Recent Private Placements

September 27:
Announced:
$20 million PP consisting of:
36.5 million Units @ C$0.55, including 18.25 million warrants @ C$0.75

Closed Nov. 5:
Raised $7.3 million, resulting in issue of approx. 13 million shares @ $0.55 and 6.5 million warrants @ $0.75

November 24:
Announced:
$4 million in FT Shares @ $0.50 = 8 million shares
$4 million in PP common shares @ $0.40 w/half warrant @ $0.75 = 10 million shares + 5 million warrants

Closed Jan. 10:
Raised $2.8 million, resulting in 5.6 million FT shares @ $0.50
No PP shares

December 24:
Announced :
7.5 million FT shares priced at $0.35

Closed Jan 10:
Issued 3,154,715 FT shares @$0.35

March 27:
Announced:
Closure of Dec 24 PP by issuing 1,142,827 FT shares @ $0.35 for proceeds of $400,000
New PP for up to $4.5 million consisting of:
- 25-cent FT shares, or
- 23-cent common shares with full warrant @$.40

Summary and Commentary:

In September they tried to raise $20 million, but could only raise $7.3 million.

On November 24 they tried to raise $8 million with an offer of 40-cent PP shares with half warrants and 50-cent FT shares. They sold 5.6 million of the 8 million target FT shares, but apparently there were no takers for any PP shares and warrants at 40 cents.

On December 24 they tried to raise $2.6 million with an offer of 7.5 million FT shares @35 cents. On Jan 10 they said they closed that offering and issued 3.15 million of the 7.5 million shares offered. On March 27 however, they said they issued an additional 1.15 million for a total of 4.3 million FT shares @ 35 cents.

Finally on March 27 they are trying to raise $4 million with a combination of 25-cent FT shares and 23-cent common shares with a full warrant, with fees paid the highest in their history.

It’s not a good record of attempted fund raising. If the original $20 million financing announced in Sept was fully subscribed, they probably would have paid off the call options and proceeded with the SJ expansion.

It also appears that based on past history, we are more likely to see a majority of this PP to be FT shares. There is only a 2-cent difference and sentiment is so low that more will likely choose the lower risk option of the FT shares than the better upside prospects of the common shares with full warrants. Looking at the past recent failures, it’s not hard to understand the sweet deal CMM had to offer this time to raise the $4 million. There is also a big incentive for First Capital to peddle the FT shares because of the additional 7% options with warrants they receive for that choice.

Therefore I’m optimistic that a majority of the shares issued under this PP will be FT shares or at least 50%. Assume:

9 million FT shares @ $0.25 = $2,250,000 * 93% = $2,092,500
9 million common shares @ $0.23 = $2,070,000 * 93% = $1,925,100

Warrants from common shares = 9 million @ 40 cents
Options from FT shares = 630,000 shares @ $0.23 + 630,000 warrants @40 cents

Total dilution this PP = 28,260,000 shares for approx $8 million.

Total dilution from other PP's since Sept 07 = 23 million shares and 6.5 million warrants

Shares o/s Sept 30 = 139,696,935

Shares o/s after this PP (not incl warrants) based on above assumptions = approx 181 million.