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S. Possible Supply-Demand Changes <br />The supply of gold in the future could be influenced by the following Factors: <br />a) The sale of bullion reserves by financially strapped countries. <br /> <br />b) Widespread dishoarding either on the belief that disinflation is "permanent" or in response <br />to a rapid gold price run-up. <br />c) Resumption of bullion auctions such as those held by the International Monetary Fund and <br />the U.S. Treasury. <br />d) Newly mined gold from centrally controlled economics entering the market as payment for <br />import products. <br />In recent decades, nations have adopted alternative precedures for dealing with international <br />transactions, thus reducing the role of gold. Several factors, some mentioned below, have contributed to a <br />re-evaluation of gold's role with an emphasis on the possible use of gold as a medium for re-establishing <br />fixed currency exchange rates: <br />a) Worldwide economic difficulties. <br />b) The U.S. budget deficit and banking problems. <br />c) Internationa! conflict, especially between Iraq and Iran. <br />d) Fundamental changes in trade patterns. <br />commodities have experienced. <br />Investment demand for gold has begun to increase from countries (i.e.. Japan, Switzerland, and <br />Germany) due to their savings and trade surpluses and strong currencies, U.S, bonds are becoming <br />exposed to potential losses from a soft U.S. dollar, these countries are beginning to look at a cheap <br />investment such as gold, hence the recent price run-up, versus continued erosion that most other <br />6. Risk Factors <br />Certain risks are involved in the gold business. The more material risks as seen by the Company are <br />outlined below as are certain factors that may mitigate such risks. <br />Business Risks <br />Gold Price Volatility <br />Exploration, and <br />Development For <br />Gold Reserves <br />Tiile to Properties <br />M1litigetinR Factors <br />-Hedging <br />-World's dominate <br />producer (South Africa) <br />is high cost producer <br />-Care drilling <br />-Geophysics <br />-Consultants <br />-Legal due diligence <br />-Title search and review <br />-Title opinion on <br />significant properties <br />