NI 43-101 TECHNICAL REPORT

PRE-FEASIBILITY STUDY ON THE QUESNEL RIVER (QR) MINE

QUESNEL, BC, CANADA

Prepared for
0847423 BC Ltd.
International Wayside Gold Mines Ltd.

Authors:
Nathan Eric Fier, C.P.G., P.Eng.
Frank Wright, P.Eng.
Ronald G. Simpson, P.Geo.
Scott Martin, P. Eng.

December 16, 2009

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PAGE

1.0 SUMMARY.......................................................................................................................................... 1
1.1 Executive Summary.................................................................................................................. 1
1.2 Technical Summary .................................................................................................................. 6
2.0 INTRODUCTION AND TERMS OF REFERENCE............................................................................ 13
3.0 RELIANCE ON OTHER EXPERTS .................................................................................................. 15
4.0 PROPERTY DESCRIPTION AND LOCATION................................................................................. 15
5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY20
6.0 HISTORY .......................................................................................................................................... 20
7.0 GEOLOGICAL SETTING.................................................................................................................. 24
7.1 Regional Geology ................................................................................................................... 24
7.2 Local and Property Geology ................................................................................................... 26
8.0 DEPOSIT TYPES.............................................................................................................................. 28
9.0 MINERALIZATION............................................................................................................................ 28
10.0 EXPLORATION ................................................................................................................................ 29
11.0 DRILLING ......................................................................................................................................... 31
12.0 GEOPHYSICS .................................................................................................................................. 33
13.0 SAMPLING METHOD AND APPROACH......................................................................................... 34
14.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ............................................................... 35
15.0 DATA VERIFICATION...................................................................................................................... 36
16.0 ADJACENT PROPERTIES............................................................................................................... 39
17.0 MINERAL PROCESSING AND METALLURGICAL TESTING ........................................................ 40
17.1 Background............................................................................................................................. 40
17.2 Sample Selection and Head Characterization ........................................................................ 42
17.3 Cyanidation Test Results........................................................................................................ 43
17.4 Metallurgical Conclusions ....................................................................................................... 48
18.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ................................................... 48
18.1 Mineral Resources.................................................................................................................. 48
18.1.1 Deposit Modeling....................................................................................................... 50
18.1.2 Exploratory Data Analysis.......................................................................................... 51
18.1.3 Compositing............................................................................................................... 52
18.1.4 Density....................................................................................................................... 52
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PAGE
18.1.5 Variogram Analysis.................................................................................................... 52
18.1.6 Block Model and Grade Estimation Procedures ........................................................ 53
18.1.7 Model Validation ........................................................................................................ 55
18.1.8 Cut-off Determination................................................................................................. 56
18.1.9 Mineral Resource Summary ...................................................................................... 58
18.2 Mineral Reserves.................................................................................................................... 59
19.0 ADDITIONAL REQUIREMENTS FOR DEVELOPMENT AND PRODUCTION PROPERTIES ........ 60
19.1 Mining Operation .................................................................................................................... 60
19.2 Mine Waste Rock Management.............................................................................................. 67
19.3 Mineral Processing ................................................................................................................. 72
19.4 Infrastructure........................................................................................................................... 73
19.5 Manpower............................................................................................................................... 77
19.6 Water Balance ........................................................................................................................ 78
19.7 Tailings Storage Facility (TSF)................................................................................................ 79
19.8 Reclamation and Closure........................................................................................................ 79
19.9 Recoverability ......................................................................................................................... 82
19.10 Markets and Contracts............................................................................................................ 82
19.11 Taxes and Royalties ............................................................................................................... 82
19.12 Capital Cost Estimate ............................................................................................................. 85
19.13 Operating Cost Estimate......................................................................................................... 86
19.14 Economic Analysis.................................................................................................................. 88
19.15 Market Analysis ...................................................................................................................... 92
19.16 Mining Life .............................................................................................................................. 93
19.17 Exploration Potential............................................................................................................... 93
20.0 INTERPRETATION AND CONCLUSIONS....................................................................................... 94
21.0 RECOMMENDATIONS..................................................................................................................... 94
22.0 REFERENCES.................................................................................................................................. 95
23.0 CERTIFICATE OF QUALIFICATIONS ............................................................................................. 97
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TABLES

Table 1 Base Case Cash Flow Summary Before Taxes

Table 2 Economic Summary
Table 3 Net Present Value Using Base Case Variations
Table 3a Costs for Recommended Programs
Table 4 QR West Zone Mineral Resources (R. G. Simpson, 2009)
Table 5 QR Mineral Reserves
Table 6 Initial Capital Cost Items
Table 7 Operating Cost Summary
Table 8 List of Abbreviations
Table 9 Status of QR Mining Lease
Table 10 Regulatory Permits and Requirements
Table 11 QR Exploration and Mining History
Table 12 QR Historic Production Summary
Table 13 Historical Resource Estimates of West Zone
Table 14 Recent Drilling Summary
Table 15 West Zone Most Significant Drill Results
Table 16 Sample Origin and Head Assay
Table 17 Comp FOB Primary Grind vs. Gold Extractions Comp. FOB
Table 18 Comp FOB – Cyanide Procedure vs. Gold Extraction
Table 19 West Zone CIP Gold Recovery
Table 20 Sample UW09 (72-75) Effect of Gravity Pretreatment on Gold Recovery
Table 21 West Zone Drilling Summary
Table 22 Lithologic Codes
Table 23 Grade Capping
Table 24 Basic Statistics Comparing Raw Data and Composites
Table 25 Block Model Parameters
Table 26 West Zone Search Parameters
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Table 27 Global Mean Grade Comparison

Table 28 Measured Resource Estimate (Geosim, 2009)
Table 29 Indicated Resource Estimate (Geosim, 2009)
Table 30 Inferred Resource Estimate (Geosim, 2009)
Table 31 Diluted Mineral Reserves
Table 32 Mine Development Schedule in Months
Table 33 ARD Field Cell Description
Table 34 Historic Sampling
Table 35 Preliminary Mill Manpower Estimate for 700 tpd Operation
Table 36 Average Underground Mine Manpower Requirements
Table 37 Initial Capital Cost Items
Table 38 Operating Cost Summary
Table 39 Economic Summary by Gold Price
Table 40 Net Present Value by Discount Rate
Table 41 Base Case Cash Flow Summary Before Taxes
Table 42 Net Present Value Using Base Case Variations
Table 43 Gold Industry Breakdown as of July 2008
Table 44 2007 Gold Production by Company
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BASIC DRAWINGS AND FIGURES

Figure 1 Regional Location Plan

Figure 2 Claims Map
Figure 3 Site Location Plan
Figure 4 Air Photo
Figure 5 Regional Geology
Figure 6 Project Site Geology
Figure 7 North Zone Exploration Adit
Figure 8 West Zone Drillhole Locations
Figure 8a Geophysics 3D Inversion Model
Figure 9 Standard PM920 Control Chart
Figure 10 Standard PM922 Control Chart
Figure 11 Check Assays - West Zone
Figure 12 Simplified Mill Process Flowsheet
Figure 13 Mill General Layout
Figure 14 Primary Grind vs. Gold Leach Kinetics Sample FOB
Figure 15 West Zone Samples Gold Cyanide Extraction vs. Time
Figure 16 Longitudinal Section Showing Block Lithology and Mineral Zone Domain
Figure 17 Box Plots of Sample Data by Lithology
Figure 18 Block Model Grades – Plan View
Figure 19 Block Model Grades – Section View
Figure 20 Grade-Tonnage Comparison Between Estimation Methods
Figure 21 Block Model Classification – Plan View
Figure 22 West Zone Underground Mine Plan
Figure 23 North Lobe Cross Sections A-A’ and B-B’
Figure 24 East Lobe Cross Sections C-C’ and D-D’
Figure 25 North Lobe – Proposed Mine Workings
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Figure 26 East Lobe – Proposed Mine Workings

Figure 27 3D Side View
Figure 28 3D Top View
Figure 29 Schematic of QR Underground Mining Method
Figure 30 Historic Price of Gold
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1.0 SUMMARY

1.1 EXECUTIVE SUMMARY

This Pre-Feasibility Study on the Quesnel River (QR) Mine was carried out by EBA
Engineering Consultants Ltd. (EBA) and several independent professionals and consultants
at the request of 0847423 BC Ltd. (Company). The purpose of this study is to update the
resource and reserve estimate for the West Zone deposit and to report potential future
production plans at the QR Mine. This study is also addressed to International Wayside
Gold Mines Ltd. (Wayside) and may be used by Wayside for completing the pending
acquisition and financing of the project. Effective date of this study is Dec. 16, 2009.
EBA has relied upon Procon Mining and Tunneling (Procon) for supplying all background
data used in this report. The resource evaluation was prepared by Ronald G. Simpson,
P.Geo. of GeoSim Services Inc. (Geosim) and the reserve evaluation was prepared by
Procon and verified by EBA. This report complies with NI 43-101 standards.
The QR Mine plan includes development and production for a 700 tonne per day
underground mine. Ore is processed via a carbon-in-pulp milling system resulting in the
production of doré.
The QR Mine and Mill are currently owned by the numbered company 0847423 BC Ltd.
0847423 BC Ltd. is a wholly owned subsidiary of 0373849 BC Ltd, which is in turn owned
99.99% by Procon. The remaining 0.01% is widely held. International Wayside Gold Mines
Ltd. is a reporting company listed with the TSX Venture Exchange.
The major assets of the Company include the QR Mine and Mill property and
infrastructure, and reclamation bond. $1,830,000 is held in security for the purpose of the
M-198 permit, including $1,230,000 in cash bonds ($930,000 at the VanCity Credit Union
and $300,000 at the Royal Bank) and $600,000 held as asset security over certain assets in
the mill. A total of $32,000 in security is held for the MX-10-189 permit including $2,000 at
the Royal Bank and $30,000 at VanCity Credit Union.
On December 16, 2009, Wayside entered into a Term Sheet with 0373849 BC Ltd. whereby
Wayside will, subject to regulatory approval and certain other conditions (including the
finalization and execution of a definitive agreement), acquire all of the issued and
outstanding shares of 0847423 BC Ltd. in exchange for 2,000,000 common shares and
500,000 warrants of Wayside (the Acquisition), an environmental indemnity agreement and
a long term mining contract.
Economic Analysis
Economics were developed using a Base Case of US$850/oz gold and a mining production
rate of 700 tonnes per day. Table 1 presents quarterly cashflows for the one year projected
mine life of the West Zone. All costs are in Canadian dollars unless otherwise stated.
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TABLE 1: BASE CASE CASH FLOW SUMMARY BEFORE TAXES

Calendar Quarter 1st 2nd 3rd 4th Total
Ore Mined (t) 10,354 78,398 68,203 36,510 193,465
Ore Milled (t) 0 63,000 63,000 67,465 193,465
Waste Development (t) 15,174 16,410 0 0 31,584
Gold Grade Milled (g/t) 0 4.77 5.05 4.85 4.85
Ounces Produced after
93% Recovery 0 8,980 9,512 9,541 28,033
Quarterly Cash Flow ($) $(6,303,717) $549,052 $4,254,281 $5,075,864 $3,575,481
Cumulative Cash Flow
($) $(6,303,717) $(5,754,664) $(1,500,383) $3,575,481 $3,575,481
Operating Cash Cost /
tonne ($/t) 290.02 70.16 36.30 24.67 61.41

Economic Criteria
Revenue:
• 700 tonnes per day of ore
• Recovery of 93% gold with no credits for silver
• Exchange rate 0.90 USD = 1.00 CAD
• Metal price of US$850/oz Au
• Revenue is recognized at the time of production
Costs:
• Initial capital cost is $3,300,000 (including mill refurbishment, mobilization
and working capital, excluding stope development, raising of the tailings dam
and grouting of tailings dam to lower seepage )
• Stope development prior to the start of production mining is $3,002,000
(occurs over the first 3 months of mine life) and carried as a mine operating
cost
• Shutdown Costs incl. Reclamation is $2,582,000 (including mine
demobilization, mill shutdown, reclamation activities, grouting of tailings
dam to lower seepage and post-closure monitoring)
• Working capital is $883,000 (estimated at average operating expenses per
month)
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• Working capital and mill asset recovery is $1,800,000 (this is considered a

positive value to the firm, as working capital can be recaptured and
equipment from the mill can be sold at the end of the mine life)
• Average operating cost / tonne of ore over the mine life is $61.41
The project has an estimated cash operating cost of $US 680 / oz Au. With capital, the total
cash cost is estimated at $US 821 / oz Au.
The project Base Case shows a before-tax internal rate of return (IRR) of 55% and a Net
Present Value (NPV) of $2.95 million, discounted at 5%, as shown in Table 2. Payback of
the initial capital cost of $6.5 million (including all works before revenue is generated and a
contingency amounting to 10% of costs) is 10 months.

