievement to be in a group with competitive peers that you're in.

LORNE: I think the key is the fact that we have very high quality assets, high grade with large byproduct credits from lead and zinc and that combined with the low cost of operating in China and the lower capital cost to build a mine allows us to, as you say, produce at the lowest cost. So in fact, where it costs other companies money to mine for each ounces of silver they bring out of the ground, in fact, we make $13.62 cents per ounce. So when you have that type of cost structure, it's not surprising that you're going to have the highest margins and the best returns in your industry. [38:30]

JIM: Now, looking at your production profile, which has been rising –it looks like to go from 3 million ounces to close to five million ounces – are you going to do that from internal development or is that going to require you to make acquisitions?

LORNE: That production is internal. In addition to that production, you can expect further growth from acquisitions and from new explorations. So on the acquisition side, as I mentioned, the mining industry in China is highly fragmented. There is a lot of small mines that often are not operated safely or in an environmental responsible manner and the government policy in China now is to try to have the smaller mines consolidated into a larger mining operation that will operate with proper safety standards and environmental standards. And Silvercorp is viewed in its county as the preferred consolidator for the silver mines. And we've been able to use that position to recently acquire a new mine in our county called the LM Silver mine and in addition to that, we are hoping to open another mine called TLP in the near future. But that's still under negotiations. So those new mines will bring incremental production online. In addition to that, we have signed a joint venture project with the Qinghai Geological Survey in the Qinghai province which is just north of Tibet and we are very optimistic based on initial trenching work there. It's still very early stages, but of course we're hoping that we'll be able to repeat the Ying success in Qinghai. [40:29]

JIM: Well, I noticed this year your stock split three-for-one. And last year when I interviewed the company on our Gold Show you said that you wanted to increase your margins, increase your production, increase your profitability and pay your first dividend. And I noticed here you just declared your first dividend in September a full year annual dividend of 15 cents.

LORNE: That's correct. Adjusted for the three for one stock split, it would be five cents a share and our cash flows operations in the latest quarter increased 182%. We have almost 90 million cash in short term investments on hand, so we're confident that we can reward our shareholders by paying dividends while at the same time continuing to be able to grow the company through acquisitions and through further exploration.

JIM: Lorne, finally, give us three reasons why an investor should own your stock?

LORNE: First would be that we have very high grade assets located in a low cost business friendly jurisdiction. And that makes us the low cost producer. The second reason is we're positioned to benefit from a government policy encouraging the consolidation of the highly fragmented China silver mining industry. And finally, we have a management team with a clear target: To replicate the success of Ying by focusing on projects that can be brought into production quickly and, most importantly, profitably. [42:02]

JIM: All right. Lorne, I want to thank you for joining us on this year's gold show. The name of the company is called Silvercorp. Its ticker symbol is SVM. It's traded on the TSX exchange. It's also a component of the S&P TSX Composite Index. The S&P TSX Global Gold Index and the S&P TSX Global Mining Index. Lorne, all of the best to you and once again our thanks.

LORNE: Okay. Thanks a lot, Jim, for having me on. [42:33]

Bradford Cooke, Chairman & CEO Endeavour Silvercorp. (TSX: EDR | AMEX: EXK)

JIM: Well, with silver prices hovering near $15 an ounce, it's a good time to be in the silver business. Joining me on the program is Bradford Cooke. He's chairman and CEO of Endeavour Silver.

Brad, why don't we get into Endeavour Silver. Tell us about the company itself, when you got started, the projects, your core assets and a little bit about the management.

BRADFORD COOKE: I'd be happy to, Jim. Endeavour silver is actually only a three, three-and-a half year old company. I'm an exploration geologist, my background, with some 32 years in the business. And we recognized in 2002 that gold had entered into a cyclic new market whereas silver had not. And there are only a few certainties in our business, but when you see gold on the move and silver flat on its back, then you can be fairly sure that silver will play catch up. That's why it's called the poor man's gold.

Anyway, we founded Endeavour in 2002, went to Mexico looking for silver in 2003, primarily because Mexico is one of the largest silver-producing countries in the world, has been for centuries and was the backbone of the Spanish silver empire for a couple of centuries in the 1600s and 1700s. So we like Mexico a lot. It’s part of NAFTA, it's got a modern, growing economy and really grossly underexplored on [indistinct] terms. Interestingly enough, we explored numerous remote prospects –old Spanish diggings in the heart of the Sierra Madre in 2003 – and thought that we really weren't finding any material silver assets that we could do anything with. And then through a friend of a friend we came across a small silver mine that was fully built, permitted but closed. And we sat down with the general manager of that mine; being the last man standing in a closed mine, we got a great mine tour. But at the end of it we recognized it was just too small for us. We really liked the Mexican engineer though who was general manager, and so we took him to dinner and asked him if he knew of any other opportunities like that in Mexico. And really, that’s how our business model was formed.

Endeavour Silver turned its focus in late 2003 to acquiring key assets in the silver business in Mexico that were fully built, fully permitted, in some cases in mature and famous silver districts, but closed –closed because they are ran out of ore, closed because the silver price was too low to make money or the owners had run out of money or they’d retired. It really didn't matter to us because what we recognized is that if you have fully built and permitted facilities, all you really need to do is bring the money and the expertise to find new ore and reopen those facilities in anticipation of a silver market. So that's kind of an introduction to the company, Jim. [45:11]

JIM: You talk about, in your presentations, one of your goals is to become a top five primary producer of silver world wide. How do you intend to achieve that?

