report on the anderson creek property of aurora … documents/15) geologists report ni...

REPORT on the

ANDERSON CREEK PROPERTY

of

AURORA MINES, INC.

R. L. Moxham Associates, Toronto, Ontario November 15, 2005

Aerial Photograph of Anderson Creek, Yukon Territory

(Courtesy of Surveys and Mapping Canada)

Copyright 2005, R. L. Moxham Associates. Reproduction of this document is not permitted without the express permission of R. L. Moxham Associates, Aurora Gold Mines Inc. and Mr. Owen (Tony) Dwyer. Frontispiece: Aerial Photograph of Anderson Creek, Yukon Territory. Courtesy Surveys and Mapping Canada

TABLE OF CONTENTS

Summary

Introduction and Terms of Reference

Disclaimer

1. Property Description and Location ...........................................................Page 1

2. Access, Climate, Local Resources, Infrastructure and Physiography............ 4

3. History................................................................................................................... 8

4. Geological Setting............................................................................................... 11

5. Deposit Type....................................................................................................... 16

6. Mineralization.................................................................................................... 17

7. Exploration......................................................................................................... 20

8. Drilling................................................................................................................ 26

9. Sampling Method and Approach..................................................................... 27

10. Sample Preparation and Security..................................................................... 31

11. Data Verification................................................................................................ 33

12. Adjacent Properties........................................................................................... 34

13. Mineral Processing and Metallurgical Testing................................................ 35

14. Mineral Resources.............................................................................................. 37

15. Other Relevant Data........................................................................................... 41

16. Interpretation and Conclusions......................................................................... 44

17. Recommendations............................................................................................... 48

18. References............................................................................................................ 50

Certificates

Addendum – Additional Requirements for Technical Reports on

Development Properties and Production Properties.

Appendices:

1. President’s Affidavit

2. Official Claim List, with Claim Plans

3. Water Permit

4. Report on Seismic Refraction Survey

5. IE-TEC Heavy Particle Concentration Technology

6. Opinion of Independent Consultant

7. Excerpt: Yukon Placer Mining Industry 1998 – 2002

8. Photograph Plates

LIST OF FIGURES

Figure 1 Claim Plan, Aurora Mines, Inc.......................................following page 1

2 Location Map, Anderson Creek.............................................................. 3

3 Highways and Principal Towns of Central Yukon................................ 3

4 Location Map, Mayo Lake, Central Yukon........................................... 3

5 Anderson Creek Area Topography......................................................... 4

6 Bedrock Geology of the Mayo Lake Area............................................. 11

7 Glacial Geology of the Mayo lake Area................................................ 12

8 Schematic Cross-valley Profile of Mayo Lake Tributaries................ 13

9 Panel Diagram of the Anderson Creek Mining Section...................... 14

10 Size Distribution of Gold Particles, Anderson Creek......................... 17

11 Exploration Stages, 2000 – 2003............................................................ 20

12 Site Sketch, Seismic Line Locations...................................................... 24

13 Location of Seismic Survey Lines on Site Plan.................................... 24

14 Outline of Sample Excavation Area, Anderson Creek........................ 27

15 Outlines of Areas of Measured and Indicated Resources................... 37

TABLE

Table 9- -1 Anderson Creek Mine: 2000 – 2002 Test Program.....following page 28

LIST OF PLATES

Plate 1 Air Photograph, Anderson Creek...................................Frontispiece

2 Aerial View, Looking Down Stream.................................Appendix 8

3 Aerial View, Looking Northwest....................................... “ “

4 Aerial Views of Site, Looking Upstream........................... “ “

5 Aerial Views of Site, Looking Upstream, Looking East.. “ “

6 View of Excavated Area, Looking East Toward Lake.... “ “

7 Fine and Coarse Gold Extracted Using HPC technology “ “

SUMMARY

The 39 placer mining claims of Aurora Mines, Inc. are aligned along the

length of Anderson Creek, Yukon Territory, Canada. Anderson Creek is a stream

some 6 km long that drains into Nelson Arm (the south arm) of Mayo Lake. The

property lies some 50 km northeast of the town of Mayo at Latitude 63*43’ north

and Longitude 135*03’ west. The claims, which cover an area of 363.3 ha, are in

good legal standing, and are compliant with the mineral lands laws and

environmental requirements of the Territory.

Local roads leading to a point on the west end of Mayo Lake terminate in a landing

area. From that point the property is reached by a 20-km boat trip along Mayo

Lake. Alternatively, floatplane or helicopter reaches the site from Mayo.

At the site, the Company has built a road some two km long that parallels Anderson

Creek, as well as other roads on the property for access and operations. Water

supply dams and work areas, including wastewater settling ponds, are in place.

Accommodation, warehouse, workshop and office buildings are built and in use.

Communications facilities are in place for satellite radio and broadband Internet

connections.

The area is mountainous and the peaks in the area rise over 1000m above the level

of Mayo Lake. Valleys are steep-walled, and streams have strong downhill

gradients.

Gold has been sought in Anderson Creek intermittently since about 1903.

Continuous mining and development has continued since about 1989, first under a

predecessor owner and, since 2000, by Aurora Mines, Inc. (the Company). Records

of work and production prior to 2000 are intermittent and incomplete.

Excavations on site and data from government publications indicate that several

stages of glacial and interglacial deposition and erosion are present. The McConnell

(ca 22 000 years bp) and the Reid (ca 200 000 years bp) glaciations covered the area.

Since that time, erosion has cut down into these glacial sedimentary deposits as the

level of Mayo Lake was gradually lowered, and erosion has deposited and

concentrated the gold in the glacial deposits in the lower valley and the delta fan of

Anderson Creek.

Since 2000, exploration and development, under the supervision of the owner-

manager of the Company, Mr. Ray Brosseuk, has been systematic and orderly. As a

result of three seasonal sampling campaigns, an area of the lower claims covering

about 18 ha has been intensely explored and sampled. The sampling program

excavated 93 large (average 400 cubic yards) sample lots and processed this material

(36 557 cubic yards in total) to produce 729 ounces of gold, the proceeds of which

were used to finance the operations. Thus, the sampling program assumed the

proportions of a regular mining operation. The total sample volume represents

about one per cent of the material present in the sampled area.

As well, the Company has contracted some 2 000m of seismic refraction surveys in

the lower and middle sections of the valley, with a view to assessing sediment

thicknesses and bedrock conditions, and gaining an idea of the volume of material

available for placer mining. Also, a hand panning survey was made of points

upstream to the headwaters of the stream, which indicated that gold values persist

in the higher sections. The results of these surveys are discussed.

Sampling has been conducted in a systematic, thorough and reliable manner. The

method of sampling was consistent throughout the program, and data on location,

volume, processing date, yield, and grain size distribution were carefully recorded.

These data are the principal product of the exploration program; the table

presenting the data forms a key part of this report and is discussed in detail herein.

The size frequency distribution of gold particles ranges from 40 mm (a four-ounce

nugget) down to less than 325 mesh size (<0.045 mm), with the median lying at

about 20 mesh size (approximately 1mm). In gold placer work, this shows a quite

coarse-grained distribution. Refining results show that the gold has a fineness of

about 860 on average.

The Company extracts the gold using its own proprietary technology in the form of

the HPC-200 heavy particle gold concentrator. This is a mobile, 50 tonne washplant

embodying several combined advances in washplant design. The machine is fast

(about 150 cubic yards per hour), efficient (91 – 94 % extraction as shown in

independent tests) and thorough (the size frequency data indicate it is removing gold

at least down to the 95th percentile of particle sizes present). The same machine as

was used in the sampling stage will be used in the full production stage (perhaps

using multiple machines).

The results of the program showed that the average grade of gold in the sampled

area was almost exactly 0.02 ounces per cubic yard. Mensuration of the area,

combined with the average thickness (12 m) as shown in the seismic data, indicate

an available volume of 2 820 000 cubic yards of material which is considered to be a

measured resource. In the area surrounding the sampled area, allowing for

variations in thickness and distance from the limits of the sampled area, there is an

additional 2 800 000 cubic yards of similar grade that can be considered an

indicated resource. There are further large volumes of resources that lie beyond this

area, as indicated by limited testing, but these cannot be considered an inferred

resource for lack of grade and volume data at this time. The measured and

indicated resources, at planned mining rates, will provide over six years of

extractable material.

The Company has maintained accurate records of operating and capital costs of

work to date. These data indicated processing plus capital costs of US$ 1.40 per

cubic yard (2002 cost data). The average yield per cubic yard was US$ 6.86 per

cubic yard (assuming a gold price of US$ 400.00 per ounce)and the production cost

per ounce was $82.00. Updated to November 2005, the operating cost per ounce has

become $2.04 (mainly due to fuel costs), the yield per cubic yard has risen to $8.20

(@480 per ounce for gold), and the production cost per ounce has risen to $118.00.

These data indicate that the project is quite robust, but final figures will be subject

to detailed engineering review.

We have made a number of recommendations. Further sampling work should be

continued in advance of mining work. A denser network of seismic survey lines is

desirable and recommended. Mineralogical examination of high-density

concentrates should be pursued to investigate whether some other minerals may be

worthy of recovery and sale. A detailed topographic map of the claims would aid in

development planning.

We conclude that the exploration and development program to date has met its

objectives in outlining and testing a mineable volume of material, the work has been

very systematically pursued and the economics of the project appear to be robust

and well supported.

INTRODUCTION AND TERMS OF REFERENCE

In mid-September of 2005 R. L. Moxham Associates was requested to undertake a

Technical Review of the mineral properties of Aurora Mines, Inc., a private

company whose only mineral property consists of the Anderson Creek placer

mining operation, located in the Mayo Mining District of the Yukon Territory of

Canada.

The Technical Review was requested with the following objectives in mind:

- to gather together the current state of geological information on the

property, within the context of the local and district surficial and bedrock

geology,

- to review the exploration, development and resource assessment work

completed on the site,

- to review the adequacy, quality and reliability of the sampling and sample

analysis programs so far completed,

- to produce resource estimates within the framework of the NI43-101

Instrument, in the categories of measured, indicated and inferred resources

as defined by the Instrument, insofar as possible.

- The review is intended as a due diligence review or technical status report.

Although the authors have adhered insofar as possible to the standards of a

NI43-101 report, the intention is to offer a technical status report. The

writers do not authorize its use as a NI 43-101 technical report without

specific permission.

As well, the reviewers were requested to make a first evaluation of the economics of

the project and to produce recommendations for the further course of development

work, if merited.

Mr. Owen (Tony) Dwyer of Internet Identity Inc. (II Inc.), a securities and business

consultant house, requested the Technical Review with the purpose of having a

technical document in hand to support future financing and investment interest in

the property.

The sources of information used in the preparation of the Technical Review

included the following:

- technical publications and published maps of the Governments of Canada

and the Yukon Territory relating to the geology and resources of the relevant

regions and district,

- personal communications with Yukon Government officials and the Yukon

Government official websites,

- privately produced technical and consultant reports made available by the

Company,

- historical documents and publications on the Mayo district, in the public

domain,

- private Company documents, including a private due diligence review, and

- Company information freely available on the Aurora Mines, Inc. website at

www.ac-mine.com . This site contains most of the documents referred to above.

Neither of the reviewers (RLM) has made a visit to the site nor has had the

opportunity to review and discuss documentation directly with the President, Mr.

Ray Brosseuk. Mr. Brosseuk however has generously extended all required support

and courtesies to the completion of this Review. A site visit is planned for the early

summer of 2006.

DISCLAIMER

The authors of this Review have relied upon other, independent, documents and

opinions in its preparation in the following regards:

- The seismic data re from report of Frontier Geosciences Inc. of Vancouver.

B.C. (2001). The author, Russell A. Hillman, P.Eng. is a qualified

geophysicist and his report appears to be full and complete insofar as his

survey area and methods will support. See Exploration chapter and related

Appendix.

- The business due diligence report of Business Resources L.L.C. of Mill

Creek, Oklahoma (November-December 2004) has been used and quoted in

the Other Relevant Data chapter.

- Company data on sampling methods, sampling results, gold production and

mineral processing have been used throughout the Review. Gold production

and disposition is supported by the President’s affidavit. The reviewer has

seen the records of the Company’s sampling program and related

exploration work which is presented in the Exploration, Mineral Processing,

Mineral Resources chapters and in Table 9-1, Results of Test Program.

- Statements and opinions of officials of the Government of the Yukon

Territory, in regard to official standings of claims, permits licences and

related matters.

The reviewers have accepted this data ‘prima facie’, but cannot claim ultimate

responsibility for statements or data therein. Geological and engineering opinions

and conclusions based on this and other data are, however, the responsibility of the

reviewers, whose certificates appear at the end of the Report.

1

1. PROPERTY DESCRIPTION AND LOCATION

Property Description

The Anderson Creek property consists of 39 placer mineral claims located in the

Mayo Mining Division, Yukon Territory, Canada. Aurora Mines, Inc. (Aurora) is

the legal and beneficial owner of the Anderson Creek property.

In the modern era, placer gold exploration has been conducted on the lower reaches

of Anderson Creek, largely on the discovery claim/lease, since the year 1989. In 2000

the 20 claims were acquired by Mr. Ray Brosseuk and partners, who began a

program of development.

A further 19 claims were staked in 2001. The property now comprises 39 claims

aligned along the axis of Anderson Creek, covering an area of 895.31 acres (363.31

ha) and forming a serpentine block extending some 1000 feet (300m) on each side of

the creek from its mouth to a point approximately 3.6 miles (6.0 km) upstream (see

Figure 1 – Claim Plan). Claims are laid out to be approximately 500 feet by 2000

feet in size (Discovery claim excepted).

The claims under consideration are listed as follows:

Claim Name Sunshine 1 Below (#P5911) to 3 Below (#P5913) 3 claims

Claim Name Discovery/Steven (#YB28728, now #3741) 1 claim

Claim Name Sunshine 1 (#P5297) to Sunshine 6 (#P5302) 6 claims

Claim Name Angie 1 (#P15507) to Angie 10 (#P15516) 10 claims

Claim Name Cassie 1 (#P47768) to Cassie 10 (#P47777) 10 claims

Claim Name Kyle 1 (#P47778) to Kyle 9 (#P47786) 9 claims

Total 39 claims

The Discovery Claim, and the Sunshine and Angie claims were staked many years

ago by the original owner (Mr. Manfred Wozniak) and purchased in the year 2000

2

by Mr. Ray Brosseuk. The uppermost two groups, the Cassie and Kyle claims, were

staked in 2001by Aurora Mines, Inc.

A Claims Status Report dated September 26, 2005 (see Appendix 1) shows that all

claims are in good standing at the time of writing (October 2005), there title is

unencumbered and that the registered owner is Aurora Mines, Inc. The Report

indicates that the Discovery, Below, Sunshine and Angie claims are effective

through October 10, 2019. The Cassie and Kyle claims had an expiry date of

September 21, 2005 and were recently renewed and are now valid through

September 21, 2012. The “R” beside their listings indicates that the renewals are

completed but officially pending.. All claims are unpatented. A full listing of the

claim particulars is given in Appendix 2.

The claims have not been legally surveyed. In accordance with Yukon Territorial

practice, the claims were laid out and measured by the staker and later verified

upon a site visit by the Mining Inspector.

Water Permit PM-04-387 (i.e. mining permit) was issued in January 2005 by the

Yukon Water Board, permitting placer mining on the lower nine claims of the

Company’s area of operations for a period of ten years. The permit allows for a

volume of water of 8 400m3 per day, sufficient to process up to 500 tons per hour of

raw material, and this volume can be amended if required. The permit is

transferable to a new owner if required. If additional mining area is required before

the end of the ten-year permit period, the permit can be amended.

3

Location

The claims are situated along Anderson Creek, which flows northeasterly and

drains into the south arm (also called Nelson Arm) of Mayo lake at a point about 2

km southeast of the bend where the south arm joins the main body of the lake. See

Figures 2, 3 and 4.

The mine site is approximately 50 km east northeast of the town of Mayo, 90 km

east-northeast of Stewart Crossing, the nearest point on the Klondike Highway, and

25 km southeast of Keno City, Yukon.

The Latitude – Longitude of the main workings is 63*43’ North and 135*03’ West.

The UTM coordinates of this point are Zone 8V (North), N7065245.0, E498353.0,

using the NAD 27 datum. The level of Mayo Lake is 671m (2203 feet) ASL. The

magnetic declination at the site is given as 34*18’ east of True North.

The claims are located in the areas covered by NTS Sheet 105M (1:250 000 scale)

and NTS Sheet 105M11 (1:50 000 scale).

The legal address of the Company is: Aurora Mines Inc.,

Post Office Box 128,

Mayo, Yukon Territory, Y0B 1M0

Fax Number: 867 456 3890

4

2. ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE

AND PHYSIOGRAPHY

Access

Travel from southern points is available by regular air service by either Air North

or Air Canada to Whitehorse, Yukon from Edmonton or Vancouver. There are a

total of four flights each day from those cities.

From Whitehorse, one proceeds by vehicle northward on the Klondike highway

some 280 km to Stewart Crossing. At Stewart, the Silver Trail highway leads

northeastward 55 km to the settlement of Mayo, and onward towards Keno Hill and

Elsa. At a point some 15 km north of Mayo, a side road (the Duncan Creek Road)

leads eastward, generally following the valley of the Mayo River. At a point about

18 km from the turnoff, at Mayo Bridge, a further side road leads southward and

eastward about 10 km to the western end of Mayo Lake. Alternatively, from Keno

Hill, the Duncan Creek road leads some 15 km southwestward to the Mayo Lake

side road turnoff. At the Mayo Lake terminus there is a boat landing.

