GEOLOGICAL REPORT

8 3 0 o u 4

0 9 3 E / / J

L a k e )

ON THE

SEEL PROPERTY

TAHTSA REACH

OMINECA MINING DIVISION

WEST CENTRAL BRITISH COLUMBIA

NTS 093E/11E 53°38' N

127°05' W

Prepared for Grayd Resource Corporation

and Gold Reach Resources Ltd.

By D.G. Maclntyre, Ph.D. P.Eng.

December 14, 2004

TABLE OF CONTENTS

Table of Contents 2

List of Figures 3

List of Tables 4

List of Photos 4

Summary 5

Introduction and Terms of Reference 8

Disclaimer 9

Property Description and Location 9

Accessibility, Climate, Local Resources, Infrastructure and Physiography 13

Accessibility and Infrastructure 13

Climate and Physiography 14

History 14

History - Ownership 15

Previous Exploration - Seel (Lean-To) Project 15

Previous Exploration - Ox C and Ox-East Projects 16

Exploration in 2003 17

Geological Setting 19

Telkwa Formation (1JT) 19

Nilkitkwa Formation? (lmJs) 21

Whitesail Formation (lmJW) 21

Smithers Formation(mJS) 21

Bulkley Intrusive Suite 21

Diorite (LKBdr) 22

Quartz Diorite to Granodiorite (LKBqd, LKBgd) 22

Porphyritic Quartz Monzonite (LKBpqm) 22

Quartz-Feldspar Porphyry (LKBqfp) 22

Porphyritic Granodiorite (LKBpgd) 22

Ootsa Lake Group 23

Breccia zone 23

Deposit Types 23

Mineralization 24

Seel (Lean-To) Breccia 24

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Damascus (OX C) Vein 25

Alteration 25

Exploration 26

Magnetic Survey 27

3D Induced Polarization Survey 28

Drilling 32

Sampling Method and Approach 35

Sample Preparation, Analyses and Security 35

Data Verification 35

Adjacent Properties 35

Mineral Processing and Metallurgical Testing 36

Mineral Resource and Mineral Reserve Estimates 36

Other Relevant Data and Information 36

Interpretation and Conclusions 36

Recommendations 39

References 43

Certificate of Author 45

LIST OF FIGURES

Figure 1. Location of the Seel property 10

Figure 2. Location of the Seel Mineral Claims, Tahtsa Reach Area 11

Figure 3. Claim map for the Seel property 13

Figure 4. Bedrock geology, Seel Property : 18

Figure 5. Bedrock geology, Lean-To area 20

Figure 6. Total field magnetic contour map 26

Figure 7. Chargeability at 100 metres depth 27

Figure 8. Resistivity at 100 metres depth 28

Figure 9. Line 4800- 3D Cross Section - Interpreted Resistivity and Chargeability 29

Figure 10. Line 4600- 3D Cross Section - Interpreted Resistivity and Chargeability 30

Figure 11. 3D resistivity model facing north 31

Figure 12. 3D chargeability model facing north 31

Figure 13. Line 4200N interpreted resistivity and chargeability 32

Figure 14. Drill hole plan, Lean-To showing 33

Figure 15. Colour contoured chargeability at 100 metres depth plotted relative to geologic contacts and drill hole collars in the vicinity of the Lean-To breccia body 38

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LIST OF TABLES

Table 1. Seel Property Claims 12

Table 1. Significant drill hole intersecti

Table 1. Seel Property Claims 12

Table 2. Significant drill hole intersections, Lean-To showing 34

Table 3. Phase 1 cost estimates 40

Table 4. Phase 2 cost estimates 41

ons, Lean-To showing (Goldsmith and Kallock, 1986) 34

LIST OF PHOTOS

Photo 1. View north towards the Lean-To breccia zone with Tahtsa Reach in the distance 7

SUMMARY

This technical report has been prepared at the request of Mr. Hans Smit, Vice President of Exploration for Grayd Resource Corporation and Gold Reach Resources Ltd. A large part of this report is taken from a previous technical report by Peter L . Ogryzlo M . Sc., P. Geo. dated June 12, 2004. Additional information contained in this report, includes the results of 9 days of geological mapping by the writer and a 3-D IP survey done by SJ Geophysics in late September and early October, 2004. The recommended program contained in this report is based on earlier recommendations by Ogryzlo (2004) and the results of subsequent geological mapping and IP surveys.

Bedrock mapping completed by the writer on the Seel Property has shown that there is a northeast trending chain of small intrusive bodies, all of probable Late Cretaceous age that transects the property. Several distinct intrusive phases have been mapped. The oldest phases are granodiorite, quartz diorite, diorite and porphyritic quartz monzonite. These are cut and mineralized by younger phases of quartz-feldspar porphyry, feldspar porphyry and porphyritic granodiorite. The intrusions cut rocks of the Lower to Middle Jurassic Hazelton Group. Four stratigraphic units are recognized -Lower Jurassic andesitic pyroclastic rocks of the Telkwa Formation, Lower to Middle Jurassic siltstones and mudstones possibly correlative with the Nilkitkwa Formation, Lower to Middle Jurassic rhyolitic pyroclastic and volcaniclastic rocks of the Whitesail Formation and Middle Jurassic feldspathic siltstones, wackes and granule conglomerates of the Smithers Formation. Major high angle faults trend north to northeasterly and displace the various stratigraphic units. Location of these faults is recognized by stratigraphic offsets and changes in bedding attitudes. Alteration and mineralization on the property appears to be associated with one or more porphyritic granodiorite intrusions that are lithologically similar to those at the nearby Huckleberry mine and Ox Lake prospect. Strong phyllic and argillic alteration zones and a well mineralized annular zone of brecciation are typical of features found associated with high level calc-alkaline porphyry copper deposits associated with the Late Cretaceous Bulkley Intrusions. High grade Pb-Zn-Ag veins also occur on the property and these appear to be emplaced along north to northeast trending fault zones.

The following summary has been extracted and modified from a previous technical report by Ogryzlo (2004).

The Seel Mineral Claims are situated in the Central Interior of the Province of British Columbia, approximately 100 kilometres southwest of the town of Houston, BC. The claims lie in the Omineca Mining Division, NTS map sheet 093E/1 IE. Grayd Resource Corporation (Grayd) has acquired one hundred per cent interest in the Seel Mineral Claims through and subject to an agreement with Mr. Rupert Seel of Seel Enterprises Ltd. of Sechelt, British Columbia. Mr. Seel has been actively exploring the region for many years.

His field work and work by previous operators led to the discovery of subcroppings of bedrock containing pervasive quartz-sericite altered intrusive and volcanic rocks. Geochemical and geophysical testing of the prospects led to the drilling of a number of diamond drill holes between 1982 and 1985.

The area enclosed by the Seel Mineral Claims had been previously explored as the REA, Lean-To, O X B, O X C and OX-EAST groups of mineral claims. The earliest recorded work was in the late 1960's, and work continued intermittently until 1989. Various operators have tested the sulphide occurrences which may be seen in outcrop and in the streams which dissect the property. Soil geochemical and ground and airborne geophysical surveys have been used to generate drill targets. Several drill programs have ensued from this work, which led to the discovery of the Seel Breccia

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Pipe and the Damascus and other Ag-Pb-Zn veins. References to this work may be found in the British Columbia Ministry of Energy and Mines Geological Survey Branch MINFILE database under occurrence numbers 093E 040 (Rea, TL), 093E 101 (OX B and OX C), 093E 105 (Lean-To), and 093E 119 (OX-EAST), in publicly available assessment reports filed with the ministry and in private company reports. This report pertains mainly to the Lean-To showing (093E 105).

The most prospective target discovered to date is the Lean-To or Seel Breccia Pipe. The pipe is an incomplete ellipse or horseshoe shape in plan, open to the west, with a long axis of 210 metres and a shorter north-south axis of 180 metres. The pipe was tested through surface workings and diamond drilling in 1982,1983 and 1985 by Lansdowne Oil and Minerals (Goldsmith, 1984; Kallock, 1986).

Surrounding the Seel Breccia Pipe is an extensive zone of pervasive hydrothermal alteration and sulphide mineralization. Sulphide contents commonly range between 1 and 8 per cent, and locally reach 40 per cent.

Check sampling by Ogryzlo (2004) appears to confirm the presence and grade of the Cu, A g and A u mineralization reported by Mr. Seel and by previous operators. The trenching of the surface exposures by Mr. Seel and shallow diamond drilling by previous operators indicate the presence of a porphyry Cu+Au±Mo system of unknown size and grade. Located within this system there is a breccia hosted Cu-Ag occurrence with significant but erratic gold values. Copper and silver grades in the breccia are an order of magnitude higher than in the adjoining porphyry style mineralization.

The Seel Minerals claims also contain an occurrence of Ag-Pb-Zn vein mineralization described in earlier reports as the O X C or Damascus Vein. The vein is approximately 1700 metres east of the Seel Breccia and was extensively explored by International Damascus Resources, Corninco Limited and Granges Inc. between 1980 and 1986 using geochemical surveying, geophysical surveys, trenching and diamond drilling. Geochemical surveying revealed anomalous concentrations of copper, lead, arsenic and silver in soils overlying the vein and also over adjoining targets. In addition, an Induced Polarization anomaly with chargeabilities greater than 40 milliseconds overlies the central portion of the Damascus vein. Diamond drilling of these targets led to the delineation of an unclassified resource of 196,087 tonnes at 411.3 g/t Ag , 0.47 g/t Au, 2.85% Pb and 4.63% zinc (Minfile database). (This resource estimate was determined prior to the implementation ofNI43-101, and does not conform to that standard. It is included here for the sole purpose of providing a scope for this occurrence.)

A compilation was prepared by Ogryzlo in early 2003 of all available historical data from the REA, Seel (Lean-To) and Damascus (OX-C, OX-E) property files. The purpose of the review was to examine the possibility that the separate occurrences were related to a single large hydrothermal system possibly arising from an undiscovered porphyry copper or porphyry copper-molybdenum deposit. Adequate continuity was demonstrated between geochemical and geophysical surveys performed by different operators on the separate claim groups to support this possibility.

Field evidence and reported historical exploration work indicate that the Seel Mineral Claims are underlain by an extensive system of hydrothermal alteration and sulphide mineralization. Systems of this size and extent may arise from the presence of a previously unreported porphyry copper or porphyry copper-molybdenum deposit. Breccia pipes and precious and base metal veins are common adjuncts to this type of deposit, but may either be zoned around or displaced from the centre of porphyry style mineralization. Breccia pipes in particular can be clustered around centres of porphyry mineralization, and are commonly the source of early production in porphyry districts owing to their relatively high grades.

Photo 1. View north towards the Lean-To breccia zone with Tahtsa Reach in the distance. The Huckleberry mine is located just to the left of the photo. Resistant knobs near the Lean-To and Ox Lake deposits are cored by granodiorite to quartz diorite intrusions of the Late Cretaceous Bulkley Intrusive Suite. Cut blocks north of the Lean-To showing are accessed by the Troitsa Main FSR. Photo taken by the writer, September 28, 2004.

It is proposed that the Seel Breccia Pipe, the Damascus Ag-Pb-Zn vein, and the pervasive hydrothermal alteration and pyritization all support the existence of a large porphyry system. Systems of this type generally respond well to Induced Polarization techniques of geophysical surveying, which serve to generate targets for testing by diamond drilling. The exploration concept for the proposed program of work is to use Induced Polarization geophysical surveys and diamond drilling to confirm reported results on the Seel Breccia Pipe, to test for extensions of the Seel Breccia Pipe horizontally and at depth, to search for additional pipes and to test for the presence of a related porphyry style deposit.

