OPINION

 THE REAL DEAL  

Robert P. Martin
President

As a longtime shareholder, and now an Officer, of Golden Phoenix, I feel fortunate.  In an age of hype and bluster, our company is proud to be grounded in everyday reality.  As many of our loyal co-owners know, we have rebounded during these last two years and begun the steady climb back to legitimacy.  This transformation-in-process has taken hard work and determination on the part of management. And it has taken patience and willingness-to-trust on the part of our shareholders.  I’m sure its taken a bit of luck as well. 

But none of this would have been possible if Golden Phoenix did not have a majority stake in a patch of the Nevada outback known as Ashdown.  This four square mile chunk of mountain was a legacy that appears to be unique in the world; for it hosts what I believe could be the richest narrow-vein deposit of molybdenite presently known to man.

And this is why I feel blessed.  For in our Ashdown Project LLC’s hands, and under its control, is a body of mineralization that represents the springboard for our company. 

As we continue to get to know our mine, we are finding the vein we call ‘Sylvia’ to be as rich as past records indicated.  Pinching and swelling between roughly three-and-eight feet thick, this wide plate of mineralization has yielded samples grading 10%, 20%, occasionally even 45%, elemental molybdenum.  In a world where the typical moly mine might average three-to-six pounds Mo per ton, our southern vein resource averages 34 pounds.  In the area that we are currently mining, we have samples grading over 100, 200, even 300 pounds Mo per ton.

Let’s pause to consider what that means.  A ton of mineralized material containing 300 pounds of Mo would have an equivalent value of 10 ounces of gold.  Even given the routine losses due to rock dilution, milling and smelting, this represents a bonanza-grade material to make even an old Comstock sourdough sit up and take notice.  So while Golden Phoenix considers itself, first-and foremost, a precious metals company (and is proud to own its Mineral Ridge gold and silver property), our Ashdown mine more than lives up to that “precious” designation.  It is, in three simple words, the real deal.

For me, being the real deal implies several of things.  First of all, moly is not a flashy metal.  It is a soft, grayish mineral that is rarely used in its pure form.  Moly is one of those substances that no one needs a lot of, but everyone needs a little of.  It makes stainless steel stainless, it makes oil and gas pipelines corrosion-proof, it makes industrial tools hard, and it makes friction slippery.  Recently, it has found new and growing uses as a catalyst in fuel cells and a stabilizer in nuclear fuel rods.  You can’t drill an oil well or build a ballistic missile without it.  So it has a strategic significance to every modern nation on earth.

Which brings me to the second reason I consider Ashdown the real deal. Recently, China imposed a 16% export duty on everything molybdenum.  China is a net importer of moly and it would appear they want to hold onto all they have.  So the world price for moly has continued to remain strong over the past year, stabilized in the mid-20 dollar range, and may remain at historically high levels through 2007, according to industry leaders.  What better metal to build our future on at Golden Phoenix. And what better time to do it. 

And lastly, Ashdown is, for me, the real deal because we are finally producing a product and shipping it.  Our first full shipment left last week, and over the next several of months we will be ramping up the rate of production.  We now join the ranks of producing moly mines as the world’s newest and perhaps its richest.  

So if anyone asks you why I feel fortunate to be a small part of this emerging company, feel free to tell them:  Its because Golden Phoenix has positioned itself to be the real deal. 

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This editorial has been prepared by the author and represents the sole views and opinion of the author and not Golden Phoenix Minerals, Inc. (the “Company”).

Forward-Looking Statements. Certain statements included herein may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These risks and uncertainties, and certain other related factors, are discussed in Golden Phoenix Mineral, Inc.’s  (the “Company's”) Form 10-KSB, Form 10-QSB and other filings with the Securities and Exchange Commission. These forward-looking statements are made as of this date and the Company assumes no obligation to update such forward- looking statements as a result of a number of factors.

 Don and Diana Prahl:  The new faces of mining in Denio

Robert P. Martin
Executive VP for Strategic Development

Newly relocated from their home in Minnesota, Don and Diana Prahl have taken up residence in Denio, Nevada, a few miles from Golden Phoenix’s Ashdown mine, which lies at the foot of Mahogany Mountain.  With their three sons grown and out of the nest, Don and Diana arrived in Nevada eager to start their new life.  Diana showed up at headquarters in her customary cowboy boots, blue jeans and western belt buckle.  A native of Montana, for Diana the serene valleys and stately mountains surrounding the Ashdown mine are like coming home.  Don and Diana have wasted no time in settling in, and Don is now fully engaged in the daily routines of the Ashdown moly project.

I asked Don to take a break from his new duties in order to chat about his past career and hopes for the future.