The property lies some 18 km eastward, and is reached by private boat. The site is

on the southwest shore of the southeast arm of the lake about 2 km southeast of the

point where the arm joins the main body of the lake. The property can be reached in

the winter months by an ice road that runs across Mayo Lake. As well, unscheduled

float plane or helicopter service is available from Mayo in summer months.

The company owns a barge that is used for transporting heavy equipment to site. A

tanker barge owned by a different operator delivers fuel.

5

Climate

Anderson Creek is situated in an area of the Yukon where winter temperatures

reach 30 degrees C in the summer and go down to –40 degrees C in winter months.

As a result, the mining season generally commences in the first week of May and

ends in about the last week of October. The latitude is such that daylight is almost

continuous in June and July, allowing 24 hour operation in the high summer season.

Long term observations taken at Mayo (the nearest Environment Canada official

weather station) indicate the following data for the period 1977 – 2000:

Average daily temperature (year round) -3.1 *C

Average daily maximum: 2.8

Average daily minimum -8.9

Average daily temperature (July) 16

Average daily temperature (December) -31

Annual precipitation (rain) 205 mm

Highest monthly rainfall (July) 54 mm

Snow accumulation (Jan. – Feb), per month 35 – 40 cm

Days per month with rain > 5 mm (July) 12 – 15

Average wind speed (summer months) 5 – 8 km (N)

Local Resources

Water is in abundant supply in nearby Mayo Lake and less abundantly in Anderson

Creek. The Company has a water permit that allows sufficient water usage to

process 500 tonnes per day of placer material. There are plentiful supplies of sand,

gravel, and aggregate materials on site. The property is sparsely covered in Yukon

spruce that has some construction value.

6

The lower claims (mainly the Discovery and Sunshine claims) offer about 300 acres

(120 ha) of relatively flat areas available for mining activities, plant sites and

disposal sites for washed material. This is the area where the camp and processing

plant are located and where mine development has taken place to date.

Infrastructure

The property is serviced by boat from the landing at the west end of Mayo Lake.

The Company has a large barge sufficient to carry heavy mining equipment and

there is a landing wharf at site. Fuel is carried to site by a fuel barge owned by a

neighboring miner. Access to the site for passengers and smaller loads is provided

by private boat service and by the Company’s speedboat from the landing at the

end of the access road.

The Company has embarked on a program of development on the site that includes:

- an access road about 2 m in length that parallels Anderson Creek,

- other roads and clearings for operations and equipment,

- water supply dams and waste-water settling ponds,

- establishment of accommodation, office, storage, and workshop buildings,

- set-up and equipping of parts inventories and workshops,

- installation of satellite telephone and broadband internet communications.

Local service businesses that support the placer mining industry include trucking

services that will deliver materials from Whitehorse to Mayo on a daily basis. In

Mayo there are companies that supply mining parts and services to the industry,

major equipment repair services, electrical and building materials, auto parts

supplies and fuel supply service. The placer industry is a major activity in the

district and has developed a strong secondary support industry.

Electrical power at site is supplied by the Company’s own generator sets.

7

Physiography

The topography of the Mayo district is alpine in nature. The stream and river

valleys have been glaciated and show U-shaped cross-profiles, and the younger post-

glacial valleys have steep flow profiles and usually a V-shaped cross-profile.

Anderson Creek rises from the level of Mayo Lake (670m) to over 1200m at its

headwater area just 6 km to the southwest. Major peaks in the district rise to over

1800m, and some peaks to the northeast of Mayo Lake are permanently snow-

covered. The topography supports Yukon spruce on the slopes. There are some

extensive areas of knob-and-kettle terrain at higher elevations, covered by low

brush alder and willow. The highest elevations are treeless alpine meadows.

8

3. HISTORY

The early record of placer mining activity at Anderson Creek is now lost to history,

but some anecdotal data is given in “Gold and Galena”, a publication of the Mayo

Historical Society, by L.E.T. MacDonald and L.R. Bleiler (1999) (see pages 45 – 47).

In the years following the Klondike gold rush prospecting activity spread to the

Mayo area.

Initial discoveries were made in the creeks draining into Mayo Lake in 1903, and

these finds produced a small rush in the district. Miners prospected and tested

many of the Mayo Lake tributaries in the years following 1903. LeBarge et al (1998)

report that activity at Anderson and neighboring creeks was noted as early as 1903.

Signs of early activity are observed at Anderson Creek today in the form of pits and

waste heaps. Activity tailed off in the 1920s to some degree but there was a

resurgence of prospecting in 1933 following the increase in the price of gold to $US

35.00. It is known that there was mining work going on at Anderson Creek in the

1930s (MacDonald and Bleiler, 1999).

Almost all of the gold produced in those years was apparently won by conventional

placer mining techniques, that is, by excavation, sieving and washing in sluice boxes.

There was no dredging or deep placer mining, other than some small and shallow

underground workings. The delta area appears to have been largely untouched.

Upstream from the delta, the early miners would have experienced difficulties with

areas of large boulders (up to one or two cubic metres in size) These areas would

probably have been avoided in that time. The 2002 testing program found unmined

gravels in these zones. It appears on the ground that the mining activity during that

period was poorly organized and inefficient, and left a significant amount of gold in

the tailings and in place in the boulder-bearing areas.

9

In the 1940s (?) the Discovery claim on the Anderson Creek delta, along with the 19

others of the two lower groups of claims were staked by the grandfather of Manfred

Wozniak. In the 1980s aand 1990s these claims were held in the name of Mr.

Wozniak’s wife Margrit. Mr. Wozniak operated the mine property intermittently

from 1989 to 1999, apparently alone for much of the time (Yukon Placer Mining

Industry, 1989 – 1990 and sequel issues).

Mr. Ray Brosseuk of Revelstoke, B.C., Canada, a prospector, miner and

businessman, purchased the claims in 2000. Mr. Brosseuk and partners completed

preliminary sampling and excavation on the Discovery claim in 2000. The results of

testwork on these samples prompted him and his partners to stake an additional 19

claims on the upper section of the creek in the 2001 season, the ten Cassie claims

and the nine Kyle claims. These claims were held in the name of 20861 Yukon, Inc.,

a company established by Mr. Brosseuk and incorporated January 24, 2000 for the

purpose of holding these and other future claims. The name was changed effective

May 10, 2000 to Aurora Mines, Inc.

In the winter of 2001 a geophysical program was completed. Seven seismic cross-

profiles and three longitudinal profiles were made to estimate depth of the gravel

section and the global resource volume on the Angie and Sunshine groups. This

work is discussed in a later section of this report.

Further bulk sampling work was done in the summer season of 2001 on the

discovery and adjacent claims, with satisfactory results. As well, in 2001 a test

program of hand-panning testwork was completed to the top of Anderson Creek. It

showed that gold values persisted in the upper stream valley. In the course of this

work old diggings and three cabins from the early days were found at points along

the upper creek course.

In 2002 exploration work continued on the Discovery and the adjacent downstream

claim (the ‘1 Below’). Also, large-scale sampling work was pushed upstream into the

10

so-called Narrows area on claims Sunshine 1, 2, and 3. Here the valley constricts

severely as one goes upstream above the delta plain. This constriction was caused by

a major slump collapse of the valley walls in 1997 (Yukon Placer Mining Industry

1995-1996-1997; published by Yukon Government). Values continued to hold well

and two very rich samples of approximately 200 cubic yards each yielded results in

the 0.1 to 0.13 ounces per cubic yard range. (All values and their locations are listed

and discussed in a later section on Exploration).

In 2003 only limited mining took place as the season was dedicated to general

development work on the site, including

- road excavation through the difficult Narrows area to gain access to the

upper claims, the main task of the season,

- equipment and plant refurbishment,

- improvement and re-routing of roads, access routes and plant areas to meet

updated environmental standards and to support future work.

In 2004 the mine was sold. The contracted buyer was unable to secure funding,

however, and the sale was halted; the mine was not operated in 2004.

11

4. GEOLOGICAL SETTING

Regional Geology

The regional geology has been described by LeBarge et al (2002) and a summary

regional map is presented in Figure 6.

The Robert Service Thrust Fault crosses the area from northwest to southeast and

crosses Mayo Lake at its center, passing down the south arm (Nelson Arm). Rocks

to the southwest are of Upper Proterozoic to Lower Cambrian (Hyland Group) ages

that are overthrust upon those to the northeast, which are of Paleozoic age, ranging

from Middle Paleozoic (Devonian-Mississippian Earn Group to the Mississipian

Keno Hill Quartzite. The Roop Lakes Stock (Cretaceous hornblende-biotite granite)

outcrops to the north of the Roop Arm in the Roop Lakes area. Between the Roop

and Nelson Arms of the lake the Mayo Lake anticline dominates the plateau. A

swarm of dioritic dykes and plugs of Cretaceous age occurs occurs in the Paleozoic

rocks along a general line from the Elsa-Keno district southeastward to the eastern

Mayo Lake area (see Figure 6). The igneous hydrothermal activity associated with

their emplacement may be the ultimate source of the gold and other metallic

deposits of the region. It has been noted that in some areas south and west of Keno

the Devono-Mississipian sedimentary units show intensive local alteration and

bleaching, probably signs of late (Cretaceous?) mesothermal or epithermal hydrous

reaction.

Surficial Geology (Unconsolidated Materials)

These deposits consist of materials laid down by glaciers (kames, moraines, fluvial

deposits, outwash deposits) and the sedimentary deposits (terraces, valley deposits,

delta fans, etc.) that were laid down by drainage processes working on the glacial

deposits.

12

There were several stages of glaciation in the central-south Yukon region. See

Figure 7. These include he following, listed from youngest to oldest):

- McConnell glaciation. Age >10 000 to 30 000 years. Direction east to west.

The western limit of McConnell deposits in the region of Mayo Lake.

- Reid glaciation. Age pre-200 000 years, as dated by volcanic ash deposits laid

down on Reid sedimentary deposits. The limit of Reid glaciation lies about 50

km northwest of Mayo Lake, and the direction of movement was apparently

southeast to northwest.

- Pre-Reid glaciation. An older age of glacial deposits is found beneath the

Reid deposits, and these are found as far west as Dawson City (over 200 km).

The advance of the glaciation at each stage ploughed and moved the surficial

materials from the lake bottoms, river valleys and uplands into poorly sorted mixed

deposits at the glacial terminus. The retreat of the glaciers in each stage laid down

poorly sorted coarse and fine materials from the melting ice and also led to the

release of large volumes of melt water. These steams, running down very steep

narrow valleys, rapidly and intensely eroded the glacial deposits and re-deposited

the materials in river channels, valley courses and in large deltas extending into the

major lakes of the region.

Local Geology

In the Mayo Lake area there are few outcrop areas of bedrock, and the bedrock is

usually only seen in stream beds and at upper levels on the plateau.

The Mayo Lake area lies within the Reid glaciated area and at the limits of the

McConnell glaciation zone. The valley deposits in the creeks draining into Mayo

Lake show successions of clastic sediments as indicated in Figure 8. The figure

shows an idealized cross-valley section to show the eight facies of glacial, periglacial

and holocene (post glacial) sedimentation defined by LeBarge et al. Around Mayo

Lake most commonly only the upper five units are noted in the valleys:

13

- Assemblage 8. Holocene alluvial sediments. Sands, gravels, silts. These

deposits form the deltas extended into the lake, as at Anderson Creek.

- Assemblage 7. Late McConnell periglacial sediments. Cobbles, gravels,

sands and some silt. Cross-bedded pebbly sand units.

- Assemblage 6. McConnell glacial sediments. Massive to stratified

pebbly and fine sands, poorly sorted. Fluvial sedimentation, and lake sediments.

- Assemblage 5. Early and Middle McConnell periglacial sediments.

Stratified and crossbedded gravels.

- Assemblage 4. Post-Reid interglacial alluvium. Fossil soils, boulder

beds, sand units.

The assemblages are successive in time, as the lake level has lowered in the post-

glacial era. These units are not everywhere present, but are the most commonly

observed. Other, older units are also observed in some valleys where they were

protected and preserved during the McConnell episode.

Most of the significant Mayo Lake placer gold deposits lie at the apex of fan deltas

that built out into the lake in the Holocene (post-glacial) era. These are the result of

the erosion of the glacial deposits formed at higher levels in the valleys, and formed

(and dropped their gold) as the stream velocities were reduced on approaching and

reaching the hydrologic base level. Upstream deposits were formed by successive

stages of scouring and redeposition of gold as the stream reworked the earlier

deposited material and laid down the gold in eddy centers and low velocity pools.

Coarse boulders and cobble beds also trap gold on the stream beds.

The bedrock sources of the gold is presumed to be the intrusive units and quartz

veins which cut the local Paleozoic schists and quartzites.

14

Deposit Geology

Anderson Creek falls clearly into the fan delta type of deposit, as well as showing the

characteristics of upstream river valley deposits, as shown by the bulk sampling

program ( described in a later section). Values are found in both settings. As seen

proceeding upstream, the area of most intensive sampling (see Figure 13) is in the

upper part of the alluvial fan where the fan constricts and enters the valley gorge

proper.

Figure 9 shows a panel diagram (from Lebarge et al, 2002) of the north face of the

excavated area, and shows a succession of nine identifiable units. The lowest is the

main pay band, although values are found throughout the column. These units are

all within the Assemblage 8 of LeBarge and co-workers, with the possible exception

of Unit 1 in the photograph, which may be periglacial. Note the very large (up to one

metre) boulders in the exposed wall at this level.

The cross profiles of the lower valley have been determined in seven places by

seismic survey. These show a broad well developed bedrock depression with

overburden thicknesses from approximately one metre to over 60 metres in the

outer sector of the delta. This work will be discussed in a later section on

Exploration.

The bedrock (composed of the meta-sediments of the Hyland Group) is found to

strike northwest-southeast in the area and dips to the northeast, that is, normal to

the direction of stream flow. A bedrock fault, found during excavation, that lies

along the line of the mine site road is of great interest as it lies along the present

gold-bearing channel. Mr. Brosseuk has suggested that this fault-line zone should be

tested more carefully in the future as it could lead to gold-rich accumulations, as the

depths in the fault area appear to be five to eight metres deeper than the current

channel.

15

Old m

ine shafts and tunnels were found during the excavation of test pits and

trenches, probably dating from the period 1900 – 1930s. T

ailings one to two m

etres

thick were found in m

any places. The tailings com

monly covered areas of m

ixed

sand, gravel and boulders up to 20 – 25 metres thick overlying the bedrock.

16

5. DEPOSIT TYPES

The deposit types, as discussed in the foregoing section, are two. The first, and most

important at this time, is the fan delta type of placer deposit. This part of the

property has been extensively sampled over a large area, and the data show a

consistent level of gold concentrations with the median values in the 0.5 gm per

cubic yard range. The grade distributions will be discussed in a later section.

A program of hand-panning to test the upper parts of the stream (above the

Sunshine 4 claim) has shown that values continue upstream, indicating that the

valley-bottom type of deposit can be demonstrated.

17

6. MINERALIZATION

In the test program conducted in the work seasons of years 2000, 2001 and 2002, 93

large samples (total 36 600 cubic yards or approximately 40 000 metric tonnes) were

taken and processed to yield some 729 grams of gold.

The gold has been described as reddish in color, coarse grained and occurring with

a great deal of black sand. The size distribution varies from sub-millimetre size up

to about 4 cm, the latter as rounded flattened bodies up to four ounces in mass.

Some of the coarser nuggets contain quartz. The size distribution is weighted

toward a coarse population of particles, which is reasonable considering the

steepness of the stream profile (approximately 100 metres per kilometre).

At the mine the Company sorted the gold produced from each sample batch into

two screen classes, <20 mesh and >20 mesh. The fines were further divided into

<80 mesh and >80 mesh classes and coarser fraction into <4 mesh and >4 mesh, and

the fractions were weighed. The results for the gold size distribution on the 93

batches can be aggregated as follows, as reported by Mr. Ray Brosseuk, President.

Screen Class Aperture Weight Fraction % Retained

> 4 mesh > 4.75 mm 17 % 17 %

< 4, >20 mesh < 4.75, >0.90 mm 34 % 51 %

< 20, >80 mesh < 0.90, >0.17 mm 33 % 84 %

< 80 mesh < 0.17 mm 16 % Remainder

The results can be plotted on a log-probability graph as shown on the following

page. This graph indicates that the three points (red points) representing the three

screen mesh sizes and marking the accumulated percentages of the weight of gold in

the 4 classes fall on a straight line, meaning that the distribution follows a log-

normal distribution, in common with many other natural distributions. The

straight-line curve allows the prediction of the probable range of gold particle sizes.

18

The horizontal axis of the plot is measured in z values, or the number of standard

deviations (the log of) the particle size lies from the mean particle size. The graph is

based on the probability curve and indicates that portions of the total mass of gold

grains will be retained on ASTM standard testing screens as follows:

-2.0 sigma 30 – 40 mm size approx 2.5 % of mass of gold retained

-1.0 sigma 4 mesh (4.75 mm) 16% of mass of gold retained

0 sigma 20 mesh (0.9 mm) 50% of mass of gold retained

+1.0 sigma 80 mesh (0.17 mm) 83% of mass of gold retained

+2.0 sigma 325 mesh (0.045 mm) 97.5% of mass of gold retained.

The yellow points represent where some other standard screen mesh sizes would lie

on the extrapolated line. For example, we can say that only about 6per cent of the

mass of gold (<1.5 sigmas) will be less than 0.063 mm (230 mesh) in particle size so

that a high efficiency could be achieved if this were the minimum size retained by

the process. Similarly, by extrapolation one can say that only about 2.5 per cent of

the gold will be less than 325 mesh (.045 mm) in average size, so that any special

effort to capture gold at such a mesh size, or finer, will be poorly rewarded.