In the opinion of Ogryzlo (2004) and the writer, the Seel Mineral Claims encompass a porphyry copper or porphyry copper-molybdenum deposit of unknown size and grade. From surface exposures and historical drill testing, the mineralization encountered indicates the presence of a porphyry copper-gold system of probable Late Cretaceous age. Within this system, zones of brecciation have developed wherein intensely altered angular fragments of the broken host rocks are cemented by infillings of massive chalcopyrite with lesser sphalerite, galena and arsenopyrite.

The results of surface sampling by Ogryzlo (2004) support the results reported by previous operators. However, Ogryzlo also pointed out that quality control procedures of previous operators do not meet current standards, and a quality assurance/quality control program must be initiated and expanded as warranted for future work. He also recommended environmental baseline studies and consultation with First Nations and other communities of interest should be initiated. However, overall, Ogryzlo

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was satisfied that historical exploration work on the Seel Property was conducted in a proper and professional manner following industry best practices of the day. After reviewing historical data for the property, the writer concurs with this conclusion.

In the writer's opinion, the Seel property is of sufficient merit to justify additional exploration expenditures. Specifically, further testing of the claims is warranted to determine the nature and extent of the underlying hydrothermal system, and in particular to ascertain the controls on the distribution of copper, silver and gold in the Seel Breccia Pipe. Further testing is similarly warranted to test for the presence of previously unreported breccia pipes and, to test for the existence of a larger scale porphyry style deposit. Based on Ogryzlo's proposed program and the results of a recent 3D IP survey, the writer recommends a two phase program. The first phase would entail 1,500 metres of diamond drilling for a total cost of $320,138 The objective of this drilling is to determine the source of the IP chargeability anomaly west of the Lean-To showings and to determine the ultimate size and grade of known porphyry Cu-Au mineralization at the showing itself. The second pahse would entail extending the existing grid and 3D IP/mag coverage 1000 metres to the southwest, till and ice flow geochemical studies, and an additional 2,000 metres of diamond drilling, mainly southwest of the Lean-To showing. The estimated cost of Phase 2 would be $508,775.

INTRODUCTION AND TERMS OF REFERENCE

According to Ogryzlo (2004), the area enclosed by the Seel Mineral Claims has been intermittently explored by a number of operators over a 34-year period. Separate programs have led to identification of the Seel Breccia Pipe, the Damascus Vein, and an extensive system of hydrothermal alteration and sulphide mineralization. Initial programs of soil geochemistry and ground geophysics were followed by diamond drilling for both prospects. Approximately 2,597 metres were drilled in 72 holes on the Seel (Lean-To) prospect by Lansdowne Oil and Minerals. A similar amount of work was completed on the Damascus Vein by International Damascus Resources and other operators.

This technical report is being prepared at the request of Mr. Hans Smit, Vice President of Exploration for Grayd Resource Corporation (Grayd). This report is based on a previous technical report dated June 12, 2004 by Peter L . Ogryzlo, M . S c , P.Geo. The writer was contracted by Grayd to do geological mapping and prepare a report on the Seel Property in late September 2004. This information, combined with Ogryzlo's earlier report plus a review of all historical data and current exploration results up to December 8,2004 have been used to prepare this technical report.

This technical report has been prepared in compliance with the requirements of National Instrument 43-101 and Form 43-101F1 and is intended to be used as supporting documentation to be filed with the British Columbia Securities Commission and the TSX Venture Exchange. Information used in the preparation of this report includes a number of publicly available assessment reports filed with the Province of British Columbia for assessment credit. These reports contained detailed drill hole logs and copies of original analytical reports from accredited laboratories. Citations for these and other assessment reports are contained in the Reference section of this report. In addition to publicly available assessment reports, the writer also reviewed unpublished company reports by Lansdowne Oil and Minerals that were provided by Grayd.

In addition to a review of available historical data, the writer did nine days of geological mapping on the property between September 19, 2004 and September 30, 2004. During this period, the author collected samples from drill core and surface exposures. These samples were submitted to Acme Analytical Laboratories for geochemical analysis.

Units of measure in this report are metric; monetary amounts referred to are in Canadian dollars.

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The effective date of exploration for this report is December 8,2004.

DISCLAIMER

This report is based on a review and digital compilation of publicly available historical data and internal company reports. According to Ogryzlo (2004) the historical data for the property is incomplete. He noted evidence that drilling may have been done in the 1970's on the R E A group of mineral claims which overlapped the current western margin of the Seel property. There does not appear to be any public record of this work. Ogryzlo also noted that some of the diamond drill records contained in reports prepared by Lansdowne Oil and Minerals for work done on the Seel (Lean-To) property in the 1980's (Goldsmith, 1984) were incomplete.

Most of the work done to date on the Seel property has been filed for assessment credit with the B.C. Ministry of Energy and Mines in the Province of British Columbia. Although the author is satisfied that this data was collected and processed in a professional manner following industry best practices applicable at the time, and that the historical data gives an accurate indication of the nature, style and possible economic value of known mineral occurrences on the property, there may be information not publicly available that could be of importance to evaluation of the property. The author disclaims any responsibility for any errors or omissions that are a result of missing, inaccurate or incomplete information.

The writer has checked the status of mineral tenures that comprise the Seel property by cross-referencing claim names and tenure numbers with those in the B.C. Ministry of Sustainable Resource Management's mineral tenure database. The names and numbers supplied by Grayd are the same as those in the database. To the writers knowledge the Seel claims have not been legally surveyed.

Details of any option agreements currently in effect on the Seel property were provided by Grayd and the writer disclaims any responsibility for the accuracy of this information.

PROPERTY DESCRIPTION AND LOCATION

The following information was provided by Grayd Resource Corporation. The writer cannot verify that this information is complete and accurate but has no reason to believe that it is not.

The Seel property consists of 10 contiguous Mineral Claims totaling 150 claim units encompassing a surface area of approximately 3750 hectares. The claims are located on the western margin of the Central Interior physiographic region of the Province of British Columbia, Canada on National Topographic System sheet 093E H E (Figure 1). The claims are centered at approximately Universe Transverse Mercator (UTM) co-ordinates 627000E, 5945500N using North American Datum (NAD) 83, or latitude 53°38'N longitude 127°05'W. The nearest town is Houston, which is located on Highway 16,120 kilometres by gravel road from the property (Figure 2).

130- MM 178* W 126* W 124" W 122" W 120* W

Figure J. Location of the Seel property.

Claims are in the name of Grayd Resource Corporation, 900-475 Howe Street, Vancouver, British Columbia V6C 2B3. Grayd acquired an option to acquire a one hundred per cent interest in the Seel #1 to Seel #7 Mineral Claims through an agreement dated 31 s t January 2003 between Grayd and Seel Enterprises Ltd., 6155 Sechelt Road, Sechelt, British Columbia, VON 3A3 (Seel). The terms of the option agreement with Seel include staged cash payments totalling $250,000 and the issuance of 650,000 shares in staged grants over 5 years. Grayd is further required to undertake $1.2 million in exploration over 5 years. Seel Enterprises will retain a 1% NSR; 50% of which Grayd has the option to purchase for $1.0 million. Pursuant to this agreement, Grayd has paid Seel a total of $10,000 and granted 100,000 shares to date. Grayd was to have spent $50,000 on exploration in the first year, but

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through a letter dated April 30, 2004, this requirement was waived, and a new requirement to spend $81,000 within two years was agreed upon. Grayd has now expended more than $81,000 on the property, and is in good standing on all aspects of the agreement.

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Kilometres

GRAYD RESOURCE CORPORATION

S E E L P R O P E R T Y Brit ish Columbia

P R O P E R T Y LOCATION

™IFl August 2003 NTS.: Q93E11

Figure 2. Location of the Seel Mineral Claims, Tahtsa Reach Area. Map provided by Grayd Resource Corporation and included in an earlier technical report by Ogryzlo (2004).

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Grayd acquired three additional Mineral Clams, Seel 8, Seel 9 and Seel 10, through staking in 2003. These claims are subject to the same agreement with Seel. The claims have not been legally surveyed, but a Global Positioning System (GPS) location has been established for the initial post of the Seel #1 Mineral Claim to a standard acceptable to the Mineral Titles Branch of the Province of British Columbia.

On May 27, 2004, Grayd signed an agreement with Websmart.com Communications Inc. (Websmart). Under the terms of this agreement, Websmart can earn a 61% interest in the Seel property by mcurring $1,000,000 in exploration expenditures before December 31, 2006. Websmart is committed to incur $400,000 of this amount by December 31, 2004. Once Websmart has vested, Grayd has 60 days to elect to earn back 10% of the interest by incurring the next $250,000 in exploration expenditures (effectively forming a 51% Websmart - 49% Grayd Joint Venture). During the earn-in period, Grayd will act as operator. Websmart wil l assume the underlying cash payments, while Grayd wil l assume the share payments. The agreement is subject to regulatory approval. Subsequent to entering into this agreement, Websmart changed its name to Gold Reach Resources Ltd.

The Seel property is on Crown land, and the area is open to mineral exploration and development. Portions of the area of the claim lie either within areas of interest claimed by the Wet'suwet'en, Cheslatta-Carrier or Carrier-Sekani First Nations. Requirements under the Mineral Tenure Act are that work be performed to a per unit value of $100 for the first three years of a tenure and $200 in the fourth and subsequent years. To perform the exploration work that wil l cause a physical disturbance, Grayd must first file and receive approval of a Notice of Work and Reclamation as required by Section 10 of the Mines Act of the Province of British Columbia.

Table 1. Seel Property Claims

Claim Name

Seel #1

Tenure Number

387586

Units

20

Mining Division

Omineca

Year Staked

2001

Expiry Date

November 30, 2009

Seel #2 387587 10 Omineca 2001 November 30, 2007

Seel #3 392096 15 Omineca 2002 November 30,2007

Seel #4 392097 20 Omineca 2002 November 30, 2007

Seel #5 398490 15 Omineca 2002 November 30,2006

Seel #6 398491 9 Omineca 2002 November 30, 2007

Seel #7 398492 15 Omineca 2002 November 30, 2006

Seel #8 403805 16 Omineca 2003 November 30,2006

Seel #9 403806 12 Omineca 2003 November 30,2006

Seel #10 403807 18 Omineca 2003 November 30, 2006

The location of the Seel Mineral Claims in relation to known mineralized zones, forest service access roads and exploration access trails may be seen on Figure 3.

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ACCESSIBILITY, CLIMATE, L O C A L RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The following section is extracted from an earlier technical report by Peter Ogryzlo dated June 12, 2004.

£ 624000 m 626000 m 626000 m 630000m 6

624000 rtl 628000 m " 628300 m " 630000 m

Figure 3. Claim map for the Seel property. Map prepared by the writer. UTM Projection, Zone 9, NAD 83. Map prepared by the writer from files provided by Grayd Resource Corporation.

Accessibility and Infrastructure The property is located approximately 120 kilometres south of the town of Houston in the Central Interior of British Columbia. Houston is a major supply and industrial centre and is serviced by the CNR transcontinental railway as well as by Highway 16, a major thoroughfare. Daily air service to

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Vancouver is available from Smithers, B C , which is located approximately 70 road kilometres west of Houston.

