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Val d'Or, November 12, 2008.

2 .3973 2

Report on Magnetometer and Induced Polarisation Surveys

CANADIAN ROYALTIES Inc. 2772, CHEMIN SULLIVAN · VAL D'OR, QUEBEC · CANADA, JOY 2NO

Surveys by TMC Geophysics for canadian R.oyalties Inc.

Bennett Gold Mine Prospect Area of Kirkland Lake, Ontario, NTS 42AOl

by L.Plante, ing., M.Sc.

2008-BennettGM

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Table of content

Introduction .................................................................................................................................... ".1 Property, Location and Access ...................................................................................................... ".1 Field Work ...................................................................................................................................... ".4 Physiography ........................... , ........................................................................................... , ........... 4 Geophysical methods ...................................................................................................................... 5

The magnetic method .................................................................................................................. 5 The induced polarization method ................................................................................................. 5

Interpretation ................................................................. , .................................................................. 7 Conclusion and Recommendations ................................................................................................. 8 Declaration for Assessment Work .................................................................................................... 9 Certificat ......................................................................................................................................... 11

Liste des figures

Figure 1. Location map ................................................................................................................... 2 Figure 2. Claim map ........................................................................................................................ 3

Maps in rear poket

Chargeabilityand Resistivity - Profiles, Values and Interpretation Total Magnetic Intensity map - Profiles and Values Total Magnetic Intensity map - Contours Chargeability map - Contours Resistivity map - Contours Pseudosections (050mE, OOOmE, 050mW, 100mW, 150mW, 200mW)

CANADIAN ROYALTIES Inc. 2772, CHEMIN SULLIVAN· VAL D'OR, QUEBEC· CANADA, JOY 2NO

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Introduction

This report describes the results of a magnetometer and of an induced polarization surveys performed over the Bennett Gold Mine Prospect by TMC Geophysics, for Canadian Royalties Inc, both from Val d'Or, Quebec. The property is located in the Maisonville Township, near Kirkland Lake, Ontario.

The magnetometer survey was performed in order to define the geological structure of the grid area and to register previous data to the new 2008 line grid. The induced polarization survey was performed in order to detect any resistivity low that may be produced by conductive horizons located in the bedrock, and to detect more disseminated type of mineralization, that may have return no response to EM methods.

The geophysical methods are briefly described and the survey results are presented along with an interpretation of the data and recommendations.

Property, Location and Access

The property is located at about 17 km west-north-west of Kirkland Lake, Maisonville township, concession II, lots 9 and 10, Ontario. The geophysical surveys were done over claims 3006706 and 4208220, which are owned 100% by Canadian Royalties Inc.

Access to the property is easy. From Kirkland Lake, one takes highway 66 to the west, highway 11 to the north and finally road 570 to the east. The south-west corner of the property is located near road 570, where a VTT trail may be used to reach the old shaft area. A gravel road gives access to the east part of the property. The property is located less than 1 km north of the Sesekinika Lake.

CANADIAN ROYALTIES Inc. Page 1 sura 2772, CHEMIN SULLIVAN· VAL D'OR, QuEBEC· CANADA, JOY 2NO

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Field Work

During the period of October 28th to November 6th, 2008, an induced polarization survey (4.2 km) was performed using an Elrec Pro receiver from Iris, and a GDD transmitter (1,8 kW). The Dipole - Dipole configuration was used along with the following separations: A = 25m, N = 1 to 6. During the same period, a magnetometer survey (4,95 km) was done using a GSM-19 from GEM-System. The data were corrected for the diurnal variations using a base station located in the field.

The grid consists in six north-south lines of 700 metre long, spaced by 50 metres, and three east·· west tie lines.

The line cutting was done during the same period. All work, including line cutting and the geophysical surveys, were done under the supervision of TMC Geophysics personnel.

PhYSiography

The property is located on high grounds, north of the Sesekinika lake. The overburden consists in a sand and gravel cover. Outcrop surface percentage is locally very high. The forest is mainly made of spruce, birch and poplar. Grey pine, fir and cedar are also seen.

CANADIAN ROYALTIES Inc. Page 4 SUI'S 2772, CHEMIN SULLIVAN· VAL IJ'OR, QUEBEC· CANADA, JOY 2NO

• Geophysical methods

The magnetic method

A concentration of minerals having a different magnetic susceptibility compared to the surrounding rocks, will give rise to variations in the earth's magnetic field. Systematic observation of the earth's total field over the property, allows us to outline zones of different magnetization, which are related to more or less magnetic geological units or concentrations of magnetic minerals. By measuring or calculating the vertical magnetic gradient, the resolution of the survey is increased, thus helping its interpretation. The magnetic field units are" nanoTeslas" or nT.

Minerals having strong magnetic susceptibility are magnetite and pyrrhotite and are usually but not necessarily associated as primary or accessory minerals in massive sulphide deposits or other possible economic mineralizations. Thus, coincident magnetic and H.E.M. or I.P. anomalies could be important but are not necessarily Significant. The global interpretation of the magnetic survey, consisting in delimitating zones of different magnetic susceptibility, is highly advisable. This interpretation contributes in outlining the major geological units and structures such as faults on the

• property.