BRADFORD: Because we were one of the first in this new silver market to acquire fully built assets in Mexico –that is, mines that had previously operated and process plants that were in good shape – we managed to get two of the larger assets that were available for sale in Mexico. And it is our belief that these two assets alone –called the Guanacevi Mines Project in Durango, Mexico and the Bolanitos Mine Project in Guanajuato, Mexico – these two mines alone have a combined capacity, that is, an evolved plant capacity of five million ounces per year of production. And yet when we bought them they were idle. And so we did bring the money and the expertise, and luckily, we found silver very quickly; a brand new, high grade discovery at Guanacevi within six months, believe it or not, of acquiring the asset. And we were able to put the mine back into production.

So again, it was a ratification that our business model works and just by unfolding the full potential of those mines to fill the processing plants to capacity has taken us two-and-a-half years so far; and will take us another two years to get to full capacity – that capacity is five million ounces a year – which takes us to the top of the junior ranks, shall we say, of silver mine producers; or perhaps even allow us to break into the mid-tier of silver producers. That's why we say that we are not only the fastest growing silver mining companies in North America but with the potential to become a top primary producer of silver worldwide. [46:50]

JIM: So a lot of this growth you expect to come from organic growth? You've had a four-fold growth over the last two years through exploration and development. What about potential acquisition strategy?

BRADFORD: Keeping in mind that our two assets were acquisitions from privately-owned mining groups in Mexico, we feel that we can not only grow through the expansion of those two assets but by buying mine number three, and perhaps even number four. So our short term goal –that is, our three-year outlook – is to not only take the two operating mines to their full capacity of five million ounces a year but to acquire additional minor mines that would give us at least ten million ounces of production capacity. If we do that, then we truly do become the leading mid-tier silver producer. [47:38]

JIM: If you look at this industry going back five or six years ago, you probably had a handful of companies around, there are still not a lot of companies getting into silver production. Certainly there are some getting into silver exploration. How would you compare yourself to, let's say, some of your peers?

BRADFORD: There are actually a number of small companies now who have borrowed from our business model in Mexico perhaps half a dozen companies are following in Endeavour's foot step in acquiring small mines and plants in the hopes that they can also expand them using our business model. And it's been very effective for us obviously. And again, if you go back to 2002, 2003, the silver space was suffering from a scarcity of quality companies. I think you probably could count on one hand the primary silver producers in North America. Let me see, Pan American is probably a familiar name; Hecla and Coeur d’Alene certainly are familiar names. And you couldn't get beyond that. There was really nobody else. Now there is Apex coming into production. We have a Peruvian miner who has joined the senior ranks – Hochschild. That’s five companies that represent the senior producing companies in the silver space. Each of them have grown through acquisition rather than organically through exploration and development. So what's happened in the last two years is those companies have in fact grown beyond the mid-tier status. What we call the mid-tier production of five to ten million ounces of production a year is actually vacant at this time. So we see a real opportunity to grow our company perhaps to be one of the first, if not the first, to grow out of the junior ranks into the mid-tier ranks. [49:12]

JIM: You know, despite the fact that we're looking at close to $15 silver, if you look at a lot of the companies in your space, the emerging producers, a lot of these companies have not done well this year, including your own stock. Why do you think that is?

BRADFORD: I think there is a couple of reasons. We've had a heck of a run so far in this commodity cycle and combined with the credit crunch in the major markets this year, all of the resource stocks took a significant pull back. The junior silver producers, I think, took a fairly strong pull back this summer partly because silver fell all of the way below $12 an ounce in August. And partly also self-inflicted wounds, if we can call that –when you grow as fast as we're growing, it's not without some problems. We did run into rising costs this summer that were somewhat unexpected, and it was caused principally by delays in our plant expansion-refurbishment projects so we did lose, I think, probably two quarters in terms of our original timetable for growth. We didn't lose any silver of course, and in fact, we ended up with 50,000 tons of broken ore in stockpiles awaiting processing outside the Guanacevi plant. So if there is a silver lining in that it's that if we had gone ahead and processed and sold that silver at $12 an ounce, then we would have deprived ourselves at the opportunity now to sell it for $15 an ounce. So a silver lining if you will from our problems in operating delays at the main asset that we have. [50:44]

JIM: What are your cash costs or expected cash costs of producing silver?

BRADFORD: Since we took on the Guanacevi project, our cash costs have ranged from $8 down to a low of $5 and then they spiked back up to $10 in the second and third quarters of this year. That’s mostly a function of planting inefficiencies and unavailabilities as we interrupted production to either refurbish or replace certain circuits in the plant. That whole plant program is going to be done by year end though. So we do fully expect, not only a regular stream of production next year, we also expect that the refurbishments in the plant will once again lift the silver recoveries –that’s the amount of silver you actually extract out of the ore. And right now they are running at about 67%; but the norm for us and for the industry would be somewhere north of 80%. And obviously, if you can produce more silver from the same amount of tons, then on a cost basis it does drive your cash cost down. We’d expected to achieve some of these cash cost gains over the next three quarters and to see a long term sustainable cash cost of five dollars or lower once we get close to capacity in these operations. [51:58]

JIM: And your resource base right now, total number of silver reserves and resources?

BRADFORD: We are reporting this year 10 million ounces of proven and probable reserves. I should point out that they are quite high grade – north of 500 grams per ton(ne), that’s north of 13 ounces per ton, average grade. Measured and indicated resources came in at 21 million ounces. And we have an additional 10 million ounces of inferred resources for a total of 41 million ounces at this time. We are targeting this 20% growth in total reserves and resources this year to the 50 million ounce range; but with a minimum 100 million ounce target by 2009 as we continue to explore these grossly underexplored districts in the hopes of finding new ore bodies. We're drilling now in two different districts with four drills, with an expectation of increasing that level of activity as we go into the New Year. [52:52]

JIM: And within these districts, the approximate location of the new drilling target to existing mills.

