Vancouver Conference overview:
The conference in general had a bigger buzz to it than last year. One of the speakers noted the TSX Venture ran from the 800’s to over 1600’s in 2009. When there is this kind of “easy” money to be made there usually are fewer people showing up (let’s hope this is the case with KXL). That being said, this was the same speaker that showed a KXL chart to reference an example of companies which run up to great heights, spend lots of money then crash back down again. Hype is nice for a quick ride but to be sustainable in today’s marketplace, proving your discovery with a 43-101 is necessary. My personal feeling is a 43-101 will not keep your stock price up either. There are other critical factors the market will take into consideration such as all the foreseen hurdles to take the resources estimate to production. Add all the hurdles up and you will begin to setup a timeline to possible future cash flow. The longer this timeline, the more discounted today’s stock price will be. In any case, the 43-101 usually acts as a base platform to hold the stock price to at least some minimum value, which is exactly what KXL needs and is getting.

The KXL private investor’s discussion:

The KXL private investor’s discussion on Monday was extremely informative as usual. Why more people don’t make an effort to come to this, listen to Brian, and ask a few questions is astonishing. This time I counted 11 investors in attendance. Well actually 10 because I think 2 of them were a couple. Seriously, the price of a plane ticket is worth meeting face to face with the people running the company you have invested tens of thousands (if not more) of dollars in!!! Brian, my input for next year would be for you to bring a few bottles of wine so the few of us can get to know each other after your presentation. Either that or just hold it in a good pub! LOL

By the way, it was great to meet Cedartree. He has a great understanding of full project pipeline and asked many excellent questions. Now if he can just get agoracom to allow me to post using my iPhone!!!

Ok, here’s what’s going on:

• $14 million resent financing bring current total to about $28million
• 43-101 of the Hercules project to be out in the next 4 to 8 weeks
• 15,000 meters of drilling this year in the Beardmore/Geraldton area at a variety of projects
• Drilling to begin at the end of January in West Millennium
• Hercules now has 6 veins with significant gold mineralization
• Winter drilling is about logistics – targeted areas which have better access with frozen terrain (golden pond, swamp and marsh, etc)
• Golden pond needs to have 30 inches of ice to bring a drill rig on, and currently has 18 inches. They are making ice to expedite this process. The lake is about 10m deep.
• Other regional projects to try and discover additional gold camps – and as we know we have many targeted areas within BG
• Drilling this winter in West Geraldton, Kaby lake, Wild Goose, Brenbar, and Milestone.
• West Millennium – 5 drill holes to date, hole 4 intercepted 0.13 U308, the strongest in the area over the last 4-5 years with exception to Hathor (HAT) – a stock I’ve been following for a couple of years and one I would suggest as a buy on any pullbacks.
• KXL project pipeline is very impressive. Look at slide 28 of the presentation on the website. Follow these projects as information is released. What we need to see is one or two of these projects flowing up this chart to resource delineation and eventually to other 43-101s. Expect many not to as is the case with most exploration projects, but the key is to have enough targets and enough money to evaluate and move high potential ones with encouraging results up through this chart. With that said and in my opinion, the market will still focus on resource estimates and flagship projects until proven otherwise. It is key to have these projects with others to eventually come while some get dropped.
• 2 drills going in B/G, a drill going in West Millennium
• Brian expects a solid flow of news over the next 3 to 4 months including the 43-101.

The recent private placement:

• Raised nearly $14M

• Could have been more with strong institutional support

• Closing date was December 18, 2009 with a 4 month hold period on those shares – April 18th open for trade.

• My question regarding this PP was why now? The answer essentially was because the opportunity both came to them from the investment bank and because they will require the money for the planned project pipeline. Although I would have preferred a business, drilling, financial, and marketing plan which dictates when a capital injection is required rather than an investment bank showing up, I have to say I do understand the decision to take the money. Like Brian said, the markets are both volatile and unpredictable. We are all shareholders, especially Brian, and none of us want excessive share dilution. Right now, that is pre 43-101, the stock price is set by both a) hope that drilling will find results – very volitile, and b) cash on hand – less volatile depending on the company’s burn rate. The more “b” you have the greater the chance that “a” will increase your stock price before further dilution.

My opinion going forward:
Brian put on a very good presentation which outlined clear objectives for the year. I like this and cannot say the same for last year. While other companies saw nice increases in stock prices, KXL went the opposite way because we were not able to prove otherwise. The market was left to guess on hype which is now a couple of years old. The good news is that with our share price having dropped so low, it has washed all past hype out of it. With clear objectives set forth for the year, there will be accompanying news flow. This news flow should have a better time determining where the correct price might be. Results will be everything beginning with the 43-101. Personally, I think the 43-101 will show a lower resource estimate than most people are hoping for, but then the market has already priced this in. Good results from further drilling at Hercules will then steadily increase the estimate. Add in new drilling from other projects and we have a formula for a healthy year. Let’s hope the market in general does too.

Best regards,
Doug