Similarly, the largest particles of gold (-2.5 sigmas, the 99th percentile) will be in the

50 to 100 mm range. Therefore the rougher screen on the gravel washing apparatus

must be no smaller than this size, because the occasional nugget will be this big, but

need be no larger than this size, because anything larger will be rock, not gold. In

fact the largest particle recovered in the test work is about 40 mm long and 20 mm

across. It is necessary to note, however, that at the top of the curve, i.e. > 10 - 15 mm

particle size, the distribution law will break down because there are so few particles

in this size class. Therefore the curve has limited predictive value at this end and

must be used with caution.

It may seem that the curve in the graph is not robust because only three screen

division points fix its location. But each of these three points represents the

19

aggregate of 93 observations. Any further screen divisions on the curve, if they were

available in the data, would be unlikely to change the outcome.

The refiner’s purchase certificates as seen by the writer indicate that the gold

ranges between 860 and 887 fineness. The company has used a value of 860 (86%) in

the table of sampling results (See Chapter 7 – Exploration).

As noted elsewhere, controlled test runs using material of known gold content have

shown that the apparatus operates with an efficiency of 91 – 94 per cent.

Plate 1 shows examples of the gold particles recovered during the 2000 – 2002

sampling program.

No data is available on other heavy minerals that occur in the Anderson Creek

heavy mineral suite, except that the occurrence of magnetite has been noted. It may

be worth the investigative effort to examine the suite of heavy minerals to see if

other minerals, for example zircon and garnet, occur in amounts worth recovering.

20

7. EXPLORATION

Figure 10 presents a summary of the locations of exploration work carried out since

1989. Chapter 3 (History) gives a brief history of activity on the creek.

The oldest known work on the creek was done in the 1800s and early 1900s by early

prospectors but no records remain of this work or how productive their work was.

Remains of their work are seen on claims on the upstream areas of the creek and the

remains of three cabins were also found.

Mr. Manfred Wozniak worked the Discovery Claim and on the claim Sunshine 1

Below (P5911) (Yukon Placer mining Industry 1989 – 1990). He worked his way

upstream as far as Sunshine 1 (claim P5297) by the year 2000. There are no records

of his results or whether he pursued any methodical exploration and development

plan.

Exploration Approach

The method of placer exploration conducted by Aurora at Anderson Creek has been

an integrated approach employing:

- seismic refraction surveys over delta and lower stream areas,

- bulk sampling from deep test pits, plus, at Anderson Creek,

- extraction of gold using the Company’s proprietary HPC/Gold Machine

technology. Older properties employ a simpler sluice box extraction method.

This is recognized in the district as being the best approach for exploring and

testing the deposits. The major advantages of this plan are

- a good, and often accurate definition of depth to bedrock, sedimentary layers

and general bedrock topography, making it possible to make volume

estimations and to locate bedrock traps,

- direct observation of the placer deposits in the excavation walls,

21

- minimal site damage, allowing easier and immediate reclamation measures,

- in Aurora Mines case, the use of their proprietary HPC / Gold Machine

technology, used in the sampling phase and in the full scale production

phase. Thus, the sampling method is exactly the same as the mining method,

allowing total prediction of forward volumes and potential yields.

Exploration Program

After Mr. Brosseuk purchased the claims in 2000, the new Company began a

program of systematic bulk sampling while mining the property. In 2000

excavations were carried out on the Discovery Claim and on the Sunshine 1 Below

claims, and was continued into 2001 on these claims.

In 2001 a program of handpanning was completed from the Narrows area to the top

of the creek to determine the continuity of values in the upper parts of the stream.

Good values were reportedly found but since this work was not systematic in

location or in sample representativity, the results while gratifying did not add to the

total exploration archive.

In early 2001, during winter months, a seismic survey was conducted on the delta

area and as far upstream as Claim Angie 10. Seven lines were laid across the valley

and three long lines were laid out along the stream axis. This work, which will be

described in a later paragraph, had the purposes of determining the depth and

shape of the valley bedrock profile and of allowing an estimation of the volume of

available resource material in the lower parts of the valley. The locations of the

seismic lines are shown in Figures 11 and 12.

Bulk Sampling Program

The bulk sampling begun in 2000, using new equipment and higher throughput of

material, yielded positive results. About 14 000 cubic yards were processed. The

22

data convinced the Company to stake the additional claims on the upper reaches of

the stream course in order to control the resources of the entire valley.

Further large-scale excavation sampling was completed in 2001 on the Discovery

Claim and on claim Sunshine 1 Below, from which about 13 000 cubic yards were

washed, yielding 251 ounces of gold.

In 1997 there had been a major slumpage caused by the stream eroding into clay

layers in the valley walls. The area is called the Narrows because the slumping

seriously constricted the stream in this reach, and is covered by claims Sunshine 1, 2

and 3. Thus in 2002 the Company began a campaign to excavate a route through

this area to permit access to the claims further up the creek.

Excavation sampling continued in 2002 on claim Sunshine 1 Below, the Discovery

Claim and upstream into the Narrows area on claims Sunshine 1, 2, and 3.

The clearing of the Narrows was the main focus of that season. The material

excavated and processed from this area, about 9 500 cubic yards, was processed and

yielded values in the $5.00 to 50.00 per cubic yard range. As well, some further

sampling was conducted on the right bank of the Discovery Claim in 2003.

The 2003 program continued some sampling work on the south bank of the

Discovery claim, but the main focus of work was directed to improvements in the

layout of roads and work areas, equipment repair and road and improvement of

access road to the upper claims upstream on the Narrows area described above.

The area sampled in this lengthy program is outlined in Figure 12. Figure 12 shows

a grid of cells that has been superimposed on the area plan for purposes of

description and illustration, and sampling sites are referred to this grid and listed in

Table 9 – 1. Material has been taken from all of the cells in the tinted area and

passed through the gold-washing plant. This area is about 45 acres in extent (about

23

18 hectares), all within the lowest 7 claims of the property. The work required just

over 800 hours of wash-plant work during the three-season period.

The samples were taken by excavating deep ramps, pits and trenches in the

unconsolidated materials of the delta and river valley, diverting the creek when and

where necessary. An effort was made to reach bedrock in all the sampled areas, so

that the complete sedimentary column was tested.

There were 93 samples each averaging about 400 cubic yards taken from this area.

In some cases two samples were taken from one location if the stratigraphic section

was a deep one, one representing the upper part of the section, the second

representing the deeper part. The detailed results of the program are shown in

Table 9 – 1, in the Chapter on Sampling Method and Approach,

The sampling program showed that the overburden above bedrock was from 10 feet

to 75 feet thick in this area, and averaged about 35 - 40 feet (approx. 12+m). This is

in agreement with records of earlier work done during the time of the previous

owner, who worked parts of the same area. Gold values are distributed throughout

the area and there are no cells that do not yield gold in paying amounts, i.e. amounts

that exceeded the operating costs per cubic yard (about $ 1.40 according to

Company records). The results are discussed in greater detail in Chapter 9.

The sampled area contains an approximate volume of 2 155 000 m3 to an average

depth of about 12 metres, or approximately 2 820 000 cubic yards. The total sample

volume that was processed is 36 557 cubic yards. Thus, as it happens, the sampling

removed and tested more than one per cent of the volume of interest. Given the

large area, the depth of the resource, and the distribution and depth of the

sampling, the sampling can reasonably be described as adequate and representative.

24

Geophysical (Seismic) Survey

The layout of the seismic lines and their locations are shown in Figures 11 and 12.

The geophysical report, by Frontier Geosciences and written by Russell A. Hillman,

P.Eng is included as an appendix to this report.

The purpose of the survey was to explore the nature and thickness of the

overburden materials and the depth to bedrock. The specific objective was to profile

the bedrock in selected sectors to locate any potential infilled placer channels in the

bedrock surface, and if possible yield data for a global resource volume.

The survey laid out 8 separate lines along which refraction seismic sonic

measurements were taken. The instruments used were a Geometrics Smartseis S-24

data receiver (capable of supporting a 24-geophone spread), a Geometrics HVB

capacitor-type blaster, and the energy sources were small explosive charges initiated

by instantaneous type blasting caps.

The results showed two distinct layers, an upper layer with a seismic velocity of

about 1 500 metres per second, representing the overburden, and a lower layer with

velocities in the range of 3 000 to 4 000 m/s, representing various types of bedrock.

Results, listed for the cross-channel line from delta to upstream areas, can be

described as follows:

Line Bedrock Valley Width Bed. Valley Depth Description

SL-2 130m 35m Broad, moderate, V-shaped

SL-8 70 10 Broad, moderate, U-shaped

SL-3 100 5 Broad, gently, curved

SL-4 80 (half-width) 1 to 10 Moderate slope, thin-covered

SL-5 40 (half-width) 0 to 5 Broad,gentle. A second channel,

20 m across and 15 m deep, is

25

observed.

SL-7 60 (half-width) 0 – 10 Broad gentle bedrock valley.

SL-6 100 m 10 – 50 m Pronounce V-shaped channel.

The lines parallel to the stream axis show a downstream sloping bedrock line that is

usually regular but with some stretches of hummocks. The drop-off from the stream

valley to the delta fan is clearly seen. Upstream, at Line 6, there is a deep pocket of

stream placer sediments, whose size cannot be determined because neither the cross-

line nor the axial line delimit its extent. The data show that the valley floor

sediments are not thick above claim Sunshine 3, and mining material will have to

come from the valley walls and slopes. The exception to this is the deep pocket of

sediments at Line 6. This zone should be examined in a future, more detailed seismic

survey.

Over all, the survey showed that there are significant volumes of untested placer

material and potential placer gold traps in irregularities on the bedrock surfaces.

The geophysical report states that the interpreted depth to bedrock is generally

valid within plus or minus 10 per cent in this type of survey. Mr. Brosseuk has

reported that geological data obtained by pit excavations by Aurora supports the

data obtained in the seismic survey, and further, depths to bedrock were generally

correct within one metre.

The geophysicist reported some problems locating bedrock in places, presumably

due to frozen soil layers. Further details of the work can be examined in the report

in the Appendix.

26

8. DRILLING

No drilling has been attempted on the property. Drilling is not an effective method

of assessing and evaluating placer deposits of this type.

Instead, the methods of choice are direct sampling and seismic bedrock surveys,

both of which have been employed and which are described in this report.

27

9. SAMPLING METHOD AND APPROACH

After acquiring the property in 2000, the Company decided to evaluate the fan delta

area first, and then to work upstream. Particular importance was attached to the

upper part of the delta, where the sedimentary material debouches onto the fan,

because it is in this zone that the water flow loses velocity as the stream widens and

the gradient decreases.

The method of evaluation was to take measured batches of the placer and alluvial

deposits at known and recorded locations and process them through the washing

plant as would be done in the normal course of mining. In this way, the sampling

method was the same as the mining method. The only and significant difference was

that sample volumes, locations and yields were carefully noted and recorded. In this

way a map of gold values, and a sense of where gold was located in the stratigraphic

column, could be gradually built up as sampling proceeded, and the incidental gold

production supported the operating and development costs on the deposit.

The sampling method consisted of driving trenches and ramps into the sedimentary

delta fan materials using bulldozer, loading the trucks with a front-end loader and

transporting the sands and gravels to the two trailer-mounted wash plants. One

wash plant was operated in 2000 and 2001, and two identical plants were operated

in parallel in 2002. Both plants were of the same design and capacity. The plant

incorporates a vibrating feeder and screen system, an inner perforated steel rougher

trommel, and an outer rotating steel cylinder equipped with spirals on its inner wall

that capture heavy minerals and, finally, a sluice channel with riffles that capture

the gold. The design of the plant is the product of Mr. Ray Brosseuk, and it has a

very high efficiency and selectivity compared to other designs. The plant

characteristics are described more fully in a later chapter and in an appendix to this

report, as it is central to the Company’s operations and business plan.

28

The results of the long period of planned sampling are shown in Table 9 – 1 and in

Figure 13. Figure 13 shows an outline map of where the sampling was done, and the

table shows locations of individual samples, their volume in cubic yards, gold yield

in grams, Troy ounces and dollar value per cubic yard (at US$400.00 per ounce).

The time of sampling is also shown in Column 1, and the table also shows the depth

of sampling for each sample, and whether the excavation reached bedrock. The

samples, averaging about 400 cubic yards each, were taken from trenches, pits, and

stream banks in the sampled area. The table shows the depths from surface that the

sample represents.

The volume of each sample was captured by first measuring the dimensions of the

shovel of the excavator used for loading material into the hopper of the wash plant.

Then a load cell on the hopper recorded the number of shovels loaded into it during

each shift or each sample run.

The sample locations are shown in Column 9 of the table and refer to the columns

and rows shown on Figure 13. For example the first sample in the table was taken

from the area shown in the grid included in columns L and M, in row 26. Bulk

samples were taken from every cell included in the outlined area. The sampled area

covers about 18 hectares (45 acres). The sample density works out to approximately

one sample per 2 000 m2.

During this task, 93 samples totaling 36 557 cubic yards of material (about 45 000

short tons or 40 000 tonnes) was processed to yield 729 ounces of gold, for an

average yield of 0.02 ounces per cubic yard. This is the equivalent of 0.53 grams of

pure gold per cubic yard (at fineness of 860 in the crude gold). Expressed in other

ways, the mean yield was approximately 0.72 grams per cubic metre or 0.88 grams

per tonne.

Anderson Creek Mine: 2000 - 2002 Test ProgramNote: Approximately 1.25 tons per cubic yard

2000 Gold Testing Program - One HPC-200 in operation

Cubic Yards Processed

Fine Gold (g)

Coarse Gold (g)

Total Gold (g)

Total Gold(Troy Oz.)

Value US$(at $400/Oz. x 86%)

US$ per Cubic Yard Location From

Depth (ft) To Depth (ft) Hit Bedrock

20-Aug-00 452 84 52 137 4.4 $1,512 $3.35 L-M 26 Area 0.0 10 NO189 64 37 102 3.3 $1,124 $5.95 L-M 26 Area 10 20 NO

21-Aug-00 420 116 56 172 5.5 $1,903 $4.53 L-M27 Area 0.0 20 NO210 56 29 85 2.7 $939 $4.47 L-M 28 Area 0.0 20 NO

22-Aug-00 420 136 68 204 6.5 $2,252 $5.36 L-M 29 Area 0.0 20 NO70 60 29 89 2.9 $983 $14.05 L-M 30 Area 0.0 20 NO

23-Aug-00 350 64 37 101 3.2 $1,115 $3.19 L-M 31 Area 0.0 20 NO448 112 167 279 9.0 $3,086 $6.89 J-K 23 Area 0.0 20 NO

24-Aug-00 455 124 89 213 6.8 $2,353 $5.17 J-K 24 Area 0.0 20 NO614 58 101 159 5.1 $1,754 $2.86 J-K 25 Area 0.0 20 NO



28-Aug-00 368 81 116 198 6.4 $2,188 $5.95 J-K 29 Area 0.0 20 NO294 110 176 286 9.2 $3,165 $10.76 J-K 30 Area 0.0 20 YES

29-Aug-00 147 45 32 77 2.5 $854 $5.81 I-30 Area 0.0 10 YES550 148 653 801 25.7 $8,858 $16.12 J-K 31 Area 0.0 30 YES

30-Aug-00 490 118 332 450 14.5 $4,980 $10.16 J-K 32 Area 0.0 25 YES559 96 345 441 14.2 $4,872 $8.72 J-K 33 Area 0.0 30 NO

31-Aug-00 532 84 73 157 5.1 $1,739 $3.27 H 30 Area 0.0 15 YES420 116 66 181 5.8 $2,003 $4.77 J-K 18 Area 0.0 25 NO

1-Sep-00 360 135 90 225 7.2 $2,483 $6.90 J-K 19 Area 0.0 25 NO420 146 87 233 7.5 $2,579 $6.14 J-K 20 Area 0.0 25 NO






TOTAL / AVERAGE 14,118 3,715 4,975 8,689 279.4 $96,111 $6.81

Purchased mine in May 2000 and setup until August (stripping, all equipment brought in & camp construction)

2001 Gold Testing Program - One HPC-200 in operationCubic Yards Processed

Fine Gold (g)

Coarse Gold (g)

Total Gold (g)



US$ per Cubic Yard

15-Aug-01 77 140 38 178 5.7 $1,970 $25.58 J-K 18 Area 50.0 85 YES84 115 31 146 4.7 $1,610 $19.17 J-K 19 Area 50.0 75 YES

16-Aug-01 70 65 30 95 3.1 $1,050 $15.00 J-K 20 Area 50.0 75 YES210 105 107 212 6.8 $2,346 $11.17 J-K 21 Area 50.0 70 YES

17-Aug-01 193 89 65 154 4.9 $1,698 $8.79 J-K 22 Area 25.0 60 YES403 68 30 98 3.2 $1,086 $2.70 I-18 Area 0.0 20 NO

19-Aug-01 292 87 67 154 5.0 $1,703 $5.84 I-19 Area 0.0 20 NO357 74 69 143 4.6 $1,580 $4.42 I-20 Area 0.0 20 NO

20-Aug-01 410 108 19 127 4.1 $1,409 $3.44 I-21 Area 0.0 20 NO302 133 88 221 7.1 $2,439 $8.08 I-18 Area 20.0 45 YES

21-Aug-01 392 111 32 144 4.6 $1,588 $4.05 I-19 Area 20.0 35 YES350 121 43 164 5.3 $1,812 $5.18 I-20 Area 20.0 30 YES

