technical report on the drayton gold … twp., patricia mining division ontario for ... patricia...

MPH Consulting Limited DRAYTON GOLD PROPERTY, ONTARIO

TECHNICAL REPORTON THE

DRAYTON GOLD PROPERTY DRAYTON TWP., PATRICIA MINING DIVISION

ONTARIOFOR

RIO FORTUNA EXPLORATION CORP.

October 8, 2002 Howard J. Coates, M. Sc., P.Geo.Toronto, Ontario, Canada MPH Reference: C-1915


TABLE OF CONTENTS

SUMMARY ..................................................................................................................................... i

1.0 INTRODUCTION.............................................................................................................. 1-1

1.1. Introduction and Terms of Reference.......................................................................... 1-11.2. Disclaimer ....................................................................................................................... 1-11.3. Property and Agreements ............................................................................................. 1-11.4. Accessibility, Local Resources and Infrastructure ..................................................... 1-51.5. Physiography and Climate ............................................................................................ 1-6

2.0 HISTORY ........................................................................................................................... 2-1

2.1. The Sioux Lookout Region............................................................................................ 2-12.2. The Drayton Gold Property.......................................................................................... 2-2

2.2.1 The ‘FP61’ Prospect .............................................................................................. 2-22.2.2 The ‘WG16’ Prospect ............................................................................................ 2-32.2.3 The Shaft Prospect................................................................................................. 2-3

3.0 GEOLOGY AND GOLD DEPOSITS.............................................................................. 3-1

3.1. Tectonic Setting.............................................................................................................. 3-13.2. Regional Geology ........................................................................................................... 3-1

3.2.1 The Neepawa Group.............................................................................................. 3-43.2.2 The Minnitaki Group ............................................................................................ 3-43.2.3 Late Intrusive Rocks.............................................................................................. 3-4

3.3. Gold Deposits.................................................................................................................. 3-53.4. Geology and Gold Occurrences of the Drayton Gold Property ................................ 3-5

3.4.1 The Shaft Area ....................................................................................................... 3-73.4.2 The ‘WG16’ Area................................................................................................... 3-7

4.0 EXPLORATION................................................................................................................ 4-1

4.1. Nature and Extent of Work .......................................................................................... 4-14.2. Geological Mapping and Geophysical Surveys:.......................................................... 4-1

4.2.1 The Shaft Area ....................................................................................................... 4-14.2.2 The ‘WG16’ Area................................................................................................... 4-14.2.3 The ‘FP61’ Area..................................................................................................... 4-2

4.3. Drilling and Trenching.................................................................................................. 4-24.3.1 The Shaft Area ....................................................................................................... 4-24.3.2 The ‘WG16’ Area: ................................................................................................. 4-44.3.3 The ‘FP61’ Area..................................................................................................... 4-5

4.4. Logging/Sampling Method and Approach .................................................................. 4-54.5. Sample Preparation, Analyses and Security ............................................................... 4-64.6. Data Verification............................................................................................................ 4-64.7. Underground Workings ................................................................................................ 4-84.8. Exploration Potential..................................................................................................... 4-8

5.0 CONCLUSIONS AND RECOMMENDATIONS........................................................... 5-1

REFERENCES


CERTIFICATE

LIST OF TABLES

Table 1: Drayton Gold Property, List of Mining Rights........................................................ 1-4

Table 2: Drayton Gold Project-Vendor Samples, Shaft Area Trenches............................... 4-3

Table 3: Verification Samples by the Optionor and MPH Consulting................................. 4-8

LIST OF FIGURES

Figure 1: Location Map............................................................................................................. 1-2

Figure 2: Property Map............................................................................................................. 1-3

Figure 3: Regional Geology....................................................................................................... 3-2

Figure 4: Sioux Lookout Area Geology ................................................................................... 3-3

Figure 5: Property Geology, Drayton Gold Property............................................................. 3-6

Figure 6: Shaft Area Trench, Showing MPH Sample Locations........................................... 4-7

Appendix 1

MPH Grab Samples and Analytical Certificates


i

SUMMARYIntroductionAt the request of Mr Robert Swenarchuk, Senior Vice President, Corporate Development of RioFortuna Exploration Corp. (“the Company”), MPH Consulting Limited (MPH), has completed anindependent report on the Company’s optioned Drayton Gold Property. This report is formallyan Independent Technical Report prepared to Canadian National Instrument 43-101 standards.The report is based on information provided by and discussions with Company personnel and theproperty vendor, Mr. Joe Riives, together with a field examination of the property.

The Drayton Gold Property is located in Drayton Township, Patricia Mining Division, Ontariosome 10 kms east-southeast of the town of Sioux Lookout. The area over which the Companyhas mineral rights include six mining claims, comprising 87 units, covering an unsurveyed areaof some 1400 hectares. The claims are 100% owned by 1179785 Ontario Ltd. (“the Optionor”)and are subject to an option to purchase agreement whereby the Company can earn a 100%interest in the property, subject to a 2.5% Net Smelter Return Royalty (“NSR”) payable to theOptionor, by making cash payments totalling $180,000, issuing 200,000 of its shares to theOptionor, and carrying out a work commitment totalling $400,000. The Company has the rightto purchase 1.5 percentage units of the 2.5% NSR by paying the Optionor the amount of$1,500,000 cash for the first 1.0 units, and by paying $1,500,000 for the second 0.5 units, leavingthe Optionor with a residual 1.0% NSR.

Access to the property is very good. The area is easily reached by road from the town of SiouxLookout. The total road distance to the property is approximately 20 kilometres. The property isalso readily accessible by boat or snowmobile on Lake Minnitaki depending on the season. Thevarious showings on the property may be easily reached by a combination of light truck, smallboat and/or light ATV.

HistoryThe Sioux Lookout district has been intermittently explored for gold and other mineral depositssince it was made reasonably accessible by the Canadian National Railway (“CNR”) in the latterpart of the 19th Century. The earliest known mineral production in the area was from the NorthPines Mines Limited underground pyrite mine located in Drayton Township some 12 kilometreswest of Sioux Lookout. This operation produced approximately 500,000 tonnes of pyritebetween 1909 and 1921.

The only gold significant production in the region came from the Goldlund Deposit located about42 kilometres southwest of Sioux Lookout in Echo and McAree Townships. Discovered in1941, Goldlund Mines Limited began processing stockpiled and underground auriferous materialin a 200 ton per day (180 t/day) pilot mill in 1982. An open pit commenced production inJanuary 1983. Approximately 100,000 tons (90,000 t) of material averaging about 0.15 oz Au/T(5.14 g Au/t) was processed by Goldlund. The property was acquired by Camreco Inc. inDecember 1986. Resources described as “drill indicated and probable reserves 442,600 tons(401,400 tonnes) averaging 0.18 oz Au/T (6.17 g Au/t) plus 400,000 tons (363,000 t) averaging0.16 oz Au/T (5.48 g Au/t) in several areas” are reported.


ii

There are three known mineral prospects on the Drayton Gold Property that have seen previouswork. These are termed the ‘FP61’, ‘WG16’ and ‘Shaft Area’ locations by the current Propertyholders.

The ‘FP61’ Area Cu-Au-Mo prospect, also known as the McCombe Occurrence on Island FP61,Minnitaki Lake, was originally staked in 1951 and optioned, firstly to Noranda Mines Limited,and then to Rio Tinto Canadian Exploration, between 1957 and 1961. Norlode Resources Inc.reacquired the prospect in the late 1980’s. The various companies conducted geophysics,trenching and drilling programs.

The ‘WG16’ Area prospect, also known as the Wright-Hargreaves occurrence, located on thenorth shore of East Bay, Lake Minnitaki was originally staked in the late 1940’s andsubsequently optioned to Wright-Hargreaves Mines Limited in 1951. Wright-Hargreavesundertook a geological mapping and extensive sampling program before dropping the option. In1991 and 1992, Teck Exploration Limited conducted a substantial systematic explorationprogram on the showing and 2 kilometres along its possible eastward extension. The programconsisted of ground geophysics including magnetic, VLF electromagnetic and InducedPolarization surveys followed by trenching and diamond drilling.

The Shaft Prospect was rediscovered in June 1998, when Glen Seim, former MNDM ResidentGeologist-Sioux Lookout unexpectedly located an old shaft on former Mining Location K171.Shortly thereafter the current Property vendors staked the area. The vendors conductedprospecting, geophysics, trenching and sampling programs in 1998 and1999.

