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& T e c h n o l o g y S t o c k sVolume 20 No. 2 (Since 1981 - Formerly J Taylor’s Gold & Gold Stocks) February 13, 2001

McKenzie Bay International

Traded: (OTC Pinks – MKBY)Initial Recommendation 3/25/00 :2.00Price 2/9/01: $1.95Shares Outstanding: 16,625,000Major Institutional Holdings: 1,000,000Public float: 3,950,000Quality Rating: “B” (At Bankable Feasibility Stage)

We initially recommended McKenzie Bay International (MKBY) just after it began trading in the pink sheets. It has endured some rather shameful market maker short selling action, which moved the price briefly below $0.50 toward the end of 2000. Oddly enough, California’s energy crisis has been the short seller’s worst nightmare with respect to MKBY. Why so? Because two new technologies capable of solving America’s energy problems, require enormous amounts of vanadium and MKBY just

happens to hold one of the biggest vanadium deposits in the world.

What do you think a company’s shares should be worth if it is able to play a major role in not only solving America’s energy crisis, but also doing it in an environmentally friendly manner? I think you would agree that such a company may well become one of the biggest storybook stocks since Microsoft. Given the company’s 80% ownership of the Lac Dore vanadium project in Quebec, MKBY appears to be one such company.

The Lac Dore Vanadium Project *Lemoine & Rinfret Townships, Quebec

The Lac Dore project is located in the Lemoine & Rinfret Townships in Quebec, less than 30 air miles south of the mining and forest service town of Chibougamau, Quebec. The area is well serviced with air, rail and roads. Together with available electrical energy and water, a solid infrastructure is in place for the development of the mine and production of vanadium.

Some C$12 million has been spent on this project to date including extensive exploration and metallurgical work. McKenzie acquired an 80% interest in the Lac Dore claims from Soquem in exchange for 1 million shares of its stock. McKenzie Bay is obligated to provide a bankable feasibility study to Soquem, which is anticipated before the end

TAYLOR HARD MONEY ADVISORS, INC.* Box 770871, Woodside, N.Y. 11377.* Tel.:(718) 457-1426* Feb. 13, 2001

of this year. For Soquem to retain its 20% interest in the project, it is required to fund 20% of capital expenditures.

Vanadium is one of the more abundant metals found in the earth’s crust. If that is true, why should the mere ownership of a vanadium deposit make MKBY so special? The reason is because the Lac Dore is uniquely capable of meeting a surging demand for vanadium thanks to the following advantages it holds over all other known vanadium deposits

1. Large-scale reserves. 2. Quality of vanadium mineralization.3. Uncommitted future production. 4. Low production cost

Following is a discussion of these four factors favoring the Lac Dore property.

Large Scale Reserves

With respect to reserves, the project contains at least 450 million tonnes of ore grading 0.50% vanadium. This means that there is something like 5.0 billion pounds of inferred vanadium pentoxide reserves on the property. Earlier, the company talked about possible capital expenditures of $85 million that could produce 16.4 million lbs. of vanadium pentoxide per year at a cost of $1.56 per lb. That would generate 36.3 million in annual cash flows or $29 million for MKBY over a mine life of over 300 years!

With large reserves, MKBY should be in a position to commit to large scale delivery of vanadium product in line with the needs of vanadium battery producers. It now appears likely that the level of production from Lac Dore may surpass the earlier annual projected 16.4 million lbs. by a factor of several times, which would also significantly reduce the cost of production. A host of questions related to new commercial applications for vanadium are now in the process of being answered and they will be factored into the final bankable feasibility study anticipated by the end of this year. By year end, we should have a much better idea about future levels of production and hence the mine life at the Lac Dore.

High Quality of Vanadium Mineralization

For optimal battery performance, it is necessary that the vanadium contain low levels of impurities such as silica and chromium. Based on metallurgical studies

carried out to date, silica level from Lac Dore production is expected to be only 1/3 to ½ as high as in South African production. The chromium levels are also said to be lower in the Lac Dore ore than in South African ores.

Uncommitted Future Production

Most existing vanadium mines have either pledged the lion’s share of their future production for existing vanadium applications, most notably as a metal alloy, or they produce vanadium as a byproduct, which means output depends on their steel production. Hence their ability to meet the major vanadium demand anticipated for battery and energy storage cell manufacturing is very limited compared to that of MKBY. Also, being a primary producer, MKBY will be in a position of entering into a long-term cost plus contracts geared to ensuring manufacturers have ample supplies of vanadium at prices they can lock in for the long term.