BRADFORD: They are all basically on existing properties adjacent to our existing plant, so we really don't have to go very far to find new ore bodies. If you’d allow me, I'd like to tell the story of how we made our first find at Guanacevi because I think it again points to the success of the business model. When we arrived at Guanacevi in November of 2003, we were able to stand on top of a 400 year old Spanish mine called the Garibaldi mine. It’s on the famous Santa Cruz vein in Guanacevi. I could look downhill at just a few hundred yards at an 80-year old head frame to a 300 yard deep shaft. That was the Santa Cruz mine which Industrias Peñoles operated for the better part of 70 years from 1926 to 1989. And yet I could look at on the next hill side and see where that silver vein should be, and we could see geologically all of the geological features that you'd expect for an extension to the silver ore bodies on that hillside and yet that hillside had never been explored, never been drilled. And so that is really what I was saying earlier on, when you get into some of these fully built and permitted assets –even famous and mature silver districts – they really haven't been well explored. Any time you can go a few hundred yards from a famous old mine, drill an extension on the same silver vein system and hit high grade, I think it points out the value of going back and reexploring these famous old districts.

JIM: And finally, Brad, if you were to give me three reasons why I should buy your stock now, what would they be?

BRADFORD: Well, I'm going to give you two fundamental reasons and a technical reason, if I may.

JIM: Okay.

BRADFORD: First and foremost, you can't do any of what I described here without a great management team and we've managed to assemble a group of operators who not only know how to find ore but also to develop mines, put them into production, and operate mines, drill mines; and in fact, reclaim mines after closure. So we have a full discover, build and operate and close team running the company, Endeavour. So that's number one I'd say. Our management team does stand out from the crowd for that.

Number two, of course, is the assets. You can't go anywhere without high quality assets and I believe Guanacevi and Bolanitos –our two silver mines that anybody in the silver business would want to own. Not only because they can grow organically just to fill the existing capacity of the plants, but the potential for new discoveries on those existing properties is outstanding.

And then last but not least, Jim, I'd like to point out our capital structure and this really does set us apart from the other junior silver producers, I think. We've been very successful at financing the company while minimizing shareholder dilution. So even today we have only 48 million shares issued; 33 million in cash and working capital and no need to issue more shares in order to fulfill all of our organic growth. I think you would not be able to find another silver producing company with that tight a share capital and that much cash per share. So that's it. I think that's a good summary of the company and I hope this is worthwhile for you and your listeners. [56:05]

JIM: All right. The name of the company is called Endeavour Silver. The ticker symbol is EDR. And it's primary exchange is the Toronto exchange. Once again, EDR. And we've been talking with Bradford Cooke. He's chairman and CEO. All of the best to you, Brad.

BRADFORD: Thank you, John.

Robert A. Archer, CEO & President

Great Panther Resources Ltd. TSX: GPR

JIM: A few years ago when the price of silver was four or five dollars, you could count the number of silver producers on one hand. Today, there are more upcoming producers in the silver field. One of them is joining me now. Robert Archer is CEO and president of Great Panther Resources.

And Bob, let's begin with Great Panther. Tell our listeners a little bit about the genesis of the company, where you're located, what you're doing now and where you intend to go in the future.

ROBERT ARCHER: Okay, Jim. First off, thanks for having me on the show. Great Panther is a primary silver producer focused in Mexico. You’re correct in pointing out where silver started a few years ago, and we were very fortunate in our timing in starting up the company in 2003 as a private entity and then going public in early 2004, because at that time silver was exactly that, trading between 4 and 5 dollars per ounce. And so we have been very fortunate with the timing and catching the rise in silver prices.

When we started the company we wanted to focus very much on early stage production and growing the company through growing our production and growing our resources with projects as we acquired them. And so what we've done is acquired an initial high grade mine in the Sierra Madre of Mexico, that’s the Topia mine; and then bought on a second mine which is in Guanajuato in central Mexico; and we've since bought on a third project where it’s not in production yet, but we are building the resources there and we are trying to work that towards production decision somewhere down the road. So we do have two mines in production at the moment. Production is growing at both and the resources growing at all three projects. [58:13]

JIM: Now, you're talking about the Topia and the Guanajuato mines and then you've got a couple of others. Where are you in achieving your corporate goals, what will your production be this year and talk about your cash cost producing silver?

ROBERT: Both of our mines are historic producers. Topia was built and bought into production by Peñoles back in 1952 and it was closed down around 1999. So we brought it back on stream at the beginning of 2006 and we've been gradually trying to increase the production there and build that up, expanding the capacity. And similarly at Guanajuato –that's actually been in production for a little over 400 years; initially by the Spaniards in the year 1600. And again it was in production at a very low rate when we took it over in 2005, we brought it back into production in the middle of 06. And we've since been building the production –the throughput – at Guanajuato, building that up quarter over quarter. So we have seen our production grown quarter over quarter from both the operations and we expect to do 1.4 to 1.5 million ounces of silver equivalent this year in 2007. And our aim is just to continue to increase that through 2008 and beyond, so I do think that both mines have the capacity to increase quite substantially. And, you know, at the same time as increasing the production of course, we're always trying to bring our cost down as well. [59:44]

JIM: If you're going to go, let's say, a couple of million ounces in production, I notice from some of your corporate presentations, long term growth is projected somewhere around 10 to 12 million ounces by 2011. Is that achievable in your opinion?