TABLE 2: ECONOMIC SUMMARY

Before-Tax
Average Gold Before-Tax NPV @
Before-Tax Cash Flow Internal Rate of
Price US$ 5% Discount
Return %
Minimum 650 $(3,283,835) N/A $(3,302,788)
Low 750 $145,823 2% $(178,201)
Base 850 $3,575,481 55% $2,946,385
Current -
950 $7,005,139 111% $6,067,985
Low
Current -
1050 $10,434,797 166% $9,178,785
High
High 1,150 $13,864,454 220% $12,289,586

Sensitivity analyses have been conducted on the economics of the project and have revealed
that the project’s Net Present Value is most sensitive to the price of gold, the Canadian
dollar exchange rate, mill recovery, operating costs, amount of reserves and ore grade on a
percentage basis. The NPV is least sensitive to capital costs. The before tax NPV of the
different scenarios is located in Table 3.
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TABLE 3: NET PRESENT VALUE USING BASE CASE VARIATIONS

Economic Scenario Before-Tax Net Present Value (CAD)
Base Case $2,946,385

CAD/USD +10% $(1,682,960)

CAD/USD -10% $9,206,049

Ore Grade +10% $5,602,284

Ore Grade -10% $290,487

Capital Cost +10% $2,533,899

Capital Cost -10% $3,358,871

Operating Cost +10% $993,205

Operating Cost -10% $4,899,565

Recovery @100% $4,945,448

Recovery @86% $947,322

Reserves +10% $4,742,651

Reserves -10% $1,150,119

All capital and operating costs are to a Pre-feasibility level and were established using
quotes, experience, and factored industry standard numbers. Costs are to a +/-20%
accuracy as is typical for this level of evaluation.
EBA and other independent qualified persons conclude that the West Zone of the QR
Project, based upon this PFS, has the potential to be technically feasible. The potential to
increase value of the project exists if resources and subsequent reserves are established in
the North Zone of the property.
Interpretation and Conclusions
This study shows a positive economic benefit at current gold prices to justify potentially
reopening the QR Mine and Mill. Based on the constraints of this study, EBA believes that
this project is economically viable.
Recommendations
Given the current rise in gold prices and the positive economic analysis on the QR Project,
development and production is recommended based on this study.
Costs of recommended initial development are stated in tables 6 and 37 and summarized
below:
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• Initial capital cost is $3,300,000 (including mill refurbishment, mobilization and working
capital, excluding stope development, raising of the tailings dam and grouting of tailings
dam to lower seepage )
• Stope development prior to the start of production mining is 3,002,000 (occurs over the
first 3 months of mine life) and carried as a mine operating cost
• Working capital is $883,000 (estimated at average operating expenses per month)
Several areas require further work as stated below.
• Proper QA/QC and assaying should be conducted on the ten surface holes completed
on the West Zone in 2008. Due to lack of quality control, these holes could not be used
in grade estimation of the resource.
• No routine check assays or duplicate sample assays were carried out on the 2007 West
Zone underground drill program. It is recommended that 5% of the samples be
analyzed by fire assay at a secondary independent laboratory.
• It is recommended that more drilling be conducted on the North Zone of the project to
establish mineral resources in that area. QA/QC of drilling and sampling in the North
Zone should be conducted to NI 43-101 standards. If substantial mineral resources are
defined in the North Zone, it is recommended that engineering studies and feasibility
work be conducted to create mineral reserves and increase overall project economics.
• A geotechnical study will need to be completed for the requirement of a crown pillar in
the West Zone North Lobe prior to mining of the West Zone North Lobe. 0847423 BC
Ltd. has initiated this work.
• For metallurgy of the West Zone, both the historical and more recent laboratory studies
are limited in scope. Relating the leach characteristics to variations in the resource
mineralogy, as well as to sample age concerns should be undertaken during feasibility.
Grind work index, and the tailing water quality also require further evaluation.
Generating operating data by comparing the West Zone ore to historical plant
performance can be considered to more accurately determine the process response.
Table 3a presents the estimated costs for recommended further studies. It should be noted
that North Zone drilling and the geotechnical study of the North Lobe do not need to be
completed prior to the milling and the project generating cashflow.
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TABLE 3A: COSTS FOR RECOMMENDED PROGRAMS

Program Description Co. Time Cost
2008 Surface Hole QA/QC performed by a Qualified
Geosim 40 hours $6,500
Assay QA/QC Person at site
Re-assay of 5% of samples from 2007
2007 Drill Program
program. 15 holes, totaling close to Lab 3 weeks $12,000
Fire Assay
1100m
Dependent upon extent of
North Zone Drilling Procon 3 months $1,000,000
mineralization encountered
West Zone North Lobe
Drilling has been completed,
Geotechnical Study - Consultant 2 months $80,000
interpretation is required
Desktop Study
Grind work index, tailing water quality
Metallurgy F. Wright 1 month $50,000
tests
Total $1,148,500

1.2 TECHNICAL SUMMARY

The QR Mine is located 58 km from the city of Quesnel, British Columbia at an elevation
of approximately 1,000 masl. The property is accessible year round by a series of maintained
gravel roads; travel time from Quesnel is approximately one hour.
Terms of Agreements
On December 16, 2009, Wayside entered into a Term Sheet with 0373849 BC Ltd. whereby
Wayside will, subject to regulatory approval and certain other conditions (including the
finalization and execution of a definitive agreement), acquire all of the issued and
outstanding shares of 0847423 BC Ltd. in exchange for 2,000,000 common shares and
500,000 warrants of Wayside (the Acquisition), an environmental indemnity agreement and
a long term mining contract.
On June 1st 2009, Cross Lake Minerals emerged from CCAA court ordered protection
through a Plan of Arrangement that saw Cross Lake Minerals change its name to 0373849
BC Ltd. and the assets of Cross Lake transferred to separate wholly owned subsidiaries of
0373849 BC Ltd. In particular, the QR Mine & Mill complex is currently owned by
0847423 BC Ltd – which is a wholly owned subsidiary of 0373849 BC Ltd.
As part of the Plan of Arrangement, new shares in 0373849 BC Ltd were issued to Procon
such that Procon now owns 99.99% of 0373849 BC Ltd. The remaining 0.01% of the
outstanding shares are publicly held by the original shareholders of Cross Lake Minerals.
0373849 BC Ltd. is a public company but is not listed on any exchange.
The Plan of Arrangement provides the transfer of QR Assets from Cross Lake to 0847423
B.C. Ltd. 0847423 B.C. Ltd. will assume the Continuing Obligations and all of the terms
and conditions set forth therein.
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Geology
The QR deposit is a propylite gold skarn. The deposit was formed in the contact
metamorphic aureole around the dioritic QR stock. The gold rich mineralization and
propylitic alteration occurs in and along the contact between lower calcareous basalt and
upper inter-bedded mudstones and argillites. An exception to this is the Northwest Zone
where mineralization occurs between several prominent dykes and the same upper
siltstones/argillites.
Several northwest-trending, west-dipping normal faults displace the basalt/mudstone
contact progressively to the north. A low-angle reverse fault known as Wally’s Fault strikes
northwest and dips 20˚ southwest, truncating the Main Zone and shifting the
basaltic/tuff/mudstone contact about 240 metres south on the hangingwall side. Another
northwest-trending fault known as the West Zone Fault lies about 1 km to the west and
dips about 35˚ to the southwest and is believed to be a thrust with around 500 metre
northeast movement of its hangingwall.
The West Zone is an elongated body following the basalt/siltstone contact for 450 metres.
The zone is approximately 60 metres wide and ranges from 5 to 15 metres thick. The
mineralization consists of green to black/green propylite, with 5-15% pyrite. In general,
pyrite is an indication of gold grade.
Exploration
The QR claims have been drilled almost continuously from 1977 to 2008. Much of the core
drilled prior to 1994 (when Kinross took ownership of the mine) has been lost or destroyed.
Since 1994, 352 holes have been drilled in various areas on the property to a total of 30,857
m. The unmined North Zone has shown indication there is potential for a significant
resource. Further drilling will be needed to delineate and quantify the potential resource in
the North Zone.
Metallurgy
The existing QR plant consists of three stages of crushing, two stages of ball mill grinding,
and a gravity circuit consisting of a Knelson centrifugal concentrator, with cleaning by
tabling. During previous mining operations the mill cyclone overflow and gravity tailings
were cyanide leached followed by the CIP (carbon in pulp) process. At the design
throughput of approximately 700 - 800 tonnes/day there is a 48 hour retention time
provided in the cyanide leach circuit, although the original design may have intended 18
hours of pre-aeration and 36 hours of leaching. This is followed by 5-6 hours retention
time in a carbon in pulp (CIP) circuit. Pregnant leachate solution (PLS) from the hot
stripped carbon was electrowon, followed by smelting in a refinery furnace to produce
Doré.
For this study a composite sample obtained from the fine ore stockpile was initially tested
using various primary grinds and cyanide leach procedures including direct cyanidation,
CIL, CIP and gravity pretreatment. The results compare well against the reported historical
 December 2009
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test work and mill operations. For the West Zone, simulation of the QR treatment circuit
with laboratory testing, showed variability in the process response to samples from different
areas of the deposit. The mid grade samples (5 g/t to 10 g/t Au) responded favorably with
gold recoveries of between 93% to 97%. However, lower and higher head grade samples
did not respond as well, yielding gold recoveries ranging from 70% to 80%. The use of
gravity treatment on the highest grade sample (23 g/t Au) resulted in improved gold
recovery and consequently may benefit higher grade areas of the West Zone deposit, as may
extending leach retention times for various ores zones.
Overall, the anticipated recovery is 93%.
Mineral Resources
Ronald G. Simpson, P.Geo of Geosim. was retained by 0847423 BC Ltd. to complete an
updated resource estimate. The resource completed in July 2009 includes all available drill
data and is presented in Table 4. Data from ten 2008 surface core holes were excluded due
to incomplete analytical and QA/QC results.

TABLE 4: QR WEST ZONE MINERAL RESOURCES (GEOSIM, 2009) *

2.5 g/t (0.073 opt) 3.0 g/t (0.087 opt) 4.0 g/t (0.117 opt)
Category
Imperial Metric Imperial Metric Imperial Metric

Measured Resource

33,150 30,080 22,000 19,960 12,630 short 11,460

Total Resource
short tons tonnes short tons tonnes tons tonnes
Grade 0.120 opt 4.10 g/t 0.140 opt 4.79 g/t 0.168 opt 5.75 g/t
Total Gold 3,960 oz 123,310 g 3,070 oz 95,610 g 2,120 oz 65,900 g
Indicated Resource
398,566 361,573 308,313 279,697 201,926 183,184
Total Resource
short tons tonnes short tons tonnes short tons tonnes
Grade 0.140 opt 4.82 g/t 0.158 opt 5.42 g/t 0.188 opt 6.44 g/t
Total Gold 55,970 oz 1,742,800 g 48,770 oz 1,516,000 g 37,910 oz 1,180,000 g
Inferred Resource
22,360 20,290 18,380 16,670 10,200 short 9,250
Total Resource
short tons tonnes short tons tonnes tonnes tonnes
Grade 0.111 opt 3.80 g/t 0.117 opt 4.02 g/t 0.126 opt 4.32 g/t
Total Gold 2,480 oz 77,080 g 2,160 oz 67,030 g 1,290 oz 39,960 g
* All numbers rounded. Complies with CIM guidelines for reserves and reserve reporting.

Mineral Reserves
Mineral reserves were determined by applying mine plans including dilution and mine
recovery, developed by Procon and verified by EBA, to the mineral resource model
developed by Geosim. The reserves are presented in Table 5. A 4 g/t cutoff was used to
develop the shape of the stopes.
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TABLE 5: QR MINERAL RESERVES *

Total In- Total
Mining Mine Grade Mill
West Zone Classification Dilution Tonnes Situ Recoverable
Method Recovery (g/t) Recovery
Ounces Ounces
Proven 10,030 4.921 1,590 1,480
East Lobe Underground 10% 85% 93%
Probable 70,580 5.182 11,760 10,940

Proven 0 - 0 0
East Lobe Open Pit 10% 85% 93%
Probable 9,280 5.836 1,740 1,620

Proven 0 - 0 0
North Lobe Underground 10% 85% 93%
Probable 79,200 4.678 11,910 11,080
East & North Proven 2,060 3.567 240 220
Lobe Ore Underground 5% 100% 93%
Development Probable 22,330 4.042 2,900 2,700

Total West Proven 12,090 4.690 1,830 1,700

Total 9.5% 87% 93%
Zone Probable 181,380 4.855 28,310 26,330

* All numbers rounded, based on a cutoff grade of 4 g/t. Complies with CIM guidelines for reserves and reserve reporting.

Total combined proven and probable reserves are 193,470 tonnes grading 4.84 g/t gold,
accounting for a total of 30,140 in-situ ounces and 28,030 recoverable ounces.
Mining Operation
The mine plan was developed by Procon in 2009 and is based on the Geosim’s 2009
Resource block model. The mine plan primarily consists of underground mining by
Longhole open stoping and sublevel retreat mining. A 9,000 tonne portion of the East Lobe
could be mined by open pit methods.
Environmental Consideration
The water balance developed by Klohn Crippen Berger (Klohn) in 2009 indicates that given
current climatic conditions and TSF dam seepage rates, the depth of the water cover would
continue to reduce until the tailings were exposed 8.6 years after mine closure. Golder has
prepared a report outlining probable mitigation strategies that can be implemented by the
Company in order to lower seepage from the main tailings dam. Klohn’s water balance
indicates that the reduction in seepage rates would allow the on-going maintenance of a
permanent one metre water cover in accordance with the reclamation plan. Some of the
standard seepage reduction techniques outlined by Golder and their estimated costs of
implementation are listed below:
• Promoting the deposition of fine tailings against the dam face and over the PAG
rockfill to provide an additional zone of low hydraulic conductivity. This may require
 December 2009
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revisions to the tailings deposition plan, which may result in a slightly higher cost of
tailing disposal.
• Installation of a geomembrane liner on the north tailings beach to reduce the hydraulic
gradient across the main TSF Dam. This would need to be installed in the relatively near
future to be effective. Sufficient exposed beach would be required to enable installation,
which may preclude this option. Based on a cost of $15 m2 for the geomembrane and
estimated TSF Dam dimensions of 425 m long by 25 m wide beach, the estimated cost
for geomembrane liner installation is $175,000. However, this method would require
partial draining of the pond which may not be feasible.
• Perform grouting of the areas of the dam or abutments in which the highest rates of
seepage are observed. This could be performed at closure. The estimated cost for grout
installation is $110 m2 plus the additional cost of site mobilization/demobilization. This
option would require further field work to determine the extent of the required grouting
and associated cost.
• Install a cut-off wall through the dam core, in the section which the highest rates of
seepage are observed. There are several; feasible options for installing such a wall. This
could be performed at closure. The western part of the dam is the area of highest
seepage and has the approximate dimensions of 200 m long by 20 m deep. The
estimated cost for grout installation is $110 m2 plus the additional cost of site
mobilization/demobilization. The estimated cost of implementing the grout cut-off wall
option would be $500,000.
If seepage from the TSF dam can not be reduced to the required flow rate to maintain the
one metre of water cover using one of the above mentioned techniques, alternative
methods for closure and reclamation of the tailings facility would need to be examined. One
such option would be the use of an engineered cover over the existing tailing pond. The
availability of suitable local materials, groundwater conditions, climatic conditions, the
geotechnical characteristics of the tailings and the stability of the current embankments
would need to be closely assessed in order to determine the validity and cost of this option.
Capital Cost Summary
Re-commissioning of the QR Mine West Zone will require minimal capital outlay in
comparison to a mine of similar size that is a start up project (green fields). The majority of
capital costs will be allocated towards the mill and tailings dam.
No capital costs are included for mining equipment, since this will be supplied by the owner
Procon Mining and Tunneling Ltd. (Procon) on a contract basis.
All capital costs were supplied by Procon using quotes and industry standards and verified
by EBA.
The major capital costs incurred in the first three months of the project are found in
Table 6.
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TABLE 6: INITIAL CAPITAL COST ITEMS

Item Costs
Mill Refurbishment $1,447,577
Mill Start-up and Commissioning $150,000
Mill Care and Maintenance $270,000
Mine Mobilization & Setup $250,000
Working Capital $883,083
Total Capital Costs w/o Contingency $3,000,660
Contingency @ 10% $300,066
Total Capital Costs w/ Contingency $3,300,726
Stope Development (OPEX) $3,002,000

Operating Cost Summary

The operating cost estimate, provided by Procon, and verified by EBA is summarized in
Table 7.
General operating parameters are:
• Ore = 193,465 tonnes
• Waste = 31,584 tonnes
• Mining rate = 700 tonnes per day
• Milling rate = 700 tonnes per day
• Mine life = 1 year
Table 7 presents a summary of operating cost items and source of the estimate.