In fact, MKBY has already signed a ‘Guaranteed Off-take Agreement’ with a metals trader guaranteeing the annual off-take of 1.2 million pounds of Vanadium Pentoxide for a period of ten years with a ten-year extension. Pricing as per the Agreement is to be at market less 4%.

Low Production cost

For a host of reasons having to do with grade, low mining dilution, metallurgical characteristics, infrastructure and low tariffs, the Lac Dore project figures to become North America’s largest vanadium deposit and one of the lowest, if not the lowest cost primary producer of vanadium pentoxide in the world.

At the present time, the most cost competitive mines in the world are located in the Bushveld complex in South Africa where costs average in the $1.70 to $2.00 range. By contrast, Lac Dore production costs are expected to be in the $1.40 to $1.70 range. Actually, the Lac Dore ore contains a large amount of titanium mineralization, that is likely to provide meaningful cash flow to the project at higher levels of production. It is believed that at moderately higher levels of production, titanium credits combined with economies of scale would reduce the cost of producing vanadium considerably below even the highly competitive $1.40 to $1.70 range.

Revolutionary New Vanadium TechnologiesTAYLOR HARD MONEY ADVISORS, INC. Box 770871, Woodside, N.Y. 11377. Tel.: (718) 457-1426 Feb. 13, 2001Copyright @ 2001 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED.

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There are essentially two new energy technologies in existence that are expected to require huge supplies of vanadium in the near future. The first technology is known as Vanadium Redox Storage Cell, which allows charging and discharging of energy as available and as needed. This technology has been used successfully in Japan and is now ready to help solve our energy crisis in a major way.

The second technology that is nearing commercial viability has been developed by Hydro Quebec and it involves the production of a vanadium-lithium fuel cell for hybrid electric vehicles, electric vehicles and communication applications.

Both of these applications will require an enormous supply of vanadium. Following is a description of these two emerging technologies that not only promise to produce lower cost energy but also should lead to a cleaner environment.

Vanadium Redox Storage Cells

Vanadium redox batteries or cells (“VRB”), invented in Australia is a proven technology that has been used at a number of locations in Japan. More units are being planned or are now under construction.

VRBs are power storage batteries that have a vanadium ion solution as an electrolyte in positive and negative electrodes. While electrolytes circulate in the battery cells, charge/discharge reactions are caused by a change of the ion state. Thus, reactions within the VRB simply change the vanadium ion state resulting in an indefinite life. Unlike all other batteries, VRBs do not lose power sitting idle therefore provide an indefinite shelf life. VRBs have the ability to simultaneously charge at one rate, while discharging at another.

The VRB technology is being commercialized internationally by Pinnacle VRB of Australia. (Additional information is available through their website - http://www.pinnaclevrb.com.au.) Although no agreement exists between Pinnacle VRB and McKenzie Bay, the advancement of this technology is being followed with great expectation.

The need for huge amounts of vanadium combined with advantages enjoyed by the Lac Dore project as noted above may well result in either a formal or

informal arrangement between MKBY & Pinnacle or at least companies manufacturing VRBs.

To provide a sense of the amount of vanadium required for VRB applications, please note that six metric tons of high quality “battery grade” vanadium pentoxide is required per mega-watt hour battery. VRBs are expected to encompass 10 to 50% of a utility companies power grid. For example, if VRBs represented 20% of California’s power grid today, approximately 500 million pounds of vanadium pentoxide or 10% of the Lac Dore reserves would be required. With no other known minable deposit in the world capable of supplying the large quantities of “battery grade” Vanadium Pentoxide required for VRBs other than the Lac Dore, MKBY appears to be in a very strong position to become a dominant player in this emerging technology.

VRBs represent the world’s best source for a clean, reliable, in-line, uninterruptible electric storage. There is no other alternative cost-effective means of storing electricity. VRBs enable power generators to operate their generation facilities more effectively and efficiently. Load leveling capabilities by storing electricity during periods of lower demand and releasing electricity into the grid at periods of high demand are but one of the many applications for VRBs. VRBs can be fully charged and discharged repeatedly (over 16,000 times) and from any state of charge without any adverse operating effect and will last indefinitely.

VRBs are ideally suited for peak shaving situations and storing power generated from wind, solar and hydro. VRBs may be fully discharged without damage and do not have a memory if recharged before being fully discharged. VRBs operate over a temperature range of 5C to 40C safely with easy maintenance. VRBs do not discharge any harmful exhaust gases such as CO2 making the VRB completely favorable to the environment. And, unlike other batteries, it does not generate heat.