ROBERT: Well, for one thing, ultimately the big boost there will come from our third project which is Mapimi and whether or not that ends up being economic. If we can go ahead with that project and we should be getting into a scoping study early next year, I might add, so we should know within six months or so about some of the preliminary economics, at least, of that project. But just looking at what that might entail, you know, that project alone could add about five million ounces a year for us. And with the potential to increase the throughput at both of our mines then, you know, those sorts of numbers are achievable. Timeframes are difficult to predict, particularly given that we're working with two historic mines, neither of which had any resources when we took them over and we're trying to develop those as we go. So these are goals that we set for the company and we do think they are achievable but of course, like with any operation that takes a lot of hard work and diligence to get there.

JIM: So without the additional mine, it looks like you could be, with just your existing mines, up to around 6 million ounces of production. If the other project turns out not to be economic, would you look for something else? I mean is the goal of the company to get up to size in that 10 to 12 million ounce production range?

ROBERT: Ultimately, yes. That would be the goal getting us up into that level would allow us to vault up into the mid-tier of silver producers and that's something that we would like to achieve. We certainly are always on the look out for new opportunities. This year we've been primarily focusing on the existing operations and trying to get a better handle on those and get the right people in place to operate the mines. As I'm sure you're well aware, you know, human resources are the most valuable commodity these days. It's very difficult to hire good people and hang on to them. So we've been sort of focusing internally a bit this year, but certainly going forward we’re going to be looking for further opportunities to grow the company. [1:02:07]

JIM: What about doing business in Mexico? How do you find it in terms of the ability to acquire a project, take it to production, and then also the economics of mining in Mexico?

ROBERT: We enjoy Mexico a lot. It's still one of the best jurisdictions of the world in which to work. It has a long mining heritage, so the people there understand mining; and there are lots of skilled labor there in that sense. And the government understands mining. They have good mining laws. There is a relatively good tax laws, as well: There is no royalties to the government or anything like that, it's just a straight corporate tax. Mexico being part of NAFTA is quite stable, both politically and economically. So it's generally we find Mexico a great place to work and we certainly enjoy doing business there. [1:02:59]

JIM: What about cash costs in terms of where the company is going? Will you have the need to finance, or is the company at this point with cash flow self-financeable?

ROBERT: Well, we're okay in the short term. We do have revenue coming in from both operations. We're not cash flow positive yet although both of the mines are generating an operating profit, but, you know, that positive number coming off of the mines is not yet sufficient to cover all of our overhead and exploration. And we do need to spend a fair bit on development and exploration to prove up the resources for the mines in order to develop a long term mine plan there, but also at the Mapimi projects where we're trying to grow our resources in order to determine a production decision at that point in a year. So in terms of outlook on that, you know, it's a little difficult to say. I guess a lot would depend on the success we have at Mapimi as well as the mines in terms of how quickly we want to advance the growth in resources. So we'll be all right for the short term. I should mention that we had about $6.5 million worth of warrants that will be exercised before the end of the year and that will certainly see us through well into next year to do what we need to do. [1:04:16]

JIM: How much exploration and blue sky is the company associated with? You have two projects you're working on proving out. Is that where most of the blue sky lies, or can you enhance the existing projects?

ROBERT: Well, certainly we can enhance the existing projects and the Guanajuato deposit in itself is a world class deposit and we're conducting a deep drilling program there right now, drilling below the old working, to determine the extent – the down-dip extent – of the mineralization to depth. And there is a lot have to grow the deposit that way. But I think at the moment, the biggest blue sky comes from our Mapimi project where we’re not only drilling off a resource on what we believe could be an open pit mine, but we've established two very large anomalies, two physical, chemical, geological anomalies that are about, well, one is about two kilometers long and 800 meters wide and the other is a kilometer long and 4- to 500 meters wide. And these zones have never been drill tested. There is silver gold, lead and zinc mineralization on surface and if we start to have good success on these zones, that could be very, very significant for us because the size of the anomalies is such that there is potential there for a major discovery.

JIM: How do you intend to make money for shareholders?

ROBERT: There are a number of features for Great Panther. I mean, one is just through growing of our production and output of silver and byproducts, and that certainly forms a good foundation for the company. We’ll get increasing value from our growth in resources and we do have two new resource reports to come out within the next couple of months. One will be on Mapimi in December; and the other at our Topia mine which should be delivered by January. And the third, as I mentioned, is the potential for a new discovery. And if we’re successful with our exploration on Mapimi then certainly that would have a lot of value for our shareholders. [1:06:26]

JIM: And how would you characterize, Bob, your company with some of your peers that are emerging in that Sierra Madre silver belt?

ROBERT: I think one of the things that has perhaps distinguished us is that blue sky potential that we’ve just discussed. Some of the other producers, the junior producers in our peer group, have only one or two mines that they are working on and trying to grow the production and resources at those mines. And I don't know that there are many that have the potential for organic growth that Great Panther does and we think that that would be one of the primary things that would help us stand out from the rest of the group. But certainly this is a very small group anyways, so lots of room there to grow. [1:07:12]

JIM: You know, one thing we've seen this year is that gold has out performed silver and with that has come some of the under performance in some of the silver stocks. What would you say accounts for some of that under performance of your stock this year?

ROBERT: Well, certainly that is a factor. About 18 months ago as you'll be well aware silver had a tremendous run up to the $15 and there was a tremendous amount of momentum that that created in the market, particularly for silver stocks, and there were only a few at that time. And we got caught up in all of that momentum and got sort of carried along for the ride as it were, and we hit our high about this time last year of 2.79. And silver has pretty much gone sideways and even down for a while during this year. So a lot of the silver stocks have done likewise. And certainly the correction that we all saw in the market in August hit the junior stocks very hard and much more so than the commodities themselves. And so we’ve developed a little bit of a disconnect between the actual commodity prices and the prices of the underlying shares. So it's been a little bit frustrating willing year for a lot of the silver companies in that regard, but now hopeful that things will turn around and people will see the underlying value in our shares and that 2008 will be a much better year. [1:08:39]

JIM: And finally, if I was to consider investing in your company, give me three reasons why I should buy Great Panther now.

