Fly Lake

Location

The Fly Lake Property is located in Mitchell Township of the Red Lake Mining Division of Ontario in the area generally known as the Birch-Uchi Greenstone Belt. The property itself is located 80 kilometres east of the Town of Red Lake, Ontario and 6.5 km south of the former South Bay Mine which produced 1.6 million tons of ore grading 2.3% copper, 14.5% zinc, and 3.5 ounces per ton of silver.

Number of Claims & Hectares

1 leased and 6 staked mining claims for a total of 44 claim units covering approximately 935 hectares.

Exploration Target

Gold.

Date of Acquisition via Option Agreement

February 7th, 2011.

Ownership Interests

100% Mainstream Minerals Corporation.

Operator

Mainstream Minerals Corporation.

Qualified Person as per National Instrument 43-101 (subject to change)

Garry Clark P.Geo.

Information

The Fly Lake property lies within the Red Lake-Uchi Subprovince of the Superior Province of the Canadian Shield. There are three mineral known occurrences on the Fly Lake property and all are from drilling by St. Joe Exploration. The Nekapean occurrence beneath Fly Lake intersected a best assay of 0.34% copper and 8.25% zinc over 1 meter in drill hole 3197-1-80. The Fly Lake occurrence yielded an assay of 3.63% zinc over 1.24 m. The Fly Lake 3197-6-80 occurrence produced assays of up to 0.23% copper, 7.4% zinc, 1.2% lead and 0.65 ounces per ton of silver over 0.5 m.

The property covers a sequence of felsic volcanics with one or more temporal discontinuities in the volcanic history. These temporal discontinuities are highly prospective horizons for VMS mineralization and are spatially coincident with both conformable and crosscutting hydrothermal alteration zones. Elsewhere in the belt base metal mineralization is known to occur associated to these alteration zones. Several electromagnetic conductors from historical and recent Fugro Airborne surveys on the property currently remain untested.

At the time of the acquisition, Mainstream’s President and Chief Executive Officer, Michael Romanik, stated: “The Fly Lake property provides the company with an entry into base metals in an area known to host economic mineralization. The property also provides Mainstream with some commodity diversification and will allow it to continue in its quest to be an important landholder and player in the Birch-Uchi Greenstone Belt of north-western Ontario. The Birch-Uchi area has been the scene of a staking rush in the past couple of months as some companies in the area, such as Gold Canyon Resources Inc. (TSX.V: GCU), are reporting drilling successes. The data generated by the recently flown Fugro airborne survey provides an excellent base for Mainstream to commence exploration efforts on the Fly Lake property. We look forward to the completed technical report and will follow up on the recommendations to guide our exploration program. In addition, Mainstream is actively pursuing other projects of interest in the Birch-Uchi belt.”
Clark Exploration Consulting Inc. of Thunder Bay, Ontario has been engaged to write a National Instrument 43-101 technical report on the Fly Lake property and will recommend an initial work program.

Under the terms of the option agreement of February 7th, 2011, Mainstream Minerals can earn a 100% interest by completing payments to the Vendor totalling $75,000 over 4 years and the issuance of 200,000 common shares over the period of 1 year as follows:

Upon signature of the option agreement	$15,000
1st Anniversary of the Agreement	$  5,000
2nd Anniversary of the Agreement	$10,000
3rd Anniversary of the Agreement	$10,000
4th and Final Anniversary of the Agreement	$35,000

 

Within 7 days of receiving regulatory approval	100,000 common shares
1st Anniversary of the Agreement	100,000 common shares

The issued shares shall be subject to hold periods as required by the applicable policies of the TSX Venture Exchange Inc and other securities laws.

Whereas the Vendor acquired the property rights to the Fly Lake Mining Lease 105625 from a third party, that third party retains an original Net Smelter Return (“NSR”) royalty of 1.5%. As such, and under the terms of the option agreement, there will be two “NSR” royalties for the Fly Lake Mining Lease with the original third party retaining a 1.5% “NSR” and the Vendor retaining a 2.0% “NSR” (for a total “NSR” on the property of 3.5%). Without affecting the other party’s “NSR”, Mainstream Minerals may buy back one-half of either “NSR” by paying a onetime payment of $1,000,000 to the applicable party. The party who is paid $1,000,000 will retain half of their respective original “NSR”.