Phyllis Lake Property  

QUICK FACTS

Location – The Phyllis Lake Property is located near the Town of Ignace, Ontario.

Number of Claims & Acres – 64 unpatented claim units for 2,560 acres.

Exploration Target – Molybdenum, Copper, Cobalt, Nickel, Zinc, Silver, Gold, Palladium and Platinum

Ownership Interests – 50 % Mainstream Minerals Corporation and 50 % King’s Bay Gold Corporation

Operator – King’s Bay Gold Corporation

PROPERTY DESCRIPTION & EXPLORATION

On November 26th, 2008, the partners were pleased to announce in a news release the successful completion of their Phase 1 drilling program on their joint-ventured Phyllis Lake Project. The results from this program confirms the presence of wide zones of uranium, rare earths, rare metals and other minerals, notably sulfur and iron, at or near surface in East Zone Number 1. Additional exploration and development work, economic analysis and research on processing methodologies and costs will be needed to determine if these zones will be economically amenable to open pit mining. The news release also noted that both companies were also cooperating to stake more land in the immediate area which could triple the size of this project from the current 64 claim units (2,560 acres) and that the property is easily accessible via the TransCanada Highway and is intersected by a railroad.

The results from the completed Phase 1 program are as follows:

Hole # 1

From 2.0 to 11.0 metres

9.0 metres grading 0.0204 % Uranium, 470.55 g/t Chromium, 27.40 g/t Gallium, 16.52 g/t Lithium, 18.22 g/t Scandium, 50.66 g/t Vanadium, 26.00 g/t Tellurium, 8.35 g/t Tantalum, 18.09 g/t Strontium, 5.50 g/t Zirconium, 7.23 g/t Cadmium, 1.021 % Calcium, 0.415 % Magnesium, 0.0654 % Manganese, 0.0343 % Titanium, 0.0222 % Copper, 0.0165 % Phosphorous, 15.03 % Sulfur and 28.80 % Iron.

From 18.0 to 29.5 metres

11.5 metres grading 0.0080 % Uranium, 606.66 g/t Chromium, 10.37 g/t Gallium, 18.58 g/t Lithium, 11.04 g/t Rubidium, 10.19 g/t Scandium, 21.79 g/t Vanadium, 8.58 g/t Tellurium, 3.33 g/t Tantalum, 5.91 g/t Strontium, 6.87 g/t Zirconium, 4.08 g/t Thorium, 8.45 g/t Cerium, 1.75 g/t Cadmium, 1.16 g/t Yttrium, 0.562 % Magnesium, 0.0603 % Manganese, 0.0513 % Titanium, 0.0245 % Phosphorous, 7.27% Sulfur and 15.32 % Iron.

Hole # 2

From 1.48 to 16.5 metres

15.02 metres grading 0.0285 % Uranium, 395.71 g/t Chromium, 30.22 g/t Gallium, 10.35 g/t Lithium, 20.39 g/t Scandium, 13.00 g/t Vanadium, 29.25 g/t Tellurium, 9.16 g/t Tantalum, 15.17 g/t Strontium, 5.23 g/t Zirconium, 9.51 g/t Cadmium, 1.091 % Calcium, 0.450 % Magnesium, 0.0585 % Manganese, 0.0180 % Titanium, 0.0230 % Copper, 0.0142 % Phosphorous, 19.09 % Sulfur and 33.35 % Iron.

From 28.5 to 33.0 metres

4.5 metres grading 0.0164 % Uranium, 591.25 g/t Chromium, 19.75 g/t Gallium, 19.12 g/t Lithium, 18.50 g/t Scandium, 29.37 g/t Vanadium, 22.37 g/t Tellurium, 6.62 g/t Tantalum, 7.12 g/t Strontium, 3.62 g/t Zirconium, 4.37 g/t Cerium, 7.37 g/t Cadmium, 0.450 % Calcium, 0.550 % Magnesium, 0.0618 % Manganese, 0.0375 % Titanium, 0.0171 % Phosphorous, 12.15 % Sulfur and 19.31 % Iron.