ROBERT: One is the underlying production that forms an excellent foundation for the company going forward. You know that with that production, the company is going to be around for a long time, not like a lot of exploration companies that will just keep diluting shareholders until they can't stand it any longer and then go through a rollback. So the company is going to be around for a long time. We'll be growing our production and other resources for which will add value for the shareholders and that tremendous blue sky with the possibility of a major discovery on our third project and looking at new opportunities elsewhere. I think all three of those give investors a good comfort level when they are investing in a company like Great Panther. [1:09:31]

JIM: All right, Bob. I want to thank you for joining us on this year's Financial Sense gold show. The name of the company is called Great Panther resources. It’s ticker symbol is GPR and that's listed on the TSX.

J. Richard Whittington, Pres. & CEO

Farallon Resources Ltd. (TSX: FAN | OTCBB: FRLLF)

JIM: My next guest heads up a company that owns a polymetallic project in Mexico. Joining me on the program is Dick Whittington. He's president and CEO of a company called Farallon Resources.

Dick, why don't you describe Farallon, the project that you have, and also where are the companies goals over the next 12 to 18 months?

RICHARD WHITTINGTON: Okay. Straight forward, I think on all respects. The company is in Guerrero state, Mexico, halfway between Mexico City and Acapulco and it is in a fairly rich polymetallic area that we do own 100 percent of that area, which gives us obviously a very good land holding. The company is in the process of developing the deposit that's called G-9. This is a rich polymetallic deposit that has primary zinc as the main metal, but has significant byproduct credits in copper, silver, lead and gold. We are fully focused on developing this deposit. We're some 30, 40 percent along the way in our development activities. We do have the mill site under construction. We do have underground development under construction; and we are in the process of putting other necessary pieces together to have a mine in production by July 1, 2008. And that is a very key date for the company and it is the date through which Farallon will fundamentally change from being an exploration/development company to a company that is producing and generating cash flow. So there is going to be a very significant shift to the company over the next 12 months.

Our focus at the same time is to continue exploration. We do have very rich fields. I think anybody checking our news releases really over the last 12 months, we have had some spectacular intersections and we continue to have very, very satisfactory intersections on our exploration.

So the focus is to build a mine, number one, and change this company from being exploration to production, which will obviously have, we believe, significant benefits to shareholders. And secondly to have the upside potential that’s perhaps more real than most, based on our track record, of adding some significant exploration value to the company over the next 12 to 18 months. So I think that covers most of your questions. [1:12:40]

JIM: Let's talk about the mine itself. It has a small footprint. What about the capital cost per annual tonnage.

RICHARD: Well, we're looking at about US$125 million , which are the sort of general numbers that we're targeting for and you look at that relative to half a million tonnes a year – no shaft. I think we're in pretty good shape there. It is not an expensive mine to bring into production because of the footprint and because essentially not having to put in a shaft and not having to put in any major infrastructural capital items. So it's not a complicated project and that's one of the reasons that we're targeting July 1, 2008 and why we're full steam ahead. [1:13:31]

JIM: Talk a bit about your exploration success because you've had a number of discoveries, and more recently, I want you to talk about the San Rafael fault discovery that was made this year.

RICHARD: Sure. I think over the years Farallon has been drilling for probably five years of elapsed drilling time and in that five years of elapsed drilling time we have discovered five deposits and I think that speaks for itself. However, it was the last deposit in June 2005 that we discovered –the G-9 deposit – that really turned everything upside down and got us going full speed ahead. This is a very rich polymetallic deposit and would appear to be mineralogically different from the first four deposits. So we definitely have a deposit that's high grade, we definitely have a deposit that metallurgically processes very well. So the question then is what is the exploration significance of this discovery. And the real exploration significance which you hit the nail on the head here is the San Rafael fault discovery.

Prior to making the discovery that we made in February of this year, which essentially confirmed the G-9 mineralization continues, the other side of the San Rafael fault. And I should mention the San Rafael fault is a major fault, it's a regional fault and it was thought to limit the G-9 mineralization. Drilling through that fault and finding G-9 mineralization on the other side is number one, opened up obviously areas on the other side of the fault to continued exploration. But number two, we have confirmed that G-9 is now stratographically 200 meters deeper than the first four deposits that we drilled and discovered in the earlier. So we have reopened the entire territory north of the fault to exploration. We've discovered a new stratographic environment that obviously hosts massive sulfides and we've essentially confirmed that there were two eras of deposition and volcanic activity in the Campo Morado area and it is the older era of deposition that we now wish to target with our drilling. So it's really opened up exploration that we thought was closed and given us tremendous upside potential to continue to add to G-9 and/or find another G-9. [1:16:14]

JIM: In terms of completion of the project, where are you in terms of hitting your goals. Has the building of the plant and mill been right on target. Where are you?

RICHARD: We're basically on target. Like most projects, it had issues along the way. I do want to commend the team for how they've responded to those issues. We are using a management model that does allow for flexibility in how we can approach the building of the mine. It is called a parallel-track model. We do have a lot of items on a parallel track so they don't necessarily interfere with other areas of the project. And on balance when one looks at the array of all of the work in front of us what we have to do we are still on target for July 1, 2008. [1:17:05]

JIM: And talk about, if you would, the infrastructure. Let's say you do find more deposits, you develop that, what about the infrastructure? Do you have the ability to expand? Do you have access to the power grid system? Water, high ways, roads, et cetera? All of those things that go into mining production.

