Gold and Minerals Shareholder Letter

Dear G&M Shareholders,                                                     December 28, 2009

Happy Holiday’s to one and all and thankfully an end to a very difficult year for most of us due to the banking meltdown. Since April when ECPN new management was put in place the stock has rebounded 900 % from their lows to $0.09 a share at year end. For those of you who don’t have access to internet, I am attaching a G&M shareholder letter from Sept. 17, 2009 that is posted on both G&M’s web page and ECPN’s www.elcapitanpmi.com  under industry news. I will be referring to that letter and our progress since 9-17-2009 in this update below.

      In reference to #1:  The Plasma and induction furnaces have been installed and are in operation using other parties’ ores. The companies we are associated with have applied for their permits to remove the 30,000 tons of mined ore on their Nevada property and are currently waiting for their bond and final approval.  As soon as the removal permit is finalized we will begin to ship ore as authorized by the refinery for processing.

     In reference to #2:  I have visited the Arizona mine numerous times this summer with geologist and mining company executives and am currently waiting for a proposal from one of them to participate in a mine operation. 

     In reference to #3:  Due to banking delays, the North Carolina party is still trying to arrange their financing for the purchase and processing of the ore from this New Mexico property and the Capitan property.

     In reference to #4: The El Capitan property development continues with Planet Resources (PRRY.PK) ongoing research into the recovery of all base, precious and rare earth metals.  Additional information on this recovery bench test process will be released as soon as it is available (see Planets recent news releases regarding associated companies and funding). G&M is also continuing with a Ph.D chemist and research project that is being developed in 3 commercial labs. 

     A very special thank you to all of the recent G&M and ECPN investors who have shown their support through continued funding of our ongoing endeavourers to create value for all G&M and ECPN shareholders.  2010 will be a great year, As someone recently said, we are on the cutting edge of something great and the uphill ride is going to be dramatic.

Sincerely,

Larry L Lozensky, President Gold & Minerals

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Dear G&M Shareholders,                                                                                     9/17/09

 A brief note to update you on a few of the more promising G&M projects being worked on in 2009. Thanks to funding from individual investors, we have been able to fund current accounting and reporting needs of El Capitan Precious Metals, Inc. (ECPN.OB) . Their new updated web site with the latest industry news can be viewed next week at www.elcapitanpmi.com . G&M has begun to develop the following multiple revenue stream opportunities that may add value to your stock as they come to fruition. 

     1. The Plasma furnace 8,000 degree flash pre -treatment we have been experimenting with since 2008, has been producing very good assay and recovery results on the four properties we have been testing (including Capitan). G&M plans on entering into an agreement on one of the properties in Nevada once its removal permit is in place. The company we are working with has already purchased land and is currently installing plasma and induction furnaces with plans to begin production of 30 tons per day by year end, expanding to over 100 tons per day in 2010. Over 30,000 tons of ore has been mined at the Nevada site and is ready for shipment, which may mean a royalty or dividend to G&M shareholders if production commences as planned.  

      2. I spent early September with a geologist gathering samples from an Arizona property we have been looking at since last spring, and all chain of custody samples have been sent to American Assay labs for evaluation. This property shows promise and it is located on private land with roads already in place, making it easy to mine. If G&M receives a favorable geological report being conducted on the property, a royalty position for G&M will be negotiated, increasing shareholder value if it goes into the production phase. G&M is also in negotiations with an additional Arizona mine which has just received it's mining permit and is expected to go into production by year end. The mine will be part of a public company, in which G&M would try to negotiate a jointly beneficial equity position.

     3.  A New Mexico mine located on private land is getting excellent results from a 3rd party who is testing and processing the ore. G&M has a verbal commitment of a royalty on the new mine if we give them a right to process a yet to be determined amount of Capitan ore until our mine is sold. The third party plans on building a plant in New Mexico for an operator to run the ore and will begin by processing the ore at their plant in North Carolina until the New Mexico land is purchased with permitting and equipment in place. They are currently considering purchasing property between the new mine and the Capitan mine and run ore from both properties until the El Capitan is sold.