From Houston, access to the property is by road using a two-wheel drive vehicle in fair weather, and a four-wheel drive vehicle in poor weather. Road access is achieved by first traveling west from Houston on Highway 16 to the intersection with the Morice Forest Service Road (FSR); thence south 56.5 km on the Morice FSR and the Morice Owen FSR to the intersection with the Morice Nadina FSR. Travel is then south and west along the Morice Nadina FSR a further 33 kilometres to the Morice Reach FSR. The Morice Reach FSR is followed to the south for a further 20 kilometres to the Tahtsa Reach Ferry crossing. The ferry is taken to the southern shore of Tahtsa Reach, and travel is resumed west and south by road to approximately Kilometre 14 of the Troitsa Main FSR. Access is thence by trail further to the south and west for approximately 3 kilometres to the showings on the property.

A logging camp has been constructed on the southern side of Tahtsa Reach approximately 4 kilometres south of the ferry landing to service the logging development in the area, and is approximately 12 kilometres from the Seel showings.

Climate and Physiography The property lies at the northern end of the Whitesail Range on the southern shore of Tahtsa Reach. The district is located in the Tahtsa Ranges physiographic region of central British Columbia. Relief is moderate on the property with a maximum difference in elevation of approximately 500 metres.

Climate is transitional between that of the Coast Ranges and that of the Central Interior, with short cool summers, and long relatively mild winters. Annual temperature variation in the region is approximately -25 to +25 degrees Celsius. Snowpack in the winter ranges from approximately 1 to 4 metres. The operating season for ground based activities such as geological mapping, surface sampling and geophysical surveys would extend from approximately early June to late October. With sufficient support, diamond drilling could be conducted year round.

The property is covered by a mature stand of mixed coniferous trees. Logging development has progressed onto the property, with clear-cutting planned for the block immediately north of the showings.

HISTORY

The following section on the history of the property is extracted from a previous technical report prepared by Ogryzlo (2004). The writer believes that this information is accurate and complete.

The Tahtsa Reach area has been actively explored since the early part of the 20 t h century. The Emerald Glacier Mine is located approximately 20 km northwest of the Seel Claims and was one of the first mines developed in north central British Columbia. The mine intermittently exploited a high grade Ag-Pb-Zn vein up to the late 1960s.

A major thrust of exploration occurred in the late 1960's and early 1970's. This work led to the discovery of the Berg and Ox Lake porphyry Cu-Mo deposits which are located 29.5 kilometres to the northwest and 3.5 kilometres to the north of the Seel Breccia respectively.

Exploration during this period also led to the discovery of the Huckleberry deposit, which was brought into production in 1997, and remains in production at the time of preparation of this report. The Huckleberry mine is located approximately 7 kilometres northwest of the Seel Breccia, on the

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northern shore of Tahtsa Reach. The mine is a modern mine and mill industrial complex producing copper, molybdenum and silver. The mine is well serviced with road, power and water.

History - Ownership Portions of the area enclosed by the Seel Mineral Claims were acquired at various times between 1995 and 2000 as the SEEL 1 to 29 two post claims by Seel Enterprises Ltd. These claims were all abandoned on June 25, 2001, and the area was restaked as the Seel #1 and Seel #2 Mineral Claims on June 28 and June 30,2001 by the same owner. The Seel #3 to Seel #10 Mineral Claims were added at various time between June 30, 2001 and July 20, 2003. Details of issue and expiration dates may be seen in Table 1.

The eastern portion of the area enclosed by the Seel #1 to Seel 10 Mineral Claims was previously held as the O X A , O X B, O X C, and OX-EAST Mineral Claims. These claims were staked between 1981 and 1982, and forfeited on October 1, 2002. The claims were held by Ravenhead Recovery Corporation of Vancouver, B C at the time of forfeiture.

Previous Exploration - Seel (Lean-To) Project The first recorded work on the Seel Claims was done on the R E A group of mineral claims in the early 1970's by Bethlehem Copper (Anderson, 1972). A widely spaced geochemical grid survey covered the middle and upper reaches of Seel Creek for copper and silver. The geochemical survey appears to have led to a diamond or percussion drilling program, but there is no public record of the drilling. The geochemical survey has been incorporated into the project database.

The Lean-To prospect was staked by Lansdowne Oi l and Minerals in 1980. They actively explored the area around the Seel Breccia Pipe from 1980 to 1985. Surface work consisted of geochemical soil sampling, trenching, magnetometer and V L F (Ager, 1981). A n Induced Polarization geophysical survey in 1985 reported very high chargeabilities (to 80 milliseconds). The area of high (+20 msec) chargeabilities extends beyond the limits of the survey (Ager, 1985). The raw IP data was reprocessed in 2003 using modern geophysical inversion techniques, and revealed in cross section a zone of high chargeabilities in the form of an inverted bowl. These geochemical and geophysical surveys have also been included in the project compilation.

This work led to three drilling programs in 1982, 1983-and 1985. In 1982, 38 EQ diamond drill holes were completed for a total of 917.3 metres (Ager et al, 1983). In 1983, 24 holes were completed for a total of 1480.9 metres. Drill logs for the 1983 program were not provided, but summary results were obtained from a compilation map. A n additional ten holes totaling 203 metres were completed in 1985. Drill logs for this program are included in Kallock (1986) and were reviewed by the writer. Locations and significant intersections for drilling done in 1982, 1983 and 1985 are shown on a map prepared by Arctex Engineering Services in 1986. This is believed to be the best and most accurate source for drill hole locations and it has been used to prepare illustrations for this report. There is an indication that a minor drill program took place in 1987, but there are no public records to verify this. Core from the earlier drill programs remains at the old diamond drill camp below the Seel Breccia, but has suffered considerable damage.

The surface exploration and drilling resulted in the delineation of an arcuate zone of sulphide cemented breccia. Highlights of the programs were DH82-19 which reported 18 metres of 1.59% Cu and 640 ppb A u ; DH85-1 with 9.76 metres of 2.08% Cu, 47 g/t A g and 0.3 g/t Au; DH85-9 with 0.46m of 8.14% Cu, 112.7 g/t A g and 6 g/t Au , and DH85-10 with 0.9 metres of 8.26% Cu, 120 g/t A g and 9.5 g/t Au . In general, the breccia has been intersected along an arc length of 450 metres to a depth of approximately 40 metres. Although the records as supplied are incomplete, the average

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width and grade as observed in core may be estimated at approximately 8.5 metres at 1.7% Cu, 20 g/t Ag and 0.20 g/t Au.

The property was revisited between 1995 and 2000 by Mr. Rupert Seel, who undertook a program of excavating trenches, and collecting rock and reconnaissance soil samples on the property. A limited program of stream sediment geochemical surveying and prospecting was performed in 2003 by Orgyzlo (2004).

Previous Exploration -OxC and Ox-East Projects The claims were explored from 1981-1983 by International Damascus Resources, who completed prospecting, soil geochemical and airborne V L F - E M surveys. This work led to the drilling of four diamond drill holes in 1982 and 36 holes in 1983 and the discovery and delineation of the Damascus vein. The property was operated by Cominco Ltd. in 1984, who completed Induced Polarization, V L F - E M and magnetometer surveys, as well as geological mapping and extensive trenching on the Damascus vein.

The O X C property was drilled again in 1989 with Granges Inc as operator. Eight diamond drill holes were completed, six on O X C and two on OX-EAST for a total of 748.56 metres. On the Damascus vein, D D H OX51 intersected 1.5 metres which reported 0.723 g/t Au , 194.39 g/t Ag , 2.7% Zn and 1.1% lead (Deveaux, 1989). The two holes drilled on the OX-EAST claim were located approximately 3.5 km SW of the Damascus vein to test an IP chargeability anomaly. Both holes were lost in shears.

Exploration began on the OX-EAST claim in the early 1980s (Ager, 1983). Road access was constructed onto the claim, and 43 line kilometres of soil geochemical survey was reported for Ag, Au, Pb, As, Zn and Cu. The claim was further explored by International Damascus Resources in 1984 (Kallock, 1984). Following grid soil sampling, magnetometer surveying and 11.65 line km of Induced Polarization surveying, seven diamond drill holes were completed on OX-EAST. D D H 84-4 intersected approximately 8 metres with stringers of sphalerite and galena. The core from this program is stored at the old diamond drill camp below the Seel Breccia. Boxes are legibly labeled. Most of the core was not split, and a cursory examination revealed extensive hydrothermal alteration. The OX-EAST soil survey only considered Pb, Zn, Ag , As and Sb. This data has been considered in the property compilation, but the lack of copper analyses in the soil data leaves a gap in the data. A more extensive Induced Polarization survey covering 30 line kilometres was completed in 1986 (Smallwood and Sorbara, 1986). This program also reported some trenching on the K vein, which is located around 200 metres south of and above the Damascus vein.

The Damascus Vein reported resources of 4711 tonnes at 580.31 g/t Ag , 0.54 g/t Au , 3.75% Pb and 4.55% Zn to a down dip depth of 9 metres (Goldsmith et al, 1984). The historical mineralized inventory reported in the MINFILE database of the British Columbia Ministry of Energy and Mines has an inferred resource of 196,087 tonnes at 411.3 g/t Ag , 0.47 g/t Au , 2.85% Pb and 4.63% Zn to a depth of 100 metres, and an indicated resource of 20,735 tonnes at the same grade to a depth of 20 metres. The source for the figures is given as a Statement of Material Facts supplied by International Damascus Resources in 1986. A l l of the historical resource figures were determined before the implementation of NI 43-101, and may not conform to that standard. lAlthough the Damascus vein is not considered to be a target for this stage of exploration, the extensive Induced Polarization and soil geochemical surveys from the O X C and OX-EAST claims have been included, with some gaps in the data, in the Seel project compilation.

There has been no recorded production from any portion of the Seel Mineral Claims.

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Exploration in 2003 Reconnaissance exploration was undertaken on the Seel Property between June 6 and June 13, 2003. Eight days were spent on the property by two prospectors under the direction of Peter Ogryzlo. The purpose of the program was to visit areas of anomalous gold and copper concentrations outside of the known occurrences; visit areas of high D? response revealed in previous geophysical surveys; and to explore the possibility for the existence of a large porphyry copper gold system on the property. The methods used were grass roots prospecting and stream sediment sampling, both directed by the extensive geochemical and geophysical database. Forty-five rock and 38 stream sediment samples were collected.

The Seel Breccia was examined, but only for instructional purposes to familiarize the prospectors with the breccia style (angular clasts cemented with pyrite and chalcopyrite) and with the ferricrete blanket. This proved useful, as both prospectors later identified mineralized breccias and ferricrete in float and in outcrop. The most important of the new occurrences are:

1. Radio (Breccia Creek) Breccia prospect. A single cobble of chalcopyrite cemented breccia was found in float near the south bank of the creek near the junction with Seel Creek at 625572E 5945118N (NAD 83). Examination of the creek revealed several hundred metres of outcrop with exposures of ferricrete and quartz-sericite-pyrite altered sedimentary and intrusive rocks. Sulphide contents were locally high. One enigmatic outcrop of chalcopyrite cemented breccia was discovered, which reported appreciable concentration of copper and gold. A n exposure of "tight" breccia (well mineralized with pyrite, but with little porosity) was noted over several hundred metres in the creek. There is a strong possibility that an unidentified breccia pipe lies close to these exposures, most likely on the south bank of the creek.

