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Post# of 19308
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Re: None

Wednesday, 07/19/2006 2:59:12 PM

Wednesday, July 19, 2006 2:59:12 PM

Post# of 19308
MPC conference call for 7/19/2006


Clayton Smith: Hello guys, thanks for being patient, been a busy morning
Zoran Minic: Hey CLayton!
Philip Gross: np
MOMOmonster: busy is good
Clayton Smith: If anone just got in, I am Clayton Smith the interm Management of Drake Gold
MOMOmonster: clay looks like we have a clean house again your thoughts??
onedown001: Hi Clayton!
theoriginalsmurfdog: Hello, Clayton
Mark Gloy: hey Clayton thanks for taking the time
Mark Gloy: Do you have an office in Oregon?
Clayton Smith: Well for starters I will be open to any questions anyone has, I will also provide updates to what is curreently happening, and would prefer one question at a time so I can answer them
Zoran Minic: How long will it take to get permitted to start mining the Gold in AZ?

Clayton Smith: Liq: the market has defiently bottomed out, we are pleased that the damaging mix up with Mr. O'Neil and our ambious move to diamonds hasn't done much more then put us back at a penny
MOMOmonster: agreed looking good again
Clayton Smith: eagle, we do have an office in Oregon, that is for the Novak Capital, not Drake, we are moving into the World Trade Center as early as next month as well in Portland. Drakes Corporate Office is in Century City, CA, where I am now.
Mark Gloy: Thanks
Mark Gloy: I am in Salem if you ever want to catch a round of golf
Clayton Smith: Zoran: The permits for the Jackpot property are expected to be had within 3-4 weeks, Mr. Parkinson and Mr. Pearson are expected to be on site on the 29th as well to review all equipment and grounds.
Zoran Minic: great!
Clayton Smith: eagle, i would love to, I am down that way a lot, have family there, so anytime I am I will let you know.
Zoran Minic: When will the next one or two gold companies be expected to close.

Mark Gloy: For the Master on Ihub, When is DKGR moving to the other exchange? Time frame 1mont 5months?
stocktalklive has joined the conference.
Good Luck: Hi Clayton, looks like we have a lot of shares on the ask at 0.01 and its always NITE there, any thoughts...
Clayton Smith: Z: to recap for new readers, our goal for Drake early on is to acquire projects that will provide cash flows the first year out, so although Pegasus is looking at doing $2.3 M in revenues, and the Jackpot is thought to be able to start to produce about $3-4 M a year, it gives us the bottom line cash flows, we are looking for about $500k a month for a good foundation early on. This makes us a self sufficent company, then we can focus on developing larger projects that we have already selected.
onedown001: When can we expect a PR regarding the Diamonds cancellation?
D Man: Clayton - Has Drake realized any actual revenue yet in 2006 from any source, but particularly from Pegasus? If not, when do you expect to be receiving revenues from the Pegasus acquisition? Will the Pegasus shares be issued at market price or at some agreed upon discount from market price?
Zoran Minic: great!

Clayton Smith: Z; so in reply to your question, we plan to acquire 2 other gold projects that are placer based and we will be able to create cash flows as soon as possible with. This is apart from any oil recompletes we plan to acquire to accomplish the same thing.
Clayton Smith: I have 3 questions, just a sec and I will reply to each.
son Goku348: give clay some time to answer people!
D Man: Z, might be easier for folks to IM you the questions and you can pose them one at a time for Clayton. Just a thought.
Zoran Minic: I think thats a great idea
Zoran Minic: IM me your questions everyone and I will ask Clayton
Clayton Smith: eagle, yesterday we just selected the auditing firm and accounting team to complete our audit, Pegasus is already audited, so the audit will take estimated 1 week after we get them the accounting, which is expected by next week. The SB2 will then be filed, its a 50 page document and will likley take about 3-4 weeks to complete, then all filings and 10q's will be availabe from the SEC and Edgar, at that point we sumbit to the SEC for an OTC listing and it varies with them on how long that takes 1-3 months is usual
Mark Gloy: great
Bob Keith has joined the conference.

