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Message: Bayhorse Silver - Shareholder Update
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Dear Shareholders and Investors;

This past week we announced an amendment to the terms of the Farm-In Agreement with Saturn Minerals. Why did we do this? To fund the cash portion of the Agreement over the next six months would have required an approximately 4,000,000 Unit financing, on top of the flow-through financing we are already completing (2/3rds completed and filed with the TSX-V as of this update).

By agreeing to accept shares in lieu of cash, we eliminate the pressure on share prices that comes with a financing, especially in this difficult financing climate. We also eliminate the need for the issuance of warrants, thus avoiding future dilution at low share prices. We believe this a good deal both for the Company and for Saturn.

Saturn Minerals has been profiled in OilPrice.com and this article we believe is worthy of a good read, as it also applies to Bayhorse.

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In our last update we outlined why we think that adding the oil deal is great for our shareholders and any increase in buying from good news should give our share price a significant boost. Why do we believe this?

Last week Junex Resources (JNX) announced they had 318 barrels of light oil production from the recently drilled horizontal well in Quebec's Gaspe Peninsula and their share price zoomed to nearly $2.00 from a low of $0.20 just prior to Christmas. They did this in 70 days. (Their share price has since fallen off to around $1.20, but still substantially higher on significant volume)

How do we compare to Junex? Let us look at just the numbers so we compare apples.

Junex is an O&G Company based in Quebec with 64 million shares out, compared to Bayhorse at 24 million shares. Junex has just drilled a 2.5km horizontal well, of which 1.5km is in the pay zone, with daily production of 318 barrels of light crude (no fracking required).

Based on a vertical cost of each well at $500,000 for each 1,000 meters, the Junex well probably cost north of $1.5 million, as compared to the first well drilled at Bannock/Little Swan at $500,000.

Pay zone for Junex is reported to be 1.5km for 318 barrels while at Bannock and Little Swan it is estimated to be 60 meters and 125-150 barrels. So for one Junex well drilled, we estimate a minimum 3 wells can be drilled for the same price for a minimum 375 barrels. We know that oil at Bannock/Little Swan will be long lived wells, we don't know about Junex.

We believe payback for any well drilled at Bannock/Little Swan will be about four months. Based upon the estimated costs of Junex, payback will probably be a minimum of 12 months.

Junex has traded over 17M shares since December 2014, of which 13 million was traded in February, while Bayhorse has only traded 6 million since December 2014 and only 1.9 million in February.

Saturn is getting very close to drilling at Bannock Creek, and based upon these comparisons, we anticipate substantial buying pressure in the Bayhorse market on any positive news.

Thanks for your continued support in these trying markets

Alan Jones

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