TABLE 7: OPERATING COST SUMMARY

Item Cost/Value Type
Drilling $5.33/t Procon/EBA verification
Blasting $2.85/t Procon/EBA verification
Hauling from East Lobe $22/t Procon/EBA verification
Hauling from North Lobe $26/t Procon/EBA verification
4 m x 4 m Development $4000/m Procon/EBA verification
Processing $31.02/t Procon/EBA verification
General & Administrative $12.45/t Procon/EBA verification
Mill Recovery 93% Testwork
Mining Recovery 85% Estimate
Stope Dilution 10% Estimate
Development Dilution 5% Estimate
Au Price US$850/oz Estimate
Discount Rate 5% Standard
CDN/US Exchange $0.90 Estimate
 December 2009
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Mining costs are $5.33, $2.85 and $22 per tonne for drilling, blasting and hauling from the
West Zone East Lobe respectively to a combined total of $30.18/t. Hauling from the West
Zone North Lobe will cost approximately $26/t to a combined total of $34.18/t.
These costs are comparable to historic site costs.
 December 2009
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2.0 INTRODUCTION AND TERMS OF REFERENCE

This Pre-Feasibility Report on the Quesnel River (QR) Mine was carried out by EBA
Engineering Consultants Ltd. (EBA) several independent professionals and consultants at
the request of 0847423 BC Ltd (Company). The purpose of this study is to update the
resource and reserve estimate for the West Zone deposit and to report potential future
production plans at the QR Mine. This study is also addressed to International Wayside
Gold Mines Ltd. (Wayside) and may be used by Wayside for completing the pending
Acquisition and financing of the project.
This study focuses primarily on the East Lobe and North Lobe of the West Zone. It should
be noted that there are instances where the North Lobe is referred to as the West Lobe.
The North Lobe and the West Lobe both represent the same area and are just different
naming conventions for the same lobe.
This document complies with NI 43-101 standards of reporting. Resource estimation
conforms to the CIM Mineral Resource and Mineral Reserve definitions referred to in
NI 43-101, Standards of Disclosure of Mineral projects. The effective date of this report is
December 16th, 2009.
Sources of Information
This study was prepared by EBA with input from several independent qualified
professionals.
• N. Eric Fier, CPG, P.Eng. – responsible for all sections of the Technical Report except
those sections completed by Ronald G. Simpson P.Geo. (Geosim) , Frank Wright,
P.Eng. and Scott Martin, P.Eng.
• Rona; G Simpson, P.Geo. (Geosim) – responsible for Sections 13, 14, 15 and 18.1 of
the Technical Report.
• Frank Wright, P.Eng. – responsible for Sections 17 and 19.3 of the Technical Report.
• Scott Martin, P. Eng. – responsible for Sections 19.7 and 19.8 of the Technical Report.
The documentation reviewed is listed in Section 3.0 Reliance on Other Experts and Section
22.0 References.

TABLE 8: LIST OF ABBREVIATIONS

µ micron kPa kilopascal
°C degree Celsius kVA kilovolt-amperes
°F degree Fahrenheit kW kilowatt
µg microgram kWh kilowatt-hour
A Ampere l litre
 December 2009
14

TABLE 8: LIST OF ABBREVIATIONS

A annum l/s litres per second
Bbl barrels m metre
Btu British thermal units M mega (million)
C$ Canadian dollars m2 square metre
Cal calorie m3 cubic metre
Cfm cubic feet per minute min minute
Cm centimetre masl metres above sea level
cm2 square centimetre mm millimetre
D day mph miles per hour
dia. Diameter MVA megavolt-amperes
Dmt dry metric tonne MW Megawatt
Dwt dead-weight ton MWh megawatt-hour
Ft foot m3/h cubic metres per hour
ft/s foot per second opt, oz/st ounce per short ton
ft2 square foot oz Troy ounce (31.1035g)
ft3 cubic foot oz/dmt ounce per dry metric tonne
g gram ppm part per million
G giga (billion) psia pound per square inch absolute
Gal Imperial gallon psig pound per square inch gauge
g/l gram per litre RL relative elevation
g/t gram per tonne s Second
Gpm Imperial gallons per minute st Short ton
gr/ft3 grain per cubic foot stpa Short ton per year
gr/m3 grain per cubic metre stpd Short ton per day
Hr hour t metric tonne
Ha hectare tpa metric tonne per year
Hp horsepower tpd metric tonne per day
In inch US$ United States dollar
in 2 square inch Usg United States gallon
J Joule Usgpm US gallon per minute
K kilo (thousand) V Volt
Kcal kilocalorie W Watt
Kg kilogram wmt wet metric tonne
Km kilometre yd3 cubic yard
km/h kilometer per hour Yr year
km2 square kilometre Ma million years
EPCM Engineering, Procurement and
Construction Management
 December 2009
15

Units of measurement used in this report conform to the SI (metric) system as shown in
Table 8 unless otherwise noted. Where imperial tons are reported these are short tons (st)
(2,000 lbs) and where ounces are reported these are Troy ounces (31.1035 grams). All
currency in this report is Canadian dollars (C$) unless otherwise noted.

3.0 RELIANCE ON OTHER EXPERTS

This report has been prepared by EBA of Vancouver, BC, Canada. EBA has relied on
others for information contained within this report. Information from third party sources
is footnoted, quoted as a report in the text or referenced. EBA makes no guarantees nor
does EBA warrant the reliability of any such reports or information. EBA used information
from these reports under the assumption that they were prepared by Qualified Persons. The
information, conclusions, opinions, and estimates contained herein are based on:
• information available at the time of preparation of this report;
• assumptions, conditions, and qualifications as set forth in this report;
• data, reports, and other information supplied by 0847423 BC Ltd. and other third party
sources;
• the 2003 technical report by G. Gilstrom, P.Eng.;
• the 2009 block model provided by Geosim;
• the 2005 study by Ronald G. Simpson, P Geo (Geosim) titled Update on Resources,
QR Project;
• the 2006 Wardrop technical report by Jake Alexander, Andy Nichols, P.Eng. and Ron
Hall;
• the 2007 Wardrop scoping study report by Mario A. Morin, P.Eng, Daniel J. Sweeney,
P.Eng., and Andrew Nichols, P.Eng.;
• mine plans and development as provided by Procon and verified by N. Eric Fier, CPG,
P.Eng, from EBA; and
• metallurgy and processing details as provided by Frank Wright, P.Eng.
For the purposes of this study, EBA has relied on ownership information provided by
Procon and 0847423 BC Ltd.

4.0 PROPERTY DESCRIPTION AND LOCATION

The QR Mine is located in central British Columbia, 58 kilometers southeast of Quesnel,
B.C. (Figure 1).
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 December 2009
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The total footprint of the mine area covers approximately 120 hectares including haul roads,
waste dumps, pits, stockpiles, infrastructure and the tailings impoundment.
Mineral Rights
The QR Mine lies within the Cariboo Mining Division and is comprised of Mining Lease
320752, presented in Table 9. The lease is located on BC mineral titles map 93A/12, at
latitude 52˚40.3’ and longitude 121˚47.2’, shown in Figure 2.
 December 2009
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The mining lease supersedes the original claim block consisting of QR1 to QR8 mineral
claims and is 3164.4 hectares in size. This area includes the area disturbed by the open pit
mines, underground mine and mine access, ore and waste rock stockpiles, roads, ditches,
mill, offices, and tailings pond (Figures 3 and 4). The 30 year mining lease is valid until
2024.

TABLE 9: STATUS OF QR MINING LEASE

Claim Name Tenure No. Area Record Date Expiry Date
Mining Lease 320752 3164.4 ha 30 Apr 1994 30 Apr 2024

The Quesnel River Gold Project Technical Review, August 1989, prepared by Fox
Geological Consultants Ltd. (Fox) states that the QR property was originally staked in 1975
by Fox for Dome Exploration Ltd (Dome) and Newconex Canadian Exploration Ltd
(Newconex) as the PR claims. In 1977, these claims were abandoned and restaked as the
QR claims (QR 1 – 6) by Newconex. In 1980, Dome took over 85% of the QR claims and
also staked claims QR7 and QR8. The lease was renewed and consolidated into tenure
number 320752 in 1994 by Kinross Gold Corp., who took control of the property in 1993.
1994 pre-dates paper staking, therefore physical claim markers are assumed to have been
placed, however; an inspection of these markers has not been completed and verified by
EBA.
Cross Lake Minerals Ltd. acquired 100% interest in the property on April 8, 2004 from
Kinross Gold Corporation. 0847423 BC Ltd. acquired 100% interest in the property on
June 1, 2009. Once the proposed Acquisition is completed, Wayside will acquire 0847423
BC Ltd. and a 100% interest in the property (subject to certain royalties).
December 2009
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 December 2009
18

Other Licensed Users

The property is located on Timber supply area TSC A323 80-81. The property and
surrounding area was logged in 1989 and burned in 1990. Most of the area required for
mine development was cleared of trees in 1989. Since the shutdown of mining operations
this area has seen a regeneration of aspen, poplar and small shrubs. At present active
logging continues within the area encompassed by the mine property due to the pine beetle
infestation.
The mine site is situated within registered trap-line 502T045 operated by Mr. Tom Sword of
Quesnel.
 December 2009
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Regulatory Permits and Regulations

The QR Mine operated under the permits presented in Table 10.

TABLE 10: REGULATORY PERMITS AND REQUIREMENTS

Permit Description Authority Status

M-198 Work Systems Approval MEMPR Active Jun 1/09

Work Systems Approval –

MX-10-189 MEMPR Active Jun 1/09
Exploration
Environmental
PR-13740 Refuse Discharge Active Oct 19/09
Management Act
Effluent discharge for mill and Environmental
PE-12601 Active Oct 19/09
tailings system Management Act
Authorized Discharge (gaseous Environmental
PA-18124 Active Oct 19/09
emissions) Management Act
Conditional Water License on
C-107283 Water Act Active Jun 4/09
Geoff Creek Water
Conditional Water License on
C-109119 Water Act Active Jun 4/09
Sandy Lake Water
Reclamation
QR Reclamations Agreement MEMPR Active Jun 1/09
Agreement

Royalties and Agreements

Revenue is subject to a Net Smelter Return (NRS) royalty of 1% originally payable to the
Placer Dome Group, now payable to Barrick Gold Corporation.
There is a 2.5% net operating profits royalty on production from the QR Mine that was
originally payable to Fox Geological Consultants Ltd. and is now payable to Foxcorp
Holdings Ltd. The terms of the agreement state that royalty payments are made after all pre-
production expenses have been deducted in full. Due to the high costs already incurred at
the QR Mine, it has been assumed that no net operating profits royalty payments will be
made.
There was a 2.5% net operating profits royalty agreement between Orbex Minerals Ltd.,
later known as Internet Identity Presence Company Inc. (Internet Identity), now known as
Revolution Technologies Inc. This agreement was annulled by a deal between Internet
Identity and Cross Lake Minerals Ltd.
Environmental Liabilities
The water balance developed by Klohn Crippen Berger (Klohn) in 2009 indicates that given
current climatic conditions and TSF dam seepage rates, the depth of the water cover would
continue to reduce until the tailings were exposed 8.6 years after mine closure. Section 19.8,
 December 2009
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Reclamation and Closure, details potential mitigation measures to lower seepage rates and
reach equilibrium whereby a constant water cover is maintained over the tailings.

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY
The QR Mine is located 58 km from the city of Quesnel, British Columbia (Figure 1). The
property is accessible year round by a series of maintained gravel roads; travel time from
Quesnel is approximately one hour.
The climate is typical of central British Columbia, with cold moderately dry winters
(October to March), and hot dry summers (June to September). It snows from mid
November to March with accumulation usually not exceeding one metre. Mean average
temperatures range from –10˚C in January to 13˚C in July.
The terrain on the property consists of glaciated gently rolling hills, covered with pine, fir
and spruce forests. Steep cliffs leading down to the Quesnel River dominate the south end
of the property. The QR Mine elevation is approximately 1,000 masl.
The local workforce is available from Quesnel. Workers that come from further away are
able to stay in the 45 person camp located on the mine site.

6.0 HISTORY
The QR deposit was first staked in 1975 by Dome Exploration and Newconex Exploration
during a regional reconnaissance program operated by Fox Geological Consultants Ltd. The
property has been continuously drilled since 1981. Five main mineralized zones have been
outlined to date. Table 11 summarizes the history of the QR Mine.
 December 2009
21

TABLE 11: QR EXPLORATION AND MINING HISTORY

Date Event
1975 Discovery by Fox Geological (soil geochem) / Staking by Dome Exploration
Canada Ltd. and Newconex Canada Exploration Ltd. (PR-2 to PR-5).
1976/77 Geochem/Geophysical Surveys and road construction. Staking over abandoned PR
Claims with QR-1 to QR-6.
1977 Main Zone outlined by drilling.
1980 Dome acquires 85% of the QR Property, QR-7 and QR-8 are staked
1981/2 Drilling outlines North and East Zones (East Zone is now included as part of the
North Zone). Dome acquires 100% of the QR Property.
1983 Drilling outlines the West Zone.
1986 Drilling outlines the Midwest Zone.
1988 QR Property acquired by QPX Minerals.
1990/91 QR Property acquired by Rea Gold Corporation. Development approval granted.
1992 Property acquired by CMP Resources. Feasibility Study.
1993 Kinross is formed from CMP, Plexus Resources and 1021102 Ontario Corp.
1994 Mining Lease 320752 granted (30yrs), Construction of Mill and Mine start.
1995 The Mine opens with projected 5 yr life @ 800 tonnes/day. Mining of Main Zone
starts.
1996 Underground mining of the Midwest Zone starts. Open pit mining of the North
Lobe Pit in the West Zone.
1997 Northwest Zone is discovered. Open pit mining of the starter pit in the South Lobe
of the West Zone.
1998 Underground operations are suspended in Feb. Surface mining suspended in April
after processing stockpiled ore. Total mined: 1.06 million tonnes @ 4.1g/t with
118,004 ounces of gold produced.
1999 Reclamation activities begin.
2000 Allen Contracting unsuccessfully negotiates to purchase the QR Mine
2002 Cross Lake Minerals signs a letter of intent with Kinross to purchase 100% interest
in the QR Mine.
2002 Gold Giant Ventures Inc. acquires an option to earn a 50% interest in the QR and
adjoining Cariboo Properties.
2002/3 Cross Lake/Gold Giant complete drill programs in the West, Northwest, Midwest
and North Zones.
2003/4 Cross Lake completed drilling and trenching programs in the West Zone, the
Northwest Zone, the Midwest Zone and the North Zone.
2004 Cross Lake acquires 100% interest in the property.
2006 North Zone exploration development is driven.
2007 Mining of the South Lobe small starter pit in the West Zone finished. Mining
occurred in the Northwest and Midwest Zones as well. Drilling program in the West
and North Zone.
2008 Mining finished in the Northwest and Midwest Zones. Drilling program in the West
and North Zone.
2009 QR Mine and Mill and certain related assets, obligations and liabilities were
transferred to a second wholly-owned subsidiary, 0847423 B.C. Ltd., in exchange for
shares of that subsidiary and a 2% net profit royalty in respect of the QR Mine and
Mill
 December 2009
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Past Mining Operations

Open pit mining commenced at the QR Mine in October of 1994 with the development of
the Main Zone pit. Underground development in the Midwest Zone and open pit mining of
the North Lobe pit of the West Zone followed in 1996. Stripping of the rest of the
overburden in the West Zone and mining of a starter pit in the South Lobe followed in
1997.
Underground operations were suspended in February of 1998 due to low gold prices.
Milling was suspended in April 1998 after processing stockpiled ore. Kinross reported
mining 1.06 million tonnes averaging 4.1g/t gold, with 118,004 ounces of gold produced
from start-up in October 1994 to temporary shutdown in April 1998.
Cross Lake Minerals Inc. (Cross Lake), using Procon as a contractor, restarted mining from
September 2007 through December 2007 and then again from May 2008 through January
2009. During this period of time, the Northwest and Midwest Zones were mined out as well
as the South Lobe of the West Zone. After this time, production was stopped due to
depletion of ore and the property was put on care and maintenance. A summary of the
historic production at the QR Mine is presented in Table 12.