22-Aug-01 308 134 76 210 6.8 $2,323 $7.54 I-21 Area 20.0 30 YES469 136 46 182 5.8 $2,012 $4.29 J-K-L 34 Area 0.0 20 NO

23-Aug-01 455 155 59 214 6.9 $2,362 $5.19 J-K-L 34 Area 20.0 40 NO350 174 68 242 7.8 $2,677 $7.65 J-K-L 35 Area 0.0 20 NO

24-Aug-01 315 121 48 169 5.4 $1,864 $5.92 J-K-L 35 Area 20.0 40 NO350 190 76 266 8.6 $2,943 $8.41 J-K-L 36 Area 0.0 20 NO

26-Aug-01 385 168 56 224 7.2 $2,472 $6.42 J-K-L 36 Area 20.0 40 NO420 186 73 259 8.3 $2,864 $6.82 H-I 34 Area 0.0 20 NO

27-Aug-01 368 193 144 337 10.8 $3,723 $10.13 H-I 34 Area 20.0 40 YES420 177 87 265 8.5 $2,929 $6.97 H-I 22 Area 0.0 30 YES





2-Sep-01 473 199 77 277 8.9 $3,062 $6.48 H-I 31 Area 0.0 15 YES490 102 81 183 5.9 $2,020 $4.12 H-I 32 Area 0.0 20 YES

3-Sep-01 490 128 385 513 16.5 $5,670 $11.57 H-I 33 Area 0.0 25 YES560 99 353 451 14.5 $4,989 $8.91 H-I 35 Area 0.0 20 NO

4-Sep-01 504 177 257 434 13.9 $4,798 $9.52 H-I 35 Area 0.0 40 YESTOTAL / AVERAGE 12,991 4,703 3,109 7,811 251.2 $86,399 $6.65

2002 Gold Testing Program - ** Two HPC-200 Machines in operationCubic Yards Processed

Fine Gold (g)

Coarse Gold (g)

Total Gold (g)



US$ per Cubic Yard

11-Aug-02 140 37 17 54 1.7 $597 $4.27 G-H 17 Area 0 20 NO12-Aug-02 245 60 49 109 3.5 $1,206 $4.92 G-H 17 Area 20 45 YES13-Aug-02 280 80 24 104 3.3 $1,150 $4.11 G-H 18 Area 0 20 NO14-Aug-02 210 60 29 89 2.9 $984 $4.69 G-H 18 Area 20 40 YES15-Aug-02 315 65 42 107 3.4 $1,184 $3.76 G-H 19 Area 0 20 NO16-Aug-02 280 101 97 198 6.4 $2,190 $7.82 G-H 19 Area 20 45 YES18-Aug-02 210 22 16 38 1.2 $420 $2.00 G-H 20 Area 0 20 NO19-Aug-02 280 59 50 109 3.5 $1,206 $4.31 G-H 20 Area 20 40 YES20-Aug-02 70 30 28 58 1.9 $642 $9.16 L-M 22 Area 0 40 NO21-Aug-02 245 47 67 114 3.7 $1,261 $5.15 L-M 22 Area 40 75 NO22-Aug-02 315 97 35 132 4.2 $1,460 $4.64 L-M 23 Area 0 40 NO23-Aug-02 140 78 13 91 2.9 $1,007 $7.19 L-M 23 Area 40 75 NO25-Aug-02 70 42 25 67 2.2 $741 $10.59 L-M 24 Area 0 40 NO26-Aug-02 140 49 16 65 2.1 $719 $5.14 L-M 24 Area 40 75 NO28-Aug-02 1,190 450 234 684 22.0 $7,566 $6.36 ** L-M 25 Area 0 40 NO

2-Sep-02 1,120 310 172 482 15.5 $5,331 $4.76 ** L-M 25 Area 40 75 NO205 167 594 761 24.5 $8,417 $41.06 ** Narrows material J 38 Area 0 10 YES

3-Sep-02 980 200 202 402 12.9 $4,447 $4.54 ** J 39 Area 0 10 NO213 272 707 979 31.5 $10,829 $50.84 ** Narrows material K 38 Area 0 15 YES

4-Sep-02 910 201 212 413 13.3 $4,568 $5.02 ** I-J 40 Area 0 15 NO5-Sep-02 1,050 300 223 523 16.8 $5,785 $5.51 ** I-J 41 Area 0 15 NO6-Sep-02 840 351 233 584 18.8 $6,460 $7.69 ** I-J 42 Area 0 15 NO

TOTAL / AVERAGE 9,448 3,078 3,085 6,163 198.2 $68,170 $7.22

** 2 HPC-200 Machines in operation

Anderson Creek: 2000 - 2002 Test Program Summary

Cubic Yards Processed

Fine Gold (g)

Coarse Gold (g)

Total Gold (g)



US$ per Cubic Yard

Pure Oz. per cubic yard

Pure Grams

per cubic yard

2000 14,118 3714.5 4974.6 8689.1 279.4 $96,111 $6.81 0.01702 0.529312001 12,991 4702.6 3108.5 7811.1 251.2 $86,399 $6.65 0.01663 0.517082002 9,448 3078 3085 6163 198.2 $68,170 $7.22 0.01804 0.56098Total 36,557 11495.1 11168.1 22663.2 728.7 $250,680 $6.86 0.01714 0.53315

$2.00 Minimum US$ yield per cubic yard during 3-year test program$50.84 Maximum US$ yield per cubic yard during 3-year test program

$6.86 Average US$ yield per cubic yard during 3-year test program(Based on a gold spot price of $400/Oz. and purity of 86%

ASSUMPTIONS$400 Gold spot price per Troy Ounce86% Crude Gold Price Index$344 Gold price per Troy Ounce (crude)

$11.06 Gold price per gram (crude)

29

The sampling program is the principal exploration effort carried out on the claims

to date, and it was completed with all due care given to the sampling parameters

outlined above.

The Gold Washing Plant

Model 200 IE-TEC HPC/Gold Machines were used for the processing. One plant

was used in the summers of 2000 and 2001. In 2002 another similar plant was added

and operated in parallel. These wash plants are mounted on flat-bed semi-trailer

platforms and employ a patented system of screens, trommels and flexible rubber

spirals that was developed by Mr. Ray Brosseuk, the president of the Company and

is a proprietary technology of IE-TEC Inc. The machines have a high efficiency of

recovery and are capable of each processing 200 tons per hour of bank-run

sedimentary material. A picture and description of the machine is included in the

appendix to this report.

Where two samples were taken in one place, the deeper sections tend to be richer

than the near surface sections above, but this is not always the case. The areal

distribution of values is rather random and does not show much zonation or

clumping. Satisfactory values continue upstream into the Narrows area on claims

Sunshine 1, 2 and 3. The two highest yield values (over $40.00 and over $50.00 per

cubic yard) are on claim Sunshine 2. All of the material processed would be run of

mine resource, as the yield exceeds the mine operating costs.

There are no factors of sampling or recovery that could have lent bias to the results

of the program. The settings and operation of the wash plants were optimized for

the maximum gold extraction well into the fine screen-size separation range, and

these settings would be the same for the mining operation.

An independent test of the machines and their technology using a prepared

concentrate was made by engineer Gerhard Van Rosen in 1993 (during the early

30

development phases of the equipment) and indicated that the machine captured 91 –

94 per cent of the free gold in the test sample. The remaining gold was fine gold

intergrown with magnetite or silicate grains. (Company documents).

The sample quality was thus as good as sampling can be, - that is, material collected

in large quantities, over a large sample area, at various depths, and mined and

processed by the same methods that are used in the commercial mining cycle.

The sampled area was selected to cover a large part of the fan delta and the lower

stream area, in the area that will be the locus of mining operations for some time

into the future. The total sample volume is equivalent to about one per cent of the

raw material available, an unusually large sample size.

31

10. SAMPLE PREPARATION, ANALYSIS AND SECURITY Samples were not prepared in the normal sense of that word as used in mineral

resource sampling programs. The sampling process was the same in practice and

principle as the mining process will be.

As explained in the previous section, material from identified areas were excavated

and hauled to the washing plant and stockpiled there for processing. An excavating

machine loaded the material into the feeding hopper of the HCP 200 gold

concentrator. The wash plant has a throughput capacity of 200 tons (approximately

160 cubic yards) per hour.

Samples batches were taken at recorded locations and from recorded depth

horizons, as in Table 9 – 1. The batches were about 400 cubic yards in average

volume.

This was the same process as will be used for the mining operation, except that in

the sampling phase, materials were taken from the deposit in a carefully selective

way to cover the designated sampling area. In the mining operation, the mining

would probably advance on fronts laid out to minimize haul distances to the

processing plant and to optimize equipment use. But the material handling process

would remain the same.

After each batch was processed, or at the end of each day’s operations, the

accumulated gold was collected from a secure compartment on the machine by

Company staff (usually Mr. Brosseuk), taken to the site office, dried, weighed and

recorded. The gold at this stage is dore gold, an alloy of gold, silver and copper.

After a certain quantity of gold was collected, it was packaged and transported by

hand delivery to the refiner, usually either Technic Canada, in Dawson City, Yukon

or Canadian Placer Gold Limited of Vancouver, B.C. Some raw gold and some

32

refined gold was used by the Company for purchases, payments or as gifts. All these

amounts were recorded on the Company’s books, and the author has viewed the

books and records related to this aspect of operations.

In the case of Aurora Mines, Inc, the transportation of the raw gold parcels was the

responsibility of Mr. Ray Brosseuk, who also received the certificates from the

refiner and is responsible for their filing and maintenance in Company files. The

certificates are important documents, as they form the basis for all of the

Company’s financial and accounting systems.

33

11. DATA VERIFICATION

In a placer operation, due to the large size of the samples involved and the

industrial-scale equipment required to process them, it is not possible to perform

the usual sample checks and repeats. Nor is it possible to make use of third party

reference samples, selected for example by an outside consultant, as is normally the

case in other mining or exploration programs.

At the Anderson Creek operation the Company staff made all the throughput

measurements. The President is responsible for gold yield data. The gold fineness

data is produced by the refiners and used to calculate gold compensation to the

Company for gold delivered.

The verification therefore lies in the veracity of the measured throughput figures

and the quantity of product, in this case gold. There is no preparation of the gold

product before delivery to the refiner-purchaser. The author has had no limitations

imposed on the access to this data beyond the impracticalities of direct sample

repetition.

The throughput figures and the gold yield figures are presented in Table 9 – 1. The

throughput figures were checked in the company work records at the mine site. The

gold figures are supported by the sworn affidavit of the management (in the person

of President Ray Brosseuk) and its accompanying table of gold disposal figures.

34

12 ADJACENT PROPERTIES

There are no other mining properties that adjoin the Anderson Creek property, and

no other claims in the Anderson Creek watershed.

To the northwest, five kilometres distant, a group of claims is held on Owl Creek by

Mr. Ralph Barchen, and at a similar distance to the southeast, on Steep Creek, he

holds another group of claims.

There is a discovery claim, Mosquito P12740, on the delta of the small creek about

two kilometres southeast of the Anderson Creek delta.

None of these properties impinges in any way on the lands or activities of Aurora

Mines, Inc, on Anderson Creek.

35

13. MINERAL PROCESSING AND METALLURGICAL TESTING

The gold operation is split into three divisions, (1) supply of raw material, (2) gold

extraction and (3) refining.

Supply

Placer material from each pit is excavated and fed into rock trucks, using an

excavator, bulldozer and loader. Each strip of placer material being worked is

excavated to bedrock, loaded on the trucks and transported to the extraction

stockpile.

Gold Extraction

There are two HPC-200 gold extraction machines on site, with a total throughput

capacity of 250 cubic yards per hour. These machines are arranged in parallel in a

single machine group, comprising the wash plant, and are supplied by one excavator

of precisely known bucket size from the material on the stockpile area. The general

operation of these machines was described in Chapter 9, Sampleing Method and

Approach.

Details of the construction and operation of the machines and their proprietary

technology is given in an appendix. The gold is collected in a secure compartment on

the machine. A front-end loader then moves the tailings from the machine area to a

tailings pile for eventual return to the pits for backfill. The water from the plant is

passed through three settling ponds before it is released into the lower delta

watershed. Fine silt from the lowest settling pond is finally placed over the coarse

tailing in the backfilled areas, re-vegetated, and the mining cycle is complete.

36

Refining

The refinery procedure is to weigh the raw gold, and reweigh the gold after melting.

In Aurora’s case, this step reduced the weight by about ten per cent, the losses being

due to rock and soil impurities in the gold particles and the breakdown of mineral

intergrowths, e.g. gold with quartz or magnetite. The attendant loss in weight is

recorded. The gold is then remelted, and the gold and silver fractions are separated

by the process of cupellation. This results in a further loss as the base metals,

notably copper, are removed, and there are small losses, perhaps one to three per

cent, of gold and silver. The resulting weights of gold and silver are recorded. The

result of the final calculation of the ratio of gold to total gold and silver is referred to

as the fineness of the gold. This is expressed as a fraction of one thousand; for

example a final ratio of 86 parts gold to 14 parts silver is referred to as 860 fine, the

nominal range for Anderson Creek gold.

The refiner imposes a refining charge and a royalty fee for his services, and then

makes a payout to the owner. The payout may be as metal or in dollar

remuneration. He also issues a certificate detailing the weights, losses, his charges

and the final payout amounts.

The amounts of gold produced are shown in Table 9 – 1 and are attested to in the

affidavit sworn by Mr. Brosseuk that is included in the appendices of this report.

37

14. MINERAL RESOURCES

The mineral resource inventory can be classed as measured, and indicated. At this

time no material that can be deemed as inferred. The Company has made an effort

to construct an isopach map of the sediment cover over bedrock in the area of the

seven lowest claims on the creek. The estimates below are based on the depth data

from the sample table (Table 9 – 1), the seismic survey, the isopach estimates, and

the contour lines shown in Figure 13.

Measured Resources

The directly sampled area shown in Figure 13 can be considered as a Measured

Resource. As described in an earlier section, this area covers some 18 ha (i.e. 133

cells, each 30m x 45m), sampled to bedrock, which was found to be about 12m depth

on average in the sampled area. Therefore this area contains a volume of 18 x 10 000

x 12 m3, or 2 160 000m3, or 2 820 000 cubic yards. The grade is almost exactly 0.02

Troy ounces per cubic yard, or 0.62 grams per cubic yard, or 0.81 grams per m3.

This is based on 93 samples, each sample representing on average approximately 2

000 m2, the total sample volume representing over 1 per cent of the volume in the

sampled area.

Indicated Resources

The area outlined by the colored line pushes the area out to the edges of the claims 1

Below and 2 Below, and the downstream half of Discovery, and out to the edge of

the sediment terraces in Claims Sunshine 1,2, and 3, and the upstream half of

Discovery. This area is covered by an additional 182 cells, covering 246 000m2 or

about 25 ha.

38

Given the uniformity of the distribution of values in the sampled area, it appears

reasonable to extrapolate to this area using a similar mean grade. This material is

all within reach of the present mining methods, and extends the area no more than

150 m outside the sampled area in most parts. It extends the area by 220 m beyond

the directly sampled area in the Discovery claim and in claim Below 1 and 2 Below,

where material is homogeneous as so far seen.

This area extends to the sediment valley edge, and extends downstream to the ledge,

or bedrock drop-off, so it must be given a weighted average depth of about half that

of the directly sampled area. The exception to this is the claim 2 Below and the area

of the right bank in 1 Below, and part of claim 1 Below, where the volume of most

blocks will equal or exceed those of the blocks in the directly sampled area.

Summing these factors, the volume of material in this area of Indicated Resources

works out to be 101 x 1350 x 6 m, = 820 000 m3, plus

81 x 1350 x 12 m, = 1 310 000 m3 additional to account

for the areas described above, totaling: 2 130 000 m3, or approximately 2 800

000 cubic yards.

Inspection of the seismic data, particularly Lines SL-2 and SL-6, shows that this is a

reasonable assumption in the delta fan area. The drop-off of the main bedrock

ledge into the lake depression lies in claim Sunshine 3 Below, about 30 metres from

its boundary with Sunshine 2 Below. Here the bedrock stream valley drops from

about 20 metres to about 55 metres depth. This should be a rich zone in that it lies

at a line where the stream (in the past) lost its velocity and spread out over a wider

sedimentary front. It is a question how much of this material will be recoverable, as

the water table will be only about 10 metres below the land level in this area. It may

be possible to recover this material by dredging rather than excavation. We have

left the material below 8 metres depth on this claim out of the available volume

calculation. Assuming that the delta could be dredged-mined to a depth of 15m

below water-table level, this would represent a future potential resource volume of

39

approximately 1.3 M cubic yards of unknown grade within the area of Claim

Sunshine 3 Below.

Further review of the available seismic data also shows that the available resource

does not appear to extend further up the creek beyond the upstream limit of claim

Sunshine 3. Some additional volumes will be found up stream but the main

resource lies downstream from this line. In order to refine this resource data, a

detailed mapping of the land surface, the bedrock topography and the water table

surface will be required for the area covered by claims Sunshine Below 3,2 and 1,

Discovery, and Sunshine 1, 2, and 3. Much more seismic work is required on these

claims.

Inferred Resources

There may be deep pockets in the bedrock profile of the stream upstream from this

point that will merit testing and development. Indeed, the seismic data show one

such deep pocket of sediment on claim Cassie 1, probably containing some tens of

thousands of cubic yards of material. Other such pockets may be revealed as more

seismic work is completed in the upstream sections of the creek.

