RESPONSE TO SHAREHOLDERS
Q&A WEBSITE
July 25, 2008

We continue this week with answering the most commonly asked questions, in no particular order.

Q) “I was wondering what was going on down in Chile?  Plan A was supposed to be done almost a year ago.  We need an update before July 21 and something other than, "we are working very hard on completing a JV."  

Hiding behind a NDA will work so long before the shareholders become enragged.  Not sure what this NDA is anyways.  It has only been an excuse for not letting us know what's going on.  Can it please be posted on the website for the shareholders' understanding in what questions we can expect to be answered?  Is this the reason for the poor communication to the shareholders? 

I keep waiting for official updates to be posted on the site, but reading, "we are working very hard on completing a JV" or "we are extremely close" gets old.  I really hope a JV can be completed before July 21.

Is Mr. Jose accepting anymore offers?  I believe in the Q&A awhile back, you said he was not.  What's taking so long?  Is Mr. Jose so out of touch with the shareholders?  What is he waiting for?  I know he's working hard for us and I am grateful of him and your work as well, but I just don't know what exactly he is working hard on...

Thank you for your time.  Answers to some of these questions ASAP would get this huge monkey off my back!  haha.” 

A) Non-Disclosure and Confidentiality Agreements are in place to protect all parties during agreement negotiations and, particularly, public companies subject to market activities.  We are not about to violate these legal agreements.  We have disclosed that we were, and are, under such agreements with a multitude of major mining companies and consortiums.  This may be frustrating to shareholders but I assure you, they are frustrating as well to Management who would like nothing better than to convey to all the parties involved the full details of our negotiations.

The Company is not entering into any new discussions at this point and is concentrating on completing a singular agreement as soon as possible.  It is impossible to give a definitive time, but I will reiterate, “we are extremely close”.

Q) “Hello, I know some shareholders have told you that an update is not needed but I think you should provide a clear outline or "update" of what has transpired and is yet to transpire.  Someone has suggested posting everything you can as long as it doesn't violate the NDA. I feel it would be beneficial to the shareholders to post something that would give us an idea of the steps and procedures you have had to take to get to where we are.  Not too many people take into account the lengthy meetings and the amount of time that is needed to organize and execute a deal like this.  So if you were able to outline the reasons this has taken so long then I think it might put some or most shareholders at ease and "re-kindle" the old faith fire for the company shareholders.  With Q&A's that say the same thing in a round about way, over and over, people start to lose sight of why we are where we are and feel that they are just being strung along with no end in sight.  Please consider some new information and a general outline of where we are realistically on this deal and allow us to understand where we sit.”

A) Basic Summary of a typical negotiation

1. An expression of interest is received and considered.
2. Lawyers prepare non-disclosure and confidentiality agreements for consideration.  Medinah provides legal disclaimers and titles for inclusion and commences its preliminary due diligence on the proposed party.
3. Legal ND and CA’s are signed, notarized and recorded.
4. Many years of geological and engineering reports, drill logs and assays, etc., are submitted for study.
5. The Joint Venture partner commences its geological investigation that includes a multitude of trips to the property, sampling and assaying of various structures, mapping out lands, examination of old core, examining all legal contracts in place, verifying titles to our properties, due diligence on the companies and their structure.
6. Negotiations commence with Medinah et al presenting its position and the Joint Venture participant responding with its wants and desires.
7. If an accord is reached in principal, the proposed agreement is then submitted to higher authorities, either corporate or governmental, for their approval to proceed to formal documentation.
8. Negotiations then commence to instruct the Lawyers to prepare final documentation for submission to the various parties, which may be as many as five or six entities.  Any last minute changes are incorporated.
   
   We are presently in the later stages of this process.

Q) “Actually JJ is not  the problem.  If it were not for him, there would be no JV negotiations at all.  The truth is that he is a little fish in a big pond.  And the Majors always call the shots.  In this case they want what we have since the property has been determined to be world class but such deals take a lot of time.  And in spite of my recent manic depressive bi-polar responses to everything as I have come face to face with my financial problems (and caved in like a wet sack under the pressure), I am convinced that they are making this happen as fast as it can. 