TABLE 12: QR HISTORIC PRODUCTION SUMMARY

Date Activity Production
1995-1998 The Mine opens with projected 5 yr life @ 800 753,728 tonnes averaging 3.43 g/t
tonnes/day. Mining of Main Zone starts.
1996 Underground mining of the Midwest Zone starts. 110,685t @ 6.0g/t
2007 – West Zone – North and South Lobe 111,076t @ 5.52g/t
2009 Midwest Zone is mined out 165,895t @ 4.0 g/t
South Lobe of the West Zone is mined out 4,195t @ 7.56 g/t
The Northwest Zone was mined out 90,491 @ 3.99 g/t
Total: 1,236,070 @ 3.98 g/t

Main Zone
The majority of the ore processed at the QR Mine was from the Main Zone. The pit was
mined using conventional drill, blast (ammonium nitrate and fuel oil), truck, and loader
methods. A total of 753,728 tonnes averaging 3.43 g/t gold were mined from the Main
Zone with a 5:1 stripping ratio.
Midwest Zone
Kinross Gold Corp (Kinross) mined the Midwest Zone from 1996 to 1998, producing
approximately 110,685 tonnes of ore grading 6.0 g/t from underground workings. The
Midwest Zone was mined using underground methods. A spiral ramp (4m x 5m) was
developed to the 945m level. Sublevel ore drifts were driven in the orebody at 20m
intervals, starting at the 1020m level and continuing down to the 940m level. This Zone was
mined out in 2008, producing another 165,895 tonnes at 4.0 g/t Au. A total of 276,580
tonnes grading 4.81 g/t gold were mined from the Midwest Zone both by Kinross and
Cross Lake.
 December 2009
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West Zone
Two starter pits were mined in the West Zone, the North Lobe pit and South Lobe pit.
Development in the North Lobe pit commenced in 1996. A total of four benches were
mined and the final 20m deep excavation covers 1.5ha. A total of 4,435 tonnes of
weathered rock grading 9.8 g/t was stripped off the North Lobe, and 60,649 tonnes of
blasted rock averaging 6.5g/t gold was mined from the North Lobe pit.
In 1997, with the end of the Main Zone mining approaching, a surface ramp was developed
down the West Zone to the South Lobe pit. The South Lobe pit was a small 2 bench pit. A
total of 38,245 tonnes grading 3.7 g/t gold was mined by Kinross. A total of 111,076 tonnes
of ore was mined by Kinross at an average gold grade of 5.52 g/t. An extra 4,195 tonnes at
7.56 g/t gold was mined by Cross Lake in 2008.
Northwest Zone
Cross Lake mined this zone by open pit mining methods from mid 2008 to mid 2009. This
zone yielded 90,491 tonnes of ore at 3.99 g/t Au.
Historical Mineral Resource and Reserve Estimates
Subsequent to the closure of the QR Mine in 1998, Kinross estimated a remaining mineral
reserve of 319,878 tonnes grading 5.08 g/t gold and a mineral resource of 463,221 tonnes
averaging 5.03 g/t gold for the West and Midwest Zones (Fortin, 1988). The preceding
estimate is not NI 43-101 compliant but was compliant with the standards during the period
it was produced. Mineral resources and mineral reserves had less stringent definitions
applied to them when the Fortin report was written, in comparison to the NI 43-101
definition that is observed in all subsequent reports of mineral resources and reserves within
this study.
The Revised Technical Report, QR Property, by Gillstrom (2003) estimated mineral
resources for the West, Northwest, Midwest and North Zones. These resources were
reported over a range of cutoff grades in the Gillstrom report.
Updated resource estimates for the Northwest, West and Midwest Zones were completed
by Geosim. in 2005.
A summary of previous resource estimates is presented in Table 13.

TABLE 13: HISTORICAL RESOURCE ESTIMATES OF WEST ZONE

Tonnes Greater
Resource Cutoff Grade
Reported by: than Cutoff Grade (g/t) Contained oz
Class (g/t)
Grade
Indicated 3.0 70,140 6.2 13,980
Gillstrom, 2003
Inferred 3.0 41,080 8.2 10,830
Inferred 1.6 355,910 5.07 58,040
Geosim, 2005
Inferred 3.0 215,620 6.95 48,230
 December 2009
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7.0 GEOLOGICAL SETTING

7.1 REGIONAL GEOLOGY

The QR Mine lies within the Quesnel terrane, a northwesterly trending island arc basin
assemblage, shown in Figure 5. It is comprised of volcanic and marine sedimentary units of
late Triassic to early Jurassic age. The Quesnel terrane is comprised of three main arc
assemblages: the Nicola Group, the Quesnel River Group and (in the area of the QR Mine)
the Takla Group. The Volcanic and sedimentary units of the Takla Group are cut by
intrusive bodies of late Triassic to early Jurassic age. Regionally, these intrusions occur at
regularly spaced intervals, forming a linear belt within the Quesnel Terrane. A number of
these intrusions are zoned, including the QR stock, and are known to host alkaline suite
copper and copper-gold deposits including the Mt. Polley Mine 15 kilometres to the
southeast (Figure 1).
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 December 2009
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7.2 LOCAL AND PROPERTY GEOLOGY

The claim is underlain by a south-dipping sequence of alkali basalts, calcareous tuffite and
calcareous mudstone of the Takla Group, shown in Figure 6. The alkali basalt unit is a
minimum of 850 metres thick and is comprised of massive flows, monolithologic
autobreccia, thin beds of basaltic wacke, sandstone and minor pillow breccia and flows. The
basalts typically contain about 20% euhedral augite and 10% tabular plagioclase phenocrysts
in a fine grained groundmass. Olivine and analcite phenocrysts have also been observed in
thick basaltic flows further to the northwest.
December 2009
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 December 2009
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The basalt unit grades upward into a poorly sorted, blocky basaltic tuff and pyritic tuffite
exhibiting epiclastic textures. The unit ranges in thickness from 5 metres in the west to
more than 80 metres east of Wally’s Fault and locally forms a massive carbonate rock,
particularly in the Main Zone footwall. Pyrite is a significant constituent, forming up to 10%
of the matrix and 5-20% of the total unit. It occurs as fine-grained colloform, framboidal
and banded mineralization. Where altered and skarned, the tuffite unit is the primary host to
all of the gold deposits on the property with the exception of the Northwest Zone.
The tuffite is overlain by a sequence of thin-bedded calcareous mudstone (‘siltstones’ on
Figure 6), black argillite and tuff. In the vicinity of the QR deposit the unit is predominantly
volcanoclastic and hornfels has developed near the intrusions. This unit contains up to 10%
fine-grained disseminated pyrite.
The Takla Group sequence is intruded by the QR stock dated at 201ma (K-Ar biotite). The
stock is mainly monzonitic in composition with a dioritic margin up to 100 metres thick.
The texture is medium to fine grained (microdiorite) and equigranular. The stock measures
approximately 1 kilometre in a north-south direction and about 1.5 kilometres east-west. A
second intrusion, located in the east part of the property is poorly defined. Other intrusive
rocks consist of hornblende porphyry dykes/sills and felsic dykes which are most common
in the vicinity of the stock.
Several northwest-trending, west-dipping normal faults displace the basalt/mudstone
contact progressively to the north. A low-angle reverse fault known as Wally’s Fault strikes
northwest and dips 20˚ southwest, truncating the Main Zone and shifting the
basaltic/tuff/mudstone contact about 240 metres south on the hangingwall side. Another
northwest-trending fault known as the West Zone Fault lies about 1 km to the west and
dips about 35˚ to the southwest and is believed to be a thrust with around 500 metre
northeast movement of its hangingwall.

8.0 DEPOSIT TYPES

The QR deposit is classified as a propylite gold skarn. The deposit was formed in the
contact metamorphic aureole around the dioritic QR stock. The gold rich mineralization
and propylitic alteration occurs in and along the contact between lower calcareous basalt
and upper inter-bedded mudstones and argillites. An exception to this is the Northwest
Zone where mineralization occurs between several prominent dykes and the same upper
siltstones/argillites.

9.0 MINERALIZATION
The majority of the gold mineralization is associated with sulphides which vary in amounts
from 1-15% pyrite+pyrrhotite with minor amounts of chalcopyrite, galena and sphalerite.
The gold mineralization occurring in the alteration halo around the QR stock has been
displaced by faulting into five main elongated zones. This post mineralization faulting
occurred in two main phases. The first of these faults strike at approximately 045˚, and
offsets the major zones. The second important phase of faulting consists of two major west
dipping faults called the ‘West Zone Fault’ and ‘Wally’s Fault’, shown in Figure 6. These
 December 2009
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two faults run north/south along each side of the QR stock and truncate the first set of
faults.
Main Zone
This pod shaped zone measured 280 metres in length and extended 100 metres below
surface. The zone is truncated at depth by Wally’s Fault. The mineralization in this zone was
typically a green to grey propylite, rich in pyrite, with minor pyrrhotite and rare chalcopyrite.
The Main Zone pit was partially back filled in 2002 with previously stockpiled low grade ore
as part of Kinross’s reclamation program.
Midwest Zone
The zone strikes at 110˚ and dips steeply to the south. Propylitic mineralization follows the
basalt/siltstone contact. Mineralization is cutoff at each end by faulting.
Northwest Zone
The mineralization in the Northwest Zone differs from the other zones in that it occurs
within the siltstone and argillites. The lower contact of the mineralization is along a
monzonite dyke. This dyke is part of a dyke swarm in the zone; some of the lower dykes
also form the base for mineralization. This flat lying zone strikes at 110˚ east and is
approximately 350 metres long, 50 to 75 metres wide and varies in thickness from 10 metres
to 15 metres. Both ends appear to be truncated by faults. The zone subcrops immediately
below the overburden that varies between 2 and 8 metres in thickness. The gold
mineralization occurs in bedding planes and cross-cutting fractures in the siltstone along
with pyrite and minor pyrrhotite.
West Zone
The West Zone is an elongated body following the basalt/siltstone contact for 450 metres.
The zone is approximately 60 metres wide and ranges from 5 to 15 metres thick. The
mineralization consists of green to black/green propylite, with 5-15% pyrite. Generally like
the other zones, the amount of pyrite is an indication of gold grade. This zone has been
partially mined.
North Zone
The North Zone is an extensive area of propylitically altered basalt lying below the Main
Zone in the footwall of Wally’s Fault. This zone has only been intersected by widely spaced
drillholes and continuity has not been sufficiently established to estimate a mineral resource.
Drilling to date has identified four high-grade pods of propylitically altered basalt.

10.0 EXPLORATION
The property was explored and drilled continuously up until 1994 by various owners.
Following a positive feasibility study in 1994, Kinross began construction of an
800 tonnes/day mill. Kinross opened the QR Mine with a projected 5 year life at
800 tonnes/day. Mining of the Main Zone open pit, the Midwest Zone underground and
West Zone starter pit continued until 1998. Underground operations were suspended in
 December 2009
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February of 1998. Surface mining was suspended in April after processing stockpiled ore.
Kinross reported processing 1.06 million tonnes averaging 4.1g/t gold, with 118,004 ounces
of gold produced.
Cross Lake conducted three phases of drilling since optioning the property. The main focus
was to verify that the mineral resources would be economic to mine. Additional exploration
has also been focused on discovering new areas and expanding on the known mineralized
areas by a trenching program in the Northwest Zone and 3 dimensional Inversion Induced
Polarization surveys covering a 700 x 1000 metre area east of the Main Zone. A total of 25
diamond drillholes (2,297 metres) NQ2 core (two inch diameter) was completed between
November 7, 2002 and July 21, 2003. All drill programs were supervised by Jim Miller-Tait,
P. Geo.
Between November 23, 2003 and May 14, 2004, 22 core holes were completed totaling
5,366 metres. The programs were supervised by Jim Miller-Tait, P. Geo., Vice President of
Exploration for Cross Lake.
In 2005, nine (9) holes were drilled for a total of 1,971.36 metres. This drilling was
dedicated to the West Zone with the exception of CL05 – 2055-56 which were drilled on
the North Zone.
In 2007, twenty one (21) holes were drilled for a total of 1,990.96 metres. Holes CL-07-
UW01 – 15 were drilled underground on the West Zone and accounted for 1,108.26 metres
with 732 samples collected for assay. Holes NUG – 07 – 01 through NUG – 07-06 were
drilled underground on the North Zone and accounted for 882.70 metres with 670 samples
collected for assay.
In 2008, twenty eight (28) holes were drilled for a total of 3,544.78 metres. Holes NUG –
08-07 through 24 were drilled underground on the North Zone out of the North Portal and
accounted for 2,560.26 metres with 1,922 samples collected for assay. Figure 7 shows a
cross section of the 2008 North Zone drilling program and exploration adit. Holes CL – 08-
01 through 10 where drilled from surface on the West Zone and accounted for 984.52
metres with 223 samples collected for assay.
 December 2009
31

A summary of recent exploration is presented in Table 14.

