The year long decline in the precious metals sector is having it's effect on PEM more so than most others. It was accurately predicted that the end of QE-2 in the US would have a negative impact on precious metals, their miners, commodities, energy, etc., and it did. The company has suffered a share price decline unseen since 2008 and early 2009. At that time the company ceased nearly all actiivity and had to let go of many of it's staff in order to preserve cash on hand, not knowing for how long that downturn would last. When the downturn finally ended, PEM went into high gear. We all know what was then accomplished in relative short order.

So, hear we are today in a seemingly similar situation with regard to drilling, staffing, share price, financing, cash enough for paying necessities and maybe some drilling (maybe). The Board has needed to prepare the company for a long downturn. How long? No one could possibly know. Nearly all the gold pundits agree that gold prices will break new records over the next 2 to 4 years, but not just yet. Maybe in a few days, a few weeks, or maybe not until early next year. But, no one knows when, for sure. The current decline has lasted longer than all the pundits have said it would last. They were all wrong. Sprott, Hathaway, Turk, and a couple dozen other notables. All wrong. If PEM had listened to their predictions and spent it's cash on hand accordingly, we'd be broke in short order. Instead our Board and CEO has had to batten down the hatches just in case this gold correction lasted longer then expected. A wise, but painfully difficult, move on their part.

The company has had to let go of a lot of the geologists and some others including one person in IR most of us have had a high regard for. One who will be missed. Word has it that some of the existing staff have offered to take pay cuts, even to work for no compensation for a period of time to help the company preserve cash in case this decline continues for many more months. The tightening of the belt decisions continue to this day. They have to, not knowing for how many more months, if any, the comnpany will have to preserve it's cash position to be used sparingly until the market reverses back upwards. Prudent but unpopular decisions for some. It is better to conserve the cash so it will last as long as it may be needed than to spend it all in just a season. Better to live to fight another day.

So, more cash preservation may become necessary and wise to implement. If so, I won't like it, but I will understand why it is needed and will in time be glad for management's caution. Like a dose of castor oil, it may taste bad but it may end up being good for us in the long run.

When a significant QE is believed imminent in the EU and/or US many expect our sector to rebound as it did in 2009, 2010 and half of 2011. It is widely believed that governments want inflation and not recession, depression and deflation. If governments are to partially inflate their way out of some of their debts, they will have to devalue their currency. QE is the surest way of accomplishing that objective. QE, they say, will inflate our sector, commodities in general and hopefully PEM's share price. Until then we need to take our austerity medicine in order to ensure there is plenty enough money in the corporate check book. In the interim many of us are grateful for the work and sacrafices of many previous and existing loyal PEM people, and we thank you.

marwal