Geology and Gold DepositsThe Drayton Gold Property lies within the Superior Province of the Canadian Shield, the world’slargest Archean craton and host to a variety of mineral deposits. The western Superior Provinceis well endowed with mineral riches including: the major gold mining districts of Rice Lake, RedLake, Pickle Crow, Long Lac and Hemlo; base metal massive sulphide (“VMS”) depositsincluding Geco, Sturgeon Lake and Winston Lake; magmatic Ni-Cu and PGE deposits includingShebandowan and Lac des Iles; and other miscellaneous commodities such as iron ore, raremetal pegmatites and dimension stone.

The subprovince assemblages of the western Superior are usually juxtaposed along majorstructural breaks or deformation zones. These breaks and their offshoots are high strain zonescharacterized by widespread alteration features of various types, and the emplacement of quartzveins that are often auriferous. All of the major gold producing areas of the western SuperiorProvince are associated with such tectonic zones.

The Sioux Lookout Lake area is located within the western Wabigoon Subprovince, a greenstonebelt terrane over 300 kilometres in length that stretches from Savant Lake in the east to beyondLake of the Woods in the west. The supracrustal rocks in the Sioux Lookout area include maficand felsic metavolcanic rocks, metasediments and related intrusive rocks that have been intrudedby Archean granitoid stocks. The lithological assemblages have been subdivided into five zonesfrom north to south including the Northern Volcanic Belt, the Northern Sedimentary Belt(Abram Group), the Central Volcanic Belt (Neepawa Group), the Southern Sedimentary Belt


iii

(Minnitaki Group) and the Southern Volcanic Group (Turner and Walker, 1973). The DraytonGold Property contains portions of the Neepawa Group, the Minnitaki Group and part of theNortheast Bay Stock which ranges in composition from trondhjemite to quartz diorite.

Gold occurrences in the Sioux Lookout area are of two styles including lode type depositsassociated with quartz +/- carbonate veins and stockworks in or near tectonic zones and a highsulphidation feldspar porphyry related copper-gold-molybdenum type. .• Auriferous Quartz Veins and Stockworks: The most common and widespread style of

gold mineralization in the area, auriferous quartz veins occur in a variety of orientations andlithologic units including the various volcanic and volcaniclastic units as well as epizonalplutons including quartz and quartz-feldspar porphyry dykes, and metadiorite andmetadiabase intrusions. Typical auriferous quartz +/- iron carbonate veins may containdisseminated or blotchy sulphides, chiefly pyrite with minor chalcopyrite, sphalerite andgalena together with calcite, +/- ilmenite, +/- tourmaline and fuchite, with local native goldand telluride minerals. The various host rocks adjacent to the veins may be sheared,carbonatized, silicified and sulphide mineralized.

• Porphyry Related Cu-Au-Mo Mineralization: This type of mineralization occurs on thecurrent property on Island FP61 in Northeast Bay of Minnitaki Lakewhere where a northeasttrending hybrid contact zone between quartz porphyry and diorite intrusive rocks containsdisseminations, blotches and stringers of chalcopyrite, pyrrhotite and pyrite with rare specksof molybdenite. The mineralization is frequently associated with randomly oriented quartz-carbonate veinlets and stringers and with nests of tourmaline needles. The contact zoneconsists of brecciated mafic volcanics, dioritic rocks and granitoid material. The host rocksof the mineralization are variably altered by silicification, sericitization and chloritization.The best results to date from 13 diamond drill holes is 0.47% Cu and 0.018 oz Au/T (0.62 gAu/t) over a core length of 70 feet (21.34 m).

As mentioned above the Drayton Gold Property contains portions of the Neepawa Group, theMinnitaki Group and part of the Northeast Bay Stock. The Neepawa Group rocks comprisenortheast trending steeply dipping mafic to intermediate lavas and pillow lavas. The volcanicrocks are juxtaposed with Minnitaki Group sediments along the Ruby Island Fault which cutsthrough the southeastern corner of the claim group. On the property the Minnitaki Groupcomprises a succession of northeast trending, steeply dipping, northwest younging slates,argillites and graywackes.

The Northeast Bay Stock outcrops on several islands in Northeast Bay, Minnitaki Lake and onthe mainland near the entrance to Alcona Bay. The outer zone of this stock has compositions ofdiorite and syenodiorite while the inner core ranges from trondhjemite to quartz diorite.

A series of east-northeasterly to northeasterly trending steeply dipping faults or shear zones havebeen mapped on the property. These structures are known to contain lode style goldmineralization located in two areas on the property.

ExplorationExploration work on the Drayton Gold Property includes early work in the 1940’s and 1950’s, orperhaps earlier, in the three known showing areas, for which there are no known detailed records.


iv

In the latter half of the 20th century, the ‘FP61’, ‘WG16’ and Shaft Areas have all been tested tosome degree by the localized use of modern techniques including geology, geophysics,trenching, and surface sampling, while diamond drilling has been done at ‘FP61’ and ‘WG16’.The current property was obtained in 1998, primarily to explore the long forgotten Shaft Areawhich has not been systematically explored by modern methods. The current property vendorshave conducted some basic geophysical surveys and trenching in the Shaft Area and otherinterested parties including the Optionor and MPH have examined the property and collectedgrab samples. The exploration done to date outside of the ‘WG16’ and the ‘FP61’ areas isrudimentary in nature and is mostly limited to prospecting and trenching. A large part of theproperty, to the knowledge of MPH, has never been tested by modern systematic integratedexploration methods.

To date there are no known records of modern multidisciplinary exploration work in the ShaftArea. Even the showings unearthed by the vendors could be further opened up and moresystematically sampled by more rigorous channel rather than chip and grab sampling. It istherefore apparent that the Drayton Gold Project has significant untested exploration potentialthat may be readily evaluated by as yet untried modern methods. The favorable location of theproperty vis a vis accessibility and exploration expertise should allow such work to be completedinexpensively by Canadian standards. MPH ranks this as a high priority target.

The ‘WG16’ Area is intriguing because of its structural setting and widespread goldmineralization. However the full extent of previous modern exploration does not appear to beknown to the Company at present. The Company should attempt to acquire the full Teckdatabase and reassess the target area in the light of more complete knowledge.

The ‘FP61’ Area target has not been tested to any degree away from the showing area. Themineralization indicated so far is low grade so only a large-tonnage open-pit situation would beof potential commercial interest. Even if this situation were present, the physiographic locationin a major drainage system would likely preclude development. MPH ranks this as a low prioritytarget.

Conclusions and RecommendationsMPH concludes that the Drayton Gold Property of the Company represents a good opportunity toexplore for gold in an area containing several known showings. At least one of the three mainshowings and the intervening areas between them have not been explored by state of the artmethods. It is concluded that the application of such methods is fully warranted and justified.

A two phase program for exploration of the property by means of geological mapping,prospecting, geophysics, trenching and drilling is recommended. The first phase is designed toestablish specific targets for drilling and mechanized trenching with an allowance for a limitedamount of trenching, while the second is a provisional phase to adequately test such targets bydiamond drilling and/or trenching.

The initial phase 1 work will be a compilation of previous exploration completed on or near theclaim group. This will include a detailed compilation of previous work throughout the property,especially that done by Teck Exploration in the early 1990’s in the ‘WG16’ Area. A grid will be


v

established for control and to tie in the trench areas at the Shaft Area. The grid will cover thenortheastern half of the claim group and should tie into the Teck grid if possible and practical.Magnetics will be completed on the entire new grid and IP will be completed on selected lines inthe Shaft Area to determine if IP or resistivity features associated with the gold mineralizationcan be detected. The claim group geology will be mapped utilizing the grid. The trenches andshowings will be mapped and sampled systematically where needed. It is anticipated that a minoramount of trenching and sampling will need to be completed to firm up drill targets. A budget ofapproximately $92,000 is required to complete the phase 1 work.

The second phase is conditional upon a successful first phase. However it is consideredreasonable to make provision for some ongoing work such as additional IP, trenching and alimited diamond drilling program to test the known mineralized areas and possible geophysicaltargets. An unallocated amount of approximately $300,000 is recommended for this purpose.

The grand total required to adequately complete the two phase exploration program on theDrayton Gold Property is approximately $392,000.


1-1

1.0 INTRODUCTION

1.1. Introduction and Terms of Reference

At the request of Mr Robert Swenarchuk, Senior Vice President, Corporate Development of RioFortuna Exploration Corp. (“the Company”), Suite 1550, 1185 West Georgia Street, Vancouver,British Columbia, MPH Consulting Limited (MPH), of Suite 615, 133 Richmond Street West,Toronto, has completed an independent report on the Company’s optioned Drayton GoldProperty. This report is formally an Independent Technical Report prepared to CanadianNational Instrument 43-101 (“NI 43-101”), Form 43-101F1, Technical Report and CompanionPolicy 43-101CP standards. The purpose of the exercise is to critically review and complementin-house due diligence work carried out by and on behalf of the Company and to prepare adocument that may be filed under Canadian securities legislation.