It is not possible to define any of these areas upstream from claim Sunshine 3 as an

inferred resource. There is not enough data available on either volume or grade at

this time. It is possible to say from the available data, however, that there are large

areas of untested material in the valley and in the delta outside of the limits of the

areas of measured and indicated resources that are fertile areas for exploration and

development.

The company has attempted to make an estimate the overall resource using

planimetric measurements and estimated isopach outlines based on the known

seismic work. They have estimated some 20 M cubic yards of total resource. This is

certainly within the limits of possibility given the large areas in the lower valley and

40

delta that have not been sampled, and the untested length of the upper valley. At

this time, and for the purposes of this report, they cannot be considered resources.

Resource Summary

Resources can therefore be summarized as follows:

Measured: 2 820 000 cubic yards,

Indicated: 2 800 000 cubic yards,

Inferred: None at this time.

Total Available: 5 620 000 cubic yards of material grading 0.02 Troy ounces per

cubic yard .

We do not foresee that this estimate is likely to be materially affected by mining,

metallurgical, infrastructural or other external material factors. In our view this is a

prudent conservative estimate. There remain, however, large areas of untested and

undeveloped river sediments so far unexamined.

This is the best estimate that can be made at this time but is subject to

1. Unexpected variations in bedrock topography in the ‘indicated’ area,

2. Potential water table problems in the lower part of the fan delta,

3. Potential changes in environmental or permitting problems, none of which

are seen as likely based on the present outlook,

4. Any failure of the Company to maintain the legal standing of the properties,

their permitting and their taxation status,

Neither of the writers of this report has any business or fiduciary relationship to the

Company, and none is contemplated.

41

15. OTHER RELEVANT DATA

Environmental Considerations

The Company has a work and reclamation program filed for placer mining on the

placer claims shown in Figure 1. This document, filed with the Ministry of Energy,

Mines and Petroleum Resources of the Yukon Territory, has been approved and

will allow for all of the Anderson Creek area to be mined. This license is

transferable to any succeeding owner of the mineral claims.

The Company has achieved a Canadian Environmental Inspection ‘A” rating

during every operating year of its work at Anderson Creek. This is largely due to

the gold extraction technology used, which uses water very efficiently, and to the

mining cycle employed, which excavates material and returns it as fill to the

exhausted open pits on a semi-continuous basis. No water or silt is released to the

lake or to Anderson Creek.

Material excavated in the advancing pit is trucked to the washplant location, and

stockpiled for processing. During processing, the course boulders and cobbles are

rejected to a pile, and the coarse gravel- and pebble-sized fraction is removed at the

next stage by means of a trommel, and similarly rejected. A continuous spiral and

sluice system processes the remainder, and collects the gold in a system of graduated

sluice channels. The final silt, sand and gravel reject is passed through a sequence of

three settling ponds. Periodically these ponds are cleaned out (while the reject

material is passed through an alternate set of three ponds). The rejected boulders,

cobbles, gravel, and sand are returned as fill to the exhausted pits, and the fine silt is

spread over the surface. The surface then re-vegetates itself. The mining cycle is

complete and self-contained on the property.

The process is completely physical, and no chemicals, flotation agents, or other

additives are employed. The method is efficient with minimal environmental impact.

42

Excavation and continual backfill using heavy machinery means that large pits do

not remain open for any lengthy period. The area occupied by the pit, machines and

settling ponds at any given moment is small: approximately one to 1.5 ha. The area

is protected by berms and pad linings against fuel leakage and dumping of materials

into the creek, and is operated within the regulatory requirements of the Water

Board and the Mines Act.

The Water Permit requires that a band of ground 30m wide must be left

undisturbed along the shore of May Lake so that disturbed ground is not exposed to

the lake. As well, the esthetics of the shoreline are thus preserved. j

Water Management

The Company is in possession of Water Permit PM-04-387, dated January 31, 2005,

permitting the removal and use of up to 8 400 m3 per day from Anderson Creek for

purposes of placer mining. The permit is for use on the lowermost nine claims on the

creek. The permit allows for damming and diversion of the stream, with conditions,

and specifies the construction of berms and fords to protect waterflow. The Mines

Inspector enforces these conditions and the Company has been compliant in these

regards. The water permit is transferable to another succeeding operator and can

be amended at the discretion of the Yukon Water Board.

The process water returned to Anderson Creek must contain no more than 2.5 ml

per litre of suspended sediment over that of the water in the stream above the

mining area. As it happens, the Company has never released effluent water to the

stream from the settling ponds, as the water apparently drains itself into the sandy

substrate and returns to the water table naturally.

A single HPC200 washplant, the type used on the property, requires 1 100 gallons

per minute, or approximately 5 m3 per minute, or 300 m3 per hour. Two machines

operating in parallel will require 600 m3 per hour, or 7 200 m3 in a 12-hour

43

working day. Thus the permitted water withdrawal of 8 400 m3 per day has been

adequate for operations as they have been carried out to date. This does not take

into account, however, the fact that the water from the lowest settling pond is

recirculated for use in the wash plant, so that the permitted withdrawal is more

than adequate for 24-hour operations of for additional washplant units. In the

extreme, application can be made for an enlarged withdrawal volume, as the stream

appears capable of supplying it.

Process Technology

Key to the economic and efficient extraction of gold at Anderson Creek is the

proprietary technology embodied in the HPC-200 self-contained mobile washplant.

The design is the original patented property of Mr. Ray Brosseuk, president and

general manage of the company, later acquired by IE-TEC Holdings Ltd. The

machine’s efficiency has been tested by outside engineering consultants and it is

claimed that the system offers yields and operating efficiencies superior to other

available technologies, and thus allows lower operating costs and better returns for

each unit volume that is processed. The critical aspect of the system is that by

combining greatly increased throughputs with higher recovery factors, lower grade

raw materials can be processed profitably.

IE-TEC Holdings Ltd. has a contractual arrangement with Aurora Mines Inc. for

continuing use of the plant technology.

The mechanical details, specifications, flowsheet and some photographs of the

apparatus are shown in Appendix 5.

Economics

The average yield of gold to date has been 0.017 ounces of pure gold per cubic yard,

with a value of US$ 6.86 at an assumed gold price of US$ 400.00 per ounce (2004).

44

The Company has calculated that their all-in costs of processing per cubic yard (i.e.

operating and capital costs) to be about US$ 2.04, and the cost per ounce produced

is about US$ 118.00. Final estimates of cost and profitability are of course

dependent on an independent feasibility study, but the project appears to be

economically quite sound.

Financial information, cost analysis and cost sensitivity data are presented in the

Addendum on Additional Requirements, at the end of this report.

45

16. INTERPRETATION AND CONCLUSIONS

Interpretation

The Anderson Creek property of Aurora Mines, Inc. has been reviewed and the

background information has been examined. This report has covered the points that are

required for a review to satisfy the requirements of a Technical Report under the terms

and conditions of NI 43-101.

The property is found to be in sound legal status. The claims are recognized by the Yukon

Ministry of Energy, Mines and Petroleum Resources as of current standing. A Water

Permit has been issued by the Yukon Water Board, A reclamation bond is in place and the

claims and mine are compliant with the requirements of the Mines Act with regard to

mining practices and environmental safeguards.

The claims have been exploited in an irregular manner since the early 20th century. The

present owners have held the property since 2000 and have conducted exploration and

some limited production since that time.

The exploration program has included three approaches:

(1) Intensive sampling of the area of the lowermost seven claims by means of taking 93

large (average 400+ cubic yards) samples and passing them through a commercial-scale

wash plant, and weighing the gold produced from each sample. In this way the grade

associated with each sample location was known and recorded. The sampling covered an

irregularly shaped but contiguous area of 18 ha (45 acres). Sampling within this area was

extended to bedrock. A detailed record of this program, the results and the area covered

by the sampling forms a central part of this report. A detailed list of results and a sampling

plan are included.

46

The results show gold concentrations ranging from 0.005 to 0.128 Troy ounces per cubic

yard, the mean value being 0.0172 ounces per cubic yard, or 0.553 pure grams of gold per

cubic yard, based on a mean fineness of gold of 860.

The density of sampling in this area is about two samples per acre, or five samples per

hectare, averaging 400 cubic yards each. The sampling removed about one percent of the

material in this area.

Thus, in regard to sample size, sample density, regularity of sample spacing and total

sample quantity, the sampling of this area is more than adequate.

(2) A program of seismic refraction surveys was conducted on the area of the lower

claims and a more limited survey was made in an area some 1.5 km upstream. A total

of about 2000 line-metres of survey line were completed. The results are included as an

appendix to this report. In the lower delta, the survey shows a broad channel varying

from 5 to 35m in depth, with an average depth of about 12m. The drop-off from the

land margin bedrock to the lake basin is clearly shown, and in the latter area of the

delta bedrock depths go down to 55m. Upstream, the bedrock depth is thinner and

irregular, suggesting that mining in this area will be problematic. In the small surveyed

area about 1.5 km upstream, a deep pocket (35m) of sediment is indicated. The

overall results suggest that the large majority of mineable material will be found on the

delta fan and in the first claims above the fan, but some potentially promising

sedimentary traps will be found in the upstream reaches of the stream. The survey

strongly points to the necessity of a denser network of seismic surveys for forward

mine planning and resource estimation. One useful outcome of the survey was the fact

that, where comparable, the depths to bedrock found in the sampling progam were

within about one metre of the predicted depths, meaning that the seismic work is a

useful planning tool on the property.

(3) A program of test panning was completed on the upper parts of the stream, and

this indicated that gold values persist all the way to the source area. The results are not

47

quantitative. Sample volumes, while small, indicate that the eventual source area lies in

the plateau area well above the property limit. It was this survey that prompted the

Company to stake the two uppermost groups of claims on the stream, the Cassie and

Kyle groups.

Owing to the nature of the gold washing machinery, in which the final product is

entrapped in a secure compartment, and to the practice whereby on the owner-

manager collected the gold and had continuous control of the product until delivery to

the refiner, one can conclude that sample security was adequate and reliable.

A special aspect of the program of the company at Anderson Creek is the use of the

HPC-200 gold washing plant system. This portable plant embodies the proprietary

technology developed by Mr. Ray Brosseuk, the owner-manager of the Company. This

large machine has been shown in independent tests to have a recovery efficiency of 91

to 94 per cent of gold present, and has been shown in comparative tests to have a

higher continuous throughput capacity compared to other systems. The technical

details are included in an appendix to this report.

Conclusions

We conclude that the exploration programs met their objectives in adequately

sampling the lower seven claims, and further, that the methods used (large bulk

sampling and seismic refraction surveys) are the appropriate methods of resource

evaluation on the property.

The evaluation of the remaining 32 claims remains incomplete but limited seismic

surveys show that potential resources are present by no conclusion can be made at this

time as to eventual grade or volume.

We conclude that the material within the limits of the sampled area contain about 2

820 000 cubic yards of material grading 0.02 ounces per cubic yard that should be

48

considered to be a measured resource, based on the density, sample size and continuity

of the results. Indeed, this material would be considered to be a proven reserve, but

for the lack of an engineering study to certify it as such.

We conclude that a larger area surrounding this sampled area, whose area can be

estimated but for which detailed depth data is not available, constitutes an indicated

resource. The depth can be estimated and limited from existing work in the sampled

area. This area contains a further 2 800 000 cubic yards with a grade of 0.02 ounces

per cubic yard.

We conclude that there is a further volume of material in the lower delta and in

upstream areas, perhaps in total exceeding the volumes in the two classes above, that

forms a future potential resource. This cannot be classed as and inferred resource

because grade and volume estimates cannot be projected at this time.

We conclude that the gold extraction technology works well and that the gold size

distribution statistics strongly suggest an efficient capture of gold down to small

particle sizes.

We conclude that the exploration completed to date indicates that the project is robust

and that further exploration and development, along the lines prosecuted to date, are

justified.

49

17. RECOMMENDATIONS

The review of available data, maps and plans indicates the following

recommendations:

1. The seismic line network should be extended and its density improved. This

is one of the most useful and important exploration tools available to the

Company. Transverse lines across the stream valley should eventually strive

for a density of one line per 100 m of stream length and lines parallel to

stream flow should be in place every 200 m in the delta area and at 100 m

intervals (or less on upstream claims. Seismic refraction surveys are

expensive but this tool is essential for work planning. The Company should

view seismic surveys as an ongoing, annual cumulative exploration initiative.

2. Sampling programs similar to that already carried out should be continued

to cover all of the lower claim area (up to Sunshine 4 (P5300). The sample

density could be reduced somewhat since the continuity of sample area of

influence is now fairly well known. One wash machine could be dedicated to

the continuing sampling program while one or two other machines are

dedicated to production needs.

3. The area covered by the lower and middle claims should be topographically

mapped, at least to the edges of the sedimentary cover, upstream as far as

claim Cassie 1 (P47768). The existing sampled area has been considerably

disturbed by excavation. The remaining are should be mapped before it is

disturbed in order to aid in forward planning and (in conjunction with he

seismic program) raw material calculations.

4. Mineralogical analysis of heavy mineral samples is recommended to

investigate whether other heavy minerals beside gold may be economically

50

recovered (candidates for examination might include garnets, rutile, zircon,

cassiterite and wolframite, all of which have some commercial value).

5. A mining plan laid out to advance mining on a broad front with mining,

processing, re-fill and revegetation progressing in a sequential manner would

reduce hauling costs and improve material –handling efficiencies. This type

of operation would follow along behind the forward-sampling program. Such

a plan would allow management to balance rich areas with leaner areas and

thus balance out cash flow, capital equipment and repair programs, and

general mine planning.

6. The compny should undertake a study of improved sizing and scaling of

equipment, by an experienced mining or civil engineering consultant.

Bank height, pit width increments, excavator capacity, truck size and

speed, washplant units, pump sizes should all be scaled so that bottlenecks

and waiting times are minimized or eliminated. Such material balance

studies are a normal part of mining operations and lead to increased

efficiencies and reduced costs.

7. The possibilities of dredging operations should be investigated. In the outer

parts of the delta fan, bedrock depth drops of to a depth of 55m, and much

of this additional sedimentary accumulation would be accessible to modern

dredging technology, without disturbing the 30-metre buffer zone required

to separate the mining area from the open lake. Dredging would make

available some 1.3 M additional cubic yards within the claim areas. As well,

there are areas outside the the present claims on the delta fan that would

perhaps be amenable to dredging operations but would require additional

claim areas to be acquired.

51

REFERENCES AND SOURCES OF INFORMATION

Anonymous Yukon Placer Mining Industry, 1989 – 1990. Indian and

Northern Affairs Canada.

“ “ “ “ “ , 1995 – 1997. Indian and

Northern Affairs Canada.

“ “ “ “ “ , 1998 - 2002. Indian and

Northern Affairs Canada. (pp171 – 2, pp177 – 9)

Aurora Mines, Inc. Company Records and Files.

Business Resources L.L.C. Due Diligence Report, Anderson Creek Gold Mine.

Private Client Report, December 2004.

Hillman, Russell A. Aurora Mines, Inc. Report on Seismic Refraction

Investigation, Anderson Creek Placer Project, Mayo Mining District, Mayo, Yukon.

Private Report, by Frontier Geosciences Inc., Vancouver, B.C. April 2001.

LeBarge, William P. Placer Deposits of the Yukon: Overview and Potential

for New Discoveries. Yukon Quaternary Geology, 1996.

LeBarge, W.P., Bond, J.D., and Hein, F.J.

Placer Gold Deposits of the Mayo Area, Central Yukon.

Bulletin 13, Exploration and Geological Services Division, Yukon Region. Indian

and Northern Affairs Canada. 1998.

52

Lipovsky, P., Bond, J., and LeBarge, W.

Mayo Area Placer Activity Map. 2001. Scale 1 : 250 000.

Exploration and Geological Services Division, Yukon Region, Indian and Northern

Affairs Canada. Open File 2001-35. 2001

MacDonald, Linda E.T., and Bleiler, Lynette R.

Gold and Galena – A History of the Mayo District.

Mayo Historical Society, Mayo , Yukon. 1999. (pp. 45 – 47).

Surveys and Mapping Branch, Natural Resources Canada.

NTS Map 105M. Mayo Lake, Yukon. Scale 1 : 250 000.

“ “ “ “ “ “ .

NTS Map 105M11. Williamson Lake, Yukon.

Scale 1 : 50 000.

ADDENDUM

Additional Requirements for Technical Reports

on

Development and Production Properties

ADDENDUM

Additional Requirements for Technical Reports on Development and Production Properties

A. Mining Operations Information and assumptions concerning the mining

method, metallurgical and production forecast. Data on some of these aspects has been

discussed in the text. Notes from Company literature on these concerns appears in the

excerpted material following this Addendum. In summary, assuming current machine

capacity, two shifts of production for 6 days per week, a six-month working season and 75

per cent equipment utilization, the plant would process 118 000 cubic yards pr month,

which would yield about 2 000 pure gold ounces per month.

These figures would change if processing capacity were added to the operation, and would

have the net effect of lowering costs per cubic yard and costs per ounce produced. Overall

costs and sales estimates, and a sensitivity analysis for an increased production rate is given

in the following pages.

B. Recoverability of gold in process. This has been referred to in the Chapter 11,

Mineral Processing and Metallurgical Testing. Recovery using the equipment in use has

been measured at 91 to 94 per cent, and the rough gold has a fineness of 860 on average, in

gold yields to date.

C. Markets. Rough gold is sold directly at any time to the bullion producer, usually in

the Company’s case to Technic Canada, who has offices and labs in Dawson City, YT.

D. Contracts in place. There are no contracts in place relating to operations, refining,

product handling, sales, hedging, or forward sales.

