Torngat diamond property, Quebec

Since 2003, Torngat has been on care and maintenance. In July 2005, the Company elected to retain only those mining claims and permits which showed the greatest potential for diamonds. One permit (50 square kilometers) was renewed and 34 claims were staked and a write down of $700,000 was taken in December 2005. The Company has incurred sufficient expenditures to keep its permit and claims in good standing until 2009. Since Torngat has been inactive for more than three years, the remaining book value of $2,692,000 was written off in 2006 to comply with Accounting Guideline No. 11 (AcG 11) of the CICA. The Company continues to hold a total of 13.423 carats of high quality diamonds which were recovered from Torngat in 2000 from a sample of 343.01 tonnes of ore.

Management believes that realization of the potential of the Brodeur and Torngat diamond properties can best be achieved if these assets are held by an entity that specializes in diamond exploration, possessing levels of funding and infrastructure to sustain exploration. The Corporation plans to continue to pursue alternatives to unlock the value of the Brodeur and Torngat diamond properties during 2007.