It should also be noted that the VRB technology can be scaled up or down to virtually any size application. Thus, it is conceivable that a large number of individual homes will be built or retrofitted with solar cells and VRB technology in the future and that wind farms may become much more prominent as a result. What we are getting at here is that the potential demand for the VRB technology is astronomical.

TAYLOR HARD MONEY ADVISORS, INC. Box 770871, Woodside, N.Y. 11377. Tel.: (718) 457-1426 Feb. 13, 2001Copyright @ 2001 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED.

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Vanadium - Lithium Fuel Cells

Over the past twenty years, Hydro Quebec has been involved in the research and development of a solid state fuel cell for hybrid electric vehicles, electric vehicles and communication applications. Until 1999 this work had been carried out jointly with 3M. At that time, Hydro Quebec spun this activity into a separate company now named Avestor Corporation that is now gearing up for commercial production of these fuel cells.

The fuel cell is comprised of many thin layers of lithium and vanadium in a jelly-roll design that contains a lithium foil anode and a vanadium foil cathode. Demand has been projected by Avestor to begin slowly but then rise exponentially, reaching 15,500 metric tons of V3O8 by the year 2010. That represents approximately twice the vanadium production levels initially discussed at Lac Dore. Although MKBY has no arrangement with Hydro Quebec or Avestor, the presence of the Lac Dore in Quebec combined with anticipated cost advantages may well work in favor of MKBY once it commences vanadium production. Additional information on Avestor is available at www.avestor.com.

Under a development agreement with General Motors, Avestor has built and delivered a high power battery designed especially for the Precept, GM’s concept hybrid electric vehicles. Avestor, which is located outside of Montreal, expects to launch its automotive line of batteries by 2004, following the launch in 2002 in the telecommunications sector.

Management - This company’s CEO is Gary Westerholm who has been a successful mining entrepreneur in the past. Gary is a CPA by trade, but

his most important attribute is his ability to attract top talent. Thus, he has attracted some of the top technical talent anywhere in the world with respect to vanadium mining and production. Summary

The economics for this company’s vanadium mine look excellent even without the development of energy producing technologies requiring lithium. Now, with two vanadium “fuel cell” technologies moving rapidly toward commercialization, the company’s Lac Dore project would seem to offer shareholders an exceptionally exciting future as part of a new energy/environmental/technology play that could make MKBY one of the most exciting stocks on our list.

Given our bearish view on the stock market and the economy in general, we are especially fond of technology plays that can lower the cost of producing essential goods and services. The ability of VRB to store energy from renewable sources like solar, wind, tidal and geothermal, not only seems to hold the potential to lower the cost of energy but to reduce the need to use environmentally controversial hydrocarbons and make shareholders of MKBY a “ton of money” in the process.

Based on the discussion above, we think MKBY is shaping up as one of the more exciting mining/energy/technology plays in the market today. However, with actual vanadium production from Lac Dore at least two years into the future, this remains a high risk/high return proposition. As such, we suggest you limit your allocation to this one stock to no more than 5% of your overall investment portfolio. For additional information please contact investor relations at 800-631-8127 or visit http://www.mckenziebay.com

J Taylor’s Gold & Technology Stocks, (formerly J Taylor’s Gold & Gold Stocks) is published monthly as a copyright publication of Taylor Hard Money Advisors, Inc. (THMA), Box 770871, Woodside, N.Y. Tel.: (718) 457-1426. Website: www.miningstocks.com. THMA provides investment advice solely on a paid subscription basis. Under copyright law, from time-to-time, THMA receives a standard fee of $250 per page from companies whose shares are discussed in this publication in exchange for the right to reproduce reports written herein. Under the Right to Reprint Agreement, companies who purchase the right to reproduce articles, acknowledge that reports appearing in this publication and/or provided in the weekly telephone messages are intended for the exclusive benefit of the paid subscribers of THMA. Companies also acknowledge that THMA retains full editorial authority over the content of material published in this letter or spoken in the weekly hotline messages. Information contained herein is obtained from sources believed to be reliable, but we do not guarantee its completeness or its accuracy. The management of Taylor Hard Money Advisors, Inc. may, from time to time, own shares of the companies recommended herein, such ownership being denoted by an asterisk behind the names displayed in the chart above. However, any purchases or sales of equities for the account of Jay Taylor or his family recommended herein are made no sooner than 24 hours following any such recommendations made herein or on our weekly telephone hotline service. No statement or

TAYLOR HARD MONEY ADVISORS, INC. Box 770871, Woodside, N.Y. 11377. Tel.: (718) 457-1426 Feb. 13, 2001Copyright @ 2001 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED.

