BOARD01932

• Board Meeting Date: 5/22/2000
• Description: Flood Section - Rio Grande Basin - Alamosa River Watershed Project
• Board Meetings - Doc Type: Memo

L<B>and<IB> <B>mine<IB>

Page 4 of20

based Galactic in 1984, The company was a legal shell when Friedland took
it over in 1981 and began trading it on Vancouver's volatile and loosely
regulated stock exchange,

e

Many of the stocks then traded in Vancouver were for mining schemes, said
Douglas Linkletter, a vice president with Bank of America's Canadian
subsidiary, who followed the exchange,

"It was fairly loose, and there were some shady characters in the market,"
Linkletter said in sworn testimony to state and federal attorneys in
November,

But Friedland was not considered shady, Linkletter said, He was viewed as
a legitimate businessman with a dream of starting a global mining company,

Friedland, who was then in his mid-30s. had come to the mining industry by
an unusual route, A former liberal arts major, he had traveled to India during
the 1970s, where he became a devotee of Eastern religions,

He described himself on one legal document from the early 1980s as a
"self-employed tree farmer,"

But others describe Friedland as a charming financial operator with a
perpetual stream of mining plans.

Risky deals "were Mr. Friedland's lifeblood," said Charles Russell, a
Galactic executive,

e

"He wanted to go in 5 million directions at once," said Gerald Wyman, also a
Galactic executive. "Robert would get an idea that this is what we should do
and want to go in that direction, and then the next day want to go in some
other direction,"

But Linkletter recalls that Friedland put together a team of executives at
Galactic who had mining and financial experience, and that the business
community was impressed,

"Mr, Friedland had a good reputation at that point in time of being able to
raise the capital to get this thing done," Linkletter said,

Friedland's goal in 1984 was to mine gold near the ghost town of
Summitville, in south-central Colorado, two miles from the Continental
Divide, He wanted Summitville to be the "flagship" of the budding Galactic
empire.

The Summitville area had been picked over by miners throughout the 19th
and early 20th centuries. But a new mining method called "heap leaching"
was developed in the 1970s that offered the chance for Galactic to recover
gold from ore that had been discarded as unprofitable,

The method involves piling ore in a heap, then spraying it with a solution of
cyanide and water, The gold bonds with the cyanide solution and is
recovered through a drain at the bottom of the heap, The liquid then is
chemically processed to separate out pure gold,

The method produces only tiny amounts of gold - less than a half-ounce
from a ton of rock, in some cases,

e

But if a company moves enough rock - and if gold prices are high enough
- the operation can be profitable, By the 1980s such mines had operated
successfully in several states.

http://www.denver-rrnn.comlnews/0507smmtl.shtrnl

517/00