The report is based on information provided by and discussions with Company personnel andthe property vendor, Mr. Joe Riives, together with a field examination of the property. TheDrayton Gold Property was visited by the undersigned on September 13 and 14, 2002 in thecompany of Mr. Riives, a resident of Dryden, Ontario. The report was prepared in Toronto,Canada in October, 2002. MPH acknowledges the assistance of the Company, Joe Riives, andJohn Wakeford of the Optionor in making information available to complete this study.

1.2. Disclaimer

In preparing this report, MPH has relied on files provided by the Company, published papers andgovernment documents, that are listed in the References section at the conclusion of thisdocument.

Draft copies of the Report have been reviewed by the Company for factual errors. Any changesmade as a result of these reviews did not involve any alteration to the conclusions made. Hence,the statement and opinions expressed in this Report are given in good faith and in the belief thatsuch statements and opinions are not false and misleading at the date of this assignment.

1.3. Property and Agreements

The Drayton Gold Property is located in Drayton Township, Patricia Mining Division, Ontariosome 10 kms east-southeast of the town of Sioux Lookout (Figure 1). The area over which theCompany has mineral rights include six mining claims, comprising 87 units, covering anunsurveyed area of some 1400 hectares (Figure 2). A summary of mineral rights is provided inTable 1.


1-2

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1-5

The claims are 100% owned by Ontario 1179785 Ontario Ltd. (“the Optionor”) and are subjectto an option to purchase agreement whereby the Company can earn a 100% interest in theproperty, subject to a 2.5% Net Smelter Return Royalty (“NSR”) payable to the Optionor, bymaking cash payments totalling $180,000, issuing shares to the Optionor, and carrying out awork commitment as follows:• $10,000 cash payment on signing of the Option Agreement• $10,000 cash on or before March 31, 2003• $25,000 cash on or before January 3, 2004• $35,000 cash on or before January 3, 2005• $100,000 cash on or before January 3, 2006

The Company will also issue the Optionor, 200,000 of its shares in accordance with thefollowing schedule, subject to regulatory approval:• 50,000 shares upon initial exchange approval• 50,000 shares on completion of the phase 1 program• 100,000 shares on completion of the phase 2 program

The Company will also be responsible for carrying out a work commitment totaling $400,000 onthe property as follows:• $50,000 in expenditures before October 1, 2003• $100,000 in expenditures before October 1, 2004• $100,000 in expenditures before October 1, 2005• $150,000 in expenditures before October 1, 2003

The Company has the right to purchase 1.5 percentage units of the 2.5% NSR by paying theOptionor the amount of $1,500,000 cash for the first 1.0 units, and by paying $1,500,000 for thesecond 0.5 units, leaving the Optionor with a residual 1.0% NSR.

The status of the mineral rights, surface rights and details of agreements have not been certifiedby MPH Consulting Linited.

1.4. Accessibility, Local Resources and Infrastructure

Access to the property is very good. The area is reached from the town of Sioux Lookout, byproceeding easterly on paved Highway 642 to Superior Junction and the hamlet of Alcona. FromAlcona, the Alcona Bay secondary road leads westward to the property and a private boatlanding (permission required) on Alcona Bay, Minnitaki Lake. The total road distance to theproperty is approximately 20 kilometres. The property is also readily accessible by boat orsnowmobile on Lake Minnitaki depending on the season. The various showings on the propertymay be easily reached by a combination of light truck, small boat and/or light ATV.

The Canadian National Railway crosses Highway 642 at Superior Junction, the closest railhead,located some 8 kilometres north-northeast of the property. There is a small municipal airport atSioux Lookout as well as a float plane base.


1-6

Sioux Lookout is a regional centre for the forestry and tourism industry in northern Ontario.Sioux Lookout can provide modern housing as well as educational, medical, recreational andshopping facilities. Labour, industrial supplies and services for mining and exploration activitiesare readily available in the region.

The property has no on site permanent facilities. Other facilities and services such as telephonelines, adequate electrical energy for a mining/ milling operation and an adequate fresh watersupply are all situated within several kilometres of the Property.

1.5. Physiography and Climate

The Drayton Gold Property has low to moderate relief and undulating terrain with elevations toapproximately 365 metres above sea level. The main drainage feature in the area is MinnitakiLake which is part of the major English River drainage system. Most of the property is coveredby a combination of glacial overburden and water, although fairly abundant outcrop is foundalong the Lake Minnitaki shoreline and in scattered places inland. The overburden ispredominantly sand and gravel, with a few low-lying swampy areas.

Climatic conditions are typical of northwestern Ontario. Mean total precipitation for SiouxLookout is 716.1 millimetres including 517.2 mm of rainfall and 204.0 cm of snowfall. MeanJuly daily temperature is 18.6o C while mean January daily temperature is –18.6o C (Source-Meteorological Service of Canada).


2-1

2.0 HISTORY

2.1. The Sioux Lookout Region

The Sioux Lookout district has been intermittently explored for gold and other mineral depositssince it was made reasonably accessible by the Canadian National Railway (“CNR”) in the latterpart of the 19th Century. The earliest known mineral production in the area was from the NorthPines Mines Limited underground pyrite mine located in Drayton Township some 12 kilometreswest of Sioux Lookout. This operation produced approximately 500,000 tonnes of pyritebetween 1909 and 1921 (Johnston, 1972).

The only gold significant production in the region came from the Goldlund Deposit located about42 kilometres southwest of Sioux Lookout in Echo and McAree Townships. Discovered in 1941the deposit was tested by extensive surface stripping, trenching and diamond drilling by LunwardGold Mines Limited between 1941 and 1948. Newlund Mines Limited continued this workbetween 1949 and 1952 by sinking a 825 foot (251 m) vertical shaft with extensive lateraldevelopment and underground diamond drilling (Ferguson, et. al., 1971). In July 1982, after along dormant period, Goldlund Mines Limited began processing stockpiled and undergroundauriferous material in a 200 ton per day (180 t/day) pilot mill. An open pit commencedproduction in January 1983. The test mining operation ceased in March 1985 after the companydeclared bankruptcy. Approximately 100,000 tons (90,000 t) of material averaging about 0.15oz Au/T (5.14 g Au/t) was processed by Goldlund. The property was acquired by Camreco Inc.in December 1986. Resources described as “drill indicated and probable reserves 442,600 tons(401,400 t) averaging 0.18 oz Au/T (6.17 g Au/t) plus 400,000 tons (363,000 t) averaging 0.16oz Au/T (5.48 g Au/t) in several areas” are reported (Canadian Mines Handbook, 1988-1989).The NI 43-101 classification of this material is undetermined.

Three gold prospects are known outside the Drayton Gold Property along the same geologicaltrend along an approximate strike length of 35 kilometres. These include the Burnthut Island andNeepawa Island occurrences (Johnston, 1972) located west of the Property and the Alcona Mineprospect (ODM, 1937) to the east-northeast. MPH has not conducted an exhaustive search forreports of work outside of the current Property.

The Burnthut Island prospect, located at the entrance to Lyons and Troutfish Bays, MinnitakiLake, is one of the oldest known gold occurrences in the Sioux Lookout area. It was explored bya group called the Harvey Syndicate that sunk a 50 foot (15 m) shaft in 1897-98 (Ferguson, et.al., 1971). The property was reactivated by Ourgold Mining Company Limited in 1947-48 andwork including 21 diamond drill holes totaling 5,028 feet (1533 m) was completed. The samecompany completed another 2,300 feet (700 m) of drilling between 1961-62. No reports of goldresource estimations are known to MPH.

The Neepawa Island gold occurrences were found about 3 kilometres west-southwest of thecurrent Property in 1950 (Johnston, 1972). Central Manitoba Mines Limited drilled 24 holestotalling 3940 feet (1201 m) on the west side of the island during 1950 and 1951. Anothercompany, Neepawa Island Gold Mines Limited, drilled 18 short holes totalling 665 feet (203 m)


2-2

on the east side of the island in 1950. No reports of gold resource estimations are known toMPH.

The Alcona Mine prospect, located some 7 kilometres east-northeast of the property, was firststaked in October 1929 by George and Stanley Michaud of the nearby hamlet of Alcona on theformer CNR branch line leading southward to Thunder Bay from Superior Junction. A group ofcompanies including firstly, Consolidated Mining and Smelting Company of Canada Limited,then Atlas Exploration Company Limited, followed by Alcona Gold Mines and Alcona MinesLimited conducted work on the prospect between 1929 and 1937 (ODM, 1937). The early work,from 1930 to 1933, consisted of extensive trenching, test pitting and 5 diamond drill holestotaling 1,960 feet (597 m) on three vein systems (Veins 1, 2 and 3). From September 1936 toMay 1937 Alcona Mines Limited sunk a 3-compartment vertical shaft to a depth of 325 feet (99m) with levels at 180 and 305 feet (55 and 93 m).