E. Environmental considerations. These concerns were discussed in Chapter 15, Other

Relevant Data. In sum, the Company has posted a reclamation bond, and has received a

Canadian Environmental Inspection “A” rating in all the years that operations have been

carried on at site. All excavated material is recycled into exhausted pit areas, and no effluent

escapes to the lake or is returned to Anderson Creek.

F. Taxes. The Company is liable for annual claim rentals and maintenance costs, for

normal business taxes, for sales taxes and value-added taxes on purchases and sales. There

are no extraordinary taxes apart from the usual business taxes on a small-scale enterprise.

G. Capital and Operating Cost Estimates. Costs, income estimates and sensitivity data

are presented in tables that follow this Addendum. In summary, operating costs and

depreciation have been determined to be about $ 2.04 per cubic yard, or $ 240 000 per

month. Income from 2 000 ounces of gold would be $ 960 000 per month at the current

(November 2005) price, yielding a net operating profit of $ 720 000 per month before taxes

and fixed running costs (e.g. insurance, offsite transportation, employee benefits, etc.). The

project is robust in the face of changing income and expenses scenarios. For example,

sensitivity cost data indicate that a doubling of fuel costs (from the current 2005 figure of $

3.42 per gallon to $ 6.84 per gallon) would increase operating costs by about $ 0.67 per cubic

yard to about $ 2.71 per cubic yard. Gold yield is $ 8.20 per cubic yard. Production cost of

one ounce of gold would increase from US$ 118.00 per ounce to US$ 158.00 per ounce. The

operating cost and capital cost data, and their derivation, are set out in tabular form in the

pages following this Addendum. Sensitivity to various cost parameters is shown in the

graphs following the tables.

H. Economic Analysis. This normally applies to properties where a mineral reserve

exists. No reserves as defined in the NI43-101 rules exist on the property, because to date no

independent engineering study has been made on the feasibility of the operations. If,

however, we consider the measured resource to be a proven mineral reserve for purposes of

this exercise, the Company management have drafted an economic analysis in the tables on

the pages following this Addendum.

I. Payback period. It is not possible at this time to accurately estimate the payback

period using the assumptions given, because some assumptions are missing or incomplete.

Inspection of the cost/income data indicate in gross terms that the payback period would be

less than one year.

J. Mine life. It is not possible to estimate mine life at this time because feasibility data

is incomplete and resources have not been formally converted to reserves. Abundant

sedimentary material is available for testing and measurement, enough to possibly last for

many years of production if costs and yields remain consistent. This however cannot be

stated with any certainty at this time.

INFRASTRUCTURE & OPERATIONS Infrastructure The Anderson Creek placer deposits were originally mined in the 1930s. There are numerous references to the difficult access into the area and generally poor logistics during the period of active placer mining between 1898 and 1935. At the present time there is excellent road access to the lake and an easy boat ride across to the property. These major improvements in access along with freight, fuel and other facilities in Mayo are very important to the economics of the proposed operation and potential to develop new areas up Anderson Creek. From 2000 to date an extensive infrastructure investment / development program has been implemented at the mine. This includes:

• Roads, access ways and clearings for equipment and operations • Water supply dams and waste-water settling pond systems • Establishment of accommodation / living and office areas • Setup and equipping of stores for parts inventories and workshops • Installation of satellite phone and broadband internet / network communication systems

Placer Mining Operations The operation is split into two sections: (1) Supply

Placer material from each pit is collected and fed into rock trucks using a cat and excavator. Each strip of placer material being worked is excavated to bedrock and loaded into rock trucks which transport this material to the extraction stockpile.

(2) Gold Extraction There are two HPC-200 gold extraction machines on site (total capacity 252 cubic yards per hour). These machines are arranged into a single machine group or wash plant and are fed by one excavator from the material stockpile / staging area. A loader then moves tailings to tailings piles and waste water flows into the settling pond system. No water or sediment enters the creek.

After processing, all material is fed back to the pits for backfill. Fine silt size material from the settling ponds is eventually placed back on top of the coarse tailings to assist re-vegetation. With this system, material is excavated, processed and backfilled on a semi-continuous basis. The method of placer gold mining on Anderson Creek is efficient with minimal environmental impact. Excavation and continual backfill using heavy machinery does not result in any large pits remaining open for any period. The area occupied by the machines and settling ponds is small, being approximately one to 1.5 hectares. This area has adequate protection against fuel leakage (pad lining, berms, etc.) and material spilling into the creek, and can be operated within regulatory requirements, such as the Mine Act. Production involves two twelve hour shifts per day. Power is generated on site.

Proposed Operation & Capacity Increase We have carefully studied the overall operating and financial performance of Anderson Creek and concluded that it would be optimal to increase the processing capacity of the mine through the addition of a single HPC-400 machine (latest generation of our HPC equipment) and implement a production scenario including 2 “machine groups”

• Machine Group-1 – Tandem configuration of two HPC-200s (currently on mine). These machines would be moved approximately 2 miles up to the fork in the Creek. Auxiliary equipment: Feed excavator, D41 supply bulldozer pushing to excavator, and 988B loader on tailings

o 3 people required per shift (supply, feed and tailings) o Capacity 250 cubic yards / hour. o Ground preparation work of 6-8 weeks would be required to build a road of about

2 miles to the fork in the Creek and prep the area / move the wash plants.

• Machine Group-2 HPC-400 situated just above “Narrows” section of mine. Auxiliary equipment: D10 bulldozer (or similar) feeding (via 50-ton push-hopper), D10 or 988B loader on tailings

o Only 2 people per shift (supply/feed and tailings) o Capacity 400-500 cubic yards per hour (possible this unit could produce up to

600yards/hour)

The advantage of this approach is that additional capacity would be 400-500 tons/hour ie. capacity of the mine would almost triple to a total of almost 750 cubic yards/hour with minimal additional capital, labor and expense increase. This would yield an increase in profitability from US$645,000 per month to US$1.8 million per month

FINANCIAL INFORMATION Equipment at Anderson Creek Value CD$ New HPC-200 wash plant, complete with sluices 389,000Reconditioned HPC-200 wash plant with sluices 350,000Hitachi UH16 Excavator 75,000Fiat Allis Bulldozer D41 115,000Caterpillar D44 Rock Truck 125,000Caterpillar D44 Rock Truck 110,000Caterpillar D44 Rock Truck 95,0008x10 - 471 Detroit Diesel water pump 12,0001.5 inch water pump 5001.5 inch fuel transfer pump 5003 inch Kubota water pump 4,0001.5 inch water pump 5001.5 inch water pump 5008x10 - 671 Detroit Diesel water pump 15,00035 kw Hatz genset 9,000100kw Cummins diesel generator 18,00040 kw John Deere genset 8,00040 kw John Deere genset 8,000Diesel Light Plant 6,000400 Amp Diesel Welder 4,000250 Amp Diesel Welder 2,000Ford F600 2000 gal. fuel transfer truck (used for storage) 5003000 gallon Western Star Fuel Truck 12,0002000 Gallon Fuel Barge with 120HP Merc Engine 12,00022' inboard Speedboat 18,00016' outboard Speedboat 7,000Zodiac with outboard engine 2,0006 Atco camp Trailers 80,000Workshop 50020 Ft Shop trailer 1,000Older 14'x70' mobile home 1,0008x8x40' Storage Container 3,000Honda ATV 3,000Honda ATV 4,000Misc Parts for Equipment incl.Misc Steel 0Radios Satellite Phone and Broadband Internet Systems 11,000Tools 60,000 TOTAL VALUE CD$ 1,562,000TOTAL VALUE US$ 1,250,000

r

Operating Cost and Profitability - Base Scenario

CD$/US$ Rate: 1.17 Gold Price (US$/Oz) 480

Operating Months per yea 6 Capacity - Cubic Yards / Hour 252 Hours per shift 12 Shifts per month - 6 day week 52 Total Capacity - Cubic Yards / Hour 157,248 Available Hours per month 624 Utilisation - less 3 Hr. downtime / shift 75%Utilised Hours per month 468 Utilised Capacity - Cubic Yards / Mo. 117,936

Operating Expenses: US$Management 25,000 Payroll 49,979 Fuel 78,320 Groceries 3,419 Parts 5,128 Others / Misc. 25,000 Depreciation - 5 Years @ 6 Mo. P.A. 53,333 Total 240,179

Total Cost / Cubic Yard USD 2.04

Ounces per Cubic Yard as per Sampling 0.0199 Purity Produced 86%Pure Ounces per Cubic Yard 0.0171 Pure Ounces per Month 2,021

Cost per Ounce 118.82USD

Annual Income 5,821,630USD Annual Expenses incl. Depreciation 1,441,075USD Margin per Ounce 361.18USD Annual Earnings before interest and tax (EBIT) 4,380,556USD

PayrollType No. USD / Pmo. CD$/month

Current:General Manager 1 7,479 8,750 Mechanic 1 5,368 6,280 Senior Operators 2 10,735 6,280 Operators 4 18,051 5,280 Cook 1 2,991 3,500 W.Comp / Statutory Dues @ 12% 5,355 Total Current 9 49,979

Fuel CurrentConsumption (Gallons/shift) 440 Shifts per month - 6 day week 52

Total Gallons 22,880 Cost per Gallon US$ (delivered) 3.42 Information from Steve at McKenzie Petroleum on 050916Total Cost/month 78,320

Depreciation (approximate) CurrentCurrent Assets 1,250,000 Excavator (delivered) 140,000

Two Loaders (delivered) 180,000 Other/misc. 30,000 HPC-4002 BulldozersBargeHovercraftTotal Asset base 1,600,000 Straight line 30 months 53,333

Payroll + Management Total Expenses Income EBIT100% 449,873 1,441,075 5,821,630 4.38 Base Scenario110% 494,860 1,486,062 5,821,630 4.34 120% 539,847 1,531,049 5,821,630 4.29 130% 584,835 1,576,037 5,821,630 4.25 140% 629,822 1,621,024 5,821,630 4.20 150% 674,809 1,666,011 5,821,630 4.16 160% 719,797 1,710,999 5,821,630 4.11 170% 764,784 1,755,986 5,821,630 4.07 180% 809,771 1,800,973 5,821,630 4.02 190% 854,758 1,845,960 5,821,630 3.98 200% 899,746 1,890,948 5,821,630 3.93

EBIT vs. Payroll + Management Costs

2.00

2.50

3.00

3.50

4.00

4.50

100% 110% 120% 130% 140% 150% 160% 170% 180% 190% 200%

Staffing Cost Index

EBIT

(US$

mio

)

Fuel Price per Gallon Monthly Fuel Cost Total Expenses Income EBIT

100% 3.42 78,320 1,441,075 5,821,630 4.38 125% 4.28 97,900 1,558,555 5,821,630 4.26 150% 5.13 117,480 1,676,035 5,821,630 4.15 175% 5.99 137,060 1,793,515 5,821,630 4.03 200% 6.85 156,640 1,910,995 5,821,630 3.91 225% 7.70 176,220 2,028,475 5,821,630 3.79 250% 8.56 195,800 2,145,955 5,821,630 3.68 275% 9.41 215,380 2,263,435 5,821,630 3.56 300% 10.27 234,960 2,380,915 5,821,630 3.44

EBIT vs. Fuel Cost

2.00

2.50

3.00

3.50

4.00

4.50

3.42 4.28 5.13 5.99 6.85 7.70 8.56 9.41 10.27

Fuel Cost (US$/gallon)

EBIT

(US$

mio

)

0%

50%

100%

150%

200%

250%

300%

350%

Fuel

Cos

t Ind

ex

Depreciation Total Expenses Income EBIT100% 320,000 1,441,075 5,821,630 4.38 Base Scenario150% 480,000 1,601,075 5,821,630 4.22 200% 640,000 1,761,075 5,821,630 4.06 250% 800,000 1,921,075 5,821,630 3.90 300% 960,000 2,081,075 5,821,630 3.74 350% 1,120,000 2,241,075 5,821,630 3.58 400% 1,280,000 2,401,075 5,821,630 3.42 450% 1,440,000 2,561,075 5,821,630 3.26 500% 1,600,000 2,721,075 5,821,630 3.10

500% Index is equivalent to:a) Base Scenario Capital with perpetual straight line depreciation accelerated from 30 to 12 monthsORb) Capital Base increase from $1.6 to $8.0 million with 30 month straight line depreciation

EBIT vs. Depreciation

2.00

2.50

3.00

3.50

4.00

4.50

100% 150% 200% 250% 300% 350% 400% 450% 500%

Staffing Cost Index

EBIT

(US$

mio

)

Total Expenses Income EBIT100% 1,441,075 5,821,630 4.38 Base Scenario110% 1,585,182 5,821,630 4.24 120% 1,729,290 5,821,630 4.09 130% 1,873,397 5,821,630 3.95 140% 2,017,505 5,821,630 3.80 150% 2,161,612 5,821,630 3.66 160% 2,305,720 5,821,630 3.52 170% 2,449,827 5,821,630 3.37 180% 2,593,935 5,821,630 3.23 190% 2,738,042 5,821,630 3.08 200% 2,882,150 5,821,630 2.94

EBIT vs. Total Expenses

2.00

2.50

3.00

3.50

4.00

4.50

100% 110% 120% 130% 140% 150% 160% 170% 180% 190% 200%

Total Expense Index

EBIT

(US$

mio

)

Gold Price Income Total Expenses EBIT50% 240 2,910,815 1,441,075 1.47 60% 288 3,492,978 1,441,075 2.05 70% 336 4,075,141 1,441,075 2.63 80% 384 4,657,304 1,441,075 3.22 90% 432 5,239,467 1,441,075 3.80

100% 480 5,821,630 1,441,075 4.38 Base Scenario110% 528 6,403,793 1,441,075 4.96 120% 576 6,985,957 1,441,075 5.54 130% 624 7,568,120 1,441,075 6.13 140% 672 8,150,283 1,441,075 6.71 150% 720 8,732,446 1,441,075 7.29 160% 768 9,314,609 1,441,075 7.87 170% 816 9,896,772 1,441,075 8.46 180% 864 10,478,935 1,441,075 9.04 190% 912 11,061,098 1,441,075 9.62 200% 960 11,643,261 1,441,075 10.20

EBIT vs. Gold Price

-

2.00

4.00

6.00

8.00

10.00

12.00

240 288 336 384 432 480 528 576 624 672 720 768 816 864 912 960

Gold Price (US$/Oz)

EBIT

(US$

mio

)

Gold Yield Income Total Expenses EBIT50% 8.6 2,910,815 1,441,075 1.47 60% 10.3 3,492,978 1,441,075 2.05 70% 12.0 4,075,141 1,441,075 2.63 80% 13.7 4,657,304 1,441,075 3.22 90% 15.4 5,239,467 1,441,075 3.80

100% 17.1 5,821,630 1,441,075 4.38 Base Scenario110% 18.9 6,403,793 1,441,075 4.96 120% 20.6 6,985,957 1,441,075 5.54 130% 22.3 7,568,120 1,441,075 6.13 140% 24.0 8,150,283 1,441,075 6.71 150% 25.7 8,732,446 1,441,075 7.29 160% 27.4 9,314,609 1,441,075 7.87 170% 29.1 9,896,772 1,441,075 8.46 180% 30.9 10,478,935 1,441,075 9.04 190% 32.6 11,061,098 1,441,075 9.62 200% 34.3 11,643,261 1,441,075 10.20

EBIT vs. Gold Yield

-

2.00

4.00

6.00

8.00

10.00

12.00

8.6 10.3 12.0 13.7 15.4 17.1 18.9 20.6 22.3 24.0 25.7 27.4 29.1 30.9 32.6 34.3

Gold Yield (Pure Ounces per Thousand Cubic Yards)

EBIT

(US$

mio

)

Average Utilization Income Total Expenses EBIT25% 1,940,543 480,358 1.46 30% 2,328,652 576,430 1.75 35% 2,716,761 672,502 2.04 40% 3,104,870 768,573 2.34 45% 3,492,978 864,645 2.63 50% 3,881,087 960,717 2.92 55% 4,269,196 1,056,788 3.21 60% 4,657,304 1,152,860 3.50 65% 5,045,413 1,248,932 3.80 70% 5,433,522 1,345,003 4.09 75% 5,821,630 1,441,075 4.38 Base Scenario80% 6,209,739 1,537,147 4.67 85% 6,597,848 1,633,218 4.96 90% 6,985,957 1,729,290 5.26 95% 7,374,065 1,825,362 5.55 100% 7,762,174 1,921,433 5.84

EBIT vs. Utilization of Production Hours

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Utilization

EBIT

(US$

mio

)

APPENDIX 1

President’s Affidavit

on

Gold Production and Disposition

APPENDIX 2

Claims List and Claim Plan

APPENDIX 3

Water Permit

APPENDIX 4

Report on Seismic Refraction Geophysical Survey

Frontier Geosciences Inc.

AURORA MINES INC.

REPORT ON

SEISMIC REFRACTION INVESTIGATION

ANDERSON CREEK PLACER PROJECT

MAYO MINING DISTRICT

MAYO, YUKON

Latitude: 63°43’N

Longitude: 135°02’W

by

Russell A. Hillman, P.Eng.

