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Gold/Mining/Energy : Steppe Gold (SPE:V) -- Ignore unavailable to you. Want to Upgrade?

To: brian krause who wrote (1233)	7/23/1999 12:28:00 AM
From: John Menzies	Respond to of 1248

I will make a single comment. I believe that management should not participate in SI or similar chats - it is generally counter productive and short term whilst building a business takes a longer term view - simple really. In the last three years the company actually achieved a great deal - it: 1) completed several feasibility studies 2) completed all project construction and environmental permitting 3) advanced a significant US$20 million bank financing with a major commercial bank 4) acquired and drilled two major gold-copper-zinc deposits - 1 million tonnes of contained copper at exceptional grades and produced some of the better base metal drillhole results seen in the last couple of years. 5) delineated a very interesting copper-gold target which remains undrilled 6) established a very good reputation and profile in the Central Asian region We applied ourselves unrelentingly over several years to the task of adequately funding the company during a capital intensive phase of its development. We were however not successful - in attracting new investors either directly into the company or into the assets and this combined with a judgement against the company in the BC courts left few options. I am concerned about those of you who may have suffered financially as a result of the cessation of trading of the company - there were unfortunately few parties other than the directors who was at the end of the day willing to fund the ongoing expenses and activities of the company. This is probably due to a number of factors: 1) the decline in the gold and base metals prices in recent times arguably had an effect on some of our negotiations 2) the international reputation of Kazakhstan suffered as a result of the behaviour of some foreign companies and the rather heavy handed response of government - the result of which will be determined by the courts. It is interesting to remember that when I first became involved in this region - this was mooted as the next Chile - at the end of the day we were amongst a small group of "believers". 3) the "collapse" of economies in the region following the debt problems of Russia and the enormous decline in the value of the Russian currency caused a tidal wave of devaluations across the region. Interestingly this has not caused social problems but has made it singularly difficult for governments to raise funds to rebuild their economies and to fund budget expenditures. I am still of the view that the region has enormous potential located as it is in the centre of Asia - with China to the east and possessing enormous oil and gas and mineral resources. This region will grow rapidly over the next few decades probably with the participation of smaller mining companies - but there will need to be a significant change of sentiment. As for the people of Kazakhstan, tough, determined, intelligent, educated, down to earth, exciting people of the Steppe. The properties were the subject of several technical and legal due diligences by independent experts and counsel - which invariably cast the projects and management in a very good light. The company had some of the best and most carefully negotiated agreements in the country with the right to develop and freedom to export product! Startup companies in developing countries are invariably challenging. Management and directors worked with singular focus and commitment but at the end of the day were left with few options. It is also worth remembering that management funded the company over many years - with vision, dedication and commitment. Some of you were enormously supportive and it is disappointing that the company was not able to realise its vision of developing significant gold and copper production, involvement in the oil and gas industries in the longer term with a strong focus on community involvement. I must admit to being disappointed that the company did not have the opportunity to dramatically enhance the living standards of the local communities in Kazakhstan who had greeted us so warmly and disappointed that we were at the end of the day unable to dramatically increase shareholders value through the development of the company's assets. As a final word - I am very pleased with what we did in Kazakhstan, with the competence of our staff, with commitment of management, with quality of our properties, with the technical progress we made in the developing country and with the profile we created in the market - in another orientation this effort, vision and commitment would have been enormously successful. As an aside a major oil exploration well is being drilled in the North Caspian Sea at the present time which has the potential to discover a truly giant oil field - more than US$600 million has been expended on this well to date - which makes it one of the most expensive exploration wells in the last couple of decades. We all live in interesting times. Good luck in all your endeavors and may your investments be very rewarding. For those of you who find joy in speculation - good luck and for those of you more bent on building real businesses - may the force be with you. Just remember that "periodically commodities can be a dreadful investments" if that was not self evident. If the red slayer thinks he slays Or the slain think he is slain They know not well the subtle ways I keep and pass and turn again --- RWE Fond Regards John

To: brian krause who wrote (1233)	7/23/1999 8:14:00 AM
From: John Menzies	Read Replies (2) \| Respond to of 1248

Brian, Paying the listing and trust company fees- completing the audit - legal fees etc would have amounted to a couple of hundred thousand plus the cost of the BC court action etc - management had funded the company exclusively for a couple of years and we were not going to fund it any longer simple as that - it was apparent that we were a small group of true believers with diminishing support in the market for our product. As you said - ON THE WRONG THREAD - we proved up a resource. In fact we had some incredible assets - I am very very pleased with what we achieved - very very pleased - the end game was not pleasant. Reality is that you can not go against a market forever when you are a public company. It is worth remembering that when I became involved in this country - it was on the cusp - huge inflows of foreign capital and it was held up as the next Chile in terms of development of the mining industry - it proved not to be - but in time it will. PS there is a reason that I have always used my name rather than some alias like "tnago" or "capmi" - I am always willing to stand by what I say and take responsibility for the outcomes of my actions. The end game for Steppe Gold was painful - considering the enormous effort which had gone into it - and you can not really imagine the degree of effort - we just kept at it for a long time with focus and commitment -which had always won out for me in the past. What is hot out there Brian at the moment in the Canadian markets?