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expression of any opinion expressed herein constitutes an offer to buy or sell the securities mentioned herein. Subscription rates: Fax: US - $150; Direct mail US $99. E-mail $99 (13 mos) -E-mail weekly hotline - $24/ (13 mos.)

TAYLOR HARD MONEY ADVISORS, INC. Box 770871, Woodside, N.Y. 11377. Tel.: (718) 457-1426 Feb. 13, 2001Copyright @ 2001 TAYLOR HARD MONEY ADVISORS, INC. ALL RIGHTS RESERVED.

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Portfolio ScorecardMining Stocks Exch Ticker Q Company Activity/Comments Price Initial Initial Price 2000 Overall Buy/

12/31/99 Date Price 7/17/00 % Gain Gain HoldAurizon Mines T ARZ A Junior Gold Producer in Ontario 0.51$ 8/15/97 0.88$ 0.57$ 12% -35% BuyAnglogold N AU A Word's largest gold producer- South Africa 25.69$ 8/29/98 21.75$ 19.81$ -23% -9% BuyAsia Minerals C AMP B Advanced Stage gold project in Arizona 0.17$ 2/2/99 0.16$ 0.11$ -38% -33% HoldBarramundi Gold C BAM C Junior Gold Exploration with Newmont Deal 0.06$ 9/10/99 0.14$ 0.05$ -3% -60% BuyBarrick Gold N ABX A Major internatioal gold producer - large hedger 15.69$ 3/31/00 15.69$ 17.88$ 14% 14% BuyCanarc Resources * T CCM B Advanced stage project in B.C. 0.15$ 2/27/89 1.19$ 0.18$ 15% -85% BuyCoral Gold T CLH B Advamced stage, low cost Nevada gold. 0.26$ 3/20/99 0.55$ 0.15$ -39% -72% BuyEaglecrest Explorations C EEL C Multi-million oz. gold target in Bolivia 0.18$ 2/20/99 0.16$ 0.20$ 12% 25% BuyEnergold Mining Ltd. C EGD D Gold exploration projects - Dominican Repub 0.13$ 8/23/97 0.61$ 0.07$ -44% -88% HoldForan Mining * C FOM C Gold & Base Metal Exploration - Canada 0.48$ 1/31/98 1.26$ 0.24$ -51% -81% HoldFormation Capital T FCO C Copper/Cobalt/Gold play in Idaho & Mexico 0.21$ 4/13/96 3.96$ 0.24$ 14% -94% HoldGolden Phoenix * O GPXM B Advanced Stage gold & copper Explorat'n 0.23$ 7/3/99 0.13$ 0.20$ -15% 50% BuyGoldcorp * N GG.A A Gold Producer with major low cost deposit 5.75$ 5/1/99 5.94$ 6.75$ 17% 14% BuyIMA Exploration C IMR D Highly Prospectie Argentinian Gold Properties 0.40$ 2/5/00 0.40$ 0.37$ -7% -7% BuyNewmont Mining * N NEM A Low Cost - 2nd Largest gold producer 24.50$ 7/18/98 23.31$ 19.44$ -21% -17% BuyMcKenzie Bay Int'l * O MKBY B Advanced stage diamond and vanadium projects 2.00$ 3/25/00 2.00$ 0.55$ -73% -73% BuyNovaGold Resources Inc. T NRI B Avanced Stage gold Mining Project in Alaska 0.44$ 7/8/00 0.44$ 0.34$ -23% -23% BuyPacific Northwest Cap C PFN C Highly Prospect PGM targets in Canada 0.32$ 9/25/99 0.27$ 0.86$ 165% 219% BuyPlacer Dome N PDG A Senior gold mining producer 10.75$ 3/20/99 11.63$ 9.34$ -13% -20% BuyPolymet Mining Corp * C POM B World Class polymetallic Deposit - Minnesota 0.82$ 12/19/98 0.64$ 0.60$ -27% -6% HoldRepadre Capital Corp. T RPD A Canadian Gold and Diamond Royalty Company 1.35$ 9/10/99 1.46$ 1.25$ -8% -15% BuyRichmont Mines A RIC A Producing gold mines in Canada 1.40$ 10/5/97 3.85$ 1.19$ -15% -69% BuyRoyal Gold O RLGD A Gold Royalty Company 2.75$ 7/1/00 2.75$ 2.81$ 2% 2% BuyStillwater Mining A SWC A Largest North American Platinum Producer 31.88$ 12/4/99 23.13$ 28.19$ -12% 22% BuyVirginia Gold C VIA D Highly prospective gold claims in Quebec. 