Clayton Smith: tt: in regards to NITE, I want to point out a couple of things, first NITE is the largest MM for small caps as far as I know. they market make for the two largest online brokerages in Drake, Ameritrade and Scottrade who hold about 60% of the stock of Drake. So all trades bought or sold will go through NITE, also many other brokerages will use NITE to route their orders as well. This is why NITE is one the bid and ask almost all the time. When you buy from one of those brokerages then they show up, they also are the biggest buyer on the bid so when sellign comes in, they buy it, then they resell it at the ask, them showing 10000 does elude to having size
Clayton Smith: the company is not selling stock in the market, in fact no new stock has been issued since before we took over in Febuary.
Good Luck: thanks
Clayton Smith: We are in fact borrowing money to add new equipment to Pegasus, and will look to pay it back with cash flows or PIPE financings, there may be some 504 financings available which will be open for any shareholders if we do it.
Clayton Smith: Also to boot, I personally have loaned the company large sums of money from outside of Drake that is what we are paying our legal, and operational/acquisitional costs with.
Zoran Minic: kingocat k: To Clayton: Where do you see the price of DKGR in the long term?
Clayton Smith: onedown: we have mentioned to many shareholders that it is our intent to focus on gold and oil development rather the diamonds, the affilations with CMKX are unexceptable and it was a mistake to of done anything in that regards, or intentions were to establish ourselves up in SK due to the fact that some great projects are in the area but at this time I blieve my management team and consultants have decided it not to be a good idea, the wires will have to officically tell it.
Clayton Smith: D Man: Clayton - Has Drake realized any actual revenue yet in 2006 from any source, but particularly from Pegasus? If not, when do you expect to be receiving revenues from the Pegasus acquisition? Will the Pegasus shares be issued at market price or at some agreed upon discount from market price?
Clayton Smith: THe reveune from Pegasus will be paid in quarterly payments, the first to be recieved in Sept. They are on track to do $2.3 million this year, but remember any new contracts will add to this amount. The shares that will be issued will be done so over a period between now and Dec. 2nd, We have agreed upon a 50% discount to market in an effort to get the purchase price down, which we did to $1.8M but we will be issuing them based on the shareprice at the time of issuance, we expect to see the price move multipules higher therefore issuing less stock along the way, all stock will be locked into 144 restriction rules and not released for 2 years from issuance
Clayton Smith: Kingocat: The price of Drake is a big focus of mine considering I am by nature an investor rleations professinal, I can't directly put a target price on the stock not as management nor IR, but can make a few comments in this regard:
kingocat k: okay...thanks
Clayton Smith: The company is highly undervalued by book value standards at this point, it does suffer from the pink sheet mentality, where it is unverifiable and therefore doesn not always refect the prices it should be trading at, just based on the first two projects this year we should start to average $500k a month profit by the year end, using a simple 20x positive cashflows or profit (not 20x revenues) which is very standard for book value you can determine your own consculsions, There are at this time approx 600M shares outstanding, we are looking to cancel a prortion of these shares as well but there will be new shares issued for Pegasus and possible PIPE finanic
Zoran Minic: Mark Gloy: are we getting close to the release of the e-mail blast that was to go out to 7 thousand brokers if I remamber right?
Clayton Smith: This of course wouldn't include any of the new projects that will be coming in or new contracts, so you can rate that yourself.
Clayton Smith: Mark: we have an opted small cap list of approx. 7000 brokers, we will be doing two-fold: one blast to them to get their attention, then a follow up by one of my staff at Novak, that will email them personally and explain our companies vision and what separates us from the rest of the pack. This will likely draw a lot of support from the instiutional side but of course our OTC listing will really do the trick.
Mark Gloy: nice time frame?
Zoran Minic: chadlentz: Is there any independent verification of any of the gold-resources information claimed by Mr. Parkinson and his company? As Mr. Parkinson has a vested interest in a new company leasing that property, and if his claim cannot be verified by an independent source, what value do these estimates really have?
Clayton Smith: We will start to target to brokers as we annouce the next couple acquisitions, and once the full package has been released, we need have a foundation to report, a timeframe for the OTC, for cashflows, etc. so that we can gain crediblity with.
Clayton Smith: chad: the estimates are done by Mr. Parkinson from data and testing done on site, he is a fully registered Arizonan geologist, Craig L. Parkinson, RG, CPG, Arizona Registered Geologist #30843 and AIPG Certified Professional Geologist #10098, National Instrument 43-101: Independent Qualified Person.
chadlentz: Follow up allowed?
Clayton Smith: chad: it would be his reputation on the line if he was misleading the numbers, the deal we have is to pay $2500 a month as advanced royalties and nothign else, no stock no other payments, except gold royalites. They would have no benefit to mislead us as they are not making any additional monies unless actual gold is found and mined.
Clayton Smith: just a sec Chad, let me finish
chadlentz: np, not pressuring you.
Clayton Smith: We of course will be independently verifying this data, this does take considerable monies to do so, actual on site testing will run us $100k plus, and a feasibilty study which would prove the assets woudl run about $500k, we ocmpleted this agreement based on this informatoin as we were not going to spend that type of capital up front without a formal agreement, Mr. Parkinson has said we can begin minig the gold right away with a proper team in place, enter Mr. Pearson, he will be on site shortly over the next two weeks and will evealute it, give me expected costs, and targets production dates.
Allyinaustin has left the conference.

Clayton Smith: Chad, please make any follow ups
Zoran Minic: D Man: What is the status of the spinoff of the old AMVS / SSWH assets?
jrussin2006 has left the conference.

Clayton Smith: dman: we are still planning to spin off the old assets of AMVS, there is an ongoing negocition to to end. we plan to get a dividend of stock from a soon to be public company that deals in like products which will go directly to the sharheolders.
Zoran Minic: Clayton: How many shares do you have in DKGR?
Clayton Smith: I have control of all the stock in the escrow which is approx 300M shares, those are the proposed shares to be canceled so that may change, I also hold considerable shares I have purchased in the open market, as well as will be paid back for my loans upward toward $100k in stock as well, at a given point in the future, my salary will be stock and cash based but will be worked out down the road, at this time the exactly ownership I have coming is undetermined. I can say that 200M shares of the float is in friendly hands that my team and my close investors own and control, there is about 100M shares in the float that is part of what you all own and others out there I am not familiar
kingocat k: wow!
Clayton Smith: As you can see this company is properly held and is posed to make signifcant moves in the market the way it is being run, no dilution, no insider selling, only a clean up from previous managements messups and real assets coming in, the market will move with upcoming annoucements as well as once the assets are proven with the audited and reported 10q's the market will likely move upward toward book value.