From early age, Don was fascinated with things electric, and became an accomplished ham radio operator by the age of 15. His father had always dreamed of becoming an electrical engineer, so Don started out his college life in Wisconsin determined to earn an EE degree.  All of that changed one night when Don met several fellow U of W students who were studying mining.  They told him stories of summer jobs in wilderness places, and being an outdoorsman himself, he took up the offer of one student, whose father was dean of the Mining School, to drop by and see what mining was all about.  The result was that Don switched his major from electrical engineering to minerals engineering, and with it took a new direction for his life. 

The way Don explains it, one of the principal attractions to mining was its direct connection to creating the raw materials needed to build better lives.  It’s what Don calls “true value,” and his career has reflected this commitment all the way.  It is raw materials that form the foundation of a society, and Don likes the feeling of being linked to the stuff futures are made of. 

During his college days, Don went to work at the fabled Climax moly mine in Colorado.  It is there that he learned to drill, blast, muck and lay track.  Through his college studies he was also exposed to equal doses of mining science and metallurgy, which provided him with unusual balance as he started his working career in 1970.  It was about then that he met Diana, who grew up in a Montana mining family (Anaconda copper mostly) and loved the outdoors as much as Don did.  Diana taught Don the art of fly-fishing, and they have been sharing their love of nature ever since.

What followed for Don was a stream of challenges and new horizons, as he perfected his trade as a mine manager with some of the premier mining companies in America.  After 30-odd years, Don has matured into a soft-spoken, direct and impeccably polite leader; a man who appears to know himself and his subject so thoroughly that he projects a quiet confidence wherever he goes.  I asked Don to share some of his beliefs and insights that have stood him in good stead over the years, and without hesitation he started with the topic of safety:

“Mining is often stereotyped as a dangerous business, but it can and should be one of the safest industrial occupations.  I’ve seen safe mines and I’ve visited unsafe mines, and it is clear to me that those mines run safely are also the most productive and the most profitable.  It’s a proven fact that safety goes hand-in-hand with profits.  So when I pursue safety, I am not just establishing a good workplace for my personnel, I’m delivering efficiency and value to the shareholders.

“In order to make a mine safe it is to critical to establish a team concept.  That way, the team reflects a spirit of safety at every level of the project.  That awareness starts at the top and needs to filter down to every supervisor and every worker, whether at the crusher, the flotation plant or in the stopes.  To get that message across I don’t hesitate to visit with my men and women in the field, to shake a greasy hand and to learn everyone’s name.  After all, the best job security a worker can ask for is a company that is safe, productive and profitable.”

While Don confirmed that it is satisfying to run a well-tuned organization, he admitted that it is even more fun to be faced with challenges.  He was clear in acknowledging that the job of mining is, at heart, the job of creating wealth.  And when asked about his feelings on tackling a “from-the-ground-up” enterprise such as Golden Phoenix, he answered that he relished the idea.  “While I’ve had to fix my share of problems, it’s always easier to do it right the first time. The mining business has had its missteps, but every one has been a learning experience and those lessons are now understood.  So there is no reason to relearn this stuff; just apply those lessons intelligently.”

On the topic of the tight hiring environment throughout the mining industry Don said that his job was to find the best caliber people possible and then keep them performing.  “Smart management hires quality people,” is how Don puts it,  “people that know the business and have a track record of personal responsibility.”  Part of that process involves setting appropriate standards, screening applicants carefully, and thoughtfully applying testing programs.  “Training is also a big part of our job,” says Don, “and it will be important that we ‘right-size’ our company.” 

A big part of Don’s definition of productivity is to expect the most out of each employee in order to keep the payroll under control. “It amazes me what humans are capable of, when asked.”  Another part is to recognize that mining and milling must compliment each other.  As Don points out, what happens in the mine and how it operates can dramatically affect the mill.  So Don believes the mill should have input to the miners and vice versa.  Which is why Don initiated a program at a previous company to ask mine and mill workers to swap jobs for a time, resulting in a greater appreciation and understanding by everyone. 

“Earl Harrison has done the same thing at Ashdown, which is very good.  It breaks down the barriers or avoids them in the first place.  After all, the miners and the mill guys are all part of the same operation.  The feedback needs to be there.  Grade control becomes everybody’s business, especially in an operation of this compact size and with these high grades.”

When asked about his contacts in the Nevada mining world, Don reminds us that as Chairman of the Nevada Mining Association, he hired Russ Fields, the NMA’s current President, and both men maintain a close relationship.  “My five years on the Board of the NMA were tremendously helpful in getting to know the people and properties throughout Nevada, and I’ve kept up my Nevada contacts over the years.”

