Ellixor Financial Investments

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Tuesday, March 14, 2006

BCMetals Update



Based on BCMetals December 31, 2005 Financial's their are a few hurdles that the company must go through in order to begin development of the Red Chris Mine. As they achieve these milestones the price, while it has already appreciated and gained some traction above $0.80 compared to when I began to follow it at $0.65, should continue to rise.

First, the company needs additional financing and is awaiting a formal Credit Arrangement with Investec Bank for 110 million US$ to help finance the poject. In addition to this amount, the company believe's it will need an additional US$85 million to fund construction of the mine and for general working capital. So, expect BCMetals to issue more stock.

The company has agreements in principal with two Offtaker's for virtually all its anticipated concentrate for the first 5 years of production. In addition, one of these offtakers has agreed to provide Red Chris with debt funding up to US$12 million for working capital purposes once the mine goes into production.

In summary, if the financing comes through then construction of the mine in earnst should begin. This should push the stock price up but the issuance of up to $85 million of equity will have a dilutive effect in the short run for shareholders. I still like the way things are shaping up for this stock and would suggest one should hold and possibly pick up some more on a price dip if that dip is not due to bad news.

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