The Alcona Mine area was included in the Alcona-Split Lake property of Cream Silver MinesLimited, comprising 31 staked mining claims acquired in 1988. The property was subsequentlyoptioned to Valerie Gold Resources Limited. Between 1988 and 1991 the two companiescompleted exploration work in Alcona Mine area including geological mapping, groundgeophysics including magnetic and VLF electromagnetic surveys, trenching/washing/channelsampling activities and six diamond drill holes totalling 1075 feet (328 m). No reports of goldresource estimations are known to MPH.

2.2. The Drayton Gold Property

There are three known mineral prospects on the Drayton Gold Property that have seen previouswork. These are termed the ‘FP61’, ‘WG16’ and ‘Shaft Area’ locations by the current Propertyholders. See Figure 5 in Section 3.4 following for locations of these prospects.

2.2.1 The ‘FP61’ Prospect

This Cu-Au-Mo prospect, originally known as the McCombe Occurrence on Island FP61,Minnitaki Lake, was originally staked in 1951, but allowed to lapse, by J. Donnelly ofPort Arthur (Johnston, 1972). R. J. McCombe of Sioux Lookout restaked the claims andoptioned them, firstly to Noranda Mines Limited, and then to Rio Tinto CanadianExploration, between 1957 and 1961. Noranda reportedly conducted an electromagneticsurvey before dropping its option while Rio Tinto completed an Induced Polarizationsurvey, did some trenching, and drilled 5 holes totalling 1,659 feet (506 m) before doinglikewise. The best reported drill intersection was in hole M-1 from 247.0 to 291.5 feet(75 to 89 m), a 44.5 foot (14 m) core length averaging 0.57% Cu and 0.04 oz Au/T (1.37g Au/t), including a 12 foot (3.66 m) section averaging 1.20% Cu and 0.065 oz Au/T(2.23 g Au/t). The same hole also intersected 0.25% Cu and 0.22 oz Au/T (7.54 g Au/t)over 5 feet (1.52 m) between 205.0 and 210.0 feet (62.48 and 64.0 m).

Norlode Resources Inc. reacquired the prospect in the late 1980’s and drilled 7 shallowAX (1 3/8”) holes totalling 1,403 feet (428m) from three locations in essentially the samearea as tested previously by Rio Tinto. Norlode encountered similar grades and core


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lengths as before, with its best drill intersection from DDH 88-3, between 65.0 and 135feet (19.81 to 41.15 m), a core length of 70 feet (21.34 m) assaying 0.47% Cu and 0.018oz Au/T (0.62 g Au/t) including a 6.0 foot (1.83 m) section assaying 1.61% Cu and 0.093oz Au/T (3.19 g Au/t).

2.2.2 The ‘WG16’ Prospect

This prospect, also known as the Wright-Hargreaves occurrence, located on the northshore of East Bay, Lake Minnitaki was originally staked in the late 1940’s by R. J.McCombe of Sioux Lookout, who conducted trenching and limited x-ray drilling in 1948before optioning his property to Wright-Hargreaves Mines Limited in 1951 (Johnston,1972). Wright-Hargreaves undertook a geological mapping and extensive samplingprogram before dropping the option.

The prospect was visited in the summer of 1980 by A. A. Speed of the OntarioGeological Survey (Speed, 1980). A few old trenches and a small amount of x-ray corewere observed in the area.

In 1991 and 1992, Teck Exploration Limited conducted a substantial systematicexploration program on the showing and 2 kilometres along its possible eastwardextension (Janzen, 1992). The program consisted of ground geophysics includingmagnetic, VLF electromagnetic and Induced Polarization surveys followed by trenchingand diamond drilling. In all the program included 35 km of magnetic and VLF-EMsurveying, 9.3 km of time domain dipole-dipole IP/resistivity surveying, 6 backhoetrenches and 9 diamond drill holes totalling 1029m were completed. The work traced amineralized silica-carbonate altered contact zone over a distance of 1,100 metres but onlyfound anomalous sub-economic gold grades so the property was relinquished.

2.2.3 The Shaft Prospect

During the course of mapping the Abram Lake Sheet, Map 2243, F. J. Johnston observedsome old trenching and one diamond drill location near the southeastern corner of MiningLocation K171 one of three former patented claims in the area (Johnston, 1972). There isno known public record of this work.

In June 1998, Glen Seim, former MNDM Resident Geologist-Sioux Lookoutunexpectedly located an old shaft on former Mining Location K171 and shortly thereafterthe current Property vendors staked the area (Riives, 2000). In 1998 prospectors I. J.Riives and A. Glatz secured the shaft collar by stringing heavy steel wire around it andalso measured its length (25 metres minimum) by depth sounding with a fishing line andweight. Also in 1998, the prospectors installed a flagged grid on which they conducted3.4 line kilometres of magnetic and VLF-EM surveying. Manual and limited backhoetrenching was done in the shaft area at this time. Several grab samples from the trenchesand old muck pile beside the shaft returned interesting gold values including two samplesexceeding 1 oz Au/T (34.28 g Au/t).


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In 1999 the prospectors secured funding to conduct further work under the OntarioProspector Assistance Program (OPAP 99-396). Six new backhoe trenches were dug,washed where possible and sampled (approximately 30 samples) mostly by grab samples,with a few chip and sawed channel samples. Again some samples returned interestinggold values.


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3.0 GEOLOGY AND GOLD DEPOSITS

3.1. Tectonic Setting

The Drayton Gold Property lies within the Superior Province of the Canadian Shield, the world’slargest Archean craton and host to a variety of mineral deposits. The western Superior Provinceis well endowed with mineral riches including: the major gold mining districts of Rice Lake, RedLake, Pickle Crow, Long Lac and Hemlo; base metal massive sulphide (“VMS”) depositsincluding Geco, Sturgeon Lake and Winston Lake; magmatic Ni-Cu and PGE deposits includingShebandowan and Lac des Iles; and other miscellaneous commodities such as iron ore, raremetal pegmatites and dimension stone (Franklin and Schneiders, 1990).

The western Superior Province is divided into subprovinces each with distinctive lithological andstructural/metamorphic characteristics (Card and Ciesielski, 1986). These are broadly classifiedas volcano-plutonic (greenstone belts), metasedimentary, and plutonic/high grade gneiss terranes.From north to south the western Superior Province is divided into the Sachigo (greenstone),Berens River (plutonic/gneissic), Uchi (greenstone), English River (metasedimentary), WinnipegRiver (plutonic/gneissic), Wabigoon (greenstone) and Quetico (metasedimentary) Subprovinces.The supracrustal rocks of the various subprovinces are of Archean age within a temporal rangefrom approximately 3,000 Ma to 2,700 Ma.

The subprovince assemblages of the western Superior are usually juxtaposed along majorstructural breaks or deformation zones. Similar major breaks occur inside subprovinces such asthe Cochenor-Gullrock Lake, East Bay and Post Narrows and other deformation zones at RedLake in the Uchi Subprovince (Andrews, et. al., 1986) and the Cameron Lake and Monte Cristoshear zones in the Wabigoon Subprovince (Melling, et. al., 1986). These breaks and theiroffshoots are high strain zones characterized by widespread alteration features of various types,and the emplacement of quartz veins that are often auriferous. All of the major gold producingareas of the western Superior Province are associated with such tectonic zones.

3.2. Regional Geology

The Sioux Lookout Lake area is located within the western Wabigoon Subprovince, thegreenstone belt terrane over 300 kilometres in length that stretches from Savant Lake in the eastto beyond Lake of the Woods in the west (Figure 3). The supracrustal rocks in the SiouxLookout area include mafic and felsic metavolcanic rocks, metasediments and related intrusiverocks that have been intruded by Archean granitoid stocks (Figure 4). The lithologicalassemblages have been subdivided into five zones from north to south including the NorthernVolcanic Belt, the Northern Sedimentary Belt (Abram Group), the Central Volcanic Belt(Neepawa Group), the Southern Sedimentary Belt (Minnitaki Group) and the Southern VolcanicGroup (Turner and Walker, 1973). The Drayton Gold Property contains portions of the NeepawaGroup, the Minnitaki Group and part of the Northeast Bay Stock which ranges in compositionfrom trondhjemite to quartz diorite. The remainder of this section will deal exclusively with thelatter assemblage.