2. Upper Damascus tourmaline zone. A single cobble of tourmaline and pyrite cemented breccia float was collected (628460,5945652) from one of the upper trenches on the Damascus (Ox-C) showing. Tourmaline cemented breccias are of considerable importance in Chilean breccia pipes, and may be both barren and highly mineralized. The area lies within the Damascus IP anomaly, and warrants further work. The cobble reported 323 ppm Cu and 48 ppb gold.

3. Breccia knoll. A n occurrence of weathered breccia (with galena? cement) was collected at the top of the knoll (627236,5945732) which contains the Seel Breccia. The occurrence is approximately 400 metres northeast of the Seel Breccia. This area lies near the edge of a gap in the sampling between the Lean-To (Seel) and the Damascus historical work. The underlying lithology is QFP (quartz-feldspar porphyry) pervasively altered to quartz-sericite-pyrite. The occurrence reported 7080 ppm Pb and 18.5 g/t silver.

4. Creek C. This drainage was visited and sampled by R. Seel in 1997, who reported a sample at 0+600 of around 2.3 g/t Au . The creek cuts through quartz-sericite-pyrite altered sandstone and felsic volcanics attributed to the Smithers Formation. Sandstones are decalcified and pyritized, giving a "sanded" texture. A sample of sandstone? with around 30% pyrite was collected from an outcrop believed to be the same as the one sampled by R. Seel, and returned 1373 ppb gold.

A stream sediment survey was conducted to test the southeastern portion of the property, which has no recorded sampling or ground geophysical surveying. Six orientation samples were collected, three regional samples and three samples from "mineralized" drainages. Six conventional silt samples were also collected at the same sites. Approximately five kilograms of sample were collected over 50 metres of stream bed at each site. The sample was field sieved down to -20 mesh, with the collection

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of approximately 300g of sieved sample. The orientation samples were further sieved to -80 mesh in the lab, and the -80 mesh fraction and the +80-20 mesh fraction were both analyzed by ICP-MS on a 30g split for base and precious metals. These results were compared with analyses of the conventional silt samples. The rationale for the detailed analysis results from the initial property visit, and the identification of erratic gold distribution from the trenches and the drill core. The stream sediment survey was designed to test the distribution of gold in the size fractions collected. Thirty eight stream sediment samples were collected in total. Access was good for most streams, but was hampered to some extent by snow in the ravines above 1500 metres. One drainage remains inadequately sampled.

624QQ0 m 626000 m 52B000 m G3O0OO m

62-1000 m

E O C E N E

Ootsa Lake Group EOy - basalt; rhyoliie ti - frfd. porphyry C R E T A C E O U S - T E R T I A R Y

KTqfp - qz-ftf porphyry

626000 m

LATE CRETACEOUS Bulk ley frttntsivv Sufte high grade breccia IKBpSd - porph granodiorite IKSqfp - qz-fd porphyry LlCSpQ.m - pofph, qz, fttorttonita IKBgd - tjraruxfiorite LK&td • quartz diorite

628000 m 630000 m

JURASSIC Hszetton Group

j j m3S - siltsfone, wsdee '. fflOW - felsic pyrwlastics

Im3s - sUtstooe, mudstorte OT - andesitic pyrodaslks outcwp area contact

inferred corvtact — — fault

eut l&ies £2004) | dsim boundary

— T r o f t s a Mart FSR quad trail

•• ™ old exploration reads

Figure 4. Bedrock geology, Seel Property. Map prepared by the writer based on nine days of geological mapping done on the Seel property in late September, 2004. UTMProjection, Zone 9.

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Despite a small sample population, some anomalous areas were indicated by the stream sediment survey. The lower reaches of the stream 250 metres south of the Radio Creek breccia prospect was anomalous in copper, gold, silver and zinc. The upper reaches of a branch of the same stream draining the slopes of Troitsa Peak were also anomalous in copper and zinc. This area lies outside the area of historical geochemical and geophysical coverage. The stream that drains the upper part of the Damascus vein was likewise anomalous in copper and zinc.

GEOLOGICAL SETTING

The following section is from an earlier geological report prepared by the writer for Grayd Resources Corporation. This report summarized the results of 9 days of mapping that was done on the Seel property in late September, 2004.

The Tahtsa Reach area is underlain by volcanic and related volcaniclastic and marine sedimentary rocks of the Lower to Middle Jurassic Hazelton Group. The Hazelton Group is comprised of subaerial andesitic volcanic rocks of the Lower Jurassic Telkwa Formation, felsic pyroclastic and volcaniclastic rocks of the Lower to Middle Jurassic Whitesail Formation, shallow water feldspathic sedimentary rocks of the Middle Jurassic Smithers Formation and shallow to deep water marine sedimentary rocks of the Middle to Upper Jurassic Ashman Formation, The Hazelton Group is cut by calc-alkaline intrusive rocks of the Late Cretaceous Bulkley and Eocene Nanika intrusive suites. South of Tahtsa Reach, in the Whitesail Range, the Hazelton Group is unconformably overlain by basalt and rhyolite of the Eocene Ootsa Lake Group. To the west, the Hazelton Group is overlain by marine sedimentary and volcanic rocks of the Lower Cretaceous Skeena Group and andesitic volcanic rocks of the Upper Cretaceous Kasalka Group. These rocks are preserved within the Tahtsa Lake cauldron subsidence complex. Emplacement of Late Cretaceous plutons and formation of associated porphyry copper mineralization is believed to be controlled by faults related to this structure (Maclntyre, 1985). A period of crustal extension and block faulting that is recognized throughout central B.C. has been superimposed on Eocene and older rocks in the area resulting in a complex map pattern. In the vicinity of the Seel property a series of northeast and north trending faults is probably related to this period of extension.

The Seel Property is underlain by a series of juxtaposed fault blocks containing tilted and locally folded strata of the Telkwa, Nilkitkwa, Whitesail and . Smithers Formations of the Lower to Middle Jurassic Hazelton Group. These rocks are cut by multi-phase intrusive complexes that are correlative with the Late Cretaceous Bulkley Intrusive suite. Intrusive phases include diorite, granodiorite, quartz diorite, porphyritic quartz monzonite (aka quartz porphyry), porphyritic granodiorite, feldspar porphyry and quartz feldspar porphyry. The youngest rocks on the property are gently dipping basaltic and rhyolitic flows of the Eocene Ootsa Lake Group that cap older strata in the Whitesail and Kasalka ranges.

Telkwa Formation (IJT) Widely spaced outcrops of maroon, purple and red lapilli tuff with lesser crystal, lithic and ash tuff, volcanic breccia and agglomerate interbeds occur along the Troitsa Main Forest Service Road and at isolated localities throughout the property. These rocks, which typically contain 30-60% 1-2 mm feldspar crystal fragments, are lithologically identical to the lower Telkwa Formation elsewhere in central B.C. Therefore, these rocks are correlated with the Telkwa Formation. The best exposure visited by the writer is located on the north side of the Troitsa Main just past the 15KM marker. Here, medium-bedded maroon and green lapilli tuff beds strike southeasterly and dip moderately to the

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northwest. Hornfelsed and altered andesitic tuffs were also intersected in drill holes near the Lean-To showing and are presumed to be part of the Telkwa Formation.

S260DO m 627000 ffl

626000 m 627000 m

LATE C f t E T A C E O U S

Bulkley Intrusive Susie

| Ses! (Lean-to) breccia

| LKEpgd-porph cran-siorfte

| tXBqfp - lj2-tti porphyry

j L.<Bpt|rri porph. t)/. man/onil!

| LKUGd-granotiioriW

J U R A S S I C

Hazefton Group IrrJW - f=&ic pyrcc'aKics

DT - and^siUc pyrocfcstics

'»,»*" outcrop boundary

contact

inferred comad:

0 DDH ccilar

cut Sines (2f>04)

~ | claim Jj-rjunciiiry

cu-id iraiJ

= "-^ old expic-fariert roads

Figure 5, Bedrock geology, Lean-To area. Map prepared by the writer based on nine days of geological mapping done on the Seel property in late September, 2004.

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Nilkitkwa Formation? (ImJs) Medium to thin bedded, dark grey siltstones and mudstones crop out in a number of steep sided creek gullies that are part of the upper Seel Creek drainage system (Figure 4). Good exposures also occur along the banks of Seel Creek near the old Bethlehem Copper camp. These fine grained sedimentary rocks were mapped as unit 6 argillites by Bethlehem Copper (Assessment report 3576). The GSC assigned these rocks to the Middle to Upper Jurassic Ashman Formation (Woodsworth, 1980), but in the writers opinion these rocks are sufficiently different in lithology and stratigraphic position to be mapped as a separate and older unit. The primary differences between these rocks and the Smithers or Ashman formations is the lack of feldspar detritus and the more reduced, finer-grained and presumably deeper marine nature of these rocks. These features are similar to the Lower Jurassic Nilkitkwa Formation that is found further north in the Smithers-Babine Lake area. This correlation is supported by the apparent stratigraphic position of these rocks which suggest they overlie the Lower Jurassic Telkwa Formation. Similar marine sedimentary rocks occur near the mouth of Kasalka Creek but these rocks were either mapped as the Smithers or Ashman Formations (Woodsworth, 1980) or included in the Telkwa Formation (Maclntyre, 1985).

Whitesail Formation (ImJW) A distinctive unit comprised of well bedded cream to light grey rhyolitic ash flow tuffs with lesser interbeds of chert, feldspathic wacke, felsic lapilli tuff and volcanic breccia crops out in creeks draining the steep north facing slope of the Whitesail range and in the area east of the Damascus vein (Figure 4). These rocks occur elsewhere in the Whitesail-Tahtsa Lake area and were mapped as the Lower to Middle Jurassic Whitesail Formation by the GSC (Woodsworth, 1980). These rocks grade upward and are in part interbedded with lower part of the Middle Jurassic Smithers Formation. The best section where this transition is exposed is in on the steep, north facing slope of the ridge south of the Lean-To showing. Here outcrops exposed in creek gullies at the base of the ridge are mainly rhyolitic ash flows interbedded with feldspathic wackes and granule conglomerates and these grade up slope and up section into predominantly feldspathic wacke, siltstone and granule conglomerate of the Smithers Formation. A similar transition is observed in the area east of the Damascus vein where the section dips gently to the north. Rocks exposed near the top of the knoll are typical Whitesail Formation whereas those further down slope and up section are typical of the Smithers Formation.

Smithers Formation(mJS) Medium to thin-bedded feldspathic wackes, siltstones and heterolithic granule to pebble conglomerates are exposed on the steep north facing slope south of the Lean-To grid and along prominent cliffs, road cuts and trenches northeast and west of the Damascus vein (Figure 4). These rocks are assigned to the Smithers Formation based on lithology and apparent stratigraphic position. Some limy beds containing macrofossils are reported to occur at the base of cliffs east of the Damascus vein (Blackwell, 1985) but these could not be located.

Bulkley Intrusive Suite Intrusive rocks on the Seel property crop out in trenches, road cuts and along the crest of the northeast trending ridge at the Lean-To showing, in creeks and along quad trails near the headwaters of Seel Creek and as small isolated bodies east of the Damascus vein. Most of the drill holes at the Lean-To showing also intersected highly altered feldspar phyric intrusive rocks. Six lithologically distinct intrusive phases are recognized and all are assigned to the Late Cretaceous Bulkley Intrusive Suite based on lithology and cross-cutting relationships. These include from oldest to youngest,

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equigranular diorite, quartz diorite to granodiorite, porphyritic quartz monzonite (aka quartz porphyry), quartz-feldspar porphyry, feldspar porphyry and porphyritic granodiorite.