RICHARD: I think there again you've hit on one of the fortunate aspects of G-9's location. While on the one hand it's in a bit of an area that has some steep terrain, on the other hand, it is not an isolated deposit. We are only 20 kilometers from the main paved Mexican highway and 22.5 kilometers from the main power line. And we do have the capacity do to the steep terrain to put up dams and store our own water and we do fortunately have a very healthy rainy season, so we have the capacity to do all our own water. And then most importantly, we have a terminal 400 to 450 kilometers away that is fully capable of handling our concentrates and taking it to market. So compared to some of the projects in more isolated areas, usually one of those four items will be an area that either restricts the time table or significantly adds to the capital cost. Fortunately in our location we’re not afflicted with any of those items and we can, again, move full speed ahead to get the mine into production. [1:18:38]

JIM: Let's assume your targets are hit, so July 1st of next year the company is transformed from an exploration company to a producing company, what next for Farallon? What's on the horizon?

RICHARD: I think the way I look at it is there is no question that G-9 is what you would call a company maker, so that's why we're full speed ahead, in developing that deposit into a mine. I think the big question then for management that we’re already being asked, by our board and interested investors as well, “that's all very well and good, but then what do you make of the company?” And I think that is clearly what is on my plate now in terms of what we make of the company. If we meet our targets and we're in production next year, we expect to be generating very healthy cash flows. Obviously, that gives us the opportunity to look at moving the company to the next level either by building another mine in the area of G-9, should we discover another G-9 deposit, or by looking at acquisitions of companies that might offer value for various reasons to us, or by selective joint ventures with companies either in Mexico or elsewhere that again will offer value. But clearly, the focus is to use G-9 to build a company. But we do not want to be a one mine company. [1:20:06]

JIM: The main story here is a mine in the making and that mine goes into production July of 2008, which is going to change the profile and what happens to the company. If you were speaking, Dick, in front of a group of investors, give them three reasons why they would want to own Farallon stock.

RICHARD: I think number one is that we have a track record of delivering on what we've committed to the market, whether it is on the exploration side or whether it is on developing G-9. I think the track record is there for that. I think number two is there is no question that when a company goes through a rapid change from exploration to cash flow that the stock is essentially reviewed by different investors; investors that have different profiles, bigger investors and one can easily see why companies like that have what's called a rerating in the marketplace. A lot of the risk is taken out of the company and you become, essentially cash flow based. So I think that is the second reason. I think the third reason is that we have, and have in front of us, just outstanding exploration potential. And obviously that is the name of the game in terms of adding value. If we can find another G-9, then I think that will reflect itself very quickly in the stock price and will return investors appropriately. [1:21:42]

JIM: All right. Well, listen, Dick, I want to thank you for joining us on this year's Financial Sense Gold Show. The name of the company is called Farallon Resources. Its ticker symbol is FAN and it's listed on the Toronto Stock Exchange. [1:21:58]

Ross Hansen, Founder

Northwest Territorial Mint

JIM: Well, one of the surprising things that we've seen this year is gold prices. Gold recently took out the highs reached back in 1980. Silver, even though it's pulled back, is still over $14 an ounce. Gold is hovering near 800, my next guest runs Northwest Territorial Mint, one of the largest mints in the country. He's Ross Hansen.

And Ross, let's talk about the run up that we've seen in gold prices recently and your perspective in terms of where you see it right now.

ROSS HANSEN: Well, Jim, metals have recently hit 27 year highs, and unlike the 1980 run up in metals, these metals prices have run up basically on fundamentals. The fundamentals of a weaker dollar, higher crude prices, fear of inflation and a massive amount of dollars being printed by the Fed. And we're pretty excited about it because I think there is a perfect storm brewing here to drive prices even higher.

JIM: Let's talk about that perfect storm because as you mentioned, what is really driving the metals prices are fundamentals now.

ROSS: The fundamentals –people are just starting to wake up to them. You know, right now is just the tip of the iceberg. We're just starting to see what I call the smart money investing in precious metals. But down the road as the credit crisis deepens and the economic fundamentals become more mainstream, I think what we're going to see is more and more flight to quality and that has to do nothing but drive the price of metal much higher. [1:23:28]

JIM: Speaking of the fundamentals, Alan Greenspan mentioned the credit crisis is just beginning. I mean if you look at the news on Fannie that they may have to –Fannie and Freddie, two billion dollars worth of losses – cut their dividend. You know, you're talking about two of the mainstays of this mortgage market. I mean Fannie and Freddie account for nearly 40 percent of all mortgages out there. On the day you and I are talking, Ross, the weekly leading index, the economic indicators are pointing to a recession. The Conference Board leading economic indicators for the month of October was down a half a percent. You know, you're taking a look at what is apparently looking like a recession that could hit us next year. [1:24:15]

ROSS: Jim, that's true. People have always been taught to store your monies, save money for the future and they've taken those monies and they've entrusted it with financial institutions that have taken our customers money and have invested it unwisely into subprime debt that now can't be paid back. So I'm instructing our customers –and I'm sure you're telling your listeners too – is put your money into real wealth, protect it in real wealth. Buy something that's tangible. You know, in the Old Testament in the Bible, they talk about shekels of gold and silver, and for over 4,000 years silver and gold have been the traditional store house of wealth. And we need to get back to those fundamentals. Look at the biblical principals and apply them in your own life. [1:25:02]

JIM: You know, it's amazing because I hear a lot of my peers come on and say, “well, the dollar is in trouble, go into another currency.” And then Ross, I look at a screen that I have in front of me that lists the year-over-year increase of the money supply and if you take a look at the top 20 central banks in the world, 18 of those 20 banks are running double-digit opinion supply growth. So I tell people, “Look, if you want to get out of the dollar and you're going to get into the euro, I see a major crack-up coming to the euro.” They have their own problems. And also, you know, you take a look at a country like Japan that has a budget deficit ratio that is skyrocketing. You're just getting from one hot seat into another, so why not get into real money, which is what you've been talking about that which is gold and silver. It's been that way for 5,000 years and we always get these alchemists that come in periodically in central banks and tell people, look, we've invented a new method of gold. It isn't working.

