All:

What a gift we have in the public markets! The chance to learn so much about ourselves, who we are, what we believe, what we stand for. It is easy for a man to say he believes in a thing, but it is quite another matter for that man to essentially put his money where his mouth is. The stock market is indeed a great testing ground for us old farts who can no longer suit up and head out onto the ball field to see what we’re made of out there.

A Question About Dilution:

There have been some rumblings among the members of this group that I’ve received in various emails about this latest stock offering and its dilutive effect on the outstanding Kimber shares. I believe that perhaps this is a short-sighted way of viewing this move on the part of Kimber. I recently heard an interview that Jim Puplava did with Keith Neumeyer involving a stock offering that First Majestic did a few years back to raise capital and the same sorts of rumblings arose from the crowd around First Majestic back then. Neumeyer made the very good point in the interview that the reason he was doing the stock offering was to raise cash in order to build mines and processing facilities in order to increase the future valueof the company for shareholders. Such rumblings might be compared to Apple shareholders vocally showing concern when Apple writes a check to buy microprocessors, plastic and other components to build a new line of computers. Sure money is going out of the company’s coffers, but the money is leaving inn an effort to create product that will ultimately bring greater monies back into the company. One cannot create wealth out of thin air. It takes money to make money.

Now if Apple did a stock offering to raise a billion dollars and Steve Jobs took the money and bought an island in Indonesia with it, I would consider that unnecessarily dilutive involving shareholder value. This might sound strange, but a better example might be if the U.S. Government were to try and solve the financial crisis by creating enough money to pay off every mortgage of every homeowner in the United States and then give that money to bankers and their friends around the world to buy yachts and Picasso’s and to secretly give kickbacks to those very same government officials. But I let my imagination run away with me. Something like that could never happen in America. Forgive me.

Anyway, remember, ounces in the ground is important for a junior minor to have. But the “quality” of those ounces are just as important if not more important. The metallurgy (i.e. how much gold and silver will be able to be ultimately gotten out of the rock) and the concentrations of those ounces are key. The questions that must be answered after a company shows that it has gold are: How easy will that gold be to mine? What are the economics of the deposit? This is one thing that Gordon Cummings as CEO of Kimber understands very well. If Kimber does not plan to build its own mine, but rather to sell its property to the highest bidder, then it has to do things that will make that deposit attractive to that potential highest bidder. Kimber has to be able to present that bidder with a package and say to that bidder, “You can expect to get this much gold and silver at these prices.” Doesn’t that make sense?

So a part of the money Kimber is using is to delineate extensions of its present deposit, and a part of it is to better define the deposit it has. Drilling is responsible for both of these processes. Drills explore areas under the ground to look for new high grade deposits, but they also are used between existing holes to better define the structures of those deposits that already exist.

Each of these processes, if successful, adds value to the company, and increases the value of the outstanding shares to an extent that will make up for any dilutive effects that a recent offering like the one that just occurred will incur.

Please understand the difference between what Kimber is doing and what Joe’s Gold Exploration Company up the street is doing. Joe and Marty are taking your money and paying themselves a salary and drilling into the ground hoping they will find something. Kimber has already found something, and something big. Joe’s is out at the scouting camp looking at the high schoolers hoping to find the next Nolan Ryan. Kimber has already found a young Greg Maddox and is just working with him on his delivery and fine tuning a few of his pitches so that he can sign a contract for $20,000,000 a year instead of $15,000,000 a year. There is a very big difference.

The message: All dilution is not the same. Don’t look at the actions, but rather the purported purposes behind the actions. Jim Puplava and Gordon Cummings came out with a plan several years ago concerning what they were going to do with this company. They have done exactly what they said they were going to do. Exactly! This has been the plan all along, and its working beautifully. You cannot get mad with people when they tell you what their plan is going to be, and you agree to it, and then they do it exactly as they said they would, but the results don’t turn out exactly as you hoped they would as quickly as you hoped they would. Well, I guess you can get mad. You can do anything you want to, but I don’t think it’s a wise idea to do so. Patience. All the best, Bull