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3.2.1 The Neepawa Group

The Neepawa Group southeast of Sioux Lookout is juxtaposed with the Abram Group tothe north along the Abram Lake/Little Vermillion Fault system and with the MinitakiGroup to the south along the Ruby Island and related faults (Johnston, 1972). Thevolcanic belt comprises two volcanic/volcaniclastic sequences with the first includingbasaltic to andesitic lavas, pillow lavas and variolitic lavas together with basaltic todacitic volcaniclastic and epiclastic units ranging from tuffs to agglomerate and breccia.Minor iron formation and quartzite is also present in this sequence. The second sequenceis rhyolitic to dacitic in composition including rhyolite, porphyritic rhyolite and daciteflows plus felsic tuffs and agglomerate. The volcanic units are locally intruded by earlyquartz porphyry, felsite and trachyte dykes and late granitic, syenodiorite, diorite andgabbro plutons.

Most younging determinations in the Central Volcanic Belt indicate a sub-verticalnortheast-trending southerly-facing succession, although local deviations may occuradjacent to intrusive rocks. As noted above the belt is bounded on both sides byprominent northeasterly-trending sub-vertical strike fault systems. Widespread lesserfaults and shear zones with a variety of orientations are present throughout the belt. Anumber of gold occurrences are associated with some of these structural features.

3.2.2 The Minnitaki Group

The Minnitaki Group or Southern Metasedimentary Belt contains deep water sedimentsincluding slates, and periodic turbidite cycles ranging from graded slates, graded arkosesand graywackes, to polymictic conglomerates. The conglomerates contain roundedpebbles and boulders of quartz and quartz-feldspar porphyry with minor felsic and maficvolcanic and granitic fragments. Angular slate and laminated slate fragments are locallycommon in the conglomerates (Johnston, 1972).

The sedimentary rocks are structurally complex in the East Bay, Minnitaki Lake area.Three major strike faults, (Ruby Island, East Bay and Twinflower Faults) and severallesser breaks disrupt the succession, while a series of upright anticlinal and synclinalfolds further complicate the picture.

3.2.3 Late Intrusive Rocks

The Neepawa Group volcanic rocks in the northeastern Minnitaki Lake area are intrudedby two zoned stocks, the David-Allan Lakes Stock and the Northeast Bay Stock. Theseoval shaped bodies are characterized by outer zones including gabbro, hornblende dioritediorite and syenodiorite and inner cores ranging from quartz-‘eye’ trondhjemite to quartzdiorite (Johnston, 1972).

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3.3. Gold Deposits

Gold occurrences in the Sioux Lookout area are of two styles including lode type depositsassociated with quartz +/- carbonate veins and stockwork in or near tectonic zones and a highsulphidation feldspar porphyry related copper-gold-molybdenum type. .• Auriferous Quartz Veins and Stockworks: The most common and widespread style of

gold mineralization in the area, auriferous quartz veins occur in a variety of orientations andlithologic units including the various volcanic and volcaniclastic units as well as epizonalplutons including quartz and quartz-feldspar porphyry dykes, and metadiorite andmetadiabase intrusions. Examples of this type of mineralization can be found at theGoldlund Mine 42 kilometres southwest of Sioux Lookout, the Shaft Area on the currentproperty, the Alcona Mine area, and the Neepawa Island and Burnthut Island occurrences atMinnitaki Lake. Typical auriferous quartz +/- iron carbonate veins may contain disseminatedor blotchy sulphides, chiefly pyrite with minor chalcopyrite, sphalerite and galena togetherwith calcite, +/- ilmenite, +/- tourmaline and fuchite, with local native gold and tellurideminerals. The various host rocks adjacent to the veins may be sheared, carbonatized,silicified and sulphide mineralized.

• Porphyry Related Cu-Au-Mo Mineralization: This type of mineralization occurs on thecurrent property on Island FP61 in Northeast Bay of Minnitaki Lakewhere where a northeasttrending hybrid contact zone between quartz porphyry and diorite intrusive rocks containsdisseminations, blotches and stringers of chalcopyrite, pyrrhotite and pyrite with rare specksof molybdenite. The mineralization is frequently associated with randomly oriented quartz-carbonate veinlets and stringers and with nests of tourmaline needles. The contact zoneconsists of brecciated mafic volcanics, dioritic rocks and granitoid material (Johnston, 1972).The host rocks of the mineralization are variably altered by silicification, sericitization andchloritization. The best results to date from 13 diamond drill holes (5 by Rio Tinto CanadianExploration in 1961 and 8 by Norlode Resources Inc, in 1988) is from DDH 88-3 whichassayed 0.47% Cu and 0.018 oz Au/T (0.62 g Au/t) over a core length of 70 feet (21.34m)(Dowhaluk, 1988).

3.4. Geology and Gold Occurrences of the Drayton Gold Property

As mentioned above the Drayton Gold Property contains portions of the Neepawa Group, theMinnitaki Group and part of the Northeast Bay Stock (Figure 5). The Neepawa Group rockscomprise northeast trending steeply dipping mafic to intermediate lavas and pillow lavas. Thevolcanic rocks are juxtaposed with Minnitaki Group sediments along the Ruby Island Faultwhich cuts through the southeastern corner of the claim group. On the property the MinnitakiGroup comprises a succession of northeast trending, steeply dipping, northwest younging slates,argillites and graywackes (Johnston, 1972).

The Northeast Bay Stock outcrops on several islands in Northeast Bay, Minnitaki Lake and onthe mainland near the entrance to Alcona Bay. The outer zone of this stock has compositions ofdiorite and syenodiorite while the inner core ranges from trondhjemite to quartz diorite. Thetrondhjemite facies is a quartz-‘eye’ porphyritic granitoid unit containing 10 to 50% quartz, up to80% sodic plagioclase (oligoclase) and 0 to 10% alkali feldspar with minor chlorite, biotite,sericite and apatite. (Johnston, 1972)

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A series of east-northeasterly to northeasterly trending steeply dipping faults or shear zones havebeen mapped on the property. These structures are known to contain lode style goldmineralization located in two areas on the property including the Shaft and ‘WG16’ areas. Theother type of mineralization found on the property in the ‘FP61’ area was previously described inSection 3.3 above.

3.4.1 The Shaft Area

The mineralization in this area consists of quartz veins containing sulphides and variableamounts of gold that have been intermittently traced by limited recent surface trenchingover an approximately 450 metre strike length. The veins in this area are contained inmafic volcanic and quartz porphyry hosts that are sheared, silicified and carbonatized.The old shaft area has been partially trenched and stripped by the current propertyvendors to reveal a mineralized zone at the contact between altered volcanic rocks andporphyry. This zone is characterized by a discrete quartz vein at the contact and similarveinlets stringers and possible weathered sulphides in the adjacent porphyry. Anomalousto highly anomalous gold values have been reported by different sources in the veins andalso in the porphyry.

This area lies on a prominent structural feature, a splay or offshoot of the Ruby IslandFault which is part of the same system that hosts the ‘WG16’ prospect on the currentProperty (see below) as well as the Neepawa Island and Burnthut Island prospects locatedto the west.

3.4.2 The ‘WG16’ Area

This area is located at the contact zone between the Neepawa Group volcanics to thenorth and the Minnitaki Group sediments to the south. The contact zone is carbonate(ankerite)-silica altered shear zone with quartz-carbonate veins and stringers,approximately 5 metres thick, with 3-5% pyrite and trace molybdenite mineralization(Janzen, 1992). The contact zone has a minimum strike length of 1100 metres that hasbeen tested by outcrop sampling, surface trenching, geophysical surveys and 9 shallowdiamond drill holes.

On the basis of widespread sampling the distribution of gold mineralization within thiscontact zone is highly variable ranging from <5 ppb to 1.5 g Au/t across the wholeapproximately 5 metre section. The best drill sample was a 1.0 metre core length sampleassaying 2.03 g Au/t.

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4.0 EXPLORATION

4.1. Nature and Extent of Work

Exploration work on the Drayton Gold Property includes early work in the 1940’s and 1950’s, orperhaps earlier, in the three known showing areas, for which there are no known detailed records.In the latter half of the 20th century, the ‘FP61’, ‘WG16’ and Shaft Areas have all been tested tosome degree by the localized use of modern techniques including geology, geophysics,trenching, and surface sampling, while diamond drilling has been done at ‘FP61’ and ‘WG16’.The current property was obtained in 1998, primarily to explore the long forgotten Shaft Areawhich has not been systematically explored by modern methods. The current property vendorshave conducted some basic geophysical surveys and trenching in the Shaft Area and otherinterested parties including the Optionor and MPH have examined the property and collectedgrab samples. The exploration done to date outside of the ‘WG16’ and the ‘FP61’ areas isrudimentary in nature and is mostly limited to prospecting and trenching. A large part of theproperty, to the knowledge of MPH, has never been tested by modern systematic integratedexploration methods.