0.44$ 7/29/95 1.75$ 0.51$ 14% -71% BuyX-Cal Resources Ltd. T XCL B Operator on Sleeper Mine nearing production 0.24 4/8/00 0.24 0.15$ -35% -35% BuyAverage Gain (Loss) on Gold Mining Stocks (Including closed positions) =====================================================================================================>> -6.94% -20.48%Technology StocksAltair International * O ALTI B Centrafugal jig recovers fine heavy metals 4.00$ 8/31/96 3.14$ 3.13$ -22% 0% BuyAMBI Inc. O AMBI A Develops & Markets Nutritional & Medicinal prod 4.88$ 2/26/00 4.88$ 2.63$ -46% -46% BuyBirch Mountain C BMD D Metallurgical R&D Gold & PGM Project 1.45$ 11/22/99 1.02$ 0.91$ -37% -11% BuyBiolabs Inc. * O BILB C Mammastatin test & therapy for breast cancer 6.56$ 2/4/00 6.56$ 5.00$ -24% -24% BuyEMR Microwave * C EMW C Microwave for enhanced metal recoveries 0.15$ 9/25/97 0.33$ 0.11$ -29% -67% HoldiExalt, Inc. * O IXLT B Christian oriented e-commerce web site 4.31$ 2/26/00 4.31$ 1.88$ -56% -56% BuyInternational Wex Tech C WXI B Pharmaceutical - Near commercial detox drug 1.99$ 11/5/99 0.59$ 1.65$ -17% 181% BuyIntegral Technologies O ITKG B Patented Technologies for wireless applications 1.96$ 7/1/00 1.96$ 1.81$ -8% -8% BuyItronics Inc. * O ITRO A Photo waste recycled to silver & fertilizer 0.73$ 3/1/97 0.10$ 0.52$ -29% 420% BuyLuxor Industrial Corp. C LRL A Patented floor joist Construction Technology 0.39$ 5/22/99 0.44$ 0.27$ -30% -39% BuyNapier International T NIR C Prop. envionmentally friendly paint stripper 0.80$ 8/8/98 1.40$ 1.68$ 111% 20% BuyOrtec International O ORTC C Innovative Human Tissue Engineering 9.00$ 1/15/00 9.00$ 8.50$ -6% -6% BuyResearch Frontiers O REFR B SPD Light Technology - Royalty Company 14.81$ 12/19/98 9.63$ 28.19$ 90% 193% BuySamsys Incorporated T SMY C Inventor of Radio Frequency ID Hardware (RFID) 1.73$ 1/15/00 1.73$ 1.65$ -5% -5% BuyAverage Gain (Loss) on Technology Stocks (Including closed positions) =====================================================================================================>> -7.68% 42.7%Miscellaneous StocksCresud Inc. (ADR) O CRESY A Agricultural production & Argentina Realestate 8.75$ 6/6/00 8.75$ 8.13$ -7% -7% BuyHelijet International * C WMH A Short run commuter helicopter transportation 0.24$ 1/8/00 0.24 0.47$ 96% 96% BuyProprietary Energy * T PPI A Oil & gas producer/ real estate/ mining expl. 2.70$ 5/6/96 1.09$ 3.05$ 13% 180% BuySharpe Energy M SHO A Producing oil & Gas Company - Texas 0.10$ 5/15/99 0.25$ 0.20$ 95% -20% BuyAverage Gain (Loss) on Miscellaneous Stocks (Including closed positions) =====================================================================================================>> 68.2% 85.5%

Other Portfolio AssetsThe Prudent Bear Fnd * O BEARX A Well Managed Hedge fund for small investors 3.66$ 9/25/99 4.37 3.53$ -3.55% -19% BuyThe Prudent Harbor Fund O N/A A Well Managed Hedge Against the U.S. dollar 9.48$ 5/20/00 9.48 9.45$ -0.32% 0% BuyGold N/A N/A N/A Time Honored Currency 290.50$ 12/3/90 390.00$ 282.70$ -2.69% -28% BuySilver N/A N/A N/A 2nd Best Currency in Mankind's History 5.40$ 11/15/97 5.29$ 4.99$ -7.59% -6% BuyPlatinum N/A N/A N/A Precious metal for Industrial use with rapid growth 443.00$ 12/17/99 438.00 585.00$ 32.05% 33.6% BuyPalladium N/A N/A N/A Precious metal for Industrial use with rapid growth 451.00$ 12/17/99 443.00$ 701.00$ 55.43% 58.2% Buy