TABLE 14: RECENT DRILLING SUMMARY

No. of Total No. of samples
Year Target Hole IDs
Holes Depth (m) collected for Assay
West Zone 15 CL-07-UW01 to CL-07-UW15 1,108.26 732
2007
North Zone 6 NUG-07-01 to NUG-07-06 882.70 670
West Zone 10 CL-08-01 to CL-08-10 984.52 223
2008
North Zone 18 NUG-08-07 to NUG-08-24 2,560.26 1922

11.0 DRILLING
The QR claims have been drilled almost continuously from 1977 to 2008, with a total of
1,371 drillholes presently in the QR database. An additional 488 underground test holes
were drilled by Boart buggy drill using 4’ extension steel and a 2.25” bit during underground
development. These additional holes are stored in a separate database and were not used for
resource estimation. A drillhole plan of the West Zone is presented in Figure 8.
 December 2009
32

Fox Geological of Vancouver conducted most of the early drilling and surface exploration
before Kinross took ownership of the property in 1994. Core from this era was stored on a
lot in Quesnel but has since been lost due to vandalism and neglect.
All of the drilling and exploration done by Kinross, between 1994 and 2002, was supervised
by the QR Mine Geology Department. Jim Fortin, the Chief Mine Geologist, did most of
this work. Some of the core from this era is stored at the QR Mine in racks. 247 holes _as
are_ 15,687 metres underground core drilling was carried out during this period.
There was a total of 25 diamond drillholes (2,297 metres) NQ2 core (two inch diameter)
completed between November 7, 2002 and July 21, 2003. Between November 23, 2003 and
May 14, 2004, 22 core holes were completed totaling 5,366 metres. All programs were
supervised by Jim Miller-Tait, P.Geo., Vice President of Exploration for Cross Lake.
Nine holes were drilled in 2005 for a total of 1,971.36 metres. All drilling was dedicated to
the West Zone with the exception of CL05 – 2055-56 which were drilled on the North
Zone. In 2007, twenty one (21) holes were drilled for a total of 1,990.96 metres. Holes CL-
07-UW01 – 15 where drilled on the West Zone and accounted for 1,108.26 metres. Holes
NUG – 07 – 01 through NUG – 07-06 where drilled on the North Zone and accounted for
882.70 metres. In 2008, twenty eight (28) holes were drilled for a total of 3,544.78 metres.
Holes NUG – 08-07 through 24 were drilled on the North Zone out of the North Portal
 December 2009
33

and accounted for 2,560.26 metres. Holes Cl – 08-01 thru 10 where drilled on the West
Zone and accounted for 984.52 metres.
Most significant drill results for the West Zone are shown in Table 15.

TABLE 15: WEST ZONE MOST SIGNIFICANT DRILL RESULTS

Hole ID From (m) To (m) Interval (m) Au (g/t)
CL-07-UW10 2.43 8.33 5.90 47.4
CL-07-UW06 3.00 5.30 2.30 41.6
CL-08-08 44.12 46.19 2.37 29.4
CL-07-UW14 1.50 5.25 3.75 14.4
CL-07-UW05 1.00 6.20 5.20 12.3
CL-07-UW11 0.00 9.36 9.36 8.5
CL08-09 50.5 56.5 6.00 9.6
CL-07-UW12 43.20 47.10 3.90 8.9
CL-07-UW03 6.00 9.00 3.00 9.3
CL-07-UW01 4.57 6.75 2.18 11.9

The deposit type at QR is of an irregular nature (not tabular) and therefore no true
thickness of the deposit exists.

12.0 GEOPHYSICS
In June 2003, a geophysical survey consisting of two lines crossing the West Zone using the
newly developed 3-Dimensional Inversion Induced Polarization Survey (IP) was completed.
This method was used to test a known mineralized zone, and to accurately delineate the
extent of the known mineralization. Due to this success a 700 m by 1,000 m area survey was
completed east of the known mineralization around the east edge of the main QR diorite
along the prospective basalt – siltstone contact to explore for “new” sulphide bodies.
The survey outlined a high priority target 400 metres east of the Main Zone pit along the
favorable basalt siltstone contact. This area also corresponds to an historical high priority
soil geochemical anomaly. The survey outlined an anomaly of strong chargeabilty with
corresponding low resistivity from 50 metres depth to the limit of the depth penetration of
the survey at 150 metres. This anomaly has the same signature of the West Zone
mineralization that was outlined in the orientation survey. The lateral extent of this anomaly
at 100 metre depth from surface is 250 metres in an east–west direction and 325 metres in a
north–south direction. Figure 8a shows some of the results of the geophysics program.
 December 2009
34

13.0 SAMPLING METHOD AND APPROACH

Core samples are collected in three metre runs that are placed in wooden core boxes. For
NQ core size, each core box holds approximately six metres. The core is photographed,
logged geotechnically and geologically by a qualified Geologist. Sample intervals are marked
and the core split prior to sampling. The average sample length is 1.5 metres, however; in
unmineralized zones it may be increased up to 5 metres. One half of the split core is sent
for assay analysis, and the other half is retained as a geological record or for future test
work. The split core is stored at the mine site east of the Main Zone pit.
Information regarding the method and approach taken during each drilling campaign was
limited at the time of this report.
EBA believes that the sampling method and approach used by Kinross and Cross Lake are
compliant to the NI 43-101 standard of reporting.
 December 2009
35

14.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

The 2005-2008 exploration work was conducted under the supervision of Cross Lake’s
Qualified Person and Vice President of Exploration, Jim Miller-Tait, P.Geo. The majority
of drill core assaying was carried out by Acme Analytical Laboratories Ltd. of Vancouver,
BC. ACME is an ISO 9001:2000 accredited laboratory. The samples were analyzed by ICP-
Mass Spectrometer following an Aqua Regia digestion on a 10 gram split. All samples
returning a gold grade of 500 ppb or greater were re-assayed using the standard fire assay
method. Samples from the 2008 surface drilling on the West Zone were analyzed by fire
assay at the on-site Mine Assay Laboratory.
During the 2005 drill program mine operations were on temporary shutdown / care and
maintenance. Two employees were on site at all times. Access to the site was restricted by
an industrial gate located two _as are_rs from site. The gate was unlocked between the
hours of 7 am and 5 pm Monday to Friday and locked at all other times. All buildings
including the core shack were locked and only authorized people were provided access.
During 2007 and 2008 the mine was active and full security measures were in place at all
times.
Most of the assay work from the Kinross era drilling programs was done by the on site
mine assay lab. Check assays were sent to various labs in Vancouver. G. Gillstrom, P.Eng.,
author of the 2003 technical report (Gillstrom, 2003), completed QA/QC for the Kinross
assay lab during the summer of 1996, and found that all industry standards for gold assaying
were being observed.
Most samples from the 2007-2008 North Zone drilling were analyzed by fire assay at
ACME on a 1 assay ton sample. Samples from the first 2 holes in the series were analyzed
by geochemical methods.
Samples from the 2007 West Zone underground drill program were analyzed at the Mine
Laboratory and at ACME. ACME analyzed the gold content using a fire geochemical
method (ICP-ES) except for over threshold (>5 g/t) values which were analyzed by
conventional fire assay. Only the fire assay values were used in the present resource
estimate.
Ten surface holes were completed on the West Zone in 2008, however, sample analysis was
only completed on selected intervals at the Mine Assay Laboratory and no standard or blank
results were reported. Consequently these holes could not be used in grade estimation but
were used to assist in the definition of the mineralized zone and for lithologic modeling. It
is recommended that the remainder of the core be split and assayed in accordance with
standard QA/QC procedures.
EBA believes that the sampling preparation, analysis and security employed by Kinross, and
Cross Lake _as are compliant with the NI 43-101 standard of reporting.
 December 2009
36

15.0 DATA VERIFICATION

Assay results from the Kinross and earlier drill programs have not been independently
verified. However, development sampling and mining carried out by Kinross and Cross
Lake have confirmed the presence of ore-grade mineralization.
Geosim has examined the original assay certificates from the 2005-2008 drill programs and
compared them to the assay database. No data entry errors were found however several
errors related to assay intervals were corrected.
Since 2005 a QA/QC program has been in place involving the insertion of reference
standards and blanks in the sample stream. QA/QC results from the West Zone drilling
are considered to be acceptable for use in resource estimation with the exception of the last
10 surface holes for which complete results were not obtained at the time of this study.
The site visits by Geosim included examination of drill core, drilling logs, drill sites and
underground workings.
Standards
Two reference standards for gold were purchased from WCM Minerals of Burnaby, B.C.
and used during the 2007/2008 drill programs. The certified Au values were 3.11 for
standard PM920 and 6.31 g/t for standard PM922. Standard results are illustrated in Figure
9 and Figure 10. Results from the North Zone exploration drilling started out poorly in
2007 with a 50% failure rate for PM920 and a 33% failure rate for PM922. All but one of
the failed standards were above 3 standard deviations from the mean. Results improved in
2008 with only 2 failed standards overall. No action was taken and there is no evidence that
this data was actually monitored at the time the results were received.
December 2009
37
 December 2009
38

Standard results for the 2008 West Zone drilling show acceptable levels of variability with
no values beyond the 3 standard deviation threshold.
It is recommended that standard results be closely monitored and failed batches re-
analyzed.
It is Geosim’s opinion that the West Zone standard results are reasonable and the data is
acceptable for use in a mineral resource estimate. A number of batches from the North
Zone drilling show significant standard failures and pulps should be reanalyzed.
Blanks
A total of 37 blanks were inserted into the sample stream during the 2007/08 drill
programs. The North Zone results had one failure attributed to a sample mix-up in the lab.
All blank results from the West Zone were below detection limit.
Check Assays
Eleven samples were analyzed by fire assay at ACME and at the mine laboratory during the
2007 underground drill program on the West Zone (Figure 11). Results show comparable
values in the 5 – 15 g/t range. Three higher grade samples appear to suggest a slight high
bias for ACME but there is not enough data to be statistically significant.
 December 2009
39

No routine check assays or duplicate sample assays were carried out. It is recommended
that 5% of the samples be analyzed by fire assay at a secondary laboratory.
EBA believes that the quality control procedures that were employed by Kinross and Cross
Lake are to the NI 43-101 standard, showing results within a statistically acceptable range.

16.0 ADJACENT PROPERTIES

Directly east of the QR Mine is the Cariboo Property. Access to the property is good due
to the intense logging activity and the proximity of the QR milling facilities. The Cariboo
claims were originally staked in 1981 to cover the drainage basin that reported anomalous
precious metal elements identified during a Provincial stream sediment sampling program.
The main area of interest is in the vicinity of diamond drillhole 89-6, completed by Corona
Gold Corporation in 1989, that intersected 5.26 grams/tonne gold over an 8.5 metre
interval (0.15 oz/ton over 27.9 feet).
In June 2002, the access roads on the property were rehabilitated and a small 411 metre
trenching program in the area of previous diamond drilling was completed. The program
was successful in exposing the favorable oxidized volcanic tuff units which contain the gold
 December 2009
40

mineralization of interest. The best trench result was in trench CT-02-1 and contained
2.24g/t gold over a 3.0 metre width.
Directly south of the QR Mine, there is a small high grade deposit called the Lloyd-Nordic.
The available data shows the high grade core of this deposit to be very similar in description
to the high grade magnetite pipes found in the east Cariboo pit at the Mt. Polley Mine
(0.5% to 2.0% Cu, 0.5 to 1.5 g/mt Au). Directly south of the Lloyd-Nordic desposit, is the
Mt. Polley open pit mine. The Gibraltar open pit mine is located near McLeese Lake,
approximately 45 minutes south of Quesnel.
EBA has not verified the results of programs regarding adjacent properties to the QR mine,
this information is not necessarily indicative of the mineralization on the QR property.

17.0 MINERAL PROCESSING AND METALLURGICAL TESTING

17.1 BACKGROUND
0847423 BC Ltd. is intending to restart the QR mill and gold recovery circuit (plant) using
ore mined from the West Zone. The plant is now under care and maintenance. The QR
plant originally operated on ore from the Main Zone.
The QR process circuit consists of three stages of crushing, two stages of ball mill grinding,
a gravity circuit consisting of a Knelson centrifugal concentrator, with cleaning by tabling.
In previous mining, the mill cyclone overflow and gravity tailings were cyanide leached
followed by CIP (carbon in pulp) process. At the design throughput of approximately 700
– 800 tonnes/day there is a 48 hour retention time provided in the cyanide leach circuit.
The original mill design may have intended 18 hours of pre-aeration and 36 hours of
leaching. This is followed by 5-6 hours retention time in a carbon in pulp (CIP) circuit.
Pregnant leachate solution (PLS) from the hot stripped carbon was electrowon, followed by
smelting in a refinery furnace to produce Doré. Plant flowsheets provided by Procon
showing the most recent operations at QR are summarized in Figure 12. The general mill
layout is presented in Figure 13.
December 2009
41
 December 2009
42

The majority of the historical metallurgical work that was reviewed during this study is in
summary form. The summary was a copy of a portion of a document in which the primary
author’s identification was not shown, QR Project Mill and Metallurgy Review, Vol. 3 of 3,
dated May 1993 (QR Project May 1993), contained within. This document contained
metallurgical related portions of reports from Melis Engineering, including laboratory
program summaries beginning with a 1981 study by Lakefield Research, and discussions of
additional testwork completed by Placer Dome from 1988 to 1990. The document also
related to discussions of process flowsheet development and plant design by Melis
Engineering, with the plant design later modified by SRK Engineering and then by Orocon
in a 1990 Feasibility Study.
The first laboratory studies were on ore samples from the Main Zone that were reported to
respond favorably to both cyanidation and flotation, with overall recoveries of ~93% on
head grades of 5.7 g/t Au. Placer Dome did some subsequent work on the Mid-West Zone
and West Zone. For the Mid-West Zone the cyanide consumptions were relatively high at
2.2 kg/t with a high reducing power (RP), but providing excellent gold extraction of 98% at
a grind of 80% passing 70 microns.
The Placer Dome study on the West Zone showed whole ore cyanidation of 94.9% at a
grind of 80% passing 65 microns on a composite assaying 8.24 g/t Au. Cyanide
consumption was 1.1 kg NaCN/tonne. Specific gravity of the ore was 2.79 and the reported
Bond work index was 18.3 (QR Project May 1993), which is assumed to be Ball Mill
kWh/tonne.
The reported gold recoveries for the last five months of plant operation varied from 32% to
95%, and averaged approximately 83% (Cross Lake September 2008 to January 2009). Part
of the lower than expected recovery may be explained by equipment downtime issues,
particularly in crushing, which adversely affects process performance and control. It was
also reported that portions of the carbon soaking and attrition treatment were either
bypassed, or notinstalled. Additional gold losses may have occurred in downstream
processing including PLS handling, and refining.