     4. Regarding the El Capitan property, G&M has hired a geologist to renew our mining leases and secure chain of custody surface samples for assay.  A Ph.D. chemist has also been retained to generate a report on all past and present metallurgy, and help develop a University research project to define the optimum assay and recovery method on the Capitan ore for consideration by a mining company. We are getting some promising results from both International Plasma Labs (IPL) and Copper State Analytical (CSA) on these 200 gram samples with fire assays by using a pre treatment which reduces the amount of iron in the sample. We have also found that it may be possible to recover valuable rare earth metals along with the precious metals if Planet Resources (PRRY.PK) ongoing research is successful.

 G&M will continue working on every possible avenue to bring value to all shareholders. Thanks to the vast majority of you for your patience and support. A year end letter will be mailed to all shareholders in December 2009 with a complete update on these and other pending developments. Please contact me if you are able to offer support or help in any way.

 Sincerely,

LARRY LOZENSKY, President  

480-451-8743  

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Gold at $2,750 an ounce?

Gold at $2,750 an ounce? Here's how it could happen

Dan Burrows
Nov 10th 2009 at 6:30AM

India, the world's largest consumer of gold, is in the midst of its traditional wedding season, and that always creates extra demand for the pretty much useless yellow metal. Judging by the recent actions of that nation's central bankers, they must have been invited to every instance of nuptials in the entire country.

The Reserve Bank of India purchased almost $7 billion worth of gold from the International Monetary Fund last week, helping to propel prices to $1,100 an ounce. (That's a nominal all-time high, by the way, not a real one. Adjusted for inflation, gold would need to more than double to set a true record.)

Of course, the wedding season has nothing to do with India taking 200 tons of gold of the IMF's hands. More likely, it's the ever-crashing greenback. The U.S. Dollar Index, which measures the buck against a basket of six major currencies, is perilously close to falling through its 52-week low.

There's little wonder why: As long as the Federal Reserve continues to print money with a zero interest-rate policy, it's only wise for other nations to purge rapidly depreciating dollars from their foreign exchange reserves and go gaga for gold. The yellow metal is, after all, the ultimate hedge against inflation.

As much as there's always been something slightly goofy, if not outright kooky, about gold bugs, you've got to hand it to them these days. Gold has soared about 50% in the last 52 weeks, while the dollar has dropped about 15%. The broader market, as measured by the S&P 500 ($INX) is up only 17% over the same period.

Even ever-bearish David Rosenberg is bullish on gold. The chief economist and strategist for Canada's Gluskin Sheff (and formerly of Merrill Lynch) hasn't had much good to say about equities throughout the long, spectacular rally. But he sees glittering things ahead for gold.

"Since the U.S. will not default [on its debt], not raise taxes nor cut spending, the only logical recourse will be to print vast sums of U.S. dollars to fund this surreal foray into deficit finance," Rosie told clients Monday.

Meanwhile, gold production peaked a decade ago, Rosie notes, making the gold trade all about scarcity of supply. To put that in perspective, Rosie laid out three "what if" scenarios and their implications for the yellow metal.

If India were to raise gold's share of its forex reserves from the current 6% to 20% -- or where it was during the strong U.S. dollar policy days just 15 years ago -- gold would hit $1,300 an ounce, Rosie says.

If China were merely to copy India's move and raise gold's position in its forex reserves to 6%, the yellow metal would go to $1,400.

And the third scenario?

It seems far-fetched, but it's certainly the most interesting case. Imagine that rampant inflation forced the U.S. to buy more gold to support its currency. To put our hypothetical gold needs in perspective, Rosie goes back a century to when the Fed -- whose policies are crushing the dollar today -- was first created. Back then the ratio of gold reserves to money supply (using the monetary base) stood at 40%. Today that ratio is 17%.

So here's the kicker: In order to get to that historical 40% ratio from the current 17%, the U.S. would need to purchase three years' supply of gold bullion, according to Rosie's calculations, thus pushing the price up to $2,750.