Background

The property is located approximately 85 kilometres east of the Kidd Creek Mine (117,547,000 tonnes @ 2.2% copper 7.25% zinc, 0.28% lead and 147.43 g/t silver) and 15 kilometres northwest of the Potter Mine (485,000 tonnes @ 1.6% copper and 1.6% zinc).

It is only 65 kilometres northeast of Xstrata's Timmins Metallurgical Facility and 100 kilometres northwest of the Horne Smelter in Noranda. Timmins and Noranda are easily accessed by all weather highways and logging roads from the property.

Additional land was staked to expand the property from approximately 1,100 acres to more than 18,000 acres.

Geotech has flown an 855 kilometre VTEM airborne survey over the part of the property.

Drilling has identified stratigraphy that may be favourable for hosting Kidd Creek Style massive sulphide mineralization. A consistent horizon of stringer and disseminated Zn, Cu and Pb mineralization with anomalous Ag has been identified spanning a strike length of approximately 2.0 kilometers. This all occurs in what is considered to be a 6 km wide volcanic-sedimentary basin.

Widely spaced shallow holes drilled by Golden Chalice have discovered anomalous zinc and copper sulphide mineralization across significant widths. One hole returned 1.25% zinc, 0.04% copper and 0.13% lead over 4.5 m in rhyolitic tuffs, breccias, and altered mafic volcanics. These shallow holes have been drilled along the interpreted 6 kilometre wide basin and are being used to help vector in on Kidd Creek type massive sulphides by identifying areas with increased mineralization and alteration that would be proximal to a volcanic vent.

One possible area was drilled with a deep hole last year and successfully intersected the most extensive zinc mineralization to date on the property. This deeper hole intersected 2.00% Zn, 0.55% Pb, and 0.01% Cu over 10.0 metres of core length from 668 to 678 metres, within a longer intercept of 1.61% Zn, 0.38% Pb, and 0.02% Cu over 20.9 metres of core length from 668 to 688.9 metres.

Geology and Mineralization

Kidd Creek Deposit occurs within overturned mafic and felsic volcanics that are overlain by a broad E-W striking younger sedimentary package to the south.

Abitibi East mineralization appears to occur in a similar volcanic environment as Kidd Creek.

Montreal River fault is considered by some to have an influencing factor on mineralization at Kidd Creek. The fault may have been a graben fault at the time of Kidd Creek volcanism, and has been reactivated overtime.

Similar graben bounding faults are considered to occur at Abitibi East. The graben is defined by the stacked nature of gabbro sills within the broad sedimentary basin, and the presence of zinc (sphalerite) with minor copper (chalcopyrite) and lead (galena) sulphides within the basin, and barren iron sulphides (pyrite) outside the graben basin.

Drilling has intersected variably silicified, chloritzed, and sericite altered mafic and felsic volcanics within the graben.

A silicified felsic porphyry sill occurs on strike with the mineralized volcanics and may be proximal to a vent. Sphalerite is found along fractures at the top of the porphyry.

Next Steps

Dr. George Hudak, an Associate Professor at the University of Wisconsin-Oshkosh and researcher on the relationships between volcanology, hydrothermal alteration and VMS deposits, has assisted Company geologists in the recognition of lithologies and alteration at the Abitibi East Property. Dr. Hudak is currently utilizing lithogeochemistry (rock chemistry) and petrographic studies (microscope analysis of rock) to help vector (target) in on felsic domes and potential synvolcanic fault zones which are often associated with VMS deposits.

In addition, a series of deeper holes will continue to test areas where sulphide mineralization and alteration are greatest. Down hole geophysics can then be used to test further at depth and along strike of the drilling to help vector in on a deposit.