17.2 SAMPLE SELECTION AND HEAD CHARACTERIZATION

The samples that were tested for the 2009 laboratory program were selected by Procon
from the ore stockpiles, and by the project geologist as archived split drill core from the
West Zone. It was requested that the West Zone samples represent the variations to
grades, lithologies and mineralogy that are to be expected from the deposit. However,
related geological data and lithology was reported to be limited. Also, no fresh samples
were available for testing and this may affect the process response. Laboratory testing on
the samples was performed by Inspectorate America Corp. PRA Division (PRA) located in
Richmond, BC. The laboratory reports will follow as addendums that are expected by
December 2009.
The stockpile samples were reported to be taken as grab samples from both the coarse and
fine ore stockpiles. The core samples are defined by the drillhole number and depth
representing a contiguous interval of drill core that were composited by PRA. The
composites were crushed to -10 Tyler mesh and blended. A representative split was riffled
 December 2009
43

out for head analyses. The head analyses for precious metals and sulfur are provided in
Table 16, below.

TABLE 16: SAMPLE ORIGIN AND HEAD ASSAY

Sample ID Au g/t Ag g/t S (Total) %
COS (coarse ore stockpile) 3.60 17.8 5.78
FOB (fine ore stockpile) 3.38 8.0 6.92
UW 09 (92-97) 0.77 0.7 5.12
UW 10 (232-237) 0.06 0.7 0.51
UW 13 (16-25) 2.94 1.3 1.86
UW 14 (26-31) 2.08 0.9 1.04
UW 09 (0-8.8) 5.47 1.8 5.49
UW 09 (54-66) 13.90 1.4 1.57
UW 09 (72-75) 22.52 4.1 17.90
UW 11 (81-90) 0.66 <0.5 0.99
UW 12 (0-7.9) 5.22 0.6 2.36
UW 15 (35-44) 2.26 <0.5 0.77

The gold grade for the West Zone drill core ranged from 0.06 g/t to 22.5 g/t. The
stockpiled sample graded approximately 3.5 g/t Au. Corresponding metallics assay shows
some variation with the fire assays, particularly on those samples exhibiting a component of
coarser gold particles. The metallics assay indicate that the West Zone drill core had less
coarse gold than the two stock pile samples, as well as lower silver grades. The solids SG of
the drill core varied from 2.95 to 3.58.
The basis of comparison between the West Zone and the two stockpile samples is limited,
but indicates lower copper and zinc in the West Zone as compared to ore being fed to the
mill at the conclusion of operations in February 2009. It also indicates that the West Zone
samples had a similar range of arsenic, but significantly higher mercury which may have
implications to the refining and environmental treatment. Further evaluation comparing to
the historical plant operating data is recommended in this regard.

17.3 CYANIDATION TEST RESULTS

Due to similarities in head composition and origin only one of the two stockpile samples
was selected for cyanide leach testing. The stockpile sample consisted of ore that was being
processed at the termination of operations in February 2009. This ore was reported to be
comprised from the MidWest Zone, but potentially with some West Zone ore blended into
it (from communication with Procon personnel).
 December 2009
44

The fine ore stockpile sample (Comp FOB – Composite Fine Ore Bin) was evaluated at
three grind sizes using whole ore kinetic cyanide procedures for 48 hours maintaining 2 g/L
NaCN. A summary of these results is tabulated in Table 17, and the gold recovery verses
leach time is plotted in Figure 14.

TABLE 17: COMP FOB PRIMARY GRIND VS. GOLD EXTRACTIONS COMP. FOB
Consumption
P80 Size Calc. Hd. Au (kg/t)
Test No. Extraction Au (%) Tail Au (g/t)
(microns) (g/t)
NaCN Lime

C1 61 1.29 91.5 0.11 2.68 0.70

C2 76 2.32 91.0 0.21 2.42 0.65
C3 134 1.87 85.1 0.28 2.33 0.65

*PRA Project # 0903104

 December 2009
45

Cyanide consumptions increase marginally at finer grinds and are considered relatively high
at approximately 2.5 kg NaCN /tonne depending on the grind.
The results show that sample Comp FOB extractions were relatively insensitive to grind,
but gold recoveries should improve marginally at finer particle sizes. This is best shown by
comparison of the tailing gold residue grades which decreased from 0.28 g/t to 0.11 g/t
when the P80 (80% particle passing size) was reduced from 134 to 61 microns. Gold
extractions plotted in Figure 14 indicate extending the leach time beyond 48 hours would
result in continued gold dissolution.
Alternate cyanide leaching procedures, all using a median grind targeting a P80 of 74
microns were evaluated for sample Comp FOB. The whole ore direct cyanidation is
compared to carbon in leach (CIL), carbon in pulp (CIP) and with using gravity pre-
treatment. A summary is provided in Table 18.

TABLE 18: COMP FOB – CYANIDE PROCEDURE VS. GOLD EXTRACTION

P80 Size Cyanide (NaCN) Calc. Hd. Extraction Tail Au
Test No. Procedure
(microns) g/L add. Kg/t Au (g/t) Au (%) (g/t)
48 h direct
C2 76 2.0 2.42 2.32 91.0 0.21
cyanide leach
CIL1 48 h CIL 73 2.0 2.94 3.22 94.7 0.17
CIP1 48 h + 6h CIP 84 1.0 2.14 3.87 95.6 0.17
Gravity + 48 h
GC4 79 2.0 2.29 2.98 94.3 0.17
direct cyanide

The alternate procedures tested including CIL, CIP and gravity pretreatment all resulted in
gold tailing assays of 0.17 g/t Au, or approximately 95% recovery. The comparison of the
tailing assays indicate that CIL procedures did not significantly improve gold recovery,
which would indicate no evidence of preg robbing potential in this sample.
Pretreatment by gravity recovery was undertaken (test GC4) using a Knelson™ centrifugal
concentrator. The Knelson™ concentrate was cleaned by hand panning, recovering
approximately 1/3 of the gold to the cleaner concentrate, which analyzed 566 g/t Au.
Further upgrading of the gravity concentrate would likely be difficult as most of the gold
appeared to be closely associated with pyrite. The use of gravity pre-treatment did not
appear to significantly improve overall gold recovery, leach kinetics, or cyanide
consumption on this sample.
The data for this stockpile sample (Comp. FOB) compares reasonably with historical
laboratory work performed on QR samples, achieving gold recovery in the mid ninety
percent range. Lowering the cyanide addition from 2 g/L to 1 g/L NaCN in test CIP1 did
not appear to decrease the kinetics of the gold leach, and marginally improved the cyanide
consumption. The final leachate reducing power (RP), which is a potential indicator of
pregnant leachate solution (PLS) fouling, was ~550 on 0.1N KmnO4/L. This is a relatively
 December 2009
46

high RP indicating potential process issues depending on the amount of recycle process
water being used.
The next phase of the test program investigated the response of the West Zone drill core
samples to a simulated QR operating circuit. Six of the drill core composites covering a
range of gold head grades were tested using CIP procedures. No gravity pretreatment was
included except for the high grade sample discussed further below.
Cyanide leach procedures consisted of 40% solids for 48 hours maintaining pH 10.5 and
1.0 g/L NaCN, followed by 6 hours CIP. The results are summarized in Table 19.

TABLE 19: WEST ZONE CIP GOLD RECOVERY

Grind Consumption, kg/t
Sample ID Drill # Test* Calc. Hd. Extraction Tail Au, Reduce
P80
(Depth) No. Au, g/t Au, % g/t NaCN Lime Power**
microns
UW09 (0-8.8m) C1 69 5.67 93.6 0.37 1.97 1.26 160
UW09 (54-66m) C2 58 10.5 96.8 0.34 1.94 0.82 100
UW09 (72-75m) C3 43 23.3 77.0 5.37 7.09 4.39 2000
UW11 (81-90m) C4 85 1.25 80.0 0.25 1.75 0.86 115
UW12 (0-7.9m) C5 46 6.80 96.3 0.25 1.89 1.16 135
UW15 (35-44m) C6 67 2.08 70.7 0.61 1.58 0.85 85

*PRA Project # 0904806

**by titration 0.1N KMn04/L

The historical work discussed previously described a work index (believed to be Bond Ball
Mill WI) of 18.3 in a sample from the West Zone, which indicates a moderately hard ore.
No further work index has been conducted in this phase of the test program. However, the
results provided in Table 18 show some variation in the ore hardness. Based on a standard
grind time of 11 minutes of -10 mesh material in the laboratory mill the resulting 80%
passing particle size of the product ranged from 43 to 85 microns.
Gold extractions varied from 70% to 96%, with lower recoveries noted for two of samples
with lower head grades of ≤2 g/t. Another reduced extraction of 77% was from the
highest grade sample tested UW09 (72-75). A possible cause is the slow leach kinetics as
plotted in Figure 15. This was exhibited for most of the samples regardless of head grade.
However, due to the elevated grade of UW09 (72-75) there is considerable gold remaining
in the tailing of test C3. This sample also experienced higher reagent consumption and PLS
reducing power.
 December 2009
47

Gravity pretreatment was studied to evaluate if there would be an improvement for the gold
recovery on the higher grade material. Due to the high cyanide consumption observed in
the initial test, a higher cyanide addition of 2 g/L NaCN was used on the leach following
the gravity recovery. The results are tabulated in Table 20.

TABLE 20: SAMPLE UW09 (72-75) EFFECT OF GRAVITY PRETREATMENT ON GOLD RECOVERY
Grind Consumption, kg/t
Calc. Au, Extraction Tailing Reduce
Test No. Procedure P80
g/t Au, % Au, g/t NaCN Lime Power
microns
no gravity
C3 @ 1 g/t 43 23.3 77 5.37 7.09 4.39 2000
CN
gravity @
GC1 48 16.0* 90 2.24 13.9 2.47 2680
2 g/t CN
*Calculated head of gravity tailing going to cyanide leach
 December 2009
48

The results show the modifications improved the overall gold recovery from 77% to 90%
on the higher grade sample. Gold tailing losses following CIP remain significant at 2.24 g/t
and may benefit from extended leach retention time.

17.4 METALLURGICAL CONCLUSIONS

A composite sample obtained from the fine ore stockpile was initially tested using various
primary grinds and cyanide leach procedures including direct cyanidation, CIL, CIP and
gravity pretreatment. The results compare well against the reported historical test work and
show that minor improvements to recovery can be obtained by finer grinding. Optimum
grinding can be further refined depending on a number of variable factors including
operating costs (power, grinding steel) and the gold price. The use of gravity pre-treatment
prior to leaching did not significantly benefit the stockpile sample, despite the presence of
some coarser gold particles identified by the metallics assays.
Following the initial evaluation of the stockpile sample, an additional six drill core
composites from the West Zone Deposit were tested for cyanidation. In general, the three
mid grade samples from the West Zone responded favorably in simulating the QR cyanide
leach and CIP circuit at a moderate grind. The head grade of these samples ranged from
5.7 g/t to 10.5 g/t Au, resulting in gold recoveries of 93% to 97%. Two lower grade
samples of 2.08 g/t Au and 1.25 g/t Au had respective gold recoveries of 71% and 80%.
Gold tailing losses (cyanide residue) for these five tests ranged from 0.25 g/t to 0.61 g/t,
and were shown not to be directly correlated to the corresponding head grade.
Mineralogical evaluation of tailing may offer an explanation for recovery variability. A
higher grade (23.3 g/t) sample from the West Zone showed poor recovery with elevated
tailing losses. This recovery was improved by 13% following gravity pre-treatment and a
higher cyanide dosage, resulting in an overall gold recovery of 90%, although comparatively
high tailing losses of over 2 g/t remained. Extending the leach retention beyond 48 hours
may benefit some of the areas of the West Zone deposit.
The reported historical and current laboratory test data are in relative agreement at >90%
gold recovery for most mid to higher grade samples, but can be expected to decrease for
lower head grades. The laboratory recoveries do not consistently match the reported mill
recoveries, as reported by the daily mill production reports (Cross Lake September 2008 to
January 2009). The reported mill recoveries for the last five months of operation varied
from 32% to 95%, and averaged approximately 83%. Part of this may be explained by
equipment downtime issues, particularly in crushing, which adversely affects process
performance and control. Additional gold losses may have occurred in downstream
processing including with carbon handling, precious metal refining and smelting.

18.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

18.1 MINERAL RESOURCES

The West Zone is an elongated body following a basalt/siltstone contact for 450 metres.
The zone is approximately 60 metres wide and ranges from 5 to 15 metres thick. The
mineralization consists of green to black/green propylite, with 5-15% pyrite. Generally like
 December 2009
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the other zones on the QR property, the amount of pyrite is an indication of gold grade.
Four benches were previously mined from the North Lobe of the deposit. In the south one
to two 10 metre benches of waste have been stripped off the top of the center of the
deposit, and a small two bench pit was mined at the East Lobe. Kinross reported total
production of 111,076 tonnes of ore grading 5.5g/t from in the West Zone.
The zone has been tested by 188 exploration holes (18,161m) and a further 245
development holes (4,893m). Since 2002 Cross Lake completed 39 core (3,294m), holed in
order to confirm previous results and further delineate the mineralization boundaries. A
summary of drill programs by year is presented in Table 21. The 10 holes completed on the
West Zone in 2008 were not used in the 2009 resource estimate because several intercepts
within the mineralized zone had not been analyzed at the time of the study and QA/QC
results had not been received.

TABLE 21: WEST ZONE DRILLING SUMMARY

Company Year(s) Holes Total Drilled (m)
Fox Geological 1983 109 12,402.81
Kinross (Exploration) 1994-1997 40 2,464.10
Kinross (Development) 1996-1997 245 4,893.18
Cross Lake 2002 5 561.40
Cross Lake 2003 4 335.50
Cross Lake 2005 5 307.66
Cross Lake 2007 15 1,108.27
Cross Lake 2008 10 981.52
Total 433 23,054.44

Lithologic codes used for modeling are listed in Table 22.

TABLE 22: LITHOLOGIC CODES

Code Description
1 Unaltered volcanics
2 Propylitic volcanics
3 Massive propylite
4 Massive carbonates
5 Carbonate-rich basalts
6 Siltstone
7 Mafic Dykes
8 Porphyry Dykes
9 Diorite Dykes
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18.1.1 Deposit Modeling

Modeling of lithology and grade domains was carried out using a structural trend with
Leapfrog3d© software.
The primary lithologies modeled were the siltstone (unit 6) and porphyry (unit 8). All blocks
outside of these domains and below topography were assigned as basalt (unit 1). Due to
inconsistencies in logging in the various drill programs, the subdivisions of altered basalt (2)
and propylite (3) were not able to be modeled with any degree of confidence. Figure 16
illustrates block lithologic coding.