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The induced polarization method

The induced polarization survey consists in introducing an electric current into the ground in the form of a "square wave", by means of two metallic electrodes. Two other electrodes permits the measurement of the current and of the voltage present in the ground during the transmission. The resistivity of the ground is then calculated with these two parameters while the chargeability is measured by observing the decrease of the voltage after the current flow stops. The chargeability is in millivolts/volt (mVN) or milliseconds, and the resistivity in ohms-metres (Q·m).

The induced polarization method allows the detection of massive or disseminated sulphide zones which are not necessarily conductive. The chargeability intensity of an anomaly depends mainly on the total surface of the disseminated sulphide grains, their nature, the geometrical shape and the depth of the sulphide zone as well as the conductivity and the thickness of the overburden.

That means the intensity of an I.P. anomaly varies with the grain size and theoritically, massive sulphide zones give a lower anomaly in chargeability than the same amount of sulphides disseminated. At the limit, if it is completely massive, we do not have a chargeability anomaly. It is almost impossible to interpret which quantity of sulphides is producing the anomaly. However, from previous data known on the property, we may guess the amount of sulphides.

CANADlAN ROYALTIES Inc. Page5sur8 2772, CHEMIN SULLIVAN· VAL D'OR, QUEBEC· CANADA, JOY 2NO

• ( '.\ " . \ I ) I .\ " e Y\ L III S i'" If a weak anomaly of chargeability coincides to a low resistivity associated to a resistivity gradient, this anomaly may be produced by ionic currents. Care should be taken in presence of this phenomenon.

High readings of resistivity normally mean that the bedrock is near the surface. Very often, this is also associated with a higher chargeability reading which is then difficult to say if there is presence of weak disseminated sulphides. High resistivity may also indicate the presence of silicified rocks. Low readings of resistivity without high chargeability readings normally mean that the current does not reach the bedrock. A greater separation should be used in these areas. However, it may also mean presence of massive sulphides, which may be interpreted by the shape of the anomaly itself.

In other words, an induced polarization survey may sometimes be difficult to interpret (it gives no information about the dip) and it is normally recommended to detail any main anomalies and to interpret them with respect to the geological, topographic and all other pertinent information before proceeding with the drilling.

The readings of the survey are plotted in form of pseudo-sections. The anomalies are indicated by appropriate symbolism. The probable location of polarizable or conductive zones is indicated by an axis.

• The resistivity was calculated using the following formula:

Pa = 1t . n . (n + 1) . (n + 2) . a . V II n·m

Dipole-dipole configuration:

n . a a -I C2

• CANADIAN ROYALTIES Inc. Page6surS 2172, CHEMIN SULLIVAN· VAL O'OR, QUEBEC. CANADA. JOy 2NO

• Profiles on the pseudosections are computed using Fraser filtering. The Metal factor was c:llso computed, using the following formula:

M.F. = (Chargeability x 100) I Resistivity The M.F. permits to enhance anomalies. If strong variations of resistivity is encountered, it is recommended to go back to the initial data for a better interpretation.

Interpretation

The apparent resistivity is quite variable over the grid. It is generally very high, ranging from less than 100 n·m to well over 10000 n'm on the N = 1 separation. The high resistivity areas are interpreted as outcropping or sub-outcropping areas. Silicification is possible. Low resistivity areas are interpreted as depression in the bedrock, depression filled with conductive overburden (see around 100mW, 100mS for example). This may be linked to some structural features such as possible faults and schears. We found no strong resistivity low that would have been caused by highly conductive lithologies such as graphitic and I or sulphidic units in the bedrock, over this grid.

The chargeability data permit to identify some anomalies over the grid. Axis P-01 is a weak and not very well defined chargeability axis, associated to high resistivities. The axis has a north-north-west direction and it is located near the Bennett Mine shaft. Even though it is weak, this axis may be associated to the mineralization found at the shaft (?). The P-01 axis may have an extension that turns east-west in the north-west part of the grid. P-01 does not show any direct magnetic association. The north-north-west trend was already identified by previous geophysics, and may be associated to some faulting or shearing.

Axis P-02 is a weak to strong chargeability axis. P-02 is rather weak and not very well defined in its east part. But it is strong and moderately well defined on lines 150mW and 200mW. It is weaker but well defined on line 100mW. It seems to have a limited depth extent on line 200mW. P-02 is striking north-north-east, parallel to a resistivity low zone (labeled R-01) located some 25m to the north. P-02 is in general associated to high resistivities, and also to a magnetic high axis that crosses the entire grid. The related rock unit may be mafic or ultramafic rocks, and the P-02 chargeability anomalies may be produced by magnetite. Note this does not prevent the presenCE! of pyrrhotite or of other sulphides. This structure is intersecting the P-01 north-north-west trend, and makes for a favorable environment for the circulation and deposition of gold bearing mineralized fluids. P-02 would be opened to the west.