Diorite (LKBdr)

Several small outcrops of medium grained diorite with trace amounts of pyrite crop out east of the Damascus vein. This rock is equigranular and comprised mostly of intergrown 2-4 millimetre feldspar crystals. Primary mafic minerals are generally weathered out or replaced by chlorite which imparts a dark greenish grey colour to the rock. Similar fine grained dioritic intrusions occur in the Kasalka Creek and Troitsa Lake area (Late Cretaceous Kasalka Intrusions of Maclntye, 1985).

Quartz Diorite to Granodiorite (LKBqd, LKBgd)

Equigranular biotite granodiorite to quartz diorite crops out near the crest of the ridge at the Lean-To showing. This rock is generally massive and resistant. Near the Lean-To showings it is weakly altered to clay. Similar equigranular intrusions occur at other porphyry copper prospects in the Tahtsa Lake district and all of these intrusions are interpreted to be the earliest phase of Late Cretaceous intrusive centers (Maclntyre, 1985). They probably represent initial, relatively slow cooling and crystallization of granitic magma in large magma reservoirs prior to fracturing and emplacement of more differentiated porphyritic phases. Rocks in contact with these equigranular intrusions are generally thermally metamorphosed to biotite hornfels.

Porphyritic Quartz Monzonite (LKBpqm)

A distinctive intrusive phase comprised of 40-60%, 2-4 millimetre rounded quartz phenocrysts in a finer-grained feldspar-quartz groundmass crops out on the lower south facing slopes above the Lean-To showing (Figure 5). Identical porphyritic rocks also crop out in steep sided creek valleys and along an old exploration road in the southwest corner of the property. The distribution of outcrop in this area suggests the presence of a southwesterly elongate intrusion that cuts marine sedimentary rocks assigned to the Nilkitkwa Formation. Locally, groundmass feldspar is clay altered and on weathered surfaces the clay is recessive, producing a distinctive, strongly pitted surface with prominent protruding quartz phenocrysts. Previous workers have referred to this intrusive phase as a quartz porphyry but the writer believes porphyritic quartz monzonite is a more appropriate classification. Regardless, this rock type is not common in the Tahtsa Lake district and appears to be restricted to the Seel property. This intrusive phase probably represents differentiated granitic magma that was emplaced after initial crystallization of quartz diorite and granodiorite.

Quartz-Feldspar Porphyry (LKBqfp)

Granodiorite and porphyritic quartz monzonite phases appear to be cut by younger quartz-feldspar porphyry at the Lean-To showing. This rock is sparsely porphyritic with 5-10% 1-2 millimetre quartz and feldspar phenocrysts in a very fine-grained quartz-feldspar groundmass. Compositionally the rock is a dacite or rhyodacite. It is often strongly quartz-sericite-pyrite altered with scattered quartz "eyes" the only identifiable primary mineral. Similar quartz phyric dacitic and rhyodacitic intrusions occur at the Coles Creek and Whiting Creek porphyry copper prospects (Maclntyre, 1985) and post­date early granitoid phases but pre-date the emplacement of porphyritic granodiorite and formation of associated porphyry copper mineralization.

Porphyritic Granodiorite (LKBpgd)

Porphyritic granodiorite is exposed in three trenches that are on or near the quad trail just southwest of the Lean-To showing (Figure 5). This rock is a crowded porphyry with 40-60%, 2-6 millimetre

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equant feldspar phenocrysts in a finer-grained quartz-feldspar groundmass. In places 2-4 millimetre remnant biotite phenocrysts are present but for the most part the rock is altered to quartz-sericite-pyrite and primary mafic minerals have been pseudomorphed by sericite. Unaltered porphyritic granodiorite crops out near the junction of the base line and line 49N and contains fresh hornblende as well as biotite. The lack of alteration suggests this rock is a post-mineral phase of the porphyritic granodiorite intrusion. The porphyritic granodiorite on the Seel property is lithologically similar to intrusions at the Coles Creek, Ox Lake, Whiting Creek, Bergette and Huckleberry porphyry copper deposits. Mineralization at these properties is spatially and temporally related to emplacement of porphyritic granodiorite and it is likely the same relationship is true at the Seel property.

A fine-grained crowded feldspar porphyry with 40-60% 1-2 millimetre feldspar phenocrysts in a finer-grained quartz-feldspar groundmass is exposed in trenches and outcrops in the vicinity of the Lean-To breccia and has also been intersected in drilling. This intrusive phase, which is typically quartz-sericite-pyrite or clay altered appears to be inter-fingered with quartz-feldspar porphyry along the north side of the porphyritic granodiorite stock. The feldspar porphyry is interpreted to represent finer-grained offshoots or dykes emanating from this stock. Locally the feldspar porphyry has small chloritic patches which may have formed after primary mafic minerals.

Ootsa Lake Group The southern boundary of the Seel Property overlaps the northern edge of the Whitesail Range. At higher elevations tilted and folded fault blocks of Hazelton Group rocks are unconformably overlain by gently dipping feldspar phyric basalt and lapilli tuff of the Eocene Ootsa Lake Group. Blackwell (1985) reports small outliers of these rocks in Poison Creek west of the Damascus vein. These rocks were not exarnined as part of this project.

A fresh dyke with 5-10% 1-2 millimetre quartz and k-feldspar phenocrysts crops out just east of Poison Creek near the Damascus vein (LKTqfp). Two small stocks, one comprised of coarse feldspar porphyry, the other biotite-feldspar porphyry intrude Eocene Ootsa Lake Group rocks south of the Seel property (Ti). These high level intrusions were probably feeders for Eocene flows that cap the Whitesail range.

Breccia zone A zone of brecciation is recognized at the Lean-To showing. This breccia is probably related to release of over-pressured hydrothermal fluids resulting in hydraulic brecciation and subsequent healing with quartz and sulphides. A n annular zone of high grade copper-silver-gold rnineralization has been defined by drilling. The sub-circular nature of this zone suggests brecciation was related to a ring and radial fracture system developed above a buried intrusive body. The brecciated and pervasively altered rocks are quartz-feldspar porphyry, feldspar porphyry and hornfels suggesting brecciation was superimposed on the contact zone of an intrusive body, possibly the porphyritic granodiorite that crops out to the west.

DEPOSIT TYPES

The following section is extracted from an earlier technical report by Peter Ogryzlo, dated June 12, 2004 (Ogryzlo, 2004).

Historical exploration and field evidence indicates that the Seel Mineral Claims may cover a mineral deposit of the porphyry copper+gold or porphyry copper+molybdenum style. There is one well-exposed occurrence of a clast supported breccia (the Seel Breccia) with dolomite, chalcopyrite and

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lesser galena and sphalerite cementing the clasts. There is also a well-exposed Ag-Pb-Zn vein (the Damascus Vein).

Porphyry copper deposits are large, relatively low grade deposits that occur in orogenic settings. They are commonly accompanied by extensive envelopes of hydrothermal alteration that can affect several cubic kilometres of rock, and by sulphide envelopes commonly referred to as pyrite haloes. The mineralization tends to be introduced into the country rocks as fine disseminations and as fracture fillings. The extensive circulation of hot hydrothermal brines can cause local dissolution of the host rocks, and subsequent caving and formation of clast supported breccias. These breccias often occur in the shape of a pipe or cylinder, the long axis being vertical. The deposits tend to be zoned, both in sulphide and alteration mineralogy with the primary controls on mineralization being pressure, temperature, structure, and the chemical composition of the enclosing rock. This zoning of elements such as Pb and Zn peripheral to the more centrally located Cu, A u and Mo rich core zones frequently leads to the development of A g -Pb- Zn bearing precious metal veins around porphyry centres. Breccia pipes may form relatively higher grade deposits within porphyry systems, and are frequently mined out early in the history of a mining district.

The possibility for the existence of a porphyry style deposit on the Seel Claims is supported by the presence in the district of the nearby Ox Lake porphyry Cu-Mo deposit, and the presence of the Huckleberry Cu-Ag-Mo deposit, which was in production at the time of preparation of this report.

The development of hydrothermal alteration and pyrite haloes makes this type of deposit amenable to geochemical and geophysical surveying. The distribution of elements in a soil survey can frequently point to a centre of porphyry mineralization. The disseminated nature of the sulphides responds well to Induced Polarization geophysical surveys, where an electrical charge is induced into the ground, and the decay of this charge at sulphide grain boundaries can be measured.

It is proposed that soil geochemical and Induced Polarization geophysical techniques be employed to ascertain the presence and location of a centre of porphyry style mineralization and any associated breccia occurrences for testing with a diamond drill.

MINERALIZATION

The following section is extracted from an earlier technical report by Peter Ogryzlo, dated June 12, 2004 (Ogryzlo, 2004).

Three styles of mineralization have been reported or observed on the Seel Mineral Claims. These are a dolomite-chalcopyrite cemented breccia (Seel or Lean-To Breccia); a structurally controlled precious and base metal vein (Damascus Vein); and an extensive system of hydrothermal alteration and pyritization.

Seel (Lean-To) Breccia The Seel (Lean-To) Breccia is exposed on the south facing slope of a small hill on the Seel #1 Mineral Claim. The breccia has been traced over an arc length of approximately 450 metres and to a depth of approximately 40 metres by trenching and diamond drilling, and forms an arcuate zone 210 metres on its long axis and 180 metres on the shorter north-south axis. The zone is open on its western side. "The breccia consists of large, angular quartz porphyry clasts and lesser siliceous hornfels fragments... The fragments are extremely angular with no evidence of rounding or abrasion and vary in size from microscopic to 10 cm. The fragments are infilled and welded by carbonate (siderite)-quartz-sulphides." (Goldsmith, 1984).

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The width of the breccia zone averages approximately 8.5 metres. The breccias exposed in the trenches are comprised of a clast and matrix supported breccia. In the breccia body, angular clasts of pervasively altered volcanic and intrusive country rocks are cemented by dolomite, calcite, quartz, rock flour, pyrite, chalcopyrite, sphalerite, arsenopyrite and galena which fill the angular cavities between rock fragments.

Two other breccia zones were located during 2003 fieldwork. These have been tentatively named the Knoll Breccia and the Radio Creek Breccia. The Knoll Breccia is located at the crest of the hill that hosts the Seel Breccia, and has galena filling the interstices between clasts. The Radio Creek Breccia is located 1.2 kilometres west of the Seel Breccia and is exposed below a waterfall in a deeply incised creek near the confluence with Seel Creek. In outcrop, the breccia is cemented with pyrite, but a cobble of chalcopyrite bearing float returned 0.64% Cu and 1.4 g/t gold.

Damascus (OX C) Vein The Damascus (OX C) Vein has been traced by diamond drilling and trenching over a strike length of approximately 400 metres. The vein is exposed on a north facing hillside on the Seel #5 Mineral Claim.

The vein is structurally controlled. Mineralization is associated with a shear zone trending 170 degrees azimuth with a dip of 80 to 85 degrees to the west. Galena, sphalerite, chalcopyrite, arsenopyrite and pyrite occur in the shear zone. The width of the mineralized zone is approximately 1.5 metres. Two other similar occurrences, the K Vein and the Hilltop Vein have been reported.