Hole # 3

From 7.5 to 9.5 metres

2.0 metres grading 0.0290 % Uranium, 546.75 g/t Chromium, 33.00 g/t Gallium, 6.50 g/t Lithium, 17.50 g/t Vanadium, 33.00 g/t Tellurium, 11.00 g/t Tantalum, 7.00 g/t Zirconium, 6.25 g/t Cerium, 3.50 g/t Cesium, 7.75 g/t Lanthanum, 11.75 g/t Cadmium, 33.00 g/t Rubidium, 11.75 g/t Scandium, 1.37 g/t Samarium, 1.72 g/t Thorium, 0.300 % Magnesium, 0.0397 % Manganese, 0.0332 % Titanium, 0.0233 % Phosphorous, 18.95 % Sulfur and 34.50 % Iron.

From 12.5 to 19.0 metres

6.5 metres grading 0.0100 % Uranium, 449.16 g/t Chromium, 19.14 g/t Gallium, 16.57 g/t Lithium, 25.41 g/t Scandium, 68.42 g/t Vanadium, 12.35 g/t Tellurium, 5.28 g/t Tantalum, 28.50 g/t Strontium, 4.14 g/t Zirconium, 3.78 g/t Cadmium, 1.401 % Calcium, 0.510 % Magnesium, 0.0655 % Manganese, 0.0310 % Titanium, 0.0199 % Copper, 0.0195 % Phosphorous, 10.05 % Sulfur and 20.01 % Iron.

From 37.5 to 42.5 metres

5.0 metres grading 0.0106 % Uranium, 500.00 g/t Chromium, 13.27 g/t Gallium, 18.63 g/t Lithium, 12.50 g/t Scandium, 23.63 g/t Vanadium, 11.81 g/t Tellurium, 4.18 g/t Tantalum, 11.45 g/t Strontium, 8.09 g/t Zirconium, 3.18 g/t Cadmium, 0.521 % Calcium, 0.360 % Magnesium, 0.0364 % Manganese, 0.0181 % Titanium, 0.0206% Phosphorous, 12.08 % Sulfur and 20.00 % Iron.

Hole # 4

From 101.0 to 106.0 metres

5.0 metres grading 0.0124 % Uranium, 640.00 g/t Chromium, 13.72 g/t Gallium, 16.81 g/t Lithium, 23.70 g/t Scandium, 50.45 g/t Vanadium, 10.18 g/t Tellurium, 4.27 g/t Tantalum, 16.45 g/t Strontium, 3.90 g/t Zirconium, 1.00 % Calcium, 0.301 % Magnesium, 0.0380 % Manganese, 0.0151 % Titanium, 0.0105 % Phosphorous, 12.25 % Sulfur and 21.77 % Iron.

From 118.5 to 129.0 metres

10.5 metres grading 0.0200 % Uranium, 546.00 g/t Chromium, 20.27 g/t Gallium, 46.13 g/t Rubidium, 27.63 g/t Lithium, 11.55 g/t Scandium, 33.40 g/t Vanadium, 19.00 g/t Tellurium, 6.36 g/t Tantalum, 7.50 g/t Strontium, 9.54 g/t Zirconium, 9.72 g/t Cerium, 7.31 g/t Lanthanum, 1.86 g/t Yttrium, 5.81 g/t Cadmium, 0.360 % Calcium, 0.701 % Magnesium, 0.0632 % Manganese, 0.0490 % Titanium, 0.0178 % Phosphorous, 16.92 % Sulfur and 21.10 % Iron.

These drill results came from an area of the property known as the East Zone Number 1 and shows excellent potential to host several times the mineralization identified to date as these highly mineralized zones are still open at both ends and at depth.

Hole #1 and Hole #4 were drilled over 500 metres apart which now confirms a strike length of at least 500 metres and drill intersections from surface to a depth of 129 metres so far. The news release noted that this area will definitely need more surface stripping at both ends to fully define the actual strike length of this large mineral-rich structure and deeper drilling to test the depth extensions.

Andrew Gracie, Ph.D, P.Eng, P.Geo is the Qualified Person under National Instrument 43-101 for this project. All of the samples herein were analyzed by Acurassay Labs. The samples were tested using the Neutron Activation Method and Acqua Regia Digestion with an ICPAES finish is being added. True widths are not known.

The news release also stated that both companies were very pleased with the results of this successful initial drill program and were presently evaluating all of the data from this Phase 1 program before commencing an aggressive Phase 2 drilling program.