4.2. Geological Mapping and Geophysical Surveys:

The Property is covered by excellent quality 1:31,680 scale (1” to ½ mile) geological mapping(ODM Map 2243) as well as ODM-GSC aeromagnetic coverage at 1:50,000 and 1:250,000scales.

4.2.1 The Shaft AreaAlthough there is a significant amount of outcrop and bedrock opened up by the 1998-99trenches there is no detailed geological map of this area.

The current property vendors installed a flagged baseline, 1800 metres in length, on abearing of 060 degrees running through the old shaft location. Cross lines at 100 metreintervals from 200 metres west to 400 metres east of the shaft were tested by magneticand VLF electromagnetic surveys. The VLF-EM survey produced an anomalousconductive response roughly coincident with the mineralized zone that was traceable thelength of the survey. No more sophisticated surveys such as horizontal loopelectromagnetic (HLEM) or Induced Polarization/resistivity (IP) surveys have been donein the area.

4.2.2 The ‘WG16’ Area

There is no detailed geological map of this area currently available to MPH, although itseems likely that there should have been a surface plan with geology, trench and drillhole locations prepared by Teck Exploration Ltd.during its 1992 program. The Companyshould try to locate this and any other potential data that might be available.

In its 1992 program Teck undertook ground geophysics including magnetic, VLF-EMand IP surveys (Janzen, 1992). Thirty-five line kilometres of magnetic and VLF-EM

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were completed with readings at 25 metre stations along the lines using a Scintrex MP-2magnetometer and a Geonics EM-16 VLF unit. Time domain dipole-dipole IP surveying(n=1 to 4), using a Phoenix IP V-4 Turbo receiver and a Phoenix IP T-1 TX transmitter,has been completed on selected lines along a 2 kilometre strike length of the Neepawa-Minnitaki Groups contact, proceeding eastward from the ‘WG16’ showing. The onlydocumentation of this work available to MPH is a 1:5,000 scale plan showing the IPinterpretation.

The current vendors have not conducted any work in this area.

4.2.3 The ‘FP61’ Area

Detailed mapping of a very small area adjacent to the showing was conducted by RioTinto in 1961 (scale 1”=50’) and subsequently by Norlode Resources in 1988 (scale1”=20’). These maps are both available to MPH.

Geophysical surveys of unknown extent were reportedly carried out by Noranda (EM,1957-58), Rio Tinto (IP, 1961) and Norlode (VLF-EM, 1988). No information about anyof these surveys is currently available to MPH.

The current vendors have prospected around the FP61 Island taking 3 grab samplescontaining moderate copper (0.21 to 1.5%) and low gold (38 to 168 ppb) values.

4.3. Drilling and Trenching

Trenching/stripping activities have been undertaken in the Shaft Area by the Property vendors in1998 and 1999. Both drilling and trenching has been done at various times in the other twoareas, the ‘WG16’ and ‘FP61’ Areas.

4.3.1 The Shaft Area

Some old trenches and a diamond drill hole location were noted in this area by F. J.Johnston while geological mapping in 1967-68 (Johnston, 1972). No information aboutthis work is currently available.

The vendors, I. J. Riives and A. Glatz, used a backhoe on August 28, 1998 to open up anapproximately 150 by 20 metre area adjacent to the old shaft. A portable power firepump was used to wash off the exposure prior to sampling. A total of 23 rock samplesincluding 11 grab samples, 6 approximately 2 metre chip samples, and 6 grab mucksamples from the shaft dump were collected at this time (Table 2). The grab sampleanalyses reportedly ranged from 0.21 to 56.81g Au/t, the chip samples from 0.19 to14.30g Au/t and the muck samples from 0.14 to 318.17g Au/t. Due to the absence ofanalytical certificates this information cannot be verified by MPH.

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TABLE 2: Drayton Gold Project-Vendor Samples, Shaft Area Trenches

General CertificateLocation Number Type Length (m) g Au/t oz Au/T Available

Trench # 1 (1999) 21084 Grab - 1.47 0.043 yes21085 Grab - 12.96 0.38 yes72812 Grab (VG) - 11.18 0.33 yes27427 Channel 5.0 0.99 0.029 yes27439 Channel 1.5 0.13 0.004 yes

Trench # 2 (1999) 27433 Grab - tr tr yesShaft Location 21059a Grab - 11.69 0.34 yesTrench # 3 (1999) 21059b Check - 11.45 0.33 yes

21060 Chip 1.0 2.54 0.074 yes27425 Chip 2.3 1.06 0.031 yes27426a Chip 0.6 6.38 0.19 yes27426b Check 0.6 6.17 0.18 yes27428a Chip 1.0 9.94 0.29 yes27428b Check 1.0 12.17 0.36 yes27429 Channel 2.5 0.11 0.003 yes27430 Chip 2.5 0.33 0.010 yes27431 Chip 2.3 0.61 0.018 yes27432 Chip 2.5 0.18 0.005 yes27434 Grab - 0.21 0.006 yes

Shaft Location 5412 Grab - 4.90 0.14 no1998 Trench 5413 Muck - 85.17 2.48 no

5414 Grab - 13.89 0.41 no18831 Muck - 1.06 0.031 no18832 Muck - 0.14 0.004 no18836 Grab - 1.37 0.040 no18837 Grab - 0.52 0.015 no18838 Grab - 56.81 1.66 no18839 Grab - 0.72 0.021 no18840 Grab - 0.23 0.007 no18845 Grab - 5.86 0.17 no18846 Grab - 1.50 0.044 no18847 Chip 2.0 0.93 0.027 no18848 Chip 2.0 14.30 0.42 no18849 Grab - 0.21 0.006 no18850 Chip 2.0 0.19 0.006 no18851 Grab - 0.21 0.006 no18852 Chip 2.1 1.30 0.038 no18853 Chip 2.0 6.31 0.18 no18854 Chip 2.0 2.02 0.059 no18855 Muck - 10.94 0.32 no18856 Muck - 13.51 0.39 no18862 Muck - 318.17 9.28 no

Trench # 4 (1999) Trench # 5 (1999)Trench # 6 (1999) 21061 Chip 1.0 tr tr yes

21062 Chip 1.0 0.279 0.01 yes27440 Chip 1.0 tr tr yes27441 Chip 1.0 0.257 0.01 yes27442 Chip 1.0 tr tr yes

Assay/AnalysisSample

No BedrockNo Bedrock

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Using OPAP funding assistance, the vendors dug 6 additional backhoe trenches in thearea from September 30 to October 6, 1999, including 4 (Trenches # 1 to 4) along strikefrom the shaft area, and 2 (Trenches # 5 and 6) on a VLF conductor approximately 150metres to the south. All of the vendors samples analytical results are presented in Table 2above. Analytical certificates for the 1999 work are available and have been examinedby MPH. Highlights of the 1999 trenching program are as follows:• Trench #1: Located about 250 metres east of the shaft this trench uncovered a strike

area 83 metres long and up to 9 metres wide. The trenching revealed an area ofaltered and sheared volcanic rocks with a few narrow conformable and cross cuttingquartz carbonate veins. Visible gold was seen locally in these veins. Five samplesincluding three grab and two sawn channel samples were taken. The grab samples,including one with visible gold, ranged from 1.47 g Au/t to 12.96 g Au/t while thebest channel sample assayed 0.99 g Au/t.

• Trench #2: A cross cutting trench put in between Trench #1 and the shaftencountered a 15 metre wide alteration zone that could not be sampled due to waterinflow. A single sample of unaltered rock from the north end of the trench containedonly trace amounts of gold.

• Trench #3: This trench extends the western part of the original 1998 trench further tothe west and north. Ten more samples were collected including two grab samples, 7chip samples and 1 channel sample. The grab samples assayed 0.21 g Au/t and 11.69g Au/t, the chip samples ranged from 0.18 to 12.17 g/t, and the channel sampleassayed 0.11 g/t over 2.5 metres.

• Trenches #4 and 5: Both trenches encountered deep overburden and did not reachbedrock.

• Trench # 6: This trench was located on another structure 160 metres south of theshaft. Sheared silicified and pyritized volcaniclastic rocks in this areas were tested by5 one metre chip samples with gold values ranging from trace to 0.28 g Au/t.

A number of samples have been subsequently collected in this area by John Wakeford ofOptionor (5 grab samples) and the undersigned (1grab and 1 chip sample). Thesesamples all contained anomalous gold values ranging from 0.15 to 9.34 g Au/t. Seesection 4.6 below for more details.