Chalcopyrite has also been reported in sandstone accompanied by tourmaline, and has been observed in float as a tourmaline-chalcopyrite cemented breccia.

Alteration Extending eastward from the Seel Breccia, fieldwork in 2003 identified an extensive zone of quartz-sericite-pyrite flooding on the property that had not been described by previous operators. There are numerous excellent bedrock exposures in the creeks that dissect the property for which there is little recorded mapping or sampling. Sulphide contents can be high, reaching 30% of the rock mass, and averaging 3-5 per cent. Hie zone extends westward from the Seel breccia, and has been observed over an area 1700 m E-W by 750m N-S. The levels^ of sulphidization are more than adequate to explain the IP response observed in earlier surveys. Alteration is penetrative: all lithologies within the area of quartz-sericite-pyrite flooding are similarly affected, and appear as a uniform bright white altered siliceous pyritic rock, with relict textures giving hints as to original lithology.

Previous diamond drilling and trenching at the Lean-To showing has defined an area of brecciated feldspar porphyry, quartz-feldspar porphyry, porphyritic granodiorite and hornfelsed volcanic rocks with strong, locally high grade copper ± silver ± gold mineralization southwest of the granodiorite stock. Rocks in the vicinity of this breccia zone are pervasively altered to quartz-sericite-pyrite ± clay alteration assemblages. Low grade copper and locally molybdenum in the form of disseminated and vein controlled chalcopyrite and molybdenite occurs within altered porphyritic granodiorite and feldspar porphyry southwest of the breccia zone. Outcrops in creeks approximately 1.2 kilometres southwest of the Lean-To breccia are also pervasively altered to quartz-sericite-pyrite and clay. Locally the rocks are hornfels with strong disseminated pyrite suggesting proximity to an intrusive contact. Highly altered volcanic and intrusive rocks are exposed sporadically over a rmnimum distance of 2 kilometres. If alteration and associated sulphide mineralization is contiguous over this distance then the presence of a very large hydrothermal system is indicated. This system is probably centered on a porphyritic granodiorite stock or stocks. This conclusion is supported by previous IP

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surveys which have defined a large IP anomaly more or less centered on the porphyritic granodiorite phase of the Lean-To plutonic center.

Figure 6. Total field magnetic contour map. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation dated November, 2004 (Rastad, 2004).

EXPLORATION

Previous exploration on the Seel property is described in the History section of this report. The most recent work on the property took place in September 2004 with the cutting of new grid covering the Lean-To breccia and a combined 2D/3D Induced Polarization (IP) and Magnetometer survey. Grid cutting was done by CJL Enterprises Ltd. of Smithers B.C. and the geophysical surveys were done by SJ Geophysics Ltd., Delta, B.C. The IP survey was done between September 27 and October 10, 2004 while the magnetic survey took place October 26-29, 2004.

The geophysical surveys were done on a single grid consisting of 10 lines. Lines 4600N through to line 5200N were used during the 3D-IP recording phase; while Line 4000N, 4200N and 4400N were recorded with a modified pole-dipole configuration in 2D mode. The 3D-IP lines had a separation of 100m, with pickets placed every 50m. The three 2D lines were spaced at 200m intervals, with pickets also placed every 50m. Al l lines had a length of 2000m with pickets labeled from station 4000E through to 6000E.

The following discussion of results is extracted and modified from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation dated November 2004 (Rastad, 2004)

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Magnetic Survey The data collected from the magnetic survey was analyzed by plotting the total magnetic field strength as a false colour contour plan map (Figure 6). The annotated black dashed lines show two NNE trending linear features as distinguished by the magnetic data. Discussion of the individual magnetic anomalies are discussed within the interpretation of the 3D-IP data set. Also annotated on Figure 6 is the IP interpretation.

Figure 7. Chargeability at 100 metres depth. Figure from a report prepared by SJV Consultants for Grayd Resource Corporation, dated November, 2004 (Rastad, 2004).

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3D Induced Polarization Survey The IP survey provides both resistivity and chargeability values which are then inverted to provide an interpreted 3D block model of the subsurface. Figure 7 shows the plan map for chargeability at 100m depth and Figure 8 shows the plan map for resistivity at 100m. In addition, the interpretation of the data has been annotated onto figures 7 and 8 and the magnetic plot above (Figure 6). The chargeability high anomalies are outlined in blue. Two levels have been introduced - very high chargeability anomalies are indicated by the solid lines and moderate chargeability anomalies are outlined by a dashed line. Low resistivity regions are indicated by a solid yellow line and a region of scattered moderate resistivity values has been outlined by dashed yellow lines.

Figure 8. Resistivity at 100 metres depth. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation, dated November, 2004 (Rastad, 2004).

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Irtfefprelec C t e r g B B t :/ (mfA>(

Figure 9. Line 4800- 3D Cross Section - Interpreted Resistivity and Chargeability. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation, dated November, 2004 (Rastad, 2004).

Two distinguishing linear features running NNE are outlined by the chargeability. The first is along the northwestern flank of a very high chargeability zone and correlates nicely with a very resistive unit to its northwest. This may indicate a geological contact. The second is on the southeastern flank of the chargeable body. There is no strong correlation with the resistivity as was seen on the northwestern flank; however, a gentle trough of lower resistivity values can be seen. These linear features are annotated with black dashed lines that separate the 3D grid into 3 regions - A, B and C (Figures 7 and 8).

Regions A and C are characterized by similar relatively low chargeability values. However, the corresponding resistivity values have distinct characteristics indicating that the regions are distinct units. Region A has high resistive values and is associated with moderate Total Field magnetic values with scattered small magnetic anomalies throughout. By comparison, region C has moderate resistivity values and relatively low magnetic values. Subtle anomalies may exist within these two regions; however, they are not examined within the scope of this report.

Region B demonstrates a more complex system as indicated by the annotated interpretation in Figures 7 and 8. This region is dominated by a zone of high chargeability values which appear to be separated into two zones by a NNE trend of broken up resistivity features. In addition, this region contains the majority of the anomalous magnetic features. Closer examination reveals this resistivity trend also correlates nicely with the chargeability model. Separated by this trend are two very high chargeability features, labeled as Features 1 and 2. The southeastern anomalous feature, Feature 1, is located between stations 5100E and 5250E and is bounded between lines 4700N and 5000N. This anomaly is associated with a low resistivity zone and appears to cut into the NNE resistive trend mentioned earlier. Additionally, the largest magnetic anomaly is situated directly to the southeast of the outlined chargeability feature and coincidently is of similar size. The largest magnetic anomaly is also coincidently of similar size and is situated immediately to the southeast of the outlined very high chargeability feature..

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The second chargeability feature, Feature 2, is situated approximately between stations 4600E and 4900E, and is bounded to the northeast by line 4800N. Trie southwestern edge is open and has not been delineated by the 3D inversion. Similarly to the anomalous Feature 1, this feature is associated with a very pronounced zone of very low resistivity values. In addition, there are two magnetic anomalies associated with this low resistive zone. The low resistivity anomaly appears to be dipping below the higher resistive unit in region A. This is illustrated in both Figures 9 and 10.

• O 3 SB

COO '3tl l*5S3Tpr95Bsl Res.istMy JGhiEwrtf

Figure 10. Line 4600- 3D Cross Section - Interpreted Resistivity and Chargeability. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation dated November, 2004 (Rastad, 2004).

With the use of a visualization program, the 3D model of the chargeability and resistivity can be sliced along any arbitrary surface. Snapshots of the resistivity and chargeability models are shown below as Figures 11 and 12. Both models have been set to arbitrary isosurfaces to help one visualize the anomalous feature. For the resistivity, the green-blue surface is set at resistivity level below 60 ohms, and the orange-red surface has been set at levels greater than 225 ohms. As for the chargeability model, the blue surface has been set to levels less than 18 milliseconds (ms), and the orange-red surface has been set to values greater than 65ms. In the chargeability model, the two features are clearly shown; however, manipulating the isosurface cutoff values can drastically effect the size and shape of an anomaly.

The three 2D lines will be examined briefly while trying to associate trends noticed in 3D to the 2D inversion. Figure 13 shows the inverted results for line 4200N. With the 2D methodology, there is no inherent control on the location of an anomaly. A chargeable feature 100m off to the side will have a similar effect as to one located directly below the line. The combined effect of data below and to the sides may add structure to the 2D inversions; whereas, you may see a smoother one in the 3D inverted results.

For the 2D-IP lines, the general trend discovered in the 3D inverted results are also evident in each of the three lines. A l l have a resistive body to the northwest with a chargeable body immediately to the southeast of the resistive body. This suggests the existence of a geological contact that trends NNE.

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Figure 11. 3D resistivity model facing north. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation dated November, 2004 (Rastad, 2004).

Figure 12. 3D chargeability model facing north. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation dated November, 2004 (Rastad, 2004).

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In all three lines, the central portion that contains the chargeable material demonstrates a more complex structure of chargeability features. This may be.an effect of the inversion; however, the main trend follows that of the 3D inversion by showing two distinct very high chargeable features being separated by a resistive body.

Figure 13. Line 4200N interpreted resistivity and chargeability. Figure from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation, dated November, 2004 (Rastad, 2004).

DRILLING

The main period of diamond drilling on the Seel Property occurred between 1982 and 1985. This work is summarized in the history section of this report. The main focus of this report is the Lean-To showing. This showing was first drilled by Lansdowne Oil and Minerals Ltd. in 1982 when they completed 38 diamond drill holes in two phases totaling 917.3 metres. The first 19 holes were drilled by Seel Enterprises Ltd. of Burnaby B.C. using a Winkie IEX-S drill rig. Drilling covered an area 650 metres long by 550 metres wide. Although some of this core is still stored at the old camp site near the Seel Breccia, the cardboard core boxes have largely disintegrated and the hole numbers are no longer identifiable.

Lansdowne drilled an additional 24 holes totaling 1,480.9 metres of BQ core in 1983. No drilling was done in 1984 but 10 more holes totaling 201 metres were drilled in 1985. Table 2 is a summary of significant drill hole intersections encountered in the 1982, 1983 and 1985 drilling programs. As can be seen in the table, most of the drill holes were very short. Most of the holes were drilled at 45 degree angles and were targeted at the Seel breccia body. The best core intersections were split and sent to Acme Analytical Laboratories, Vancouver B.C. for standard assays for copper, silver and gold and for geochemical analysis by ICP methods for copper, lead, zinc, silver, tungsten and gold. Some of this core is stored on the property but only a few boxes remain intact. Of these, only a few boxes have readable labels on them.

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627000 m

Figure 14. Drill hole plan, Lean-To showing. Map prepared by the writer using data from Goldsmith andKallock, 1986.

