KIRKLAND MINERALS CORPORATION LIMITED•UITC 1D3

leo BAY BTKCCTTORONTO l

CANADA

lieNE0099 DAVIS-36-A1 DAVIS 010

INTERIM PROGRESS REPORT

October 1st, 1958.

TO THE SHAREHOLDERS:

In view of recent important developments that could have far reaching effect on the growth and future success of the Company the following brief interim report has been prepared to keep shareholders fully apprised of the Company's progress.

OPERATIONS

It is gratifying to report that operations at the Company's producing gold mine in the Kirkland Lake camp are progressing in an extremely satisfactory manner with a total operating profit of )1 52, 582. 16 before cost aid shown for the first seven months of 1958.

During this period a total of 4-4,877 tons were milled. Recovery averaged J17.40 per ton giving a total value of production to July 31st of ^780,0,48.45. Costs were kept to an average of J13.78 per ton.

This greatly improved picture is largely the result of a program of increased efficiency and control of grade instituted at the Mine last autumn. This program involved the raising of the ore grade by cut ting dilution to a minimum an J eliminating slopes not of ore grade; employing more careful mining methods while keeping mine crews and supervision at a minimum; and reusing all salvageable supplies, has been a pronounced success as evidenced by the above figures.

NORSTAR ACQUISITIONThrough consummation of negotiations during the past few weeks your Company has been success

ful in acquiring 650,000 shares of Norstar Lake Mines which provide effective control of that Company.

This valuable acquisition will provide your Company with an important new gold venture with the added advantage of diversification since the Norstar holdings are in Davis Township, approximately 25 miles east of Capreol, and approximately the same distance from Sudbury, Ontario, the home of Intei- i national Nickel Company. Diamond drilling and surface work on the Norstar property has indicated the l possibility of some 275,000 tons of Copper Gold mineralization with the promise of a grade of 1.5*fo Cop- per and 0.41 O?.. Gold per ton.

Your Company has let a contract to Temiskaming-Inspiration Mining for the erection of all min ing buildings necessary and the sinking of a new shaft to 275 feet. In addition 1,000 feet of lateral underground work will be carried out to initiate the exploration of the property underground.

MATTAGAMI BASE METALS CAMP

In addition to the Norstar project the Company has acquired ninety claims in Vezza Township in the Mattagami area of northwestern Quebec; Canada's hottest new b,ise metal camp. This ground is considered favorably located and geophysical work to pinpoint the most likely areas for further explo ration has already been started.

ON BEHALF OF THE BOARD,

"S. G. TAYLOR",President.

t* ;.KIRKLAND MINERALS CORPORATION LIMITED

Suite 103 - 160 Bay Street - TORONTO l - CANADA

PROGRESS REPORT

TO THE SHAREHOLDERS?Your Company's Management is pleased to advise you that production operations at our Kirkland Lake Area

gold mine continue to show very satisfactory improvement. While year end figures are not yet available, we fully expect that our 1958 operation will show jn appreciable profit, in refreshing contrast to the losses experienced in previous years. Another promising highlight in our continuing effort to locate new ore at this mine haj Wen the recent discovery of what may be a new ore zone. Current drilling has intersected commercial grad; ore at points some 300 feet apart, in which some very excellent assays in gold were secured. A still further factor in your Com pany's accelerated activities is the progress of underground development at the Davis Township gold-copper property of Norstar Lake Mines Limited, which is controlled and operated by Kirkland Minerals Limited.

These and other various aspects of your Company's activities and achievements to date, are reviewed in greater detail in the following, which is submitted for your further enlightenment.

KIRKLAND LAKE AREA GOLD MINING PROPERTYBullion production for the first ten months of 19 J 8 has already exceeded the output for the entire preceding

year, with a gross value of SI,040,245.00 to the end of October, exclusive of E.G.M.A. payments, estimated to idd a further J135,983.00. This reflects the program of operating efficiencies initi?tcd late last year, which has brought about close cost control; arid selective mining techniques which have increased mill-head recoveries to an average increase of around 50S& over last year's figures. We are confident, therefore, that the end of the current fiscal year will see your Company well on the profit side, reversing the trend of previous years.

A mo.it encouraging recent development at this property has been indicated in current drilling operations, suggesting the possibility of a new ore zone, in which commercial grade ore was intersected at two separate points, approximately 300 feet apart, with some assays running as high as S600.00 per ton (uncut) in gold, over 0.5 feet. The signif ;,incc of this new ore rone could be confirmed within the next six weeks as further drilling is completed. Obviously, if this meets expectations, it might well materially enhance and lengthen the productive life of the mine.

NORSTAR LAKE MINES' UNDERGROUND PROGRAMRecently your Company acquired effective control and direction of Norstar I.nke Mines Limited, which is

actively developing a gold-copper property in Davis Township, Sudbury Mining District, Ontario, where earlier dia mond drilling and surface work indicated an ore 7one estimated to contain 275,000 tons of golH-copper bearing ore, grading 0.41 o'/, gold and J.5% copper per ton. The zone is estimated to have a length of 225 feet and an average width of 25 feet within the presently explored area. Shaft-sinking, to open up this indicated ore zone on two levels, Fas now been completed to the initial depth objective at 275 feet. Lateral exploration at the !25 and 250 foot horizons has made excellent progress, with drifting proceeding both east and vest along the zom. simul taneously on both levels.