It is never easy dealing with the Chinese or the Japanese.  Historically they have always been a pain.  And the only reason we are where we are today is because they NEED this deal as much as we do.  If it were not for that, and the fact that Rio now has the finances needed to really compete head to head with them on this deal, IMO, they would still be jerking us around.

As it is, if I were not so financially strapped, I would not care if JJ closed this soon or not.  He has managed to do GREAT things in these negotiations.  And more time would undoubtedly bring more benefits to us all.  In spite of how frustrating the wait has been, if we are honest, IMO, we will all have to admit that we will owe JJ and LP a lot when this is done.  They have done a great job against some incredible odds.  We cannot take that from them.

And, finally, I want to apologize to this board for my recent behavior and my near bi-polar swings.  I have not been acting like a man of faith.  And I sorry.  That will not happen again.  Pinkies always seem to bring the very worst out of me.

And if LP is reading this, I am sorry for my recent behavior.  I know that the pressure I am under is NOTHING compared to what you are facing.  And I apologize for adding to your troubles.  It will not happen again.

A) Comments from a long-term shareholder – July 2008.

Q) “Thank you for your response to my last email inquiry in today's Q and A.  While I appreciate both the candor and conciseness of your response ("The Directors are taking this into consideration and will publish a formal update on progress shortly, meaning by the week of July 21"), I cannot help but feel a small measure of disappointment as this response apparently means that we will definitely NOT be seeing an announcement of a JV before the week of July 21st, and even at that point we may only receive an update and NOT word of a consummated deal.  I sincerely hope that I am wrong, but based on your (above quoted) response, I now firmly believe that the prospects for an announcement of a consummated JV agreement being made within the month of July are dismal.  Again, I hope I am wrong on this point, but we shareholders have received very little in the way of official information on JV negotiation progress since the AGM, and what we have received has not been sufficient to give us a realistic insight into the status of negotiations or prospects for a time when same may be completed and a deal announced.

In response to another Q and A question you stated "I cannot state when completion [of a JV agreement] will occur, but I am also not aware of any impediment to an early finalization."  Shareholders (including myself) have heard many such statements since the AGM earlier this year, including Sr. Quinones statement that we would have a JV "soon".   I would ask you to respond with a clear definition of what is meant by "early" and "soon" - your own statements.  To me "soon" does not mean half a year (which, although still several weeks away, is now within a discernibly immediate time horizon), and "early finalization" means "within a couple of weeks to, MAXIMUM, a month".  If your definition of these words is different, please advise what you do mean by these.  If your definition is the same as mine, I can only hope that we have a deal done and announced by, at the very latest, the end of this month.

Again, I appreciate that there is only so much that you can reveal publicly without risking violation of NDAs and/or potentially surrendering an advantage or edge at the negotiating table.  After all, nothing is over until it is done, and there is much at risk until we have a done deal.  Nonetheless, at this point, after such a protracted amount of time has elapsed since we entered what one could consider the beginning of the endgame, it is clearly not unreasonable for shareholders to expect either a finalized JV agreement, or failing that, a detailed explanation of why we haven't been able to consummate an agreement, and if at all possible some indication of the identities of our potential partners.

If we don't actually have a JV agreement announced by the end of the week of July 21st, at that point I look forward to an announcement or communiqué that is at least INFORMATIVE, DETAILED, MATERIAL and hopefully POSITIVE.  What I don't want is a combination of 1) no JV agreement and 2) advice from the board that is vague in its meaning and sparse in its details.  No advice from the board by the end of the week of July 21st is also not going to be received very well.

I will be on vacation the week of July 21st, but I will have access to the internet.  Hopefully there will be something for me to celebrate beyond a change of scene and the glories of closer contact with Mother Nature than I am usually afforded on holiday.

Again, I commend all involved in the negotiations for their hard work up to this point, and I'm sure there is plenty that has been achieved that cannot be shared with everyone due to the sensitive nature of the negotiations.  Nonetheless, it's time that we shareholders had some clear and detailed insight into the negotiation process.

I look forward to a response at your earliest convenience - again, you may respond privately or post a public reply via the Q and A.” 

A) Your comments are concise and to the point.  I can only assure you that there are no impediments to the completion of an agreement.  The proper corporations are involved but I cannot give you a firm closing date.  I fully understand this has been a long and trying time for all shareholders, but I am also very confident the gain will be well worth the pain.

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