- Don will remain self-assigned to the Ashdown project in Denio until it is time to join management at the Sparks headquarters or one of our other properties. -

 Looking Beyond Our Ski Tips...

Robert P. Martin
Executive VP for Strategic Development

From the parking lot of our corporate headquarters in Sparks, Nevada, we have a beautiful view of the backside of the Lake Tahoe Sierras.  It’s been a good year for snow, and the mountains to the west are covered with the white stuff.  The Mt. Rose Ski Area can be seen on days like this, when it’s clear and bright out.  It’s only 20 minutes away by car. So once in a while, when time permits, I sneak off to ski for a couple of hours, and call it an aerobic workout.

I’ve been skiing most of my life, and remember back when I first learned to parallel.  The tendency of new skiers is to lock their eyes on the tips of their skis in the desperate hope that it will somehow prevent them from crossing, which invariable leads to a nasty face-plant.  With practice, every skier learns to control the skis by feel, not sight, and over time stop staring at his or her tips, and instead start looking farther downhill.  This is imperative, since as one gets better one goes faster, and spotting that offending tree or boulder or out-of-whack snowboarder becomes mighty important to one’s health and wellbeing.

I raise this point during ski season because I see it as a metaphor for what we are trying to do at Golden Phoenix.  15 months back, when new management was brought in, everyone involved was pretty much occupied staring at their tips, totally focused on just keeping things on the straight and narrow.  With time, however, as we picked up speed in both our operations and our market trading, we reached the point where our vision needed to shift farther ahead.  It’s that vision thing that lies at the heart of my job title:  “Strategic Development” is just a fancy phrase for staring out ahead of our ski tips.  Over the past several months, as the company has stabilized and settled in, I am able to spend more time in consultation with Ken, Dave, Earl, Larry, Dan and our Board, planning and positioning now for what the future may offer or demand.

As with skiing, running a company is a balancing act.  At Golden Phoenix we have had to balance limited resources against unlimited potential.  We've methodically sought to improve our balance sheet (pun intended), bring the Ashdown moly mine into production, foster the goal of positive cash flow this year, stabilize outflows, prepare to pay off old debt, and still have the time and imagination to grow our future by carefully and creatively laying the foundation for subsequent advance.  This has called for tough decisions and disciplined execution, coupled with the understanding and patience of our past creditors. Early on, we developed financing that relied on private funds.  We then pushed through six-months of legal work to establish the Fusion Capital equity line we called a safety net. Now we are working hard to bring molybdenite production on line.  Our ultimate goal, of course, is to replace past debt and dilution with solid cashflow and profits.

Having reached the Sylvia Vein at Ashdown, and with the moly mill essentially complete and being readied for commissioning, our operations staff, led by Ken and Earl, have brought in outside expertise to assist in final engineering and planning. As with safety, the company’s policy is to be methodical and steady, avoiding haste whenever it might lead to unexpected consequences.  We are carefully setting the stage for the kind of moly production that can yield long-term benefits.  Those remarkable rock samples pictured on the homepage bear testiment to the promise of those long-term benefits.

Speaking of the long-term, we continue to address our Mineral Ridge gold property, and are pleased to see the value of its reserves rising with the price of gold and silver. We are also working to position the Company for long-term growth in what we feel is a bull market commodity cycle still in its infancy.  Toward that end, three weeks ago the decision was made to put our Fusion Capital equity line into limited operation, and we have begun “dollar-cost averaging” daily, converting small blocks of shares into working capital at ascending prices.  (By the way, several months ago we elected to decline Fusion's initial offer to capitalize $200,000 at fifteen cents per share, as originally stipulated in our registration.  This has paid off handsomely, and we are presently enjoying a 150% increase in return, which should continue to rise in parallel with our rising share price.)   The beauty of our equity program is that it can be started or stopped with one day’s notice, so we have full control to maximize our share value while avoiding the indiscriminate dilution of the past by making incremental conversions timed to market conditions. Much to their credit, Fusion is very supportive of this approach.  Proof of its effectiveness is that since starting in mid-March, our share price has risen over 50%. 

The funds raised in this manner are providing that safety-cushion we have sought, and allow us to  tackle both current projects and nail down future opportunities.  The benefits of this should become apparent to our shareholders over the coming weeks and months.  While management remains 100% committed to earning our way to prosperity, it is the measured application of debt and equity that allows us to always advance, yet in a conservative and balanced manner that uses every tool at our disposal to build a better company.

As I like to tell those shareholders who call in from time to time, we have a plan and we are working that plan.  It's just that simple.

So keep your eyes ahead of those ski tips, stay balanced and relaxed, and join us for the ride toward success.  There’s plenty of room on the slopes, so the more the merrier.

Sincerely,

Rob Martin