PROJECT FGI-580April, 2001______________________________________________________________

Frontier Geosciences Inc. 237 St. Georges Avenue, North Vancouver, B.C., Canada V7L 4T4 Tel: (604) 987-3037 Fax: (604) 984-3074

CONTENTS

64. LIMITATIONS

4 3.2 Discussion

4 3.1 General

43. GEOPHYSICAL RESULTS

3 2.3 Interpretive Method

3 2.2 Survey Procedure

3 2.1 Equipment

32. THE SEISMIC REFRACTION SURVEY METHOD

11. INTRODUCTION

page

ILLUSTRATIONS

AppendixInterpreted Depth Section SL-8Figure 14







AppendixInterpreted Depth Section SL-1EFigure 7

AppendixInterpreted Depth Section SL-1DFigure 6

AppendixInterpreted Depth Section SL-1CFigure 5

AppendixInterpreted Depth Section SL-1BFigure 4

AppendixInterpreted Depth Section SL-1AFigure 3

AppendixSite SketchFigure 2

Page 2Survey Location PlanFigure 1

location

(i)


1. INTRODUCTION

In the period April 6 to April 12, 2001, Frontier Geosciences Inc. carried out a seismic

refraction investigation for Aurora Mines Inc. at the Anderson Creek Placer Project, located

in the Mayo Mining District approximately 45 kilometres east-northeast of Mayo, Yukon.

A Survey Location Plan of the area of investigation is shown at 1:250,000 scale in Figure 1.

The seismic refraction survey was carried out to determine the nature and thicknesses of the

overburden materials and the depths to bedrock. The specific objective was to profile the

bedrock to locate any potential, infilled, placer channels in the bedrock surface. The

seismic refraction survey included eight separate lines totalling approximately 2000 metres

in length. The locations of the seismic lines are illustrated at 1:5,000 scale in the Site

Sketch in Figure 2.

1


AURORA MINES INC.

ANDERSON CREEK PLACER PROJECT

SEISMIC REFRACTION SURVEY

SURVEY LOCATION PLAN

FRONTIER GEOSCIENCES INC.

DATE: APRIL 2001 SCALE 1:250,000 FIG. 1

2

SITEAREA

0.0 2.5 5.0 7.5 10.0

KILOMETRES

THIS FIGURE IS A SEGMENT OF THENTS MAP SHEET 105M, "MAYO"

2. THE SEISMIC REFRACTION SURVEY METHOD

2.1 Equipment

The seismic refraction investigation was carried out using a Geometrics, Smartseis, S-24, 24

channel, signal enhancement seismograph and Mark Products Ltd., 48 Hz geophones.

Geophone intervals along the multicored seismic cables were maintained at 5 metres in

order to produce high resolution data on subsurface layering. The zero delay or

instantaneous blasting caps in the small explosive charges used for energy input, were

detonated electrically with a Geometrics, HVB-1, high voltage, capacitor type blaster.

2.2 Survey Procedure

For each spread, the seismic cable was stretched out in a straight line and the geophones

implanted. Six, separate "shots" were then initiated: one at either end of the geophone

array, two at intermediate locations along the seismic cable, and one off each end of the line

to ensure adequate coverage of the basal layer. The shots were detonated individually and

arrival times for each geophone were recorded digitally in the seismograph. Data recorded

during field surveying operations was generally of good to excellent quality.

Throughout the survey, notes were recorded regarding seismic line positions in relation to

topographic and geological features, and claim posts in the area. Relative elevations along

the seismic lines were recorded by chain and inclinometer. with absolute contour

information provided by the 1:250,000 scale NTS map sheet, “Mayo.”

2.3 Interpretive Method

The final interpretation of the seismic data was arrived at using the method of differences

technique. This method utilizes the time taken to travel to a geophone from shotpoints

located to either side of the geophone. Using the total time, a small vertical time is

computed which represents the time taken to travel from the refractor up to the ground

surface. This time is then multiplied by the velocity of each overburden layer to obtain the

thickness of each layer at that point.

3


3. GEOPHYSICAL RESULTS

3.1 General

The results of the eight seismic lines carried out in the survey area are illustrated at 1:500

scale in Figures 3 through 14, in the Appendix. Ground surface profiles are approximate

and were determined by chain and inclinometer measurements and reference to elevation

contours published in the 1:250,000 NTS map sheet, “Mayo.”

3.2 Discussion

The analysis of the seismic data indicates that two distinct velocity layers underlie the site

area. The surficial layer with velocities varying from 1500 m/s to 1520 m/s is consistent

with surficial exposures of glacial till, saturated silt, sand, gravels and cobbles and possibly,

weathered or altered schist bedrock.

The surficial layer velocities at several locations were difficult to determine due to the

presence of frozen ground or a relatively shallow, dense overburden layer. Refractions

emanating from these high speed layers in some instances, obscured the slower-travelling

compressional wave through the overburden. The overburden arrivals were frequently

evident as second arrivals on the seismic traces.

The basal layer with velocities varying from 1900 m/s to 4400 m/s is the interpreted

bedrock surface. Generally, the basal velocities fall in the range of 2860 m/s to 4400 m/s

indicating competent bedrock. Lower velocity zones on seismic lines SL-1C, SL-3 and

SL-7 indicate less competent rock such as a shear or fault zone. The relatively narrow 1900

m/s zone on seismic line SL-7 may be consistent with a vertically-walled channel cut into

the bedrock. In that case, the bedrock surface would be greater than indicated in Figure 13.

With the exception of the middle grouping of lines, the bedrock surface was identified as a

second arrival in the seismic data. Early shock wave arrivals in the data were determined to

be due to shallow frozen ground or a buried, high speed, overburden layer. In most

instances, the shock wave arrivals from the deeper, competent bedrock surface were

apparent as later arrivals in the seismic data.

4


The lowest group of seismic lines encompassing SL-1, spreads 1 to 4, SL-2 and SL-8 are

located in the current mining area. The interpretation for seismic line SL-1 reveals a

significant depression in the bedrock surface in the vicinity of station 140NE. Further to the

northeast, the interpreted bedrock surface deepens quickly to depths of the order of 55m on

spreads no.’s 1 and 4.

Along crossline SL-2, a bedrock depression over 30 m in interpreted depth is evident at

about station 160NW. The axis of this depression is approximately 35m southeast of the

present location of Anderson Creek. No similar feature is apparent on seismic line SL-8 due

likely, to the limited seismic data recorded on that traverse.

The interpretations for the middle group of seismic lines shown in Figures 5, 6, 9, 10 and 11

display relatively shallow interpreted bedrock depths throughout the area. The data along

seismic line 1 shows little variation in bedrock depths as do crosslines SL-3 and SL-4.

Seismic line SL-5, however, shows a 10m bedrock depression at about station 100NW.

This bedrock feature is consistent with an elongate ground surface depression that may be a

higher, abandoned channel of Anderson Creek.

The highest group of seismic lines are illustrated in Figures 7, 12 and 13. The interpretation

for seismic line SL-1E indicates deep bedrock with a sharp rise in the bedrock surface to the

northeast. This sharp rise in the bedrock may be due to a fault in the bedrock surface.

Crossline SL-7 displays shallow bedrock with four distinct bedrock velocity zones. The

rapid lateral change in bedrock velocities along line SL-7 also suggests a fault zone.

The interpretation for seismic line SL-6 shows relatively deep bedrock with a well-defined

bedrock depression at about station 43NW. This depression based on its position and

gradient up from the middle group of lines, is likely the original Anderson Creek channel.

5


4. LIMITATIONS

The depths to subsurface boundaries derived from seismic refraction surveys are generallyaccepted as accurate to within ten percent of the true depths to the boundaries. In somecases, unusual geological conditions may produce false or misleading data points with theresult that computed depths to subsurface boundaries may be less accurate. In seismicrefraction surveying difficulties with a “hidden layer” or a velocity inversion may produceerroneous depths. The first condition is caused by the inability to detect the existence oflayers because of insufficient velocity contrasts or layer thicknesses. A velocity inversionexists when an underlying layer has a lower velocity than the layer directly above it.

In this survey, some difficulty was encountered in identification of bedrock surface, secondarrivals after the onset of earlier shock wave events from frozen ground or dense,overburden layers. This second arrival data was infrequently obscured by other seismicarrivals and may be less reliable in some instances.

The results are interpretive in nature and are considered to be a reasonably accuraterepresentation of existing subsurface conditions within the limitations of the seismicrefraction method.

For: Frontier Geosciences Inc.

Russell A. Hillman, P.Eng.

6


AURORA MINES INC.ANDERSON CREEK PLACER PROJECT

SEISMIC REFRACTION SURVEY

FRONTIER GEOSCIENCES INC.

DATE: APRIL 2001 SCALE 1:5,000 FIG. 2

SL-1

SPRE

AD 1

0

SL-7

SL-6

SL-2

SPREAD 1

SPREAD 2

SL-8

SL-1

SL-1

SPREAD 1

SPREAD 4

SPREAD 2

SPREAD 3

SPREAD 9

SPREAD 8

SPREAD 7

SPREAD 6

SPREAD 5

SL-4

SL-5

SL-3

0 50 100 150 200

METRES

NO. 1 POST

ROCK OUTCROP

MAYOLAKE

5299

POST 5302

CLAIM POST 15516 NO.2 POST

APPENDIX 5

IE-TEC Heavy Particle Concentrator Technology

HEAVY PARTICLE CONCENTRATION TECHNOLOGY

INNOVATIVE ENVIRONMENTAL TECHNOLOGIES

WWW.IE-TEC.COM

For additional information contact Greig [email protected] +1 (646) 541 6002

For additional information contact:

Greig Oppenheimer Phone: +1 (212) 222 0318 Fax: +1 (760) 860 9885 Mobile: +1 (646) 541 6002 [email protected]

WWW.IE-TEC.COM HPC Technology 1

Heavy Particle Concentration Technology IE-TEC’s HPC Technology allows for cost-effective separation of materials of differing specific gravity – specifically: • In Primary and Secondary mineral extraction activities for the separation of minerals such as

gold, platinum and PGMs, from gravel / sand / carrier material in: o alluvial or placer mining operations o reprocessing operations for extraction from waste or tailings dumps o as a process component in hardrock mining plants - prior to, or in place of chemical

leaching processes • For Environmental Cleanups / Lead remediation projects in decontamination of polluted

land, specifically shooting ranges Key benefits of this technology include: • A broad material-size processing spectrum with 95%-97% extraction yield • Mobile, self-contained equipment which is complete and easy to set up and use • A continuous process with a simple, secure and highly efficient final recovery stage • An environmentally friendly process with no chemicals and minimal water use. • Versatility/scalability to suit a wide range of different operating needs The “bottom line” is high yield, cost effective and reliable equipment requiring minimal operator skills allowing for the profitable processing of lower grade ore bodies in any location worldwide.

“I’ve looked at a lot of equipment in my time, but in 30 years of mining I’ve never come across anything as simple and effective as this”.

Operations Manager – South Africa 2003


DEVELOPMENT BACKGROUND In 1986 Raymond Brosseuk – inventor of the HPC process - began development of a gravity separation system for extraction of minerals from alluvial deposits and tailings/waste dumps. Focusing only on gold extraction in placer/alluvial mining operations, this self cleaning, portable system was developed and field tested by Mr. Brosseuk between 1986 and 1994 with very positive results.

A US patent application was filed in October 1990 and the “Apparatus for extracting heavy metals from ore” patent was granted on April 28th 1992 (patent no. 5108584). “The Gold Machine” was registered as the trademark for this technology.

Independent analyses on a concentrate sample by engineer, geologist Gerhard Van Rosen, in 1993 evidence that the Gold Machine system recovered between 91% and 94% of the gold in the sample concentrate. Of the remaining gold, nearly one half was in the -45 mesh fraction (assayed 39.2 g Au). Close to one third of the remaining gold is not recoverable (physically) as it is interstitial with magnetite or in silicate grains. The magnetic fraction, mainly magnetite assayed 6.82 g Au. Excluding this non recoverable fraction, the recovery efficiency of the system was close to 95%.

Additional early field tests by Mr. Brosseuk using a prototype machine on a placer operation near Likely, B.C. and Revelstoke B.C. allowed comparison of the Gold Machine with a conventional screen deck-sluicing system. The comparison evidenced superior gold recovery from the Gold Machine by as much as 40% while using 75% less water than the comparable equipment. Setup time for machinery was reduced from a month to several days and overall costs were reduced by 45%.

Starting with a medium size machine which was built in 1986, the design was refined and a small Model-5 (5 ton per hour) prototype was built in 1988. In 1990 the patent was filed and ten more Model-5 units were built. All ten units were sold within 2 weeks of completion. A more advanced version of the machine was built in 1991 and in 1994 two large Model-200 machines were built and sold to a mine in B.C., where they operated successfully, processing more than 180 cubic yards per hour. Another Model-200 was built in China under a licensing agreement, and is producing gold successfully for the Chinese.

By 2001 two Model-200 machines were in operation at the Anderson Creek mine in the Yukon and to date one Model-100, four large Model-200 and sixteen Model-5 units have been sold to mining operations in Canada, China, Mexico and the USA.

In 2003 IE-TEC acquired all rights to this HPC technology with the intention of focusing on commercialization of the HPC system.

In addition to the existing deep experience in gold recovery, IE-TEC has conducted testing with extremely positive results in extraction of other minerals such as platinum, chrome, diamonds and in lead remediation / environmental cleanup operations in North America, Europe and South Africa.

HPC design feedback and operating experience includes a total of over 125,000 machine hours (equivalent to more than 14 years of 24 hour per day, 7 day per week operation) logged on this equipment.

Accumulation of machine operation experience worldwide as well as the firsthand perspective gained from operation of the mine at Anderson Creek has been the base for design feedback on our HPC technology. Accordingly, IE-TEC is in the process of filing two additional patents for this technology.


HPC PROCESS OVERVIEW

A. Infeed material is fed into the hopper where it is washed to ensure that loose material is broken free from rocks and fed into the system. Oversized rocks and boulders are removed.

B. In the first of three chambers of the inner drum, material is thoroughly scrubbed with numerous paddles and sprayed with high pressure water.

C. The second inner-drum chamber consists of punched plate (usually half-inch holes) which screens the washed material, allowing the undersize material to pass into the outer, reverse-spiral drum. At the same time, the oversized material is carried into the third section of the inner drum and removed as tailings.

A) Infeed washing and pre-screening

B) Scrubbing

C) Screening

F) Final concentration sluice

D) Reverse spiral concentration

E) Heavy fraction pre-concentrated and fed

to sluice

G) Final Concentrate

J) Light fraction

K) Sluice Tailings

H) Oversize Tailings

I) Large Tailings


D. Reverse spiral metal ribbing on the inside surface of the outer drum serves as riffles. Rotation of the outer drum results in pre-concentration of heavy particles, including nuggets, fine particles and flour particles. These particles are then fed to the sluice system ‘E’. At the same time, most of the lighter, undersized material is washed down-slope, to be discharged as middling tailings at ‘J’.

E. No nuggets or finer particles are trapped in the outer barrel since the reverse spiral ribbing assures that the outer barrel is self-cleaning.

F. A traditional sluice, optimized for material flow from the reverse-spiral concentration step is used for final concentration. This sluice is relatively small, since only a small percentage of the original infeed material reaches this point.

G. Final concentrate volume is minimal, secure and can be removed whenever convenient, without shutting down the entire system.


FEATURES AND BENEFITS • Broad material-size processing spectrum with 95%-97% extraction yield

o Unlike any other equipment on the market, the machinery is capable of handling infeed and scrubbing and screening of material from fine sand up to massive rocks of up to 36 inches or 1 meter in diameter (often covered by mineral-rich dirt/sand) without any additional screening or feeding machinery. The trommel system for scrubbing and screening has been modified to have extremely high throughput and can handle the very toughest mining applications like clay and shale.

o The machine uses the established technology of a reverse spiral drum to classify and retrieve heavy particles. This technology was used with great success in small machines in the past; however its potential was never realized in large scale operations.

o An independent second phase extraction via a modified four-part sluice box system utilizing turbulent, laminar and effectively quiescent water flow facilitates extraction of small particles from 1 inch or 25mm down to 300 mesh fine or 45 micron level (powder sized particles just visible to the naked eye).

o The feed of material coming off the reverse spiral drum to the sluice boxes is at a steady flow rate to prevent surging, as, when surging occurs, a loss of fine particles of gold results.

o Due to this comprehensive and highly efficient capability across a broad processing range, high yield extraction is achieved without any other machinery aside from materials handling equipment (bulldozers, etc.).

• Mobile, self-contained and simple to set up

o All models are trailer mounted systems, fully mobile, road legal and containing all equipment required for power generation, pumping and system operation. This allows for access to typically remote or inaccessible mining locations at minimal cost.

o Setup is completed in minutes for smaller units or hours for large units vs. days or even months for other systems. This is vital since setup in a poor yield location means relocation of equipment, incurring significant downtime if setups are slow or significant materials-handling costs if machinery is not relocated.

• Simple, secure and highly efficient final recovery stage from continuous process

o Removal of the final mineral concentrate material from the machine is completed in a matter of minutes and does not require a system shut-down. This allows for concentrate processing on a daily basis.

o The recovery boxes can be secured to prevent theft, requiring 2-3 people to unlock with separate keys to retrieve the final concentrate.

o The final stage mineral concentrate has automatically been reduced to ultra high yield material which means that only a few pounds / kilograms of concentrate are sent to the final recovery step. This is extraordinary considering that competitive processing systems require hours to clean out and give several cubic yards of concentrate which take days to process and extract the finished product.

• Environmental performance

o Based on the reverse spiral classifier’s ability to concentrate the ore before the final stage of recovery, the equipment uses 75% less water than competitive system. This can be further reduced to nominal requirements via an additional water recirculation system.

o Beyond the direct environmental benefit of reduced resource usage, allowing for operation in dry areas, this facilitates operating with settling ponds which mean that absolutely no solids or silting waste are discharged and operation is possible in sensitive areas such as fish-stocked streams, rivers and lakes.

o No chemicals are used.


o Compliance with environmental legislation has been proven again and again with Canadian Environmental Inspection awarding an "A" rating during every operating year that this technology has been in place at the Anderson Creek, Yukon mine.

