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... ... Mr. Rodttey D. Knutson April 16, 1990 Page• 2 Dick Fraser declares he is unwilling to fund mill start-up costa where the mill is delivered to Mi Vida to operate in support of processing Gold Hill ores. Those expenditures necessary to put the mill into operation for this purpose would have to come from the venture presumptively through the general partner. insofar as management of the mine dump and development of mine properties, that appears a matter entirely within the scope and control of Mi Vida as general partner to Gold Hill Ventures. Costs of sorting the dump and otherwise delivering ore to the mill should be borne by the owner of the ore. All operational costa of milling the ore should be borne by COM, Inc. or its licensee in possession of the mill. These costs should be recovered directly from the sale of concentrate and the processed ore products. Z see no objection to a dedicated account into which would be deposited all proceeds of sales. The mill operation could then be first reimbursed for actual operating costa from funds flowing into this account. Secondary disbursement should be made to COM, ZNe. to compensate for ongoing costa of mill ownership such as taxes, insurance, permitting, licenses, fees, general accounting and overhead. Capital cost recovery would be part of the sale transaction. The balance should be retained in this account for Limited Partnership purposes to finance ongoing ore operations to be delivered to the mill to continue the processing. The effect of this adm_nietratlon should support the enterprise such as to encourage attraction of additional capital to further develop the ore properties. This should all be in aid of your stated objective in paragraph (1) to "help prove the project". This general approach seems appropriate. I do not understand why there would be any split l50/SOf of a net realized between COM, Inc. and Mi Vida. I am troubled here by the suggestion, that the other limited partner's interest may not be accommo- dated. I believe whatever distributions are made, they should clearly accommodate the real and agreed interests. This includes, among other things, the interests of the limited partners. I again emphasize the willingness of the Frnsers to Eell the mill for $1,500,000 payable: 5500,000 cash on closing with $1,000,000 to be paid over term not to exceed three years.