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Table 2. Significant drill hole intersections, Lean-To showing (Goldsmith and Kallock, 1986)

Hole No. Hole Length (m)

Interval Start (m)

Interval End (m)

Width (m)

Cu (%) Ag (opt) Au

82-2 30 5.2 5.8 0.6 0.3 0.01 8.4 9 0.6 1.1 0.01

82-3 18.9 11.1 12.8 1.7 1.14 3.63 82-4 27.4 4.9 6.9 2 0.38 0.28

11.3 11.9 0.6 0.75 0.46 12.5 14 1.5 0.31 0.28

82-5 17.1 5.2 12.1 6.9 0.96 0.77 including: 8.4 12.2 3.8 1.25 1.08

and: 14.6 17.1 2.5 1.39 1.1 82-6 23.8 4.1 5.3 1.2 0.63 0.49

7.3 9.8 2.5 0.58 0.46 20.4 23.8 3.4 0.36 0.28

82-19 29.3 7.2 25.3 18.1 1.59 1.24 including: 7.3 9.4 2.1 4.2 2.94

and: 18 21.3 3.3 2.29 1.65 82-29 53 51.2 53 1.8 0.48 0.28 82-34 23.5 12.2 15.2 3 0.1 0.11 360 ppb 82-10 23.3 14.3 15.8 1.5 0.13

17.4 18.9 1.5 0.26 0.16 190 ppb 82-28 40.9 12.8 21.3 8.5 0.12 0.1 83-1 91.4 11.8 20 8.2 0.48 0.4

20 60 40 0.13 0.14 60 62.2 2.2 1.1 0.98

83-2 97.8 2.6 4.6 2 0.3 0.22 65 66.7 1.7 0.44 0.27

83-4 168 1 14 13 2.28 1.61 14 18 4 0.13 0.14 18 30 12 0.09 0.09 30 46 . 16 0.79 0.59 46 50 4 0.3 0.24 50 93 43 0.12 0.09

83-6 104.5 18.6 24 5.4 1.52 1.28 83-7 • 54.7 33.1 33.4 0.3 0.21% Mo 83-11 89.4 7.6 25 17.4 1.58 1.23

25 31 6 0.16 0.16 85-1 7.9 11 3.1 1.64 1.12 0.007 opt

11 17.7 6.7 2.28 1.49 0.011 opt 85-3 11 11.9 0.9 0.67 0.42 0.001 opt

12.2 13.7 1.5 1.4 0.82 0.002 opt 13.7 15.3 1.6 0.89 0.43 0.001 opt 15.3 16.8 1.5 0.8 0.57 0.001 opt 16.8 18.6 1.8 1.42 1.23 0.001 opt 18.6 20.1 1.5 0.96 0.69 0.002 opt 20.3 21.2 0.9 2.09 1.51 0.001 opt

85-4 3.66 4.9 1.24 0.14 0.18 0.002 opt 4.9 5.5 0.6 2.73 2.63 0.001 opt 6.7 7.9 1.2 0.2 0.35 0.001 opt

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85-5 5.8 6.6 0.8 0.18 0.9 0.001 opt 10.1 13.7 3.6 2.04 0.86 0.010 opt

85-6 16.5 17.7 1.2 3.18 1.85 0.008 opt 18.8 20.7 1.9 1.97 1.22 0.007 opt

85-7 15.3 16.8 1.5 1.4 0.78 0.002 opt 17.5 18.5 1 3.9 2.59 0.003 opt

85-8 7.6 8.2 0.6 4.35 2.76 0.005 opt 11.3 12.8 1.5 4.11 2.24 0.012 opt 20.1 21.7 1.6 4.39 2.47 0.004 opt

85-9 4.6 5 0.4 8.14 3.29 0.175 opt 8.2 9.5 1.3 3.37 1.04 0.013 opt 9.5 9.8 0.3 0.96 0.47 0.021 opt 9.8 11.3 1.5 3.12 1.36 0.003 opt

85-10 5.2 6.1 0.9 8.26 3.5 0.276 opt Notes:. opt=ounces per ton; ppb=parts per bilhon; source of data is Goldsmith and Kallock, 1986

SAMPLING M E T H O D AND APPROACH

Work done on the Seel property is described in a number of publicly available assessment reports and private internal reports. A review of these reports suggests that rocks samples collected from the property were either random grab samples or chip samples over a specific width. Examination of core remaining on the property indicates that it was split by a core splitter. Some of the core was not split and sampled. Examination of drill logs indicates the core was sampled in intervals ranging from 0.5 to 2.5 metres. There is no information provided in any of the reports reviewed by the writer that discusses what controlled the selection of sample interval and length.

SAMPLE PREPARATION, ANALYSES AND SECURITY

Historical reports give little information on sample preparation, analytical procedures or security. Most of the historical analytical work has been done by Acme Analytical Laboratories, Vancouver B.C. a well-respected and accredited analytical facility. The writer has no reason to believe that sample preparation and security were not done in an appropriate manner, following industry best practices applicable at the time.

DATA VERIFICATION

The primary source of data for the Seel Mineral Claims has been the historical work reported by previous operators, which includes geochemical surveys, geophysical surveys and diamond drilling. Examination of the analytical results presented in publicly available assessment reports and in a previous technical report (Ogryzlo, 2004) suggests that quality assurance was performed to the best practice standards of the day. Analytical results reported by different operators for samples collected from the same surface showings have generally given comparable results. Examination of these showings and drill core by the writer also confirms the presence of significant sulphide concentrations on the property. These concentrations are consistent with reported analytical results for samples collected from the same localities.

ADJACENT PROPERTIES

The following description of adjacent properties is extracted and modified from a previous technical report by Ogryzlo (2004), dated June 12,2004.

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There is one adjacent and one nearby property with published estimates of a mineral resource or mineral reserves. These are the Ox Lake porphyry Cu-Mo deposit and the Huckleberry Cu-Mo operating mine.

The Ox Lake Property (Richards, 1976) is located approximately 3.5 kilometres north of the Seel Breccia Pipe. The Ox Lake deposit has reported reserves of 17.2 million tonnes, grading 0.33 per cent copper and 0.035 per cent MoS2 (Richards, 1976). These figures and the reserve classification were generated before the implementation of National Instrument 43-101, and may not conform to that standard. The historical estimate is relevant to the Seel Mineral Claims in that the property is proximate to the Seel Claims, and serves to establish the potential for the existence of a deposit with similar characteristics on the Seel Claims.

The Huckleberry Mine is located approximately seven kilometres northwest of the Seel Breccia. The mine was put into production in October 1997, and produced at a rate of 20,000 tonnes per day in 2002. Probable reserves as of December 31, 2002 were 36,719,000 tonnes at 0.489% Cu, 0.013% Mo, 0.056 g/t Au, and 2.884 g/t A g using a 0.26% copper cut-off grade (Imperial Metals Corporation website). Production to the end of 2001 was 38.7 million tonnes from which the operation won 17.6 million grams Ag, 583,460 grams Au , 150.1 million kilograms Cu and 2.18 million kilograms molybdenum.

MINERAL PROCESSING AND METALLURGICAL TESTING

To the writer's knowledge there has not been any mineral processing or metallurgical testing of material collected from the Seel Property.

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

The only historical resource estimate for the property pertains to the Damascus vein. Diamond drilling at this target led to the delineation of an unclassified resource of 196,087 tonnes at 411.3 g/t Ag, 0.47 g/t Au, 2.85% Pb and 4.63% zinc (Minfile database). In a more recent report, McMillan (1998) quotes an historical resource calculation of 13,873 tonnes grading 579.3 g/t Ag , 3.8% Pb and 4.6% zinc over a true width of 1.2 metres and over a length of 177.5 metres. These resource estimates were determined prior to the implementation of NI43-101, and do not conform to that standard. They are included here for the sole purpose of providing a scope for this occurrence.

O T H E R RELEVANT DATA AND INFORMATION

The writer has reviewed the sources of information cited under References including drill hole logs, cross-sections and property maps at various scales produced by the different operators on the Seel property. Some of the reports reviewed are publicly available as assessment reports through the B.C. Ministry of Energy and Mines, others are internal reports done by or for the property operator. The writer is not aware of, or was not presented with, any additional sources of information that might significantly change the conclusions presented in this technical report.

INTERPRETATION AND CONCLUSIONS

The following conclusions and observations are modified from a previous technical report by Peter Ogryzlo, dated June 12, 2004. After working on the property for 9 days in late September, 2004, the writer concurs with the conclusions presented in this earlier report.

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Ogryzlo concluded that the Seel Mineral Claims cover an extensive system of hydrothermal alteration and sulphide mineralization that arises from a porphyry copper or porphyry copper-molybdenum deposit of unknown size and grade. Surface exposures and historical drill testing indicate the presence of an upper Cretaceous or Eocene porphyry copper-gold system. Associated with this system are one or more breccia hosted Cu-Ag +-Au deposits of modest size: zones of brecciation have developed wherein intensely altered angular fragments of the broken host rocks are cemented by infillings of dolomite and chalcopyrite with lesser sphalerite, galena, and arsenopyrite. Breccia deposits are common adjuncts to porphyry copper deposits, and are often mined out early in the development of a porphyry copper district owing to their high and sometimes spectacular grades. They have been important producers of copper, silver and gold in Mexico and Chile. Breccia deposits commonly occur in clusters, so there is a potential to discover and develop additional similar deposits on the Seel property. The outer contact of the quartz feldspar porphyry (QFP) is considered to be prospective for the development of such deposits.

In particular, the highly sulphidized samples collected from exposures in the trench south of and below DH85-9 indicate that the breccia zone is considerably wider than reported in DH85-9. This exposure should then be tested by diamond drilling to verify the grade, width and attitude of the mineralization.

The breccia body has only been tested by drilling to a relatively shallow depth. The body appears to be ovoid in plan, with the long axis directed E-W, and may have the form of a champagne glass in cross section. Sections should be drafted from the existing drill records to see i f there is any indication of orientation to the breccia body to assist in formulating a model.

The high gold values obtained from grab and soil samples in the trench along the baseline at DH82-19 warrant further examination. The surface exposures should be extended and sampled.

The historical Induced Polarization surveys completed on the Lean-to (Seel), O X C and OX-EAST projects indicate that a very extensive area of high chargeability underlies the area now covered by the Seel Mineral Claims. The zone of >10 millisecond apparent chargeability as outlined in these surveys extends for approximately 6.3 km east-west, and is approximately 1.5 km in width. In particular, the area west of the Seel Breccia Pipe reported an apparent chargeability anomaly with dimensions of approximately 1000m by 500m that has not been closed off. Within this envelope there is a zone of low resistivity approximately 700 metres by 200 metres in size and very high (>60 msec) chargeabilities. The chargeabilities may be due to a very well developed pyrite halo, or may represent the highly sulphidized extension of the breccia body. Considering the high concentrations of pyrite observed in exposures of outcrop in this area, it is assumed that the zone of high chargeability arises from an extensive zone of hydrothermal alteration and sulphidization. If these assumptions are correct, the hydrothermal system would be one of the most extensive in central British Columbia. The extent of the zone of high chargeability has not been determined.

The following is modified from a report prepared by SJV Consultants Ltd. for Grayd Resource Corporation and dated, November, 2004 (Rastad, 2004).

SJ Geophysics Ltd. conducted a combined 2D/3D Induced Polarization survey with a ground magnetic survey for Grayd Resource Corporation over its Seel property. The geophysical crew surveyed approximately 20 linear kilometres of IP data over a two week period and the magnetic data over a three day period. The data was processed and inverted by S.J.V. Consultants Ltd. using the UBC-Geophysical Inversion Facility inversion code. The interpreted inversion was then outputted as section and plan maps. Visualization software and the outputted maps were used to describe the geophysical responses and conduct a brief interpretation.

