Ann Mason (Nevada, USA) - PacMag 100%

Last Updated 26 February 2008

The 100% PacMag owned Ann Mason project in Nevada, USA boasts a mineral resource of 810 million tonnes @ 0.4% copper, 0.004% molybdenum (7.1 billion pounds of contained copper metal).

The Company is focusing immediate future efforts towards high-grade copper sulphide (Shamrock prospect and Ann Mason “5000” zone) as well as the near surface copper-oxide targets (Blue Hills oxide target) that may be developed with high unit value returns and corresponding low capital costs. Success in developing an initial operation at these projects may provide the catalyst to develop the much larger scale and more capital intensive porphyry deposits at Ann Mason and Blue Hills.

Figure 1: Yerington District – PacMag Projects and Resources

Shamrock Copper Prospect
In late 2008 the Company announced that it secured the Shamrock Project, a high-grade copper project located 5 kilometres south east of Ann Mason (Figure 1). Based on historical records that are well documented but incomplete, previous drilling at Shamrock has intersected wide (10 – 20 metre) zones of strong copper mineralisation (1-3% copper), located on patented mineral claims. Field assessments by PacMag personnel concluded that no subsequent drilling has been undertaken and that the high-grade copper results have never been followed up and remain open along strike for approximately 500 metres as well as at depth. The Company is currently finalising a drilling proposal to test the target.

Blue Hills Oxide Copper
Future assessment and exploration activities will focus on near surface copper-oxide mineralisation intersected at Blue Hills, where the Company has identified a large coherent target south and west of the recently discovered Blue Hills porphyry copper-molybdenum sulphide deposit 5km south east of the Ann Mason resource.

Based on new and previous drilling, new field observations and soil assays (up to 0.13% copper), the Company has outlined a copper oxide target zone at Blue Hills over an area 1.5km by 350 metres. Previously reported oxide drill intersections at the northern eastern end of the target zone include; 21.3 metres @ 0.46% copper, 36.3 metres @ 0.46% copper, 32.7 metres @ 0.22% copper and 39.6 metres @ 0.26% copper, defining a continuously mineralised zone over 360m of strike length within the new 1.5km long target (Figure 2).

Potential exists for the development of a substantial horizontal, near-surface copper oxide zone, developed within a zone of deep weathering which extends to depths in excess of 120 metres.

Testwork for the mineralised interval in hole BH08006 confirm copper oxide mineralisation is acid soluble, with an average acid soluble copper assay recovery of 80%. This is an excellent result and indicates the potential for copper oxide extraction via simple acid leaching, with corresponding low operating and low start-up capital costs.

The widths, tenor and depth to mineralisation intersected by PacMag at Blue Hills are consistent with that of the nearby MacArthur copper-oxide deposit, located approximately 7km north-east of Blue Hills, where TSX listed Quaterra Resources Inc is currently undertaking resource drilling. The MacArthur copper-oxide mine operated in the 1970’s, at a time when copper prices were significantly lower than today’s price. The target lies within relatively flat, open terrain allowing easy access for drill testing.

Figure 2: Blue Hills Oxide Copper Target (Note only oxide copper intersections are shown, no sulphide intersections have been annotated).

Ann Mason – Near Surface High-Grade Copper Zone (“5000 Zone”)
Near surface high-grade copper mineralisation has been identified in drilling at Ann Mason northwest.

The high-grade copper zone named the "5000 Zone" is semi-massive quartz sulphide lode and has been confirmed in three new drill holes at the equivalent level below surface (5000m RL) displaying excellent continuity over 130 metres of strike.

Previously reported intersections from the zone include:
• 4.3 metres at 4.2% copper from 137 metres including 1.2 metres @ 8.6% copper
• 6.1 metres @ 5% copper from 146 metres depth, including; 3 metres @ 9.05% copper

Mineralisation is at least 100m in width and is open to the northeast and a further 280m southwest towards previously drilled hole D150 that intersected 4.6m @ 1.2% copper.