No modern drilling has been done in this area.

4.3.2 The ‘WG16’ Area:

R. J. McCombe of Sioux Lookout reportedly conducted trenching and limited x-raydrilling in this area in 1948 (Johnston, 1972). No details of this work are currentlyavailable.

Teck Exploration reportedly dug 6 trenches and drilled 9 BQ diamond drill holes totaling1029 metres in 1992 (Janzen, 1992). A report summarizing the drilling and trenchingprogram, with detailed maps of the trenches, has been acquired by the Company,although no drill logs or analytical certificates were available to MPH. A copy of an

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earlier Teck trench map entitled ‘Main Trench’ dated August 1991 was also provided bythe Company indicating that additional work was done by Teck for which MPH currentlyhas no additional details.

Teck concluded that the drilling, trenching and other work conducted in 1991 and 1992effectively tested the volcanic-sedimentary contact target area and indicated that the goldmineralization there is sub-economic. Without having detailed information on this workprogram, MPH is unable to comment on the validity of this conclusion.

This area was not visited by MPH due to high wind conditions on Lake Minnitaki.

4.3.3 The ‘FP61’ Area

Two diamond drilling and trenching programs have been completed in this area, the firstby Rio Tinto in 1961 and the second by Norlode Resources in 1988.

Rio Tinto drilled 5 holes totaling 1,659 feet (506m), inside an approximately 300 by 300foot (90 x 90m) area, on or near Island FP61. A surface plan showing simplifiedgeology, two trenches and the drill hole surface projections is available as are the drillhole logs albeit without analytical certificates. These holes were drilled in 5 differentdirections including; north, southwesterly (2), northwest and northeast. Only two of theholes, ‘scissor-holes’ drilled in opposite directions beneath the showing, encounteredsignificant mineralization including a 5 foot (1.52m) core length that assayed 0.22 ozAu/T (7.54 g Au/t) and 0.25% Cu and a 44.5 foot (14 m) core length averaging 0.04 ozAu/T (1.37 g Au/t) and 0.57% Cu both from DDH M-1. The other hole, DDH M-2intersected 37.5 feet (11.4m) averaging 0.01 oz Au/T (0.34 g Au/t) and 0.28% Cu.

Norlode Resources drilled 7 additional holes inside the same small area in 1988. Thecomplete drilling database including analytical certificates is available for this program.This time the holes were oriented in a different pattern including; vertical, northwest (2),southeast (2), west and north-northeast. Three surface trenches but no sample sites areshown on the surface plan. Only one hole, DDH 88-3, collared about 50 feet (15m) southof the showing contained significant mineralization, a 70 foot (21.34m) core lengthaveraging 0.018 oz Au/T (0.62 g Au/t) and 0.47% Cu.

MPH visited the prospect in connection with this report and collected a relatively wellmineralized grab sample from the trench beside Minnitaki Lake (Trench #1 from theNorlode surface plan). This sample assayed 1.18% cu and 0.55 g Au/t.

4.4. Logging/Sampling Method and Approach

The Shaft Area trench exposures and outcrops have been examined and sampled by Propertyvendors, John Wakeford of the Optionor; and finally by the undersigned in connection with thisreport.

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As indicated above there are key parts of the databases missing from the previous drilling andtrenching programs in the “WG16’ and ‘FP61’ Areas. In the absence of such items as detailedlogs, analytical certificates etc. MPH is unable to comment on logging/sampling method andapproach for these programs.

The Shaft Area trenches were completed by the property vendors primarily under the OntarioProspector Assistance Program (“OPAP”). While these have been extensively sampled theyhave not been geologically mapped in detail or systematically channel sampled. Mostly grab,several chip and a few channel samples have been collected from these trenches by the vendorsand a few others. The vendors’ samples have been previously been tabulated in section 4.3.1above. All of the 1999 program samples were submitted to Swastika Laboratories Ltd. inSwastika, Ontario for gold and other analyses.

John Wakeford of the Optionor collected 5 more grab samples from the area in June 2002.These submitted to the ALS Chemex laboratory in Vancouver, British Columbia for goldanalysis.

Finally the undersigned collected 2 grab samples and 1 chip sample (across 5 metres) onSeptember 13 and 14, 2002 in connection with the present report. The sample sites were locatedon property maps and by GPS. See Figure 5 above and Figure 6 for MPH sample locations. Thesample records are kept in duplicate in a field note book and a numbered sample book. Twonumbered tags were then placed inside the sample bags. These were submitted to the ALSChemex Laboratory in Mississauga, Ontario for gold and other analyses. Two separate crushedmaterial split analyses were requested for the chip sample.

4.5. Sample Preparation, Analyses and Security

Sample preparation at the various laboratories was done according to standard industry practiceby crushing, splitting and pulverizing the core or rock samples to obtain pulps for assay and/orgeochemical analyses. Gold determinations were made for the most part using one assay tonportion fire assays with atomic absorption finish (“FA+AA”). A rigorous series of in-laboratoryduplicate, reference and blank sample analyses were carried out. One MPH sample was testedfor 34 elements by aqua-regia acid digestion and conventional ICP-AES analysis.

MPH is unable to comment on sample security other than for those samples collected by theundersigned. The 3 samples were taken by MPH from outcrop, and were continuously in thepossession of the undersigned from collection in the field until delivery to the laboratory. MPHwas given full and unrestricted access to the property, and project database.

4.6. Data Verification

The gold showings on the Drayton Gold Property have been sampled by three unrelated partiesincluding the prospectors, the Optionor and MPH Consulting. In all instances there is generalagreement between the sample sets with individual samples being obtained by all the parties thatare anomalous to highly anomalous in gold content. The results of the sampling exercises by thethe Optionor and MPH are presented in Table 3 while the vendors’ samples were previously

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Porphyry

Volcanics

Shaft

G8419

G8418

Drayton Gold Property Rio Fortuna Exploration Corp.

Figure 6: Shaft Area Trench, Showing MPH Sample Locations. (Photo by J. Wakeford)

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presented in Table 2. Analytical certificates are currently available for all but the vendors’ 1998samples.

Table 3: Verification Samples by the Optionor and MPH Consulting

General Sample Assay AnalysisLocation Number Type Length (m) Grams Au/t Cu %

John Wakeford, OptionorShaft Area-Trench #1 499488 Grab - 4.16 -

Shaft Area-1998 Trench 499489 Muck - 7.46 -Shaft Area-1998 Trench 499490 Grab - 8.30 -Shaft Area-1998 Trench 499491 Grab - 9.34 -Shaft Area-1998 Trench 499492 Grab - 1.04 -

Howard Coates, MPHShaft Area-1998 Trench G8418A Chip 5.0 0.15 -Shaft Area-1998 Trench G8418B Chip 5.0 0.21 -Shaft Area-1998 Trench G8419 Grab - 5.84 -

‘FP61’ Area G8423 Grab - 0.55 1.18

The single sample (G-8418) tested by MPH for 34 elements by aqua-regia acid digestion andconventional ICP-AES analysis returned no significant values for silver or toxic elements such asAs or Hg.

MPH has verified the existence of most aspects of the recent and early programs at the ShaftArea and the ‘FP61’ Area. In the Shaft Area the old shaft collar, muck dump, parts of theflagged grid, and the 1998 and 1999 trenches were inspected. In the ‘FP61’ Area the oldtrenches and several old drill collar locations were observed. As noted above the ‘WG16’ Areawas not visited.

4.7. Underground Workings

The old workings in the Shaft Area are currently flooded and inaccessible. There are no knownrecords of the historic work available.

No reports of gold resources or reserves have been found by MPH.

4.8. Exploration PotentialThe systematic exploration work completed to date on the Drayton Gold Property has beenconfined to the ‘WG16’ Area and to the immediate area of the ‘FP61’ Showing. The Shaft Areagold bearing zones, some substantial distance away from the above areas, have been found tocontain significant gold values in quartz veins and also in altered host rocks. All of the goldshowings also occur in association with extensive alteration phenomena that may be associatedwith substantial gold deposits. The target area of immediate interest is the Shaft Area where nomodern systematic exploration has been conducted, while the information viewed to date byMPH from the ‘WG16’ area does not eliminate it as high potential target area.

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To date there are no known records of modern multidisciplinary exploration work in the ShaftArea. Even the showings unearthed by the vendors could be further opened up and moresystematically sampled by more rigorous channel rather than chip and grab sampling. It istherefore apparent that the Drayton Gold Project has significant untested exploration potentialthat may be readily evaluated by as yet untried modern methods. The favorable location of theproperty vis a vis accessibility and exploration expertise should allow such work to be completedinexpensively by Canadian standards. MPH ranks this as a high priority target.

