Quebec - Langlois

Langlois Mine Video [.wmv]

The Langlois mine is located in northwestern Québec, approximately 48 kilometres northeast of the town of Lebel-Sur-Quévillon and 213 kilometres northeast of Val d’Or. The Company acquired the Langlois zinc/copper mine effective May 1, 2000 for US$19.8 million, which included approximately US$0.9 million of working capital.

The mine facilities include a headframe, a paste backfill plant, mechanical and electrical shops, a service building, a zinc/copper concentrator and a tailings pond. During operation, the Langlois mill processes approximately 2,000 tonnes per day, five days per week. However, it has a nominal capacity of 2,570 tonnes per day. Zinc and copper concentrates are produced by differential flotation, with payable gold and silver recovered in the copper concentrate. The zinc concentrate is loaded on CN railcars directly at the mine site and transported to Xstrata Plc.’s (“Xstrata”) CEZ smelter in Valleyfield, Québec or to the HudBay Minerals Inc. smelter in Flin-Flon, Manitoba. Copper concentrate is sent by rail to Xstrata’s Horne smelter in Rouyn-Noranda, Québec.

During operation, approximately 60% of the tailings are used as paste backfill. The paste backfill plant thickens and filters the mill tailings and then mixes these tailings with cement and water to make a paste that flows underground by gravity to Zone 3. The Company has installed a pump to deliver paste backfill to Zones 4 and 97. The mill tailings not used for paste backfill underground are discharged subaqueously at a two square kilometre tailings impoundment. Retaining dykes are constructed of sand and gravel mass with slope protection composed of clean, non-acid generating mine rockfill. Seepage control within the dykes is achieved with a low permeability geosynthetic clay liner (thin layer of bentonite sandwiched between two layers of geotextile). The pond is located three kilometres away from the mine site and has the capacity to store all the tailings to be produced from the currently known mineral reserves and resources.

Milling resumed in November 2006. A total of 59,373 tonnes were processed during the last two months of 2006. All this material was from Zones 3 and 4 except for 3,256 tonnes from Grevet B.

During 2007, 8,758 metres of development was completed at Langlois and Grevet B.  Commercial production was declared July 2007.  A total of 437,875 tonnes of mineralized material was blasted and hauled to surface.

The Langlois mine produces its zinc (along with lesser values of copper, silver and gold) from narrow, tabular volcanogenic massive sulphide (“VMS”) bodies. The Langlois mine contains four zinc-rich deposits consisting of zones of massive sulphides, primarily pyrite and sphalerite, occurring within a thick, highly deformed felsic volcanic sequence injected by numerous barren mafic dikes. Each massive sulphide body is relatively thin (one to eight metres), but with considerable vertical and lateral extensions (more than 500 metres in either direction).

Summary of Mineral Reserves and Resources

For the December 31, 2007 mineral reserve estimates, metal prices, including premiums, used to determine economic viability were US$1.12/lb. zinc, C$/US$ exchange rate of 1.09, US$600/oz. gold, US$12.00/oz. silver, US$2.55/lb. copper and US$0.54/lb. lead. For Grevet B, the satellite deposit at Langlois, the metal prices used were US$1.45/lb. zinc, C$/US$ exchange rate of 1.09, US$12.00/oz. silver and US$3.27/lb. copper. Higher prices were used on this deposit as it is expected that it will be mined over the next two years.

The massive sulphide zones trend easterly with a near vertical dip, sub-parallel to the regional structural fabric. The zones are stacked across the felsic sequence along a narrow corridor slightly oblique to the main structural trend. From southwest to northeast the zones are: Zone 5 (small economic lens near surface), Zone 4, Zone 3 and Zone 97. In longitudinal section, each massive sulphide zone portrays an elongated lensoid shape, whose long axis plunges moderately towards the southeast, parallel to the plunge of the regional stretching lineation. In addition, the centre of gravity of each lens becomes progressively deeper moving along the stacking corridor toward the northeast. Consequently, the top of Zone 97 is located at approximately 300 metres below surface. Production at the Langlois mine has historically come exclusively from two zones, namely Zones 3 and 4, while Zone 97 discovered in 1994 was not fully defined until recently.

The Company’s land holdings around the Langlois mine include several mining properties that cover in excess of 10,000 hectares in 797 claims. In 2006, a 50/50 joint venture agreement with Metco as the operator added new ground around Langlois mine. All properties now extend over more than 27 kilometres laterally and are underlain by the same stratigraphic rock sequence that hosts the massive sulphide zones at the Langlois mine. The massive sulphide horizons at the Langlois mine are elongated and narrow.

A diamond drill program was conducted in 2007 to investigate the highly prospective extensions of all the known zones containing resources and reserves at the mine.  This program covered an area of 800 vertical metres from surface by two kilometres along the strike of the Langlois deposit.  One objective of this program was to move some of the known inferred resources into the indicated category.  Very few of the proximal zone extensions had been tested from underground before 2007 due to a lack of development.

By the end of 2007, 52,614 metres were drilled from both surface and underground to investigate the surface and underground extensions of Zones 3, 4 and 97.  For Zone 3, economic mineralization appears to extend to the surface and consequently a new resource estimate was prepared.  Zone 97 has been tested using two drill rigs and results show a new satellite zone near surface at the east end of the existing deposit.  From underground, Zone 97 west extension was tested from level 13 following a promising intersection obtained in 2006 from surface drilling which was located about 400 metres west of the currently known Zone 97.  Another satellite zone has been defined and has been included in the resource estimate.  In 2007, a deep drilling program was initiated in Zone 97 to target 300 metres below the last developed level.  By the end of the year, two holes were drilled, one of which intersected the mineralized zone with an economic intersect and the other did not reach the target.  The new resource estimate takes this information into account.

During the third and fourth quarters of 2007, Zone 1 (parallel to Zone 3 but about 20-30 metres further south) and Zone 3 were drill tested from surface with the objective of upgrading some inferred resources to the indicated category.  The Zone 3 west extension, located between level 6 and 8, has also been drilled in order to upgrade inferred resources to the reserve category.  A 200 metre long lateral extension of economic mineralization was defined to the west of Zone 4 between level 4 and 6.  Underground drilling has also defined an eastern down plunge extension of Zone 4 below level 4 that has been included in the current resource estimate and further delineation drilling is planned for 2008.

Drilling of the Zone 3 east plunge extension between level 11 and 13 will continue in 2008 with an underground drill rig on level 13 as the economic continuity has yet to be determined.  The west, east and down plunge extensions of Zone 4 will also be tested from underground.

During 2007, all of the zones were reinterpreted and re-modeled to incorporate forecast base metal prices, lower cut-off grades and incorporation of all diamond drill intersections and channel samples in order to redefine the economic envelope.  At end of 2007, a fully integrated 3D block model has been developed for Langlois and Grevet B with which to calculate new resource and reserve estimates.

During 2008, all targets will be investigated further with drilling as well as the deep down-plunge extension of Zone 97, 200 to 300 metres below the current deepest level of the mine.  The Zone 3 west extension, located between level 6 and 8, will be drilled in order to upgrade inferred resources to the reserve category.  Drilling of the Zone 3 east plunge extension between level 11 and 13 will continue with an underground drill rig on level 13 as the economic continuity has yet to be determined.  The east and down plunge extensions of Zone 4 will also be tested from underground.