Potential exists for a near surface, low tonnage but high-value copper zone that partly lies within the previous scoping study pit limits. The grade and thickness of the central portion of this zone would also be potentially suitable to support underground extraction, should sufficient tonnes be delineated.

Ann Mason - North West Resource Target
Drilling at the Ann Mason north-west zone has successfully demonstrated the continuity of mineralisation and extent of higher-grade copper zones in the sparsely drilled north western portion of the Ann Mason deposit.

Ann Mason East Target
Drilling at Ann Mason east has been successful in extending copper–molybdenum mineralisation beyond the limit of the current resource. Mineralisation intersected in drill holes Ann07007 and Ann07008 of confirms continuous porphyry mineralisation that will allow extension of the resource by greater than 300 metres to the east.
Geological modeling continued as a prerequisite to resource estimation.

Blue Hills - Porphyry Copper-Molybdenum Discovery
The Blue Hills porphyry copper discovery contains drill intersections including; 73.2 metres @ 0.57% copper equivalent and 100.6 metres @ 0.41% copper equivalent. The size potential of the Blue Hills mineralisation is highlighted by the massive lower-grade mineralised halo that extends from 152 metres below surface to the end of hole (BH08001) grading 526 metres at 0.3% copper equivalent.

Copper and molybdenum in both holes is located within disseminated and sheeted vein-style mineralisation hosted within porphyritic quartz monzonite.

Mineralisation remains open to the east and south as well as at depth to the north and west, with relatively flat open terrain allowing easy access in all directions.

The alteration and sulphide species logged in each of the Blue Hills holes confirms a large porphyry copper-molybdenum system had been defined, but that neither the core of the system nor its extents have been determined. The Company has not yet ascribed a target size to the discovery, but wishes to point out that the known porphyry copper-molybdenum sulphide deposits within the district range in size from 162 to 810 million tonnes.

Three RC pre-collars remain to be extended with diamond drilling, with an initial aim of scoping the size of the mineralised system.

Ludwig – Casting High-Grade Copper "skarn" Style Targets
Drilling in early 2008 beneath the historic Ludwig high grade copper mine that produced 115,000 tonnes averaging 6% copper, returned modest copper intersections down dip of the mine workings as well as defining a new zone of copper mineralisation hosted in sulphide-marble breccia that is stratigraphically below the Ludwig mine horizon. In addition, drilling intersected a new zone of near surface, oxide copper mineralisation grading 9.2 metres at 2.3% copper from 27.4 metres including 3 metres @ 5.2% copper.

Drilling by the Company also intersected high-grade copper mineralisation within the Castings mine host rocks some 100 metres below the historic workings. Detailed mapping of the immediate Castings mine area is proposed prior to follow up drill testing along the mine horizon which will require systematic drill fences.

Minnesota Copper-Iron Target
The Minnesota IP and magnetic geophysical targets are similar in character to the nearby Lyon skarn copper-iron deposits. The Lyon skarn deposits being explored by TSX listed Nevada Copper Corporation form a cluster of six individual copper-iron deposits including the East Deposit containing measured and indicated resources of 20 million tonnes at 1.78% copper, the East-2 Deposit containing 6 million tonnes at 1.92% copper and the North Deposit containing 74.8 million tonnes @ 0.61% copper.

Drilling by the Company intersected strongly altered limestone, andesite and granitic rocks with alteration assemblages equivalent to those commonly observed in outer zones of a large mineralised system. The company’s geophysical consultant has now re-modelled the magnetic anomaly incorporating information sourced from the drilling program and suggests a much deeper (>500 metres depth) but stronger magnetic source is responsible to explain the observed highly anomalous surface magnetic readings.

The company is currently assessing its options to test this deeper target.

Progress on Ann Mason Pre-feasibility Study Activities
In addition to the ongoing resource programs and detailed geotechnical data collection, progress has continued on the Environmental Assessment (EA) for the Ann Mason project. During the quarter the EA was submitted to the Federal Bureau of Land Management for expanded exploration activities at the Ann Mason site.

Proposed Merger