Clayton Smith: I want to make a few comments that reflect some of the concerns that I have seen and heard. If I may give me a couple minutes to post this.
Clayton Smith: The addition of Pegasus is a huge move for Drake Gold, for two reasons, one it drives up cashflows and profitablity and also makes us very versitile once entering into the oil extraction stages of new up coming leases, due to record breaking oil prices getting rigs and equipment is nearly impossible when you want them, by having this in house we are able to expand very fast and do mulitpule recompletes at once, this iwll drive profitablity up even further. We have several pending leases now. The concern some have and I want to be very frank and open about is the team we have at Pegasus, there are some of the former management and the same engineer as TNOG. This to s
Clayton Smith: 5000% last year on anticpation of strong oil reserves, the main well the k1 hit oil then they prepared for horitzontal drilling but hit water, which drove the stock down, this put them into capital difficulties and have since been emerging once again with real operations on the same projects but in different areas. My point is that the managemetn and engineer are stand up people and i will back them up on that anytime. Even the biggest companies hit dry holes sometimes, I brought this team in because I know they are honest, hard wordking and able to accomplish the vision I have set forth for this company.
Zoran Minic: Good Luck: Does Pegasus own any rigs or drilling equipment?
Clayton Smith: This issue with Mr. O'Neil will be resolved as well, I am not making any comments against Mr. O'Neil as I do believe he has great contacts in SK and has intented to perform a good job for Drake but what we didn't account for was his repuation which he stated was a positive one and would help Drake, this of course was not the case.
Clayton Smith: Good: Pegasus right now has 6 trucks which are primarly used for cementing and fracing work, we will be expandikng our fleet to encompass serveral new cementing rigs, fracturing units, wire line, coil tubing and full scale drilling rigs which will be ongoing this year and even more so next year as we expand to Midland Texas as well as North Texas.
Clayton Smith: I think we should make a few other points about the jackpot project, for one the reputation of Parkinson is on the line as he has provided information from his studies that he believes proves 60,000 of gold. They don't look to benefit anything by misleading us as the $2,500 advanced royalty goes to the land owner not him and his services will be paid in cash but if there is not the reserves he says are there then within the second month we cancel the contract, so we are only out $13k and some wasted time. Hardly enough to jepordize his integrity with unless in fact the gold is actually there, the $2500 advanced royalties go towarded the 10% royalty the land owner act
Clayton Smith: Here are some pictures that are of gold that was recently taken from the Jackpot project, the reason they outsourced the project is they want others to invest their capital to produce the gold whereas the land owner my not be capitally prepared to do so.
Clayton Smith: http://www.drakegold.com/images/temp/JackpotGold3.jpg
Clayton Smith: http://www.drakegold.com/images/temp/JackpotGold1.jpg
Clayton Smith: http://www.drakegold.com/images/temp/JackpotGold2.jpg
Zoran Minic: Good Luck: How other employees of DKGR get paid? including Nia?
Clayton Smith: The only two official full time staff is Nia and myself besides consultants and engineers, Nia is recieving shares in the company and then cash is paid for her staff which is handling the legal filings and contracts. Cash in which I am loaning the company. Consultants are either paid in cash, restricted stock or options
Zoran Minic: Great...no Dilution!
Good Luck: follow up
Good Luck: what if u decide to stop the loans?
Clayton Smith: Exactly my point, we are adding real value, with real cash flows, with minimal issuance of shares, non of whihc will be free trading except what 504's we may offer to shareholders
Clayton Smith: tt: there are sharehodlers in this company that will provide the capital in exchange for interest or for stock. We have this covered, plus we are working with as Nasdaq company with $4m dollars that is willing to loan us the money with interest, after the first 3 months we won't need additional capital as we will be cash flow heavy.
Clayton Smith: Once we get our OTC listing we will then be able to pull in multimillion dollar financing to expand all operations and enter into larger projects with.
Good Luck: cool
Zoran Minic: Ok Guys Clayton has to run
Zoran Minic: He's running late...thanks for stopping by Clayton
Clayton Smith: Unfortunantly I am expected to be in a meeting in about 20 minutes which I will be late for
Zoran Minic: lol
kingocat k: Thanks Clayton for the answers
Good Luck: thanks
theoriginalsmurfdog: thanks a lot clayton
chadlentz: Thanks, Clayton, talk atcha later.
Mark Gloy: Thanks Clayton look me up for some golf
son Goku348: Thanks clay!
Zoran Minic: Have a great meeting and we are lookin forward to a follow up!
Clayton Smith: I can continue this next time and thank everyone for their support. I added most of you to my list so please feel free to ask me any questions via IM or email as well.


END

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