Hey Danny,

I agree with most of your comments outlining the apparent need for warrants to succeed in the junior mining business today. I would point out, however, that I am invested in another junior company that gets along just fine without issuing warrants by using option agreements (other companies pay them to explore their properties), royalty payments from producers on their previously optioned properties, and PPs that only issued at share prices well above the current one. So it is possible to succeed without warrants. But you need a company that is not willing to compromise and a prospective investor base that does not expect them to.

I was at a panel discussion at the last PDAC that focussed on the future of investing in the junior mining sector (Roulston, Fulp, the Coffins et al.). According to these guys the danger with the current junior mining investment industry is the systematic belief that its PP investors are entitled to warrants and the very short timeframe before the shares can be traded. Afraid that they will not be able to raise money otherwise, these companies issue dilutive PP share offerings with juicy warrants. With increasing frequency the firms that "buy" these deals (eg. mineral fields) will sell the PP shares quickly for break-even or slight gains and hold the warrants in case the company performs well over the next 24 months. Then the companies move on to the next desperate company collecting warrants along the way. Before you know it you have an entire industry that is diluted to a greater extent than it should. The panel believes this is why it is getting harder to make money on the junior stocks despite what they believe will be a long-term bull market in commodities.

Both Skier and Glorieux have stated that they are bullish on GNH's prospects.

So if I look at it from Skier's point of view, I believe he is upset at the extent of possible dilution that we will face and would prefer that those invested in the PPs do not use their advantageous financial positions to dilute GNH into oblivion.

If I look at it from Glorieux's position, he is merely working within the confines of the system that has been created and is doing the same thing that the "smart money" players like mineral fields are doing. If you're in not in the smart money- where are you?

I feel the long-term solution to this problem will be for GNH to be viewed by the industry as such a good investment that they do not need to issue warrants to get new investors to buy in. Alternatively, maybe GNH can come up with alternative means of raising cash (mini-production facilities, optioning claims, JVs etc.) where they can sustain operations without dilution. If you look at the last PP, we are definitely moving in the right direction. The deal closed above the market price and the warrants issued were cut to half-warrants. Let's hope the next PP does not have any warrants attached to it. Let's also hope (for the sake of the entire industry) that regulatory bodies increase the hold period on PP shares back to a year to give companies more time to put out results before the PP shares are sold off.

Let's please try to keep the rest of this discussion on track and without further personal attacks. We have one of the most informative hubs on Agoracom here at GNH an I would not want to see that jeopardized.

Best,

Scott

Personal disclosure with respect to the 0.25 warrants discussion- my wife and I have 275,000 warrants.