Uranium – Supply and Demand

The main use of uranium in the civilian sector is to fuel commercial nuclear power plants. A persistent deficit between world U3O8 demand and the world’s U3O8 mining supply has existed for close to two decades and inventories are steadily being depleted. As such, prices are expected to increase significantly in the future due to international supply shortages of uranium, along with escalating demand from nuclear programs in nations such as India and China. According to the World Nuclear Association there are official plans in the works worldwide for 349 new reactors (either under construction, planned, or proposed). Governments worldwide are struggling for solutions to control green house gas emissions and to produce affordable energy. Nuclear power is the cleanest, least expensive and most secure source of electricity. There are currently 439 operational nuclear reactors worldwide and that number is expected to grow significantly within the next decade. In the U.S.A., which has 104 operational nuclear power plants providing approximately 20% of the country’s energy, reactors that have met the end of their normal 40-year operating license are being granted extensions and the U.S. Department of Energy is actively providing incentives encouraging power corporations to apply for licenses to build new reactors. U3O8 is currently trading at $53 US per pound. Source: http://www.u3o8.biz/ - Market Commentary of November 21st, 2008

Rare Metals and Rare Earth Elements – Demand, Uses and Supply

Demand for rare metals and rare earth elements is soaring because of consumer demand for more fuel-efficient cars, alternative energy technologies such as fuel cells, the nuclear power industry for both practical and experimental utilization, rechargeable batteries, lasers, hydrogen storage, superalloys as used in the aerospace industry, computer chips, cell phones, digital cameras, plasma televisions, computer screens, permanent magnets as used in electric-hybrid vehicles and in the conductor industry for many of the new "Green" technologies, etc. By some estimates, 30% of the world's consumption of rare earths is related to cars, a figure that could grow as more consumers shift to hybrid vehicles, which typically contain more than 60 pounds of rare-earth products.

China recently announced a reduction in the exports of REMs coming out of their mines, in part because the government in Beijing may be trying to encourage the development of more value-added processes at home. This decision will considerably reduce the supply for buyers outside of China while world demand is in full growth. The many plants in China are competitive, and that has traditionally kept prices low for overseas buyers in the past. But in recent years the Chinese government has imposed tariffs and export restrictions that are causing concern for foreign buyers of the minerals. The potential bottleneck in supply is forcing some overseas buyers to consider shifting their own plants to China to ensure secure and cheap raw materials. And regardless of whether buyers move entire plants, prices will remain strong because of higher demand that China alone cannot meet.

The current situation, with China dominating the supply chain, is "unhealthy and unsound”. Prices and demand are both expected to continue to rise drastically. It will soon become critical to produce these resources outside of China.


Sulfur and Iron – Prices, Uses and Demand

In only a year, the price of sulfur has risen more than tenfold from $50 US per metric tonne to $500 US, according to ICIS, the chemicals-pricing service. Editor Stephen Burns writes to clients today that Mideast sellers have mentioned $900 US per metric tonne as a minimum target for second-half sulfur contracts, with up to $1,000 US possible. “Their position is based on higher spot prices since the start of this year and expectations that the sulfur market will strengthen even further as the year progresses,” ICIS writes.

Demand for sulfur, long an ugly yellow waste product of petroleum refining, is surging because it's needed to make sulfuric acid, which in turn is essential to the production of fertilizer. Earlier in November 2008, Purchasing.com reported that increased demand for sulfuric acid from booming agricultural and base metals markets has pushed the raw material price of sulfur through the roof in the U.S. while the U.S. market continues to see a long-term slowdown in sulfur supply from reduced production at oil refineries. The media spotlight on potash has made Canadians are somewhat familiar with this boom in the demand for components used in the manufacture of agricultural fertilizers. Source: http://www.purchasing.com/article/CA6564115.html/ - Article entitled “Sulfur Prices Rise, Boosting Fertilizer Costs” by Tom Stundza dated May 27th, 2008.

Although iron prices are depressed at the moment at approx. $70 US per metric tonne, industry analysts expect prices to stabilize in the first part of 2009 and then upwards once the global economy eventually recovers. Source: http://www.bloomberg.com/ - Article entitled “Spot Iron Prices May Have Reached Bottom, Macquarie Says” by Alistair Holloway dated November 25th, 2008.
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