ROSS: And that's true and we need to get back to the fundamentals. A few years ago when we had the run up in the tech industry, they said it's a new economy and they saw the implosion of the tech industry, you know, whole companies being wiped out. And recently, you know, they've announced that there is a new math for the credit industry and now we're seeing an implosion of that. We need to get back to the fundamentals and the fundamentals are gold and silver; and good for 5000 years, good in every country in the world. Get back to the fundamentals. Put your old economic house in order because the Feds aren't going to do it for you. [1:26:38]

JIM: And that's the point I'd like to stress is that look, if you're relying on politicians to take care of your family, your retirement, you're going to be in for a major shock because politicians have let us down and look at what they've done to Social Security. You know, they told us it was going to be secure to 2030 – they spent the surplus. People thought that they were going to receive a Social Security check – it was going to be their money in their retirement. Then they started taxing it, taxing 50 percent of it. Then they went to 85 percent of it. So the point I'm making here is don't rely on politicians and their promises. Do the smart thing which is take care of yourself and that's get some real money. Ross, let's talk about you deal in bullion. What are you seeing in the market? Where are the best areas to accumulate and what would you recommend?

ROSS: Well, I believe that everybody should have precious metals in their portfolio and like you said, it's fundamentally your responsibility to take care of your own financial house. And whether you have just $50 a week to invest or $5000 a week to invest, put some metal away. I like the new fundamentals are gold and silver but also some platinum and palladium. Platinum of course is a very good industrial metal but also have that tangible value of being a precious metal. And so does palladium. But the main customers of ours are buying gold and silver. I recommend the pure silver of the Pan American bars or the Northwest Territorial Mint bars, and those bars come in one ounce rounds, one ounce bars, five ounce bars, ten ounce bars or 100 ounce bars. Also the 90 percent US coin. That's the coins that were made by the US government in 1964 and before. The premium is low. They are sold for the value of the silver. They do have the guarantee of the government having made them, and people know what they are. And they are also in small denominations. And Jim, call me a pessimist, but I think some day we're going to be buying our groceries with silver and gold. And if you have a little 90 percent, that way it's in such a small denomination you can use it for change. So I tell people when you're buying metal, not only put away for your portfolio, but get some of the products that can be used for money. If you're going to be buying gold, buy some ten ounce pieces and some quarter ounce pieces; and that way if, God forbid, this crisis ever metastasizes into...with the fears that we all have, then that way you have something that you can actually spend. [1:29:15]

JIM: Now, what you're talking about that with the old 64 money, pre-64 money is what we call junk silver: it's the dimes, the quarters, the half dollars that were made with real silver. What about on the gold front because right now, Ross, you're looking at gold close to $800 an ounce. What denominations do those coins come in? Do they come in a quarter ounce, half ounce?

ROSS: Well, yes. The different products are the Royal Canadian Mint produces a one-20th of an ounce. A 10th of an ounce, a quarter ounce and a half ounce and a full ounce gold coin. The US American gold Eagle program has got the tenth ounce, quarter ounce, half ounce and full ounce. And all of those are just top notch products. They are beautiful coins and they also are used as currency all over the world and being legal tender coins they have the status of being backed by the respective government. And they can cross borders without any duties or taxes and that's important because if ever this crisis does blowup and we have to get out of Dodge, you want to be able to take your wealth with you and that's one of the nice portable things about gold. It's so portable. You can take it with you and it's good in every country in the world. [1:30:24]

JIM: You know, there are a lot of recommendations that advisors make. Put 5 percent of your portfolio in precious metals, but I'm going to raise that percentage, Ross. We're telling people you need to have between 20 and 25 percent in precious metals because when the currency that you have in day-to-day transactions has lost over a 30 percent of its value –just think about that, if you had $100,000 CD at the bank, its purchasing power has dropped by over 30 percent. And I have a lot of clients who have gone to Europe over the summer and it was a big shock for them in terms of the dollar's purchasing power. So the 5 percent in precious metals is not going to do it. Let's take a guy that has a lot of money, a large wealthy investor so he needs to protect his portfolio. Layout a plan for that person and then let's talk about the little guy because there is a lot more of them. You know, maybe you can only put aside 50 to 100 bucks a month. Let's talk about a plan for both individuals.