The ‘WG16’ Area is intriguing because of its structural setting and widespread goldmineralization. However the full extent of previous modern exploration does not appear to beknown to the Company at present. The Company should attempt to acquire the full Teckdatabase and reassess the target area in the light of more complete knowledge.

The ‘FP61’ Area target has not been tested to any degree away from the showing area. Themineralization indicated so far is low grade so only a large-tonnage open-pit situation would beof potential commercial interest. Even if this situation were present, the physiographic locationin a major drainage system would likely preclude development. MPH ranks this as a low prioritytarget.

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5.0 CONCLUSIONS AND RECOMMENDATIONS

MPH concludes that the Drayton Gold Property of the Company represents a good opportunity toexplore for gold in an area containing several known showings. At least one of the three mainshowings and the intervening areas between them have not been explored by state of the artmethods. It is concluded that the application of such methods is fully warranted and justified.

A two phase program for exploration of the property by means of geological mapping,prospecting, geophysics, trenching and drilling is recommended. The first phase is designed toestablish specific targets for drilling and mechanized trenching with an allowance for a limitedamount of trenching, while the second is a provisional phase to adequately test such targets bydiamond drilling and/or trenching.

The initial phase 1 work will be a compilation of previous exploration completed on or near theclaim group. This will include a detailed compilation of previous work throughout the property,especially that done by Teck Exploration in the early 1990’s in the ‘WG16’ Area. A grid will beestablished for control and to tie in the trench areas at the Shaft Area. The grid will cover thenortheastern half of the claim group and should tie into the Teck grid if possible and practical.Magnetics will be completed on the entire new grid and IP will be completed on selected lines inthe Shaft Area to determine if IP or resistivity features associated with the gold mineralizationcan be detected. The claim group geology will be mapped utilizing the grid. The trenches andshowings will be mapped and sampled systematically where needed. It is anticipated that a minoramount of trenching and sampling will need to be completed to firm up drill targets.

Work program for first phase of target definition as follows:• Grid covering the Shaft Area and its southwest extension at 100m line spacing, total 30

km with baselines.• Magnetics on all gridlines• IP over showing areas, 10 x 1 km lines• Geological mapping of existing trenching and grid mapping.• Prospecting in areas between showings• Sampling of existing showing areas, estimated 150 samples• Research and compilation of the property with emphasis on the WG16 area• Reports and recommendations for next Phase including drill targets.• Contingency will likely be allocated to new trenching and stripping and/or saw channel

sampling of stripped areas

DRAYTON GOLD PROJECT

Property Total costGrids $9000Magnetics 4500IP 8000Power Strip 5000Drilling 0

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Field equipment 5400Compilation 8000Sampling assays 5250Field tech 3300Field geologist 6600Senior Geologist 4000Accommodation 5400Transport and Comm 4050Drafting 5000Demob 4000Contingencies 6500

Subtotal 84000Management 8400

TOTALS 92400Say $92,000

The second phase is conditional upon a successful first phase. However it is consideredreasonable to make provision for some ongoing work such as additional IP, trenching and alimited diamond drilling program to test the known mineralized areas and possible geophysicaltargets. An unallocated amount of approximately $300,000 is recommended for this purpose.

The grand total required to adequately complete the two phase exploration program on theDrayton Gold Property is approximately $392,000.

Respectfully Submitted,

MPH CONSULTING LIMITED

(Signed H.J. Coates)

Howard J. Coates, M.Sc., P. Geo.Vice President, MPH Consulting LimitedOctober 8, 2002

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REFERENCES

Andrews, A. J., Hugon, H., Durocher, M., Corfu, F and Lavigne, M.J., 1986. The Anatomy of aGold-Bearing Greenstone Belt: Red Lake, Northwestern Ontario, Canada, in Macdonald, A. J.ed., Proceedings of Gold ’86, an International Symposium on the Geology of Gold: Toronto,1986, pp. 3-22.

Canadian Mines Handbook- 1988-89. P. 87.

Card, K. D., and Ciesielski, A., 1986. DNAG No. 1. Subdivisions of the Superior Province ofthe Canadian Shield; Geoscience Canada, Vol. 13, pp. 5-13.

Chorlton, L. B., 1987. Stratigraphy, Structural Development and Auriferous Mineralization inthe Cross Echo-Troutfly Lake Area, Northern Wabigoon Greenstone Belt, Northwestern Ontario:pp. 72-83 in Summary of Field Work and Other Activities 1987, Ontario Geological Survey,Miscellaneous Paper 137.

Dowhaluk, H., 1988. Drayton Township (Northeast) Project for Norlode Resources Inc.Unpublished company report.

Ferguson, S. A., Groen, H. A., and Haynes, R., 1971. Gold Deposits of Ontario: Part I, Districtsof Algoma, Cochrane, Kenora, Rainy River and Thunder Bay; Ontario Division of Mines,MRC13, 315p. (reprinted 1982).

Franklin, J. M., and Schnieders, B. R., 1990. Mineral Resources of the Western SuperiorProvince, Ontario: pp. 1-6 in Geological Survey of Canada, Open File 2164.

Hood, W. C., 1990. Report on Alcona-Split Lake Property for Cream Silver Mines Ltd.Unpublished company report.

Hood, W. C., 1991. Report on Geological Mapping and Drilling at the Alcona-Split LakeProperty, Sioux Lookout Area, Northwestern Ontario for Valerie Gold Resources Ltd.Unpublished company report.

Janzen, J., 1992. Report on 1992 Exploration Program, Minnitaki Property, Teck ExplorationLtd. Report-0131. Unpublished company report.

Johnston, F. J., 1972. Geology of the Vermillion-Abram Lakes Area, District of Kenora, OntarioDivision of Mines, Geological Report 101.

Melling, D. R., Watkinson, D. H., Poulson, K. H., Chorlton, L. B., and Hunter, A. D., 1986. TheCameron Lake Gold Deposit, Northwestern Ontario, Canada: Geological Setting, Structure andAlteration, in Macdonald, A. J. ed., Proceedings of Gold ’86, an International Symposium on theGeology of Gold: Toronto, 1986, pp. 3-22.

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ODM, 1937. Superior Junction-Sturgeon Lake Area. Forty-sixth Annual Report ODM,Vol.ILVI, Part VI, 1937.

Speed, A. A., 1980. Wright-Hargreaves Mines Limited (McCombe Group) Occurrence.Unpublished ODM site visit report.

Riives, I. J., 2000. OPAP 99-396 Final report, Project #1, Drayton Twp Gold Prospect.Unpublished company report.

Turner, C. C., and Walker, R. G., 1973. Sedimentology, Stratigraphy, and Crustal Evolution ofthe Archean Greenstone Belt near Sioux Lookout, Ontario. Can. J. Earth Sci., Vol. 10, pp 817-845.

Wakeford, J., 2002. Drayton Gold Property, Zarn Lake Area, Patricia Mining Division, Ontariofor 1541386 Ontario Inc. Unpublished company report.

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CERTIFICATE OF QUALIFICATION

I, H. J. Coates, of Mississauga, Ontario do hereby certify that:

1. I am a consulting geologist with an office at 615–133 Richmond Street West, Toronto,Ontario, Canada.

2. I am a graduate of Memorial University of Newfoundland in St. John’s, Newfoundland andhold a degree of Master of Science in Geology.

3. I am a member in good standing of the Association of Professional Engineers andGeoscientists of the Province of Newfoundland, as a Professional Geoscientist, MembershipNo. 03766.

4. I have practiced my profession continuously for a period of 32 years including substantialwork on gold projects in the Superior Province, other parts of Canada and several overseascountries.

5. I have personally undertaken and/or assisted in the preparation of many independenttechnical reports for other clients in the past.

6. I have read National Instrument 43-101, Form 43-101F1 and Companion Policy 43-101CPand this report has been prepared in compliance with same.

7. As a result of my education, professional experience and professional qualifications, I am aQualified Person as defined in NI 43-101

8. I have no present or anticipated interest, either directly or indirectly in the Drayton GoldProject or securities of 1179785 Ontario Ltd., Rio Fortuna Exploration Corp., or any relatedcompanies.

9. The statements made in this report are based on data made available to MPH ConsultingLimited from Rio Fortuna Exploration Corp.’s files. The information is to the best of myknowledge correct, complete and not misleading. A site visit was made by the undersignedon September 13 and 14, 2002.

10. I consent to the use of this report dated October 8, 2002 for regulatory filing purposes of thecompany.

(Signed H.J. Coates)Mississauga, Ontario Howard J. Coates, M.Sc., P. Geo.October 8, 2002

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