In order to constrain the grade estimation it was deemed necessary to create a gradeshell or
isosurface to prevent smearing of high grades into unmineralized or untested areas. After
some experimentation a semi-continuous zone was modeled using a 0.5 g/t Au envelope
and this domain was used as a hard boundary for geostatistical analysis and grade
estimation.
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18.1.2 Exploratory Data Analysis

Basic statistics were generated by lithology for all samples within the West Zone domain
constraints. Figure 17 illustrates the grade distribution by lithology as box plots. Late stage
dykes (Units 7-9) are excluded as they were unmineralized. The propylite (unit 3) and
propylitized basalt (unit 2) clearly contain the highest grade gold populations with the
remaining units being fairly similar. The data set for unit 4 (massive carbonate) consisted of
only 12 samples so is not considered highly representative.

Outlier analysis by the decile method and log probability plots reveals that all gold grades in
all lithologies require capping or cutting to limit the influence of extreme values. It was
decided to impose top cuts at approximately the 99th percentile by lithology prior to
compositing as presented in Table 23.
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TABLE 23: GRADE CAPPING

Lithology Code Topcut g/t Au
1 15
2 42
3 54
4 30
>4 15

18.1.3 Compositing
Assay grades within the West Zone mineralized domain were composited using the ‘best fit’
method. This procedure produces samples of variable length, but of equal length within a
contiguous drillhole zone, ensuring the composite length is as close as possible to the
nominated composite length. In this case, the nominated length was set at 2.5m.
Statistical analysis reveals that the compositing reduced the coefficient of variation (COV)
form 3.04 to 1.48 (Table 24).

TABLE 24: BASIC STATISTICS COMPARING RAW DATA AND COMPOSITES

Assays Capped Assays Composites
Count 1732 1732 821
Min 0.00 0.00 0.00
Max 260.78 54.00 31.77
Mean 3.27 2.95 2.84
Median 0.72 2.90 1.30
Variance 99.57 35.29 17.64
Std Dev 9.98 5.94 4.20
COV 3.04 2.05 1.48

18.1.4 Density
A specific gravity of 3.1 was assigned for all blocks coded as unit 1 (basalt) based on
previous studies by Kinross (Fortin, 1998). Blocks coded as unit 6 (siltstone) or 8
(porphyry) were assigned a value of 2.65.

18.1.5 Variogram Analysis

Downhole and omni-directional variograms of composited gold grades revealed no
discernible structure (pure nugget effect).
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18.1.6 Block Model and Grade Estimation Procedures

A block model was created in Gemcom Surpac Vision© software as outlined in Table 25.
Sub-blocking down to 1.25m was implemented in order to more accurately represent the
irregular nature of the mineralized zone.

TABLE 25: BLOCK MODEL PARAMETERS

Y X Z
Minimum 9300 10800 850
Maximum 9900 11400 1075
User Block Size 5.0 5.0 5.0
Min. Block Size 1.25 1.25 1.25

Block grades were estimated from the downhole composites using the “Inverse Distance
Weighting (IDW)” and “Nearest Neighbour (NN)” methods. The IDW interpolations used
powers of 2 (ID2) and 3 (ID3) for comparison.
For grade estimation the zone was divided into two lobes termed ‘East’ and ‘West’, both
with differing geometry and search ellipsoids. A hard boundary was not imposed between
the lobes as there was no definite break apparent.
Hard boundaries were imposed both within the gradeshell domain and between the
siltstone and volcanic domains within it such that composites were restricted to the domain
they inhabited.
A minimum of 4 and maximum of 12 composites were used to estimate a block and the
maximum for any single drillhole was set at 3. The search parameters used are summarized
in Table 26.

TABLE 26: WEST ZONE SEARCH PARAMETERS

Search Ellipsoid Search Composites
Zone
Bearing Plunge Dip Dist (m) Bearing Plunge Dip

East 309 -3 20 50 4 12 3
West 120 -40 -20 50 4 12 3

The block model grade distribution it illustrated in Figure 18 and Figure 19.
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18.1.7 Model Validation

Model verification was carried out by visual comparison of blocks and sample grades in
plan and section views. The estimated block grades showed reasonable correlation with
adjacent composite grades.
The global mean grade comparisons between samples, composites and block model grade
estimates show reasonable correlation (Table 27).

TABLE 27: GLOBAL MEAN GRADE COMPARISON

Data Set Mean
Samples (Raw) 3.27
Composites (Raw) 3.15
Samples (Capped) 2.95
Composites (Capped) 2.84
Block Grades (ID2) 3.12
Block Grades (ID3) 3.09
Block Grades (NN) 3.08

Comparison of block model statistics by cut-off grade (Figure 20) shows only minor
difference between the ID2 and ID3 methods.
Block classification is illustrated in Figure 21.
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18.1.8 Cut-off Determination

The Mining Cutoff Grade is the grade at which it is possible to mine and process a block of
material at a profit. It is calculated as the average grade, a block of material must possess
(usually the smallest amount of material that can be mined given equipment constraints)
multiplied by the price of gold and gold recovery. That is then equated to the costs incurred
by mining, hauling and processing the material if it were sent to the mill. The mining cutoff
grade for Longhole Open Stoping in the East Lobe of the West Zone at the QR Mine
under base case conditions is 3.22 g/tonne. The mining cutoff grade for Longhole Open
Stoping in the North Lobe of the West Zone is 3.39 g/tonne.
A base case Au cut-off grade for the East Lobe was determined using the following
cost/price assumptions:
Price of Gold: US$850/oz
CAD/USD exchange rate (E$): 0.90
Recovery: 93%
Drilling Cost: $5.33/t
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Blasting Cost: $2.85/t

Hauling Cost: $22/t
Milling Cost: $31.02/t
General & Administrative Cost: $12.45/t
COGMine = [(CD + CB + CH + CM +CG&A) / (PG / E$ * %R)] * g/oz
COGMine: The mining cutoff grade.
CD: The cost of drilling for one tonne of ore.
CB: The cost of blasting one tonne of ore.
CH: The cost of hauling one tonne of ore.
CM: The cost of milling one tonne of ore.
CG&A: General & Administrative costs averaged over a per tonne basis.
PG: The price of gold per troy ounce in USD.
E$: The CAD/USD exchange rate.
%R: Recovery of gold.
g/oz: Number of grams per troy ounce
COGMine = [(5.33 + 2.85 + 22 + 31.02 + 12.45) / (850 / 0.90 * 0.93)] * 31.1035 = 3.22
g/tonne
Note: The only expected difference between cutoffs for the East and North Lobe result
from increased haulage costs from the North Lobe.
Hauling Cost from North Lobe: $26/t
COGMine = [(5.33 + 2.85 + 26 + 31.02 + 12.45) / (850 / 0.90 * 0.93)] * 31.1035 = 3.39
g/tonne
These cutoff grades are applied specifically to the underground stopes of the operation and
do not take into account the amount and cost of development to access them. The actual
cutoff grade is therefore location dependant. General and administrative costs have been
taken into account to determine these cutoff grades. This is because the West Zone is the
only section of the mine intended to be producing for the following year, if mining a
specific block of resource does not have enough economic value to cover costs of
extraction and general and administrative costs, it is best to move to another part of the
Zone and not waste time and money on extraction of resources that don’t cover all
operational costs. General and Administrative costs would not be used in cutoff calculations
if it were applied to areas of ore development. This is because if the area has to be mined
anyway to get to other more profitable parts of the mine, ore blocks need only cover the
cost difference between mining waste and mining and processing ore to maximize profits.
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General and administrative costs will be incurred regardless of whether the material is
processed or not.

18.1.9 Mineral Resource Summary

The undiluted mineral resource estimate for the QR West Zone is presented in Tables 28,
29, and 30, using a range of cut-offs with a Base Case of 3 g/t Au.

TABLE 28: MEASURED RESOURCE ESTIMATE (GEOSIM, 2009)

WEST ZONE
Cutoff Grade
Measured Resources Grade Total Ounces
(Au g/t)
Tonnes (Au g/t) Oz Au
2.0 40,048 3.65 4,697
2.5 30,075 4.10 3,963
3.0 19,961 4.79 3,071
3.5 16,000 5.16 2,654
4.0 11,461 5.75 2,117

TABLE 29: INDICATED RESOURCE ESTIMATE (GEOSIM, 2009)

WEST ZONE
Cutoff Grade
Measured Resources Grade Total Ounces
(Au g/t)
Tonnes (Au g/t) Oz Au
2.0 479,345 4.18 64,435
2.5 361,573 4.82 55,974
3.0 279,697 5.42 48,766
3.5 234,239 5.85 44,064
4.0 183,184 6.44 37,911

TABLE 30: INFERRED RESOURCE ESTIMATE (GEOSIM, 2009)

WEST ZONE
Cutoff Grade
Measured Resources Grade Total Ounces
(Au g/t)
Tonnes (Au g/t) Oz Au
2.0 24,290 3.55 2,768
2.5 20,285 3.80 2,478
3.0 16,674 4.02 2,157
3.5 14,309 4.14 1,903
4.0 9,251 4.32 1,285
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Mineral resources that are not mineral reserves do not have demonstrated economic
viability.

18.2 MINERAL RESERVES

Mineral reserves were developed by Procon, verified and edited by EBA. They were
determined through the construction of mine plans (Section 19.1) around the resource built
by Geosim. A summary of the mineral reserves is presented in Table 31.

TABLE 31: DILUTED MINERAL RESERVES *

Total In- Total
Mining Mine Grade Mill
West Zone Classification Dilution Tonnes Situ Recoverable
Method Recovery (g/t) Recovery
Ounces Ounces
Proven 10,030 4.921 1,590 1,480
East Lobe Underground 10% 85% 93%
Probable 70,580 5.182 11,760 10,940

Proven 0 - 0 0
East Lobe Open Pit 10% 85% 93%
Probable 9,280 5.836 1,740 1,620

Proven 0 - 0 0
North Lobe Underground 10% 85% 93%
Probable 79,200 4.678 11,910 11,080
East & North Proven 2,060 3.567 240 220
Lobe Ore Underground 5% 100% 93%
Development Probable 22,330 4.042 2,900 2,700

Total West Proven 12,090 4.690 1,830 1,700

Total 9.5% 87% 93%
Zone Probable 181,380 4.855 28,310 26,330

Table 1 All numbers rounded, based on a cutoff grade of 4 g/t. Complies with CIM guidelines for reserves and reserve reporting
Total combined proven and probable reserves are 193,470 tonnes grading 4.84 g/t gold,
accounting for a total of 30,140 in-situ ounces and 28,030 recoverable ounces.
Inferred material is too speculative to become part of the economic analysis and can
therefore not make up part of the reserve. Any inferred resource located within stopes that
will be mined has been assumed to be of 0 g/t. Small amounts of inferred material are
categorized within the mining plan. Geostatistics suggests that these small pockets of
resource will be higher grade than 0 g/t, however, to comply with NI 43-101 standards; this
report values them as having no grade.
Dilution
The mineral reserves reported in table 31 have been diluted. Production was diluted by 10%
at a dilution grade of 0 g/t as a conservative measure. This suggests that all mineral resource
surrounding the production stopes is at a grade of 0 g/t. It is expected that surrounding
grades will range from 1 to 3 g/t. Ore development was diluted by 5% at a dilution grade of
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0 g/t. A lower dilution value was used for development as opposed to production due to
the more precise excavation techniques involved during development.
Mining Recovery
The mining recovery used to determine the reserves reported in table 30 was 85%. This is a
standard recovery based upon past experience with sublevel stoping in underground mines.
EBA believes that reserves are reported in a professional manner by qualified persons and
comply with NI 43-101 reporting standards.

19.0 ADDITIONAL REQUIREMENTS FOR DEVELOPMENT AND PRODUCTION PROPERTIES

19.1 MINING OPERATION

Mine Plan
The mine plan was developed by Procon in 2009, based on results of the 2009 Resource
block model. The mine plan consists of underground mining primarily by employing the use
of Longhole open stoping and sublevel retreat mining. There is one small portion of the
East Lobe, accounting for 9,000 tonnes that could be mined by open pit methods. Figures
22 to 28 provide details of the proposed mine plan.
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A proposed underground mine plan for the East and North Lobes has been developed by
Procon and verified by EBA to allow for efficient mining utilizing mechanized production
mining equipment consisting of:
• Electric hydraulic drill jumbos;
• Scooptrams (3.5 cu. yd. – remote operated in stopes); and
• Haulage trucks (16 and 20 tonne trucks).
The estimated recoverable reserves from the East and North Lobes are presented in
Table 31.
A detailed mine plan will be developed by a professional engineer and maintained on site
prior to commencement of the mining activities. This will include plans, sections,
geotechnical records, mining sequence and schedule, and a ground control log. This will
continually be updated and available for review on-site at all times.
The mine plan will incorporate the recommendations as summarized in the attached
geotechnical report on the East Lobe. In addition, the Mine Plan will incorporate a
ventilation/escape raise, refuge station and dual sumps. The sumps will allow for the
removal of a considerable portion of the sediments from, and recycling of, the mine
discharge water.
East Lobe
Longhole mining methods will be the mining method primarily used in the East Lobe.
Longholes will be developed by driving drawpoints and drill accesses along the bottom of
the planned stopes. Wherever possible, stopes will be silled out (i.e. opened to full stope
width) to the final design width to allow the subsequent development of slot raises and
longhole drill access. It is envisioned that all longhole drilling will be done by drilling from
the ramp upward into the stope. The silling out of the stopes will allow better stope wall
control by permitting the longhole drill to drill parallel to the final planned wall. This will aid
in mitigating blast damage.
Figure 29 shows a cartoon schematic of a typical longhole stoping operation. It should be
noted that although similar to the QR operation, this schematic shows drill access from the
top of the stopes drilling downwards. At the QR operation drill access will be at the bottom
of the stopes drilling upwards. Mucking of the longhole stopes will be done using remote
controlled scooptrams.
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North Lobe
The North Lobe block forms part of the current mining plan, however additional
geotechnical investigations are required to address crown pillar stability. A Crown Pillar may
be developed at the North Lobe as part of the mine plan. Preliminary inspection indicates
that geotechnical conditions may be similar to those of the East Lobe. Due to their
suspected similarities, all geotechnical constraints on mine plans applied to the East Lobe
have been applied to the North Lobe as well. Geotechnical drilling will need to be
conducted during development into the North Lobe to verify geotechnical characterization
and finalize mine planning including stability of a potential Crown Pillar. 0847423 BC Ltd.
has indicated their intention to have a qualified consultant perform a geotechnical
assessment on the North Lobe prior to mining.
Mining on the North Lobe is anticipated to be longhole-sublevel retreat mining, with access
to the ore on three or four levels. Ventilation, second egress and servicing would be via an
Exhaust / Escape Raise driven by Alimak to surface and would nominally be 2.1m x 3.0m
 December 2009
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in size. Mucking would be by remote scoop through longitudinal retreat or conventional

draw points.
In advance of mining the North Lobe, the North Lobe open pit will be dewatered by
pumping water to the Main Zone pit via an existing spillway.
The underground mine plan and design accompanied by cross-sections can be seen in
Figures 22, 23, 24 and 25.
Production and Development Schedule
It is anticipated that mining operations on the West Zone underground will initially run
concurrent with some on-site infrastructure upgrades at the process plant in order to
provide a small stockpile and ensure a steady ore supply once the mill is put back into
operation. If new reserves are not identified to extend the mine life, once the reserve is
depleted the project will revert to reclamation status, which will take an estimated one to
two working seasons to complete.
The schedule below depicts the development and production of the mine plan at the West
Zone.

