Last week I flew to Vancouver to attend the AGM. Thursday evening I had the pleasure of meeting Jim Voisin for supper. This was the first time I have met Jim and although we have communicated extensively by telephone and e-mail I want to assure all of my UC compatriots that I was very pleased with my first impression and am thoroughly impressed with Jim Voisin the man and the President of our investment.

Jim is 100% engaged in guaranteeing the success of UC Resources. His attention is not diverted by opportunistic gain, he is a strategic thinker and there was not a single topic that we covered that Jim was not fully cognizant of all implications and accountabilities. Jim has divided his focus accurately between McFauld’s and Mexico with two specific objectives.

1. Near term and long term cash flow from La Yesca.
2. Verifiable legal right to 55% ownership and operator status of the East and West McFauld’s land packages JV’s from SPQ and KWG.

1. La Yesca

There have been delays at La Yesca but these are minor. Specifically, the Cat work required to build the new tailings ponds. There have been service interruptions from this contractor based on both the machine repair and the operator’s health. This delay has been resolved and expedited. The new tailings ponds will be operational by the end of January.

Trials at the mill demonstrated that the ball mill that we inherited from the “Modern Romero” mill will not create a suitable and consistent grind for mineral extraction by the mill process. (A ball mill is similar to the tank of a cement mixer where hardened balls of metal are bouncing around as raw ore is fed into the tank. These balls collide with the ore and render it into a dust of a specific dimension.) Therefore a ball mill three times the size has been sourced and delivered to La Yesca. It will have to be reassembled, installed and commissioned, but Jim and his process guys are very confident that this will provide the raw material grind to feed the mill. Although this was not initially anticipated, the result is that we will have these two ball mills situated in parallel at La Yesca that could be converted to a ‘in-series’ process if necessary to assure that the ore grind sizing is perfectly suited to the scale of the remainder of the mill. (It is necessary to understand that the Au and Ag recovery rate is a factor of processing and residency times within the various vessels as determined by the consistency of the size of the feed ore.) Interestingly, if the new ball mill is adequate on its own, the old ball mill can be removed and transported to another site, say Xora or La Colorado, where ore or tailings sourced there can be pre & semi processed prior to transport to La Yesca.

Jim is considering purchasing a bulldozer to work the existing ore into a more homogenous grade as it appears the existing tailings have leached with the result being that higher grade ore is covered by lower grade ore and that consistent feed is desirable to the mill processing. The contractor that we have building the new tailings pond has been doing this lately and this practice should be continued. CAT bulldozers are not cheap to own or maintain, so perhaps we will continue with the contractor now both he and the machine are functional

Jim has purchased a small dump truck and a high reach skid steer loader to transport the ore from the tailings pile to the mill site and to feed the mill. These were purchased on a demand loan basis, so these debts will have to be remedied before cashflow proceeds start making their way to operating profits. I forget the total value of these two machines, but they were not terribly expensive and their cost will be recovered quickly.

I anticipate that the mill will start commissioning during Q1 2009 and that the bugs will be worked out and the demand loans remedied. We will see the definitive affect of cash flow on the balance sheet and income statement during the entire second quarter of 2009. Jim and I had several conversations during our time together about the magnitude of the cashflow and the operating profit from it. We both approached this query from our own perspectives. I look forward to reviewing the financials next year to confirm that Jim was right.

McFauld’s

As we are all aware, we have two partners on this JV and the agreement has not been ratified. The letter of intent was created before the hype of McFaulds and before the market crash. I believe that prior to July of this year, both SPQ and KWG may have thought that they left too much value on the table for UC. Since the crash, I believe that both of these parties recognize that their remaining ownership of these claims is a major portion of their company’s present value. The important part of this whole JV agreement fiasco is that UC has not faltered in their responsibilities. Jim will assure that we accomplish 55% ownership and operatorship of the land. Once this has been accomplished, UC will be able to contribute to the future development of the land lock-step with SPQ if they decide to invest in the property. (Please recall that we have cash flow to finance this and there would not be immediate dilution required to progress exploration as would be the case with SPQ)

Understanding that McFaulds is going to take decades to move from spec to potential and even more time from potential to development, UC has secured a decisive role in a sizeable chunk of real estate that holds minerals that we do and don’t understand. The best thing that can happen now is that our next two years of work on this property defines either Chromium or any other valuable mineral on this property that is nearly the size of Noront’s. (We already have Zn, CU etc). The infamous red line divides our land and any/all interest in the area by a major will include UC’s land if only because of its size.

The real future for UC is in Mexico though. Jim has been adding to land holdings there and has been sampling resource on our existing land. Jim wanted to share with me that the mill permitting and construction has taken less than one year from breaking ground and culling the “Modern Romero” mill to commissioning. During this year Jim has made bonifide, functional high level contacts with Mexican environmental, social and industrial government ministers. These folks are increasingly appreciative that UC has brought an essence of hope to a rural economy that has been further decimated by current market conditions. UC is now employing and training three shifts of employees in the workings of the La Yesca mill. This is skilled work. The La Yesca mill can be replicated in a time span of one year and pay out in three. Small operations such as the La Yesca / UC business model can be installed in more remote areas of Mexico and bring prosperity to new areas rapidly. These relationships and the inaccessibility of Ag and Au in Mexico requiring the 'minimill approach' are the key to the long term.

I as an investor see this as the red carpet potential of UC beyond 2009.

This short report is based on my recollection and could be inaccurate in its detail, but not in its essence. If you have specific questions, issues or remarks that you think I may be able to lend some insight, please do not hesitate to inquire and I will do my best to recall and report.

Kindest Regards & Seasons Greetings

AafabVentures