• Versatility

o Smaller units are perfectly suited to sampling, prospecting or artisan-scale operations whilst high capacity machines form the base of a full scale commercial mine.

o Although the HPC technology has been designed for placer mining conditions, it is clear that the equipment has broad application in traditional hard rock mining. Together with grinding or crushing machinery, the equipment is capable of supplementing and possibly even replacing massive extraction plants in concentrate upgrading and extraction processes at a fraction of the capital and operating costs.

• The bottom line - viability

o The equipment design is based on non-proprietary mechanical components, and production processes. This means that only generic consumables are required for operation and maintenance (bearings, gears, etc.)

o Reliable/robust heavy industry design has been employed for minimal maintenance in harsh environments (the Model-200 machines have polyurethane plastic liners that can be replaced every two years to prevent excessive maintenance costs associated with replacing steel plates which is a requirement of other extracting machines on the market).

o Whilst energy efficient pumps and drive motors allow for low fuel costs, manning is minimal and operator training requires only standard skill-levels.

o The “bottom line” is a high yield, cost effective and reliable construction with minimal, basic skill, operator requirements and extremely low operating costs which ultimately facilitate consideration of processing lower grade ore bodies in any location worldwide.

SPECIFICATIONS Specifications will depend on capacity / application. Examples below illustrate typical configuration of small and large units. HPC-5 HPC-200 Capacity 5 tons/hour (bank run) 200 tons/hour (bank run) Weight Approx. 650 lbs / 290 kg 65,000 lbs / 30 tons Length approx. 8.5 ft. / 2.6 m 56 ft / 17m Width approx. 5.5 ft. / 1.7 m 8ft 6" / 2.6m Height approx. 5 ft. / 1.6 m 10ft 9" / 3.3m Motor (direct drive) 5 hp Honda 60 kW diesel generator Fuel consumption 0.2 gallons / 0.75 liters/hour 0.4 gallons / 1.5 liters/hour Water consumption 21 gallons / 80 liters/minute 1100 gallons/minute Water pump 5 hp Honda 6" diesel pump Maximum output 60 g / 240 liters p/min 2,400 gallons / 9,600 liters/minute rating Fuel consumption 0.25 g / 1 liters/hour 1.5 gallons / 6 liters/hour Trailer type Standard 1 7/8" receiver hitch Standard 5th wheel plate hookup


HPC-5 5 ton/hour machine


HPC-200 200 ton/hour machine (images show 2 machines in tandem configuration)


Concentrate upgrading in sluice of HPC-200

Range of particle sizes captured by HPC (approx. 45microns upwards)


Finer gold particles extracted by HPC process suspended by water surface tension

APPENDIX 6

Opinion Letter of Independent Consultant

Oliver T. Maki

RESUME SYNOPSIS

Oliver T. Maki 718 Joe Persechini Drive

Newmarket, Ontario, L3X 2S1, Canada Tel. 905 853 5506 Fax905 853 9862

Email [email protected]

Specialized in: Porphyry copper, epithermal vein deposits, placer evaluations and development, Fair Market Value determinations and property appraisals. Due diligence and qualifying reports. Studies related to mining education in developing countries. Areas of Activity: Extensive and varied experience in most of Latin America, Southern Africa, Southwest United States and Cananda. South America: Chile, Peru, Argentina, Brazil, Venezuela Central America: Nicaragua, El Salvador, Honduras Mexico: Veracruz, Sonora, Chihuahua, Sinaloa, Michoacan. United States: Utah, Colorado, Nevada, New Mexico, Oregon California, Wyoming, Arizona, Wisconsin, Connecticut, Massachusetts, Montana Canada: Ontario, Quebec, Manitoba, Saskatchewan Africa: Zimbabwe, Botswana Areas of Responsibility: Prospecting, exploration, development, production and mine management. Preliminary reconnaissance, evaluation sampling, and the production of gold placer deposits. Retired professor of applied mining geology at College of Mineral Resources Technology, Cambrian College, Sudbury, Ontario. Consultant in mining and mining-related studies for the governments of Chile, Argentina. and Zimbabwe, under the direction of the United Nations Development Programme, the Organization of American States, and the Canadian International Development Agency. Initiated hard rock and gold placer projects in Zimbabwe. Languages: English, Spanish, Finnish. Objectives: In developing countries, can provide the benefit of sound support with local residents and key decision makers in governments, to optimize assurances of success. Have personal knowledge of regions within which many placer and lode occurrences warrant further investigation.

APPENDIX 7

Excerpt: Yukon Placer Mining Industry 1998 – 2002

Mayo Mining District, Anderson Creek Activities

Yukon Placer Mining Industry, 1998-2002 171

LEGEND 167..... Duncan Creek GoldDusters, Duncan Creek 168 .... Joe Raab, Duncan Creek 169..... M. Zemenchik, Duncan Creek 170..... Bardusan Placers, Lightning Creek 171..... Lucien Roy, Hope Gulch 172..... Kim Klippert, McNeil Gulch 173..... Paul Rivest, Davidson Creek

174..... Bruce Rivest, Davidson Creek 175..... Ralph Barchen, Owl Creek 176..... Margrit Wozniak, Anderson Creek 177..... 20861 Yukon Inc, Anderson Creek 178..... Ralph Barchen, Steep Creek 179..... Ralph Barchen, Ledge Creek 180..... Lawrence Dublenko, Williamson Creek

SITES167-180

0 10

km

135°

30'W

135°

30'W

63°30 'N 63°30 'N13

4°30

'W13

4°30

'W

64°00 'N64°00 'N

trails main roads rivers contour lines site no. elevation

NElsa

Van Cleaves Hill

Stewart River

Williamson Lake

Mayo Lake

Steep Cr.

Anders

onCr.Ow

l Cr.

Ledg

e Cr.

Casc

ade Cr.

Edm

onto

nCr

.

Keys

tone Cr.

Granite Creek

5936

Pingpong Cr.

Parent Cr.

Beliveau Cr.

Duncan Creek

Williams Cr.

DavidsonCreek

Mayo River

Lightning Creek

ThunderGulch

Mc'Neill

McM

illanAl

len

McKim

Keno-Ladue River

Faith

Christal Creek

HansonLakes

RoopLakes

Keno-Ladue River

Janet Lake

4 Mile Creek

5935

65154667

6579

4326

171

172170

168169

167

173

174

175

177

176

178179

180

Galena Hill

DUNCAN CREEKPLACER AREA

SITES167-180


D C P A

DAVIDSON CREEK 105M/11

Bruce Rivest 63°43'N 135°23'W

Water Licence: PM96-077 1998, 1999, 2000, 2001, 2002

Duncan Creek Placer Area Site no. 174

OPERATION/LOCATION Rick Rivest continued exploration,

testing and stripping of ground on three claims above the

canyon on Davidson Creek.

EQUIPMENT/FUNCTION Exploration was done with a Hy-

Hoe 6000TT excavator and a D-6 Caterpillar bulldozer

with a Hough 120 loader being used to move tailings. A

D-8 Caterpillar bulldozer was used for stripping test areas.

WASH PLANT A 12-foot by 24-inch test sluice box with a

trommel unit processed the pay gravels.

GROUND DESCRIPTION Coarse gravels and boulders up to 20 feet

thick overlay bedrock in the tested areas.

WATER SUPPLY AND TREATMENT Effl uent in testing programs was

discharged into out-of-stream pits.

GOLD Seventy percent of recovered values were reported to be

coarse gold with a fi neness of 860.

OWL CREEK 105M/11, 105M/14

Ralph Barchen 63°45'N 135°30'W

Water Licence: PM01-247 2002


OPERATION/LOCATION Ralph Barchen operated a one-person

mining operation on Owl Creek after testing on Steep Creek.

An estimated 400 hours were spent on Owl Creek in 2002.

Th e mining followed a seismic program completed in 2001.

EQUIPMENT/FUNCTION A D9H Caterpillar bulldozer was used

for stripping and stockpiling of materials. A 988B Caterpillar

loader fed the box and removed the tailings.

WASH PLANT A derocker 10 feet wide by 17 feet long fed

minus 2-inch material to an undercurrent sluice run 16 feet

long by 4 feet wide. Th e processing rate was 150 cubic yards

per hour.

GROUND DESCRIPTION Th e ground was 20 feet to bedrock

near the apex of the alluvial fan and the lower 10 feet were

processed as pay gravels. Th e top 4 feet of material were

described as coarse with well-rounded polished diorites with

fi ner gravels mixed with clay found below.

MINING CUTS In 2002, an estimated 30,000 cubic yards were

processed as pay gravels and another 10,000 cubic yards were

handled for stripping and ground preparation.

WATER SUPPLY AND TREATMENT An 8- by 8-inch Gorman Rupp

trash pump provided water to the wash plant. Out-of-stream

settling ponds provided the effl uent discharge required.

GOLD Gold values were described as coarse, well-rounded

nuggets with a fi neness of 840. Th e largest nugget recovered

in 2002 weighed 1 ounce.

ANDERSON CREEK 105 M/11

Margrit Wozniak 63°44'N 135°03'W

Water Licence: PM97-006 1998, 1999


OPERATION/LOCATION Th is operation is located on Anderson

Creek, a tributary on the south shore of Mayo Lake. Th e

creek channel above the alluvial fan was mined.

EQUIPMENT/FUNCTION A D-7 Caterpillar bulldozer was used

to strip, stockpile pay and rip bedrock. A Trojan 453 loader,

with 1½ -yard bucket, fed the wash plant and stacked the

tailings. A 4-inch Kubota water pump utilized the full creek

fl ow when sluicing.

WASH PLANT A dump box fi tted with a dry grizzly classifi ed

materials for a single run sluice 20 feet long by 3 feet wide.

GROUND DESCRIPTION Th e average depth to bedrock was

30 feet. About 1 foot of black muck overburden was found

throughout the mined areas, underlain by a mix of glacial

gravels. Th e gravels had red layers throughout the vertical

profi le, with a 1-inch layer of peat overlaying the blue/grey

gravels above the bedrock which contained coarse nuggets.

MINING CUTS Mining during 1998, 1999 consisted of a series

of alternating cuts mining upstream for a total of 100 feet.

WATER SUPPLY AND TREATMENT Effl uent was treated in a series of

out-of-stream settling ponds.

GOLD Th e gold was coarse and angular. Fineness was 870.

COMMENTS Th e 1999 season was the last for the Wozniak

family operation on Anderson Creek, with the transfer of

the property to Ray Brosseuk of 20861 Yukon Inc. under a

separate water licence (PM99-120).

178 Yukon Placer Mining Industry, 1998-2002

D C P A

ANDERSON CREEK 105M/11

20861 Yukon Inc. 63°43'N 135°03'W

Water Licence: PM99-120 2000, 2001, 2002


OPERATION/LOCATION In 2000, the Anderson Creek property

was transferred to 20861 Yukon Inc. Th e alluvial fan has

been systematically worked upstream through the previous

workings to the steep-walled creek mouth to Mayo Lake.

Two 12-hour shifts were worked with 13 staff in 2000. Th is

was downsized in 2002 to seven employees.

EQUIPMENT/FUNCTION A Caterpillar D-9R, a 950G Caterpillar

loader and a Caterpillar 335DL excavator were used to

process materials for a single wash plant in 2000. In 2001

and 2002, a second wash plant was used, which was supplied

by two Caterpillar 988B loaders with 9-yard buckets and a

Case 220B excavator with a 3-yard bucket. Th e Caterpillar

loaders were replaced in 2002 by D-31 Fiat Allis loaders.

WASH PLANT A reverse spiral trommel wash plant

concentrated pay gravels to minus 1 inch through a 3-foot

by 20-foot tail sluice run and a feedback loop to a 18-inch

by 16-foot side sluice run. An estimated 8 yards per hour of

minus 1 inch concentrate were processed by the side run and

225 cubic yards per hour were processed in the main sluice

run.

GROUND DESCRIPTION Th e mining since 2000 has shown the

top 10 feet to be loose materials overlaying large boulders

in a layer 8 to 10 feet thick which proved to be pay gravels.

Th e layer below the large boulders was defi ned by compacted

coarse gravels in clay which extended down an additional

18 feet and also proved to have reasonable pay values.

Th e fi nal 6 feet to bedrock was described as having bright

orange/yellow stains inside a black substrate which proved to

have the coarsest pay values located on the property. Bedrock

was described as being a decomposing blue schist which was

extremely weathered and rotten. Bedrock depths increased

each year as the mining progressed upstream. In 2002,

mining was done in a sand profi le which bottomed out on a

scoured sandstone bedrock which deepened from 40 feet to

70 feet when the mining cut changed stream sides from the

left limit to the right limit. Th is activity was located on the

alluvial fan immediately below the stream mouth onto the

alluvial fan.

MINING CUTS A single mining cut on the alluvial fan was

mined in 2000 totalling 100 feet wide by 250 feet long and

40 feet deep. A series of mining cuts in 2001 progressively

20861 Yukon Inc. on Anderson Creek, looking upstream.


D C P A

mined upstream on the alluvial fan totalling 100 feet wide

by 125 feet long by 40 feet deep. In 2001, the operation

attempted moving through the canyon to upstream pay

values but the clay deposit on the left limit presented serious

access problems. In 2002, two mining cuts were done below

the stream mouth onto the alluvial fan. Th e left limit bedrock

bench was mined fi rst, totalling 300 feet by 150 feet and was

40 feet deep to bedrock. Th e deposit was followed across

Anderson Creek onto the right limit and another mining

cut was developed, totalling 100 feet by 200 feet, which was

excavated to bedrock at 70 feet.

WATER SUPPLY AND TREATMENT Water supply was provided by

Anderson Creek through a 471 Jimmy 6-inch Monarch water

pump operating at 1300 igpm. Effl uent was treated in two

out-of-stream settling ponds measuring 50 feet by 80 feet

in 2000, and a third cell was added in 2001. Additional

armouring of the settling ponds in 2001 has stabilized the

creek and channel.

GOLD Gold was described as granular with 40% being #4

Tyler screen mesh or larger, and ranging to the 300 mesh

size. Fineness of gold values was 890-910.

COMMENTS A full creek seismic program was conducted in

2001 providing the bedrock profi le for future mine plans.

STEEP CREEK 105M/14


Water Licence: PM00-191 2002


OPERATION/LOCATION Ralph Barchen operated a one-person

operation on Steep Creek on optioned claims. Th e alluvial

fan of Steep Creek was extensively tested with washing

occurring in the central mine cut on the left limit.


for stripping and stockpiling of material. A 988B Caterpillar

loader fed the box and removed the tailings.



long by 4 feet wide. Th e processing rate was 150 cubic yards

per hour.

GROUND DESCRIPTION Th e areas mined and tested showed

a depth to bedrock of 45 feet with glacial gravels mixed

throughout. Th e apex of the alluvial fan was tested and

outfl ow gravels from Steep Creek were the only materials

found to bedrock.

MINING CUTS A central mine cut 200 feet by 100 feet on the

left limit of Steep Creek was tested to bedrock at 45 feet

and then was used for settling purposes in the remainder of

the test program. Material from ten test pits throughout the

alluvial fan were washed in the central mine cut in 2002. In

total, 30,000 cubic yards were washed with an additional

10,000 cubic yards being stripped for ground preparation.


trash pump pumped water to the wash plant at a rate of

1000 igpm.

GOLD Reported fi neness value was 950. Gold was reported to

be angular and fi ne-grained.

COMMENTS After extensively testing the alluvial fan of Steep

Creek, Ralph Barchen has moved to Owl Creek with plans

for fully demobilizing Steep Creek in 2003.

LEDGE CREEK 105M/10


Water Licence: PM98-046 1998, 1999, 2000, 2001


OPERATION/LOCATION Th is was a continuation of operations

under licence PM94-069 for Ralph Barchen to mine the

claims on Ledge Creek held by Bert Liske. A left limit bench

at the top of the alluvial fan was mined in 1998 and the

forks of Ledge Creek were mined in 1999. Th e last mining

occurred in 2000 with the reprocessing of several old tailing

piles on the alluvial fan and the bedrock bench beneath.

Final site reclamation was completed in 2000 and 2001, with

fi nal site abandonment awaiting a new water licence.


for stripping and stockpiling of material. A 988B Caterpillar

loader fed the box and removed tailings.



long by 4 feet wide. Th e processing rate was 100 to 120

cubic yards per hour.

GROUND DESCRIPTION Th e left limit bench mined in 1998 was

frozen gravels to bedrock at 40 feet with 4-foot boulders

throughout. Th e mining at the forks of Ledge Creek was

done in confi ned working areas with shallow bedrock

overlain by glacial till with large boulders. Th e mining in

2000 below the reprocessed tailings had 5 feet to 10 feet of

gravels to the bedrock bench.

MINING CUTS Th e 1998 season moved 150,000 cubic yards, of

which 100,000 cubic yards were washed. Th e 1999 season

processed 130,000 cubic yards in the forks of Ledge Creek,

while 30,000 cubic yards were washed in 2000.


trash pump, powered by a D311 Caterpillar engine, pumped

APPENDIX 8

Photographs of Site

Anderson Creek Mine - Images

View of Mayo Lake from the mine

Anderson Creek Mine

Aerial photographs of Anderson Creek

Stockpiling

Extraction / Washing operation using HPC-200 Gold Machines

Fine and coarse gold extracted using HPC technology

Nuggets including 2.6 Oz. 1.75” nugget found in Narrows area in July 2003

report on the anderson creek property of aurora … documents/15) geologists report ni...

Documents