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Gold/Mining/Energy : Naxos Resources (NAXOF) -- Ignore unavailable to you. Want to Upgrade?

To: Larry Macklin who wrote (8528)	1/24/1998 2:40:00 PM
From: Henry Volquardsen	Read Replies (2) \| Respond to of 20681

Larry, IMO the biggest risk at this stage is that the process cannot be scaled up for commercial production. At this stage I am fairly well convinced that Franklin Lake is a unique and very valuable geologic formation so the metals are there. The question remains, however,'is commercial production viable?' Number 2 on my list would be mismanagement. I am not referring to all the innuendo people like HungryLion use to fling about concerning Jimmy John or whoever their target of the moment might be. I am referring to professional mine management. Right now the company is very short on serious mining people who will be needed to convert FL into a producing property. John Norton appears to be a good start but we will need to see a lot more hires of that quality and these people will need to be in positions of authority. Hiring qualified people is important. A third risk is that the company will take a long time in gaining acceptance in the market. I believe the company has done a good job of communicating with investors regarding the nature of Franklin Lake and the efforts to prove out the process. We have Kim and investor relations to thank for this. Now I know what you must be thinking, good communication? we have waited forever for reports and there have always been rumours and the infamous 2 more week phenomenom. If you look at the past months I believe you will see that Kim and investor relations have been consistent and conservative in their comments. Their comments have ben accurate. If that was all the information we were receiving the thread would be calmer and more patient. However we have seen an unending stream of bogus rumours. Many people have commented about an underground thread. These rumours have invariably been wrong, premature and hyped. If the source or sources for these hyperbolic rumours are inside the company then they need to be told to cut it out. These rumours make the stock look like a scam and have the effect, imo, of depressing the stock because othe people don't take Naxos seriously. A direct result of this is that it has made finacing more expensive and dilutive. Any leaks need to be plugged. Fourth on my list of risks would be environmental. I consider this remote but there is always the possibility. We are close to Death Valley National Park and it is possible we might face resistance from people who wish to protect the desert environment. Again I consider this remote. Finally as remote as I believe the final possibility is there is always the possibility that there is a scam. Someone may have figured out a chink in the coc. Again I don't believe it is but until we prove production that remains a risk no matter how remote. Larry I hope this helps. This is how I see the risks at the moment and would be interested in anyone else's view of the risks. Henry