Probe Mines

Folks,

Below is a note which was produced during a lazy Saturday morning. It was just sent to Dr. Palmer, via Karen, for his consideration. Since I am just one individual, perhaps the ideas would carry more weight if they are presented (preferrable face-to-face, or at least discussed by phone) by PSU Representative (representing 10+% of OS).

Your thoughts?

goldhunter

----------------------------

New Year resolution for PRB

Spin off PRB and make it a mother company, the current PRB, with at least one 100% owned subsidiary, and the second 100% could be the chromite BC at the RoF, the rest would be rolled in another lump which could be later developed into another precious metal company (gold anyone?). Below are some general ideas.

1.Spin off Borden Lake, PRB-Gold:

-Spin offBL as a 100% subsidiary of PRB, and name this new entity, the new baby, PRB-Gold

-This spin-off contains the current land holding of Borden Lake only which currently contains 5.8 Moz (and expanding, Ref. Corp Presentation).

-The mother company, PRB holds everything: PRB-Gold, other properties such as BC chromite ($100+M baby which could be spun off as well), JV with REC, and any other subsequent property acquisitions.

-If the price is right for PRB-Gold then PRB would sell this subsidiary as a separate portion. Currently, it has 5.8 Moz and could expand to 7-8 Moz easily following the next resource update based on currently reported drill results. The area in the SE (50m @10gpt) will need to be drilled like Swiss cheese, at least to a level that can be included in the resource estimate as “inferred” (we don’t really need to bring it to the “indicated” category for this demonstration… let the purchaser do this).A rough estimate based on a shoe box model for a 500m x 500 m would produce another 2 Moz .Let’s say that the 10 Moz number is within reach by the end of 2013.

-Total worth of PRB-Gold with 10Moz (and expanding) = 10 Moz x 50/oz = $500 M, or $7.5/s (minimum first offer from a major).

2.Spin off BC chromite property This property has the following assets: the BC chromite, transpo access, and elbow room for KWG/CLF to dump waste rock, and build facilities for BD mine which could easily be mined together with BC. Value: (some $100+M, ref. PRB Corp Present. There is no hurry to have a fire sale of this property. PRB (and most of us?) can wait for a couple of years. This is a sleeping baby…just leave it alone for now. Call this PRB-Chromite?

3.What are left in the other lump (we need a name for this 3rd entity, PRB-Future, or something?)

-Mother company PRB still has $40M cash + other stuff (Redpine, JV with REC, and who-knows-what-else in the BL neibourhood). $40M is quite a bit of cash (to-kill-for for many juniors).

-Let’s set aside $10M cash (which is a generous amount to be spent, say in 1 year) for drilling and reporting to produce the magic number 10+Moz for PRB-Gold.

-The remaining cash of $30M (again, a lot of money for a junior) would be used for explorations and acquisitions. If BC is sold at some fair price, say $100+M, then the total cash would be some $130+M, or 130/66M_OS = $2+/share, some of which could be distributed to shareholders, or retained for acquisition of other properties that show potentials for expanding of their initial resource estimates.

The Fully Diluted (82Ms) calculation is not done here, since the exercise of wts and opts (16Ms) would bring in some sizable $M as well, and must be included in the math (too complicated for me). Note: Even $30M cash would keep Dr. Palmer busy with his new explorations to find another elephant deposit, perhaps in some properties around the neighbourhood such as Redpine, etc?