Gold recoveries of 91.4% and silver recoveries of 80.2% have been achieved in preliminary metallurgical testing conducted on a composite sample comprised of material from the four principal gold bearing zones located along the Bug Lake Trend on the Company’s Martiniere Property in Quebec. Results were achieved by standard flotation followed by cyanide leaching of the flotation concentrate and tails.

The Bug Lake Composite sample was collected from previously drilled core holes. It was dominantly comprised of material from the Lower Bug Lake Zone, but included representative material from the Hanging Wall, Upper Bug Lake and Footwall Zones. The average assayed head grade for the Bug Lake Composite was 6.3 g/t gold and 7.1 g/t silver. The current metallurgical testing was performed on behalf of the Company by Blue Coast Research Ltd. of Parksville, British Columbia following an initial stage of work conducted by SGS Minerals in Lakefield, Ontario.

Initial metallurgical testing consisted of direct cyanidation of the Bug Lake Composite using a series of grind sizes which would be typical of the industry. Direct cyanidation achieved gold recoveries of 72 to 81%, and silver recoveries ranging from 65 to 73%. In general, finer-grind sizes resulted in higher recoveries. Gravity recoveries ranged from 7.3% to 24.3% for gold, again increasing at finer grind sizes. Gravity recovery followed by cyanidation of the gravity tails achieved virtually identical results to direct “whole ore” cyanidation.

Blue Coast conducted five flotation tests on the Bug Lake Composite; three to establish the optimal grind size and two to create concentrates for leaching. All three grind sizes tested produced similar gold (97%) and silver (92-93%) recoveries to concentrate. The coarsest grind - 127 microns - was selected for the leaching tests.

Testing included separate and combined leaching of the flotation concentrate (after fine regrinding) and tails. Optimal recoveries were achieved from separate leaching of the flotation concentrate and tails. The table below summarizes the metallurgical balance for this scenario.

Metallurgical Balance from Separate Concentrate and Tails Leach Option

	Mass %	Gold %	Silver %
Feed	100	100	100
Flotation concentrate	20.4	96.1	92.5
Concentrate leach extraction	n/a	88.9	74
Concentrate leach residue	20.4	7.2	18.5
Flotation Tails	79.7	3.9	7.5
Tails leach extraction	n/a	2.5	6.2
Tails leach residue	79.7	1.4	1.3
Combined circuit extraction	n/a	91.4	80.2
Extraction rates		Gold, %	Silver, %
Conc leach extraction rate		92.5	80
Tails leach extraction rate		65	83

• Note: rounding errors may lead to some numbers adding to over 100%

Leach testing of the flotation concentrate displayed very rapid kinetics with gold extraction peaking after only 3-5 hours. In general, cyanide consumptions during both the concentrate and tailings leach were very low and lime consumptions were also modest given the precious metal content in each product.