Axis P-03 is interpreted over lines 050mE and OOOmE. It is a moderate to weak chargeability axis., associated to high resistivities, striking north-north-west, parallel to P-01. No magnetic association. The axis would be opened to the east. Note it is located at about 50m south of historical grab sample 13648. which yielded 7.05 glt Au (see previous work reports).

Other moderate to weak chargeability anomalies are observed over the grid. Other data are needed in order to assess their value.

CANADIAN ROYALTIES Jnc. Page 7 SUI'S 2772, CHEMIN SULLIVAN· VAL D'OR, QUEBEC· CANADA, JOY 2NO

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Conclusion and Recommendations

The geophysical data acquired over the Bennett GM Prospect, permitted to define some chargeability anomalies and structures of interest over the grid.

Chargeabilityaxis P-01, although it is weak, may be related to the Bennett Gold Mine mineralization, as it is located close to the historical shaft. At some distance from the shaft, it is intersecting axes P-02 and R-01, forming a potentially interesting structure, through which circulation and deposition of gold bearing fluids may have occurred.

Axis P-02 is of interest in itself, but may be produced by magnetite in a magnetically strong rock unit (mafic or ultramafic rocks ?). This does not prevent other sUlphides to be present. P-02 is opened to the west.

Axis P-03 is located about 50m south of an historical grab sample which returned 7.05 glt Au. The axis is opened to the east

Other moderate to weak chargeability anomalies have also been interpreted, but other data are needed to assess their value.

We recommend that the grid be extended over the entire property, and the magnetic and induced polarization surveys be resumed. This would permit to define the possible extension of some of the chargeability axes we interpreted.

A thorough compilation of recent and historical works, including a compilation of previous drilling results, should be undertaken in order to identify prospective area over the property. Following this, a diamond drilling campaign may be planned. Since many of the chargeability anomalies are associated to high resistivities, a visit of the possible related outcrops may permit to explain some of the anomalies.

We also recommend that the claim boundary be refreshed and surveyed.

CANADIAN ROY ALT'mSInc. PageSsulS 2772, CHEMIN SULLIVAN· VAL D'OR. QUEBEC· CANADA, JOY 2NO

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Declaration for Assessment Work

I, the undersigned Langis Plante, testify to the following:

During the period of October 28th to November 6th, 2008, line cutting (4,95 km), a magnetometer survey (4,95 km) and an induced polarization survey (4.2 km) were performed over the Bennett Gold Mine Prospect by TMC Geophysics, for Canadian Royalties Inc. I took charge of producing final maps and writing this interpretation report. II did not visit the property recently.

The property is located at about 17 km west-north-west of Kirkland Lake, Maisonville township, concession II, lots 9 and 10, Ontario. The geophysical surveys were done over claims 3006706 and 4208220. The description of the methods follows.

The Magnetic method:

Instrument: Measured parameter: Precision: Reading interval:

GSM-19, from GEM System; Magnetic Total Field; ± 1 nT; 12,5 m.

The Induced Polarisation method:

Receiver: Intergration: Transmitter: Time Base: Configuration: Spacing: Separation: Reading interval:

CANADIAN ROYAL TIES Inc.

Elrec Pro, from Iris; 20 windows from 0 to 1760 ms; GOD, 1,8 kW; 2 s +ON, 2 s OFF, 2 s -ON, :2 5 OFF; Dipole-Dipole; A= 25 m; N = 1 to 6; 25m.

2772, CHEMIN SULLIVAN· VAL D'OR, QUEBEC· CANADA, JOy 2ND Page 1

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Operators

TMC Geophysics personnel. Val d'Or.

Alain Lafond: Une cutter, and crew chief for the magnetometer survey;

Onil Patry: Crew Chief for the IP survey;

Jimmy Robert: technician; Normand Reiche: technician; David Grenier: technician; Denis Ouellet: technician.

Respectfully submitted,

CANADIAN ROYAL TIES Inc. 2772, CHEMIN SULLIVAN· VAL D'OR, QUEBEC· CANADA. JOY 2NO

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Certificate

1. I, the undersigned Langis Plante, residing at 73, chemin Baie Carriere, Val d'Or, QC, graduated with a B.Sc.A degree in geological engineering in 1983 and with a M.Sc. degree in geology (geophysics) in 1986 from Laval University.

2. I am a member of the Ordre des Ingenieurs du Quebec. I have been continuously working in mining exploration since 1986, and I am practicing as an engineer since 1988.

3. I am currently employed by Canadian Royalties Inc. and I have interests in the company (stock options).

• 4. The interpretation and recommendations described in this report are based on my general knowledge and on my personal experience in geophysics, geology and mining exploration.

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5. I authorize the above-mentioned company to use this report for any legal and/or official purposes.

Signed in Val d'Or, this twelfth (12th) day of November of year two thousand and eight (2008).

CANADIAN ROY AL TIES Inc. 2772, CHEMIN SULLIVAN . VAL D'OR, QUEBEC· CANADA, JOY 2NO

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