On the 250 foot level both headings are drifting in ore, with assays received to date returning 10.8 feet assay ing S21.44 in combined gold and copper per ton, S18.00 of which is attributable to the goli! content. Drifting on the upper 125 foot level has not yet sufficiently advanced to place both headings in ore, but is expected to reach the 7onr very shortly.

MATTAGAMI AREA CLAIM-GROUPYour Company holds a group of 90 claims in Vezza Township in the Mattagami Area of northwestern Quebec,

which was the scene of very extensive staking and exploratory activity during 1958. The current exploratory boom in the Mattagami Area, which embraces stakings throughout an area covering 40 townships, was born of the 1957 discovery of the large base metals deposit of the original Mattagami Syndicate, which has subsequently been con firmed as a huge deposit estimated at around 20,000,000 tons. This, and other more recent discoveries throughout an area of many miles, has blanketed upwards of 2,000 square miles, resulting in exploratory activity at a pace equal to all other Canadian mining camps combined.

The large claim-group held by your Company is considered to be favorably located, and on the recommen dation of our Consulting Engineers, a preliminary program of geophysical investigation was initiated, coripletion of which is expected after the first of the year. Some work was conducted prior to the "freeze-up" inu will be resumed as soon as weather conditions permit.

Your Company is adequately financed for its presently-planned programs, with its treasury recently aug mented by an underwriting of treasury shares, netting 5120,000.00. In keeping with our policy of providing Share holders with information of Company activities, further reports on progress will be issued from time to time.

On behalf of the Board of Director?.

"S. G. TAYLOR", Dated December 31 st, 1958. ^,*.,. '--- PrtsiJtnf.i^ff,*!'''

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Kirkland Minerals Corporation Limited• UITC 103 * 1*0 BAY •TftECT . TORONTO 1. CANADA * TCLIPHONK CMflOI •Sill

MINK OrrlCL: P.O. BOX B BO. CHAPUT-HUQHM. ONTARIO

ANNUAL MEETING

President's Address to the Shareholdersat the Special and Annual General Meeting of the Company,

held at the Royal York Hotel, Toronto, Ontario,on the 3rd day of March, 1959.

With adequate funds on hand or assured, Kirkland Minerals Corporation is now carrying out the active and diversified mining program which was planned last year, shareholders were told at the Company's Annual Meeting in Toronto this week.

Sydney G. Taylor, President, said the Company's gold mine at Kirkland Lake, Ontario, was doing exceptionally well. He reported that there is now sufficient ore available for a full-scale operation throughout 1959 while "prospects for 1960 look better than ever". In 1958 this mine produced gold valued at 31,209,620, a substantial increase over the previous year. More efficient production methods, rigid cost-cutting and slightly better grades resulted in a net profit of 328,412 for the year, as compared with losses in excess of 3100,000 in each of the two previous years.

NORSTAR PROGRESS

Mr. Taylor also told shareholders that the Company was definitely aiming at early production from the Norstar Lake gold-copper property acquired from Harrison Minerals last August. He said work had progressed to the point of sending out ore for mill tests and drawing up a flow sheet preparatory to designing a mill for production. The pro gram of diamond drilling to 400 feet has been completed and engineers are now computing results which should be known in about a week. Previous drilling has indicated a minimum of 275,000 tons of ore, but it is now believed this figure will be increased considerably when full results are tabulated. Individual drill holes showed average grades from the 125-foot level of 323.67 gold-copper, and 318.62 from the 250- foot level. W. P. McGill, P.Eng., reported that an average of 320.00 per ton or better can be expected, while some sections on the 125-foot level showed well above the 340.00 value. Rib sampling in the west drift on the 125-foot level gave 354.37 in gold copper for a length of 43.5 feet, it was reported. Cost of production had been estimated at about 38.80 per ton.

Page 2

Mr. Taylor also announced that Kirkland Minerals had taken an option to purchase another gold property from Reyford Mines. This property in the Gowganda area of Northern Ontario is, according to consulting engineer J. J. Harris, "one of great merit". Shareholders were told that Mr. Harris had informed the Company that previous work, which included the sinking of a shaft, shows "not just a prospect but a promising young mine". Mr. Taylor added that the Company intended to carry out a program of under ground and surface drilling immediately.

ADEQUATE FUNDS AVAILABLE

Kirkland has signed a contract with Inspiration Mining to carry out diamond drilling on the Mond Township nickel property adjoining Beauvale Mines, a wholly owned subsidiary of Kirkland. Previous work on this property, which lies 45 miles south of Timmins, Ontario, had indicated 210,000 tons of 1.295 nickel plus 400,000 tons of lower grade in two zones.

Tlie Company's Mattagani property in Vezza Township, Quebec, acquired in August, 1958, has shown enough to warrant further work, Mr. Taylor said.

Kirkland working capital position at the end of 1958 showed $185,726 available. Mr. Taylor said the Company had been assured by its financial backers that there will be no shortage of funds to carry out all the activities planned.

"In short," the President concluded, "1959 shapes up as one of the most important years in our history. Our Kirkland Lake Mine should continue to show a profit. The Norstar gold-copper property is more than measuring up to expectations and promises to be another profitable producer. In addition to these, we have very high hopes for the Reyford property in the Gowganda area, while the drilling program on the ground adjoining the Beauvale nickel property could prove to be of major importance. The future for Kirkland Minerals looks very bright indeed."

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