ROSS: Well, if I were to make a recommendation, and we do every day, the good thing about dealing with Northwest Territorial Mint is we sell precious metals in small denominations. And what we can do for the wealthy investor who can come in and put six or seven figures into metal, we can put together a portfolio of investing in large bars of silver, gold products that have a small premium and that's one of the things that I preach is that when you're buying metal, buy it for the metal content. Don't get into products that have large premiums because those premiums go away as the price goes up. You want to be buying products that have low premiums so you can buy as much as you can of the metal. And when you call a lot of my competition, what they are going to try to do is try to talk you into buying numismatic coins. And there is a place in somebody's portfolio for numismatic coins. But for the crisis type investing that we're talking about today, you want to stay a way from those numismatic coins. You want to be buying the coins that can contain the most metal that are recognized all over the world, such as the gold Krugerrand, the Canadian maple leaf, the American gold Eagle. All of those products are portable all over the world and they have low premiums. In other words, the price that the dealer charges you is small over the price of the metal contained. Buy the metal, don't buy the premium. And so for a large investor who is going to be investing like I said, six or seven figures, thousand ounce bars, Krugerrands, things that have low premiums; on the smaller investor, I would buy one ounce rounds, ten ounce bars, things that also have a low premium but you can buy in the smaller denominations. And those products, again, are very portable, can be taken to any country in the world or any place in the United States. [1:33:28]

JIM: So if I was looking at, the day you and I talking, silver is roughly at 14.45, if I were to buy a silver round, I could lock in the price of that silver round as close as it is to the price of spot silver?

ROSS: Yes. And right now if you wanted to buy the minimum rounds that we sell which is 50 rounds, you're going to get charged 14.45 plus 80 cents and that 80 cents not only includes the manufacture of that round, the premium that you're going to pay over it for our profits but also it's delivered. So all of that 80 cents takes care of the manufacture, you know, our overhead and the delivery of those pieces. And we're unique. We actually don't charge for delivery and we ship it anywhere in the United States. [1:34:15]

JIM: Ross, let's say I'm accumulating silver, I'm buying some silver rounds. What would you recommend to get started in gold? Would you buy a quarter ounce of gold? Where would you begin?

ROSS: I'd begin with tenth ounce pieces. The premium on the tenth ounce pieces is not much more than the quarter ounce pieces and again, the visible, to be able to make change with your metal, some day God forbid if you have to use it for money, you want to be able to make change. [1:34:42]

JIM: And a tenth ounce would be roughly 80 bucks.

ROSS: That's going to be about 82, 83 dollars right now.

JIM: And what are they about? The size of a dime?

ROSS: Actually, just a little bit smaller than the size of a dime, but they are a very attractive piece.

JIM: All right. Ross, let's talk about Northwest Territorial Mint. You're one of the largest mints in the country, you've experienced a lot of growth over the last couple of years but you've had some delivery problems. I want you to address that, please.

ROSS: You bet. You know, North West Territorial Mint, we make over 2000 products here in the factory and our business model is we don't sell old product. Johnson Matthey which is the world's largest refiner and Engelhard Corporation, which is the second largest refiner used to make a majority of the bullion products in the market. Johnson Matthey and Engelhard both closed their mints a few years ago. In fact, we bought all or part of both of their mints. We are pretty much the premiere maker of bullion products, of new bullion products. Most of our competition is going to sell you something that they have on the shelf and it's going to be what we call secondary market products. And it's going to be old products, and it's going to be products that could be damaged, could be what we call “dinged up” quite a bit and it's going to be delivered in a bucket or it's going to be tarnished heavily. What we're going to sell you is fresh product. Literally, product that's hot off the press.

And how we do it is when we get our orders in, we batch our orders and then we go ahead and manufacture the product. We try to deliver all product within 30 days of your funds clearing. Sometimes depending on market conditions we can get a little bit behind on there and for that I apologize. We've recently purchased another mint and we've got added production, we've increased our production over 50 percent. But I have to tell you, with the current economic conditions and the large volume of orders we've been struggling to keep up with our orders. And if anybody has any delivery problems feel free to call me directly. But we’ve addressed those problems with added capacity and we think we have most of those under control. And so, unfortunately some people have had to wait for our product, but we've never failed to deliver and our products when they come, I think you'll find that they are worth the wait because they are factory fresh, they are sealed in plastic. And I think we make the most beautiful product out there. [1:37:04]

JIM: All right, Ross. Listen, if our listeners would like to contact you and find out more about the products and the things that you make available, tell them how they can do so.

ROSS: Well, they can call us direct at northwest territorial mint at (800)344-6468. Or we have a very extensive website. You just go to www.nwtmintbullion.com, or just www.nwtmint.com itself and then click on the ‘bullion’ icon. And you'll find all of our products. Like I said we have over 2000 products and we have a number of bullion professionals standing by to answer your questions and to take your orders. And also again, with us, you don't have to have an account preset up and we are willing to talk to you on the phone, we'll take your order without a preexisting account. And we trust you to live up to your end of the deal, and we'll live up to our end of the deal. [1:37:53]

JIM: Ross, I want to thank you for joining us on this year's gold show and the message I'm telling people it's time to start hoarding. Get it while you can and get it while it's still cheap.

JOHN: You know, we always come to the end of the show by me saying “Well, Jim, that was an exciting show” or something like that. Well, that was an exciting show, Jim, what's coming up next week on the program, we're back to our normal routine.

JIM: Armageddon, John.

JOHN: Really?

JIM: We'll be out of contact, we'll be in our bunkers and hope for the best. Hope you all survive and – no, actually, let me see. We're heading into the final weeks of the year. Charles Mizrahi, I'm probably butchering this guy's name. He's written a new book called Getting Started In Value Investing. That's coming up on December 1st. And then, you know, I don't know who we have on the program. Liz hasn't posted the schedule. But I'm sure we'll have some interesting guests. And of course, our year end special that we do at the end of the year as we look back, looking at the calls, looking at the things that happened, the major stories in the development of where we are heading. So a lot of that coming up in the weeks ahead, John. So on behalf of John Loeffler and myself, we want to wish you a pleasant holiday weekend. [1:39:23]

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A Special Roundtable
PFS Group's Financial Sense
Also see our Precious Metals Resource Page