History of the Abitibi Gold Property

History has demonstrated that the Abitibi volcanic belt is characterized by one of the highest probabilities for discovering new or adding to known gold resources. The Province of Québec is also the top ranked North American jurisdiction for mining investment according to the Fraser Institute, both with respect to policy and mineral potential.

The Abitibi gold belt is the source of approximately 5,000 (150 million ounces) of the 8,000 tonnes of gold which have been extracted from the Superior Province of the Canadian Shield. Québec’s portion of the belt continues to yield many new discoveries and annual production exceeds one million ounces, of which a large portion is from the Doyon-Bousquet-LaRonde Mining Camp.

The Company currently holds an option from Breakwater Resources Ltd. to purchase up to an 80% interest in 62 claims covering approximately 4,500 acres located along Quebec’s Cadillac-Malartic portion of the Abitibi Gold Belt (the “Breakwater Claims”). Under the terms of this option acquired in August 2003, the Company is obligated to make a series of cash payments totaling $125,000 and to incur expenditures totaling $3.5 million by September 2008 to earn a 60% interest. The Company can then purchase a further 10% interest for $100,000 and following completion of a feasibility study, the Company can purchase an additional 10% interest for $500,000. If Breakwater’s interest is reduced to 10% or less, its interest will be converted to a 1.5% net smelter return royalty which may be purchased by the Company at any time for $1.5 million. To date, the Company has made cash payments totaling $75,000 and incurred expenditures totaling approximately $2,186,000, sufficient to maintain the Breakwater Claims in good standing until September 1, 2007 at which time a further payment of $25,000 will be required to maintain the option.

In addition, the Company holds 13 claims covering approximately 20.3 square kilometers (5,018 acres) in the Bousquet Region, which are located adjacent to the Normar portion of the Breakwater Claims. The Bousquet Claims, first staked in December 2003 and April 2004, are in good standing until 2008.

During 2006, the Company’s exploration program focused on the Normar portion of the Breakwater Claims. Normar was selected as having a high potential for discovery of a gold resource because it straddles the prolific Cadillac Break which most recently has yielded Agnico Eagle’s impressive Lapa gold deposit about 20 kilometers to the east. Past drilling had confirmed the existence of the Decoeur and Paquin gold deposits for which Breakwater reports cited a combined “drill-indicated mineral inventory” of 60,000 tonnes at 6.6 grams of gold per tonne. This grade is better than the 5.3 grams of gold per tonne reserve grade at Cambior’s Doyon mine some 8 kilometers to the northeast.

In addition to Normar, the Breakwater Claims include the Malartic “H” property, the Malartic “H” Annex claims and the Mouskor property. The Malartic “H” property is situated on the northern limb of the Malartic Syncline which hosts within 2.5 kilometers of the property boundary the Black Cliff, Marban, Malartic Hygrade, Norlartic and Camflo gold mines. Production from these mines has exceeded 2 million ounces. Up to six gold-bearing zones are associated with the Norbenite/Norlartic shear where it crosses the south portion of the Malartic “H” claims. The shear zone continues on to the south where it has yielded significant gold production. Portions of the Malartic “H” zones, from one of the deeper holes reported in Breakwater files, assayed 5.33 grams of gold per tonne over 1.05 metres, 5.54 grams of gold per tonne over 1.76 metres, 7.93 grams of gold per tonne over 2.25 metres, 42.7 grams of gold per tonne over 0.9 metres and 3.86 grams of gold per tonne over 2.89 metres.

On the Malartic “H” Annex claims gold has been known to be associated with pyrite where a prominent shear zone cuts basaltic volcanics (“Discovery Zone”). Over 2 million ounces of gold have been produced from the Siscoe and Sullivan mines, which are located on the same shear zone. This is the only property for which Breakwater files revealed that additional geophysical coverage might result in definition of new drill targets. Thus, it was decided to conduct induced polarization and magnetometer surveys to focus drilling on unexplored parts of the shear zone with the highest gold potential. Grab samples from a trench on the “Discovery Zone” were reported in Breakwater files to have returned gold values of more than 1,800 grams of gold per tonne. A drill hole (M-3, 1936) under this mineralization encountered sections which assayed 94 grams of gold per tonne over 0.35 metres, 31 grams of gold per tonne over 0.34 metres and 21 grams of gold per tonne over 0.65 metres.

The Mouskor property is considered to be located on the same favorable horizon, which to the east contains the Doyon, Bousquet #1, Bousquet #2 and Dumagami Mines. More than 5 million ounces of gold already have been produced from the Doyon and Bousquet #1 mines.

Exploration

The Company began a four-hole, 1,500-meter drill program on the Normar claims in November 2006. The project was completed in December 2006 and assay results were announced in February 2007. All four holes intersected narrow yet significant gold mineralization ranging from 1.34 g/t gold over .44 meters to 7.27 g/t gold over .31 meters. All these intersections were found in smokey quartz veins, stockworks and flood zones all associated with chalcopyrite, pyrite, and arsenopyrite within larger sericite / chlorite alteration zones.

Hole TMN-06-01 intersected the mineralized structure approximately 100 metres above the zone in Hole TMN-03-19. Holes TMN-06-02 and 03 intersected the mineralized structure approximately at the same elevation, 100 metres east and west of the zone discovered in Hole TMN-03-19. Hole TMN-06-04 evaluated the Tonalite Zone 100 metres west of Hole TMN-03-07. True widths and overall geometry of the mineralized zones are impossible to determine at this early stage in the evaluation of the Normar Property.

Significant assay results from the drilling program at Normar are presented below.

 

This drill program is further evidence that the Normar property contains a geological environment and rocks similar to those found at nearby current and past producing gold mines in the area.

The Company intends to continue exploration of the Abitibi project, both by the Company and, if possible, by joint venture partners.