TABLE 32: MINE DEVELOPMENT SCHEDULE IN MONTHS

Ramp Level and Ore Development

The development at the relatively shallow West Zone currently consists of a ramp totaling
305m in length and 28 m of Level development. The ramp extends from surface to the start
of the East Lobe orebody.
Subsequent development will consist of completing waste and ore drives for the East Lobe
over a period of approximately three months and developing toward the North Lobe.
Waste development in the North Lobe will overlap the last month of ore development in
the East Lobe. Waste and ore drives in the North Lobe will be developed over a four
month period.

19.2 MINE WASTE ROCK MANAGEMENT

A number of ML/ARD related studies were previously carried out by Kinross in the 1990s
to assess the potential risk for acid rock drainage and metal leaching (ARD/ML) of mine
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rock and tailings from the QR. Much of the past test work was focused on characterizing
the waste rock and pit wall material associated with the Main Zone pit (i.e. operational
sorting, segregating and closure).
Mine Permit M-198 stipulates that an ARD/ML monitoring program be implemented at the
QR Mine in order to identify waste rock with the potential to generate ARD and ensure that
all waste rock materials are placed in the appropriate disposal locations. Composite samples
representing 10,000 tonnes of waste rock from the mined zones were collected during
operations and submitted for ARD testing.
The Company is committed to continued ARD sample collection from active mining zones,
collection of monthly final mill tailings composites and quarterly testing of on-site kinetic
field test cells.
Waste Rock Material Characterization
According to Price et al (2000), there were more than 2000 samples collected to characterize
the ML/ARD behaviour of different rock types associated with the QR deposits in the
1990s. A number of lithologies were sampled and included:
• Unaltered basalt;
• Altered basalt (propylitic basalt, propylite and carbonate basalt);
• Siltstone;
• Felsic instrusives;
• Waste rock;
• Ore; and
• Tailings.
A good portion of the 2000 samples were collected and tested for operational sorting and
segregating purposes into three classes:
• Potentially acid generating (PAG), with a neutralization potential ratio (NPR) < 2;
• Medium neutralization potential ratio (medium NPR) with an NPR between 2 and 2.5,
and
• Non-acid generating (NAG), high NPR, or basic rock with an NPR > 2.5.
Samples included core, blasthole cuttings and grab samples from various campaigns and at
different times with different intensities. Some general observations reported by Price et al.
(2000) included:
• The average NPR for different rock types was relatively similar between zones;
• Samples with an NPR< 2 were present in all mineralized zones and rock type
combinations;
• The median NPR values for the calcareous basalt and the massive carbonate was > 2;
 December 2009
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• The median NPR values for the propylite, propylitic basalt and siltstone was between 1
and 2 and there were samples with an NPR < 1;
• NP values were all high, with minimum values ranging from 72 to 284 kg CaCO3/t
equivalent, indicating a significant delay in the onset if ARD did occur;
• The carbonaceous nature of the sedimentary rocks meant that a total carbon assay could
not be used to predict the carbonate content; the required assay would be analysis of
carbonate-carbon;
• Mean AP values in pre-mining samples were between 95 and 150 kg CaCO3/t
equivalent in the Main and Midwest Zones, the values in the limited number of West
Zone samples were significantly lower; and
• While there was some similarity in median values, the range in NPR values was much
greater in the blasthole versus drill core for the Main Zone samples.
Kinetic test work consisting of lab-based humidity cells was undertaken at two different
times. The more extensive work was done in 1996 by Norecol Dames and Moore as
summarized by Price et al (2000). This test work suggested slow oxidation rates with
adequate neutralization for approximately 30 years. In addition a site specific NPR of 1.2
was suggested by that work.
Waste Rock Acid Rock Drainage Potential
A review and analysis of ARD potential was conducted by URS Norecol Dames and Moore
(February, 2001). The report predicts the potential for generation of low pH solutions from
rock captured on the benches of the Main Zone pit, and a small generation potential from
the high wall rock itself. However, it is their conclusion that the volume of low pH
solutions would be small, and would be buffered, perpetually, by the large volume of
alkaline water contained in the pit. The site water quality data included the Main Zone pit
from initial closure until March 2006 confirms that the pH of the Main Zone pit lake has
remained near-neutral to basic (pH greater than pH 6.99).
ABA testing program by bench in the Main Zone and West Zone (North Lobe and South
Lobe) pits was reviewed for the prior permit application and the previous URS assessment.
No past or additional sampling was undertaken in the West Zone underground ore zone.
This report also included a review of humidity cell data from up to 3.5 years of testing from
the Main Zone and West Zone pits. It was concluded that a sample, site specific NPR
criteria of 1.4, was appropriate to segregate PAG and Non-PAG samples.
Waste Rock Metal Leaching
Five on-site kinetic field test cells are currently located on the QR Mine (~100 m southwest
of the Midwest Zone portal) to measure drainage chemistry and weathering of various
materials under natural environmental conditions. The field cells are constructed
depressions lined with impermeable high density polyethylene (HDPE) with a drain pipe
that extends up through the liner at the low point of the depression and is open at a lower
elevation down gradient of the lined depression. This allows any fluids that collect in the
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line depression to flow through the pipe to a point that can be sampled. New covered
effluent collector containers were installed in 2002 to reduce sample contaminations and
reduce dilution from precipitation. The cells contain ore; low-grade ore, basic (medium
NPR), neutral (construction), and PAG waste rock material that was excavated from the
Main Zone pit. Each of the field cells were originally designated by color as presented in
Table 33.

TABLE 33: ARD FIELD CELL DESCRIPTION

Colour Material Cell
White Ore Cell A
Blue Low-grade Ore Cell B
Neutral WR (Construction Material)
Orange Cell C
(NPR>2.5)
Red/Pink Basic WR (Medium NPR) (2.5>NPR>2.0) Cell D
Yellow PAG WR (NPR<2.0) Cell E

Sampling of leachate from the field cells was initiated in July 1997. PH and EC
measurement of the leachates have occurred erratically since their initiation with some
results (2002 to 2008). Occasional analyses of leachates for general parameters and metals
have also reportedly been conducted in the past.
A brief description of each of the field cells are discussed below.
Cell A
Cell A is ore material and is characterized by the highest solids sulphur content of all five
cell materials. The ore material classifies as PAG with a low NPR value. The pH (<2mm
fraction) of the ore material is acidic at pH 4.5 (rinse) and 5.2 (paste). However, despite the
acidic rinse pH, laboratory leachate analyses indicated neutral to alkaline conditions (pH 7.3
to 8.0) (field pH ranged from 6.71 to 7.67).
Cell B
Cell B is low-grade ore material with relatively high sulphur content and elevated Cu, Fe and
Ag contents. Although this material reported significantly high Sobek NP relative to the ore
cell, the low-grade material still classified as PAG with a NPR value of 0.9. Similarly,
leachate pH for the low-grade ore is indicated near neutral to slightly alkaline lab pH
conditions (7.5 to 8.0). Field pH was 7.05 to 7.15. In contrast to the ore material, leachate
from the low-grade material (Cell B) contains generally low metals with no values exceeding
permit discharge criteria and/or BCWQG-WL/LV.
Cell C
Cell C is “basic” waste rock. The basic waste rock contains significantly lower solids sulphur
and metals contents than both the ore and low-grade ore materials. Cell C has the highest
NPR (3.0) of all the cells and a non-PAG classification, due to abundant buffering capacity
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in the cell and the relatively lower sulphur content. Leachates for this cell indicated slightly
alkaline conditions with a laboratory pH range from 7.6 to 8.1. Field pH was 6.71 to 8.13.
Cell D
Cell D is comprised of neutral waste rock, defined by Kinross to be waste with NPR
between 2.0 and 2.5. Field pH ranged from 7.06 to 7.87. Similar to basic waste rock (Cell C),
metals within the Cell D leachates are typically low.
Cell E
Cell E material consists of PAG waste rock with a NPR of 0.6. Solids sulphur content in the
cell is 3.31%. Similar to the ore materials (Cells A and B), the PAG waste rock is
characterized by elevated solids content. Rinse and paste pH values are slightly acidic with
ranges from 5.0 and 6.6. Overall, leachate results indicate that all the cell leachates are
buffered with neutral to alkaline pH conditions. Elevated conductivities and soluble
sulphate in the leachates are consistent with surface weathering of the materials over the
past 10 years.
Projected Material Quantities
There will be no further planned mining in the Main Zone pit. Waste rock expected to be
produced at the QR Mine over the proposed 12 months of operations from the West Zone
is estimated at 31,583 tonnes. The waste rock is comprised mainly of three rock types:
Siltstone, Basalt and Diorite.
In the Klohn 2009 report, the tailings production rate is estimated as one tonne of tailings
produced per tonne of ore processed. Based on this formula, it is expected that
approximately 193,000 tonnes of tailings will be produced over the 12 months of mine
production. According to the discussions above, the tailings are PAG and require sub-
aqueous disposal. Tailings will be disposed in the existing tailings facility.
Table 34 provides a summary of the number of samples from each zone that underwent
ABA analysis. Results indicate that low sampling frequency has been conducted in the
Midwest Underground, West Underground and bench sampling throughout the West Zone
pits. It has not been determined how the samples are distributed between ore and waste.

TABLE 34: HISTORIC SAMPLING

Zone Number of ABA Samples
West Zone – North 374
West Zone – South 144
West Zone 0
Midwest Zone 7
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Waste Rock Material Quantities

The Main Zone pit had the capacity to store approximately 800,000 tonnes of waste rock
generated at the start of Cross Lake operations. This was equivalent to nearly half of the
waste rock expected to be produced at QR Mine.
Using the site specific sample NPR criterion of 1.4 and assuming that the bench sampling
undertaken in the West Zone is spatially and geologically representative, approximately 20%
of the samples collected from the South Lobe pit can be considered PAG, while
approximately 30% of the samples tested from the North Lobe pit could be considered
PAG. Given that the graphs included in the URS (2001) report do not provide conclusive
evidence that the waste rock can be segregated by rock type alone, the NPR criterion will be
used for waste segregation.
Details of Waste Rock Disposal
The majority of waste produced by the QR mine West Zone underground is considered to
be NAG as determined by the study “2008 Acid Rock Drainage and Metal Leaching
Monitoring Report, QR Mine, BC” by Mesh Environmental.
All NAG material produced by the mine will be stored in the West Zone waste pile, located
100 m east of the West Zone portal. Any PAG material produced will have sub-aqueous
within the Main Zone pit. Under the terms of the permit, PAG must be disposed of within
three months after coming to surface.
Mining ceased in the Main Zone pit in 1997 and the pit was flooded as part of reclamation
measures implemented by Kinross at the QR Mine. A hydro-geochemical model of the
Main Zone pit conducted by URS-NDM (2001) indicated that pit water chemistry would be
controlled by tailings overflow water in the short-term and by in-flowing groundwater in the
long-term.

19.3 MINERAL PROCESSING

The plant is generally referred to as a carbon in pulp (CIP) process. Cyanide leaching of the
gold is followed by CIP adsorption of the dissolved gold. The targeted grind size for the
leach feed has historically been 80% passing 74 microns by feeding fine ore into two ball
mills operating in series, in closed circuit. A small gravity circuit was incorporated in 2008
utilizing a Knelson concentrator and a 4 foot Deister shaker table, which improved gold
recovery, particularly for the higher grade feeds. Prior to smelting, electro-winning is used
for recovery of precious metals that is hot stripped from the loaded carbon. The general
QR mill layout is shown in Figure 13.
The CIP tailing are treated using the INCO SO2 Air process for cyanide destruction, prior
to discharge to the tailings impoundment area. Reclaim water from the tailings pond is
pumped back to the mill for recycling with makeup water pumped from the Main Zone pit.
The crushing circuit, leach feed thickener, cyanide leach tanks, and cyanide destruct tanks
are situated outside the mill building; which houses the other circuits, the MCC room, and
PLCs. A small metallurgical laboratory is situated in an adjacent structure.
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Mill reagents are stored outside and under cover in a Weather Haven type structure adjacent
to the laboratory. A simplified flow sheet of the process is shown in Figure 12.
The estimated salvage value of mill equipment at the end of mine life is $807,700.

19.4 INFRASTRUCTURE
Infrastructure at the QR Mine is considered appropriate for conducting a conventional
mining and milling operation as presented in this study (Figures 3 and 4).
Existing West Zone Development
North Lobe Pit
A spillway has been established on the south side of the pit to regulate the water level. The
pit is not currently discharging to the environment, but is ultimately designed to discharge
water through a riprap lined ditch and ultimately into No. 2 Creek. This water in this pit will
be pumped back to the Main Zone pit prior to underground development on the West
Zone, North Lobe.
South Lobe Pit
Due to the tabular nature of the zone and the depth of waste rock only the south end sub
crop was exposed to a depth of 10m. To facilitate hauling of ore and waste, an area was
cleared for haul road construction but the road was never completed. The South Lobe pit
was backfilled with NAG waste rock and soil (7,000 cubic metres) to create a free draining
surface. A riprap-lined channel was constructed at the outlet to drain into the No. 2 Creek
drainage. Additionally, runoff diversion ditches were established east and north of the South
Lobe pit to reduce runoff though the pit disturbance. PAG zones in the upper remaining
bench faces were covered with NAG rock and soil (17,000 cubic metres). In 2007 Cross
Lake Minerals established the West portal out of the South Lobe pit at the second Bench
Elevation. A temporary underground mechanics shop was also established on the first
Bench Elevation. This area will be the primary future production area.
Underground
Development consisted of a 4.2 m x 3.5 m ramp collared at 973 m elevation and extending
to the current face at elevation 964 m. The current face terminates at approximately the
midpoint of the East Block development. Several headings will be developed from this
ramp to access the East Lobe stopes. In addition, it will continue to be developed to the
northwest to access the North Lobe ore.
Development to date in the West Zone was completed under Exploration Permit MX -10-
189 as amended April 13, 2007.
During the exploration phase, mine ventilation was supplied via two 42 inch diameter, 75
HP axial vane fans with 36 inch vent duct. The portal is currently gated and locked during
the temporary shutdown period. The fan and ventilation infrastructure has been removed.
The ramp is flooded at this time and is being pumped intermittently to the Main Zone pit in
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order to meet zero discharge criteria. New exhaust escape raises will be developed to
surface to provide flow-through ventilation and a second means of egress.
Existing North Zone Development
The North