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626000 m 626500 Ri 62:7000 m 827500 m

626000 m 826500 m 627000 m 627600 m

Figure 15. Colour contoured chargeability at 100 metres depth plotted relative to geologic contacts and drill hole collars in the vicinity of the Lean-To breccia body. The chargeability plotis from a report prepared by SJV Consultants for Grayd Resource Corporation, dated November, 2004 (Rastad, 2004). See Figure 7 for chargeability colour contour legend. Map prepared by the writer.

Interpretation of the 3D-IP data set gives an indication of two linear features running through the grid in a NNE trend, as well as a central chargeability region. On the most northwestern linear trend, there are strong correlations between the magnetic, resistivity and chargeability sets which may indicate a geological contact. The central region has two very high chargeable anomalies, Feature 1 and Feature

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2, which are separated by a region of broken up resistivity. From this, it is believed that the geophysical data gives enough evidence to warrant further investigation.

Initially, a detailed interpretation of the area should be conducted to include regional geology, geochemistry and other geophysical data. To fully delineate the strong chargeability Feature 2, it is recommended to extend the grid to the southwest with the 3D methodology with 100m lined spacing, at least covering the 2D-IP data region with a 3D-IP survey.

RECOMMENDATIONS

The Seel property covers a large area of pervasive hydrothermal alteration and mineralization that is spatially and probably genetically related to emplacement of Late Cretaceous porphyritic intrusions. A large part of this area remains untested by diamond drilling. A recent 3D/2D IP survey has confirmed the presence of a strong coincident high chargeability-low resistivity anomaly that covers the area around the Lean-To showing. This anomaly is open to the southwest (Figure 15). It is important to determine the ultimate size and shape of this anomaly. It is recommended that the grid cut in 2004 be extended to the southwest by at least 1000 metres, with 100 metre line spacing (must also add lines 45N, 43N and 4 I N to the existing grid) and additional 3D IP and ground magnetometer surveys be done on this grid expansion and extension. The new data should be integrated with the existing data to build a more complete chargeability and resistivity model.

The main exploration target on the property is the Lean-To breccia which has returned impressive Cu and locally encouraging Mo, A g and A u values. This target has only been tested to a very shallow depth. In order to determine the ultimate size and geometry of this deposit, deeper drill holes are required. As noted above, the breccia is open in a number of directions and these should have priority as drill targets. At the same time the area southwest of the breccia should be tested by widely spaced holes. At this time the grade and extent of mineralization in this area is very poorly known and and there is virtually no geological information due to a complete lack of outcrop. There is the potential for a large tonnage, low grade porphyry copper deposit in this area. Drill holes should be collared in such a way as to test the area of high chargeability keeping in mind that this chargeability may be the pyrite halo around a porphyry deposit. Without drill hole information, however, it is completely unknown as to the significance of the IP and soil geochemical anomalies in this area.

Historical geochemical surveys have defined strong" copper soil anomalies, and local gold soil anomalies in the area of coincident high chargeability and low resistivity. The source of these anomalies is unknown at this point in time. A till geochemical survey similar to those recently completed at the Huckleberry mine should be done to better understand the glacial dispersion patterns in the area (Ferbey and Levson, 2001). A public-private partnership with the B C Geological Survey branch to conduct such a survey should be considered.

Although there have been a number of geochemical surveys on the property over a 20 year period, the quality and suite of elements analyzed varies greatly. A multi-element, systematic soil sampling program covering the area of interest would be helpful in identifying future drill targets. Samples should be collected every 50 metres on the new and extended cut line grid.

A two phase exploration program is recommended. The first phase would involve 1500 metres of diamond drilling to test the coincident high chargeability/low resistivity anomalies defined by the recent IP survey. The second phase would involve extending the 3D/mag survey a further 1000 metres to the southwest, followed by additional diamond drilling in this area. The second phase of exploration would not be contingent upon the results of the Phase 1 program.

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Table 3. Phase 1 cost estimates

Phase 1 - Drill 1500 metres

Personnel

Food & Accomodation

Drilling

Helicopter Support

Analytical

Transportation

Government fees

Reclamation

Contract services

Miscellaneous

number type rate cost total

helper helper geologist

50 50 50

days days days

$150.00 $150.00 $500.00

$7,500 $7,500

$25,000 $40,000

Field costs Tahtsa Timber 160 man days $75.00

$10,000 $12,000

$22,000

diamond drilling 1500 metres $100.00 $150,000 $150,000

mob/demob/drill moves 8 hours $1,000.00 $8,000

$8,000

sample prep - rock ICP-MS 36 element fire assay supplies GST

1000 1000 50

samples samples samples

$5.25 $10.50 $12.00

$5,250 $10,500

$600 $2,000 $1,285

$19,635

truck rental truck mileage ATV/snowmobile rental

60 10000

120

days kilometres

days

$100.00 $0.44

$50.00

$6,000 $4,400

$6,000 $16,400

claim filing $8,000 $8,000

site cleanup $14,000 $14,000

expediting etc. digital cartography/GIS report writing

20

5 5

days

days days

$400.00

$500.00 $500.00

$8,000

$2,500 $2,500

$13,000

contingency 10% $29,103 $29,103

Total $320,138

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Table 4. Phase 2 cost estimates

Phase 2. Linecutting, IP, Mag, geochem and 2000 metres of drilling number type rate cost

Personnel helper 50 days $150.00 $7,500 helper 50 days $150.00 $7,500 senior geologist 50 days $450.00 $22,500 prospector 50 days $325.00 $16,250

Food & Accomodation Tahtsa Timber 200 man days $75.00 $15,000

Drilling diamond drilling 2000 metres $100.00 $200,000

Helicopter Support mob 4 hours $1,200.00 $4,800 demob 4 hours $1,200.00 $4,800 drill moves@2 hrs 12 hours $1,200.00 $14,400

Geophysics IP 27 line km $1,500.00 $40,500 Mag 27 line km $500.00 $13,500

Analytical sample prep - rock 1000 samples $5.25 $5,250 ICP-MS 36 element 1500 samples $10.50 $15,750 fire assay 50 samples $12.00 $600 sample prep - soil & silt 500 samples $1.60 $800 ICP water analysis 100 samples $15.00 $1,500 GST $1,673

Transportation truck rental 100 truck days $100.00 $10,000 truck mileage 5000 kilometres $0.44 $2,200 ATV rental 200 atv days $50.00 $10,000

Heavy equipment road construciton (25m/hr) 50 hours $120.00 $6,000 drill pads 50 hours $120.00 $6,000

Government fees claim filing $8,000

Reclamation site cleanup 20 man days $250.00 $5,000

Contract services program management 20 days $500.00 $10,000 linecutting 27 line km $1,000.00 $27,000 digital cartography/GIS 5 days $500.00 $2,500 report writing 5 days $500.00 $2,500

Total

$53,750

$15,000

$200,000

$24,000

$54,000

$25,573

$22,200

$12,000

$8,000

$5,000

41 -

environmental surveys

Miscellaneous contingency

2 days $500.00 $1,000 $43,000

$46,252 $46,252

Total $508,775

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REFERENCES

Anderson, R.E. (1972). Summary Report Geochemical Survey - Mineral Claims R E A - Bethlehem Copper. British Columbia Ministry of Energy and Mines Assessment Report 03576.

Ager, J.G. (1981). Geochemical and Electromagnetic Report on behalf of Lansdowne Oi l and Minerals Ltd., Lean-To, Lean-To 1-4 Mineral Claims, Tahtsa Lake Area, Omineca Mining Division, BC. British Columbia Ministry of Energy and Mines Assessment Report 9098.

Ager, J.G. (1985). Induced Polarization -Resistivity Survey Report Lean-To Claim Group, Tahtsa Lake Area, Omineca Mining Division, B C . British Columbia Ministry of Energy and Mines Assessment Report 13592.

Ager, J. and Holland, R. (1983). Geological, Diamond Drilling and Road Construction Report on the Lean-To Group of Mineral Claims. British Columbia Ministry of Energy and Mines Assessment Report 11237.

Ager, J. G. (1983). Geochemical and Road Construction Report on the Ox-East Mineral Claim. British Columbia Ministry of Energy and Mines Assessment Report 11777.

Deveaux, P.J. (1989). Diamond Drilling Report. O X Claim Group, Whitesail Tahtsa Area, Omineca Mining Division (NTS 93E11) Smithers District, British Columbia for Granges Inc. British Columbia Ministry of Energy and Mines Assessment Report 19094.

Ferbey, T. and Levson, V . M . (2001). Ice Flow History of Tahtsa Lake - Ootsa Lake Region Geological Survey Branch Open File 2001-8. British Columbia Ministry of Energy and Mines.

Ferbey, T, and Levson V . M . (2001). Quaternary Geology and Til l Geochemistry of the Huckleberry Mine Area. British Columbia Ministry of Energy and Mines Geological Fieldwork 2000, paper 2001.

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McMillan, R.H. (1998). Report on the Mineral Potential of the Ox Silver Property, Report prepared for International Damascus Resources Ltd.

Ogryzlo, P.L. (2004). Technical Report and Exploration Recommendations, Seel Mineral Claims, Tahtsa Reach, Omenica Mining Division, Report prepared for Grayd Resource Corporation.

Rastad, S. (2004). Geophysical Report - 3D Induced Polarization and Magnetometer Survey, on the Seel Property, SJV Consultants Ltd., Report prepared for Grayd Resource Corporation.

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CERTIFICATE OF AUTHOR I, Donald George Maclntyre, Ph.D., P.Eng., do hereby certify that:

1. I am a Consulting Geologist, with residence and business address at 4129 San Miguel Close, Victoria, British Columbia, Canada.

2. I graduated with a B.Sc. degree in geology from the University of British Columbia in 1971. In addition, I obtained M.Sc. and Ph.D. degrees specializing in Economic Geology from the University of Western Ontario in 1975 and 1977 respectively.

3. I have been registered with the Association of Professional Engineers and Geoscientists of British Columbia since September, 1979, registration number 11970. I am a Fellow of the Geological Association of Canada and a member of the British Columbia and Yukon Chamber of Mines.

4. I have practiced my profession as a geologist, both within government and the private sector, in British Columbia and parts of the Yukon for over 30 years. Work has included detailed geological investigations of mineral districts, geological mapping, mineral deposit modeling and building of geoscientific databases. I have directly supervised and conducted geologic mapping and mineral property evaluations, published reports and maps on different mineral districts and deposit models and compiled and analyzed data for mineral potential evaluations.

5. I have read the definition of "qualified person" set out in National Instrument 43-101 ("NI43¬101") and certify that by reason of my education, affiliation with a professional association (as defined i n N I 43-101) and past relevant work experience, I fulfill the requirement to be a "qualified person" for the purposes of NI 43-101.

6. I am responsible for the preparation of the technical report titled Geological Report on the Seel Property, Tahtsa Reach Area, Omenica Mining Division, West Central British Columbia, dated December 14, 2004. Sections not written by myself are noted in the text. I spent 9 days on the Seel property between September 19-30,2004.

7. I have not had prior involvement with the property that is the subject of the Technical Report. 8. I am not aware of any material fact or material change with respect to the subject matter of the

Technical Report the omission of which would make the Technical Report misleading. 9. I am independent of the issuer applying all of the tests in Section 1.5 of National Instrument

43-101. 10.1 have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has

been prepared in compliance with that instrument and form. 11.1 consent to the filing of the Technical Report with any stock exchange and other regulatory

authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report.

Dated this 14 t h of December, 2004

D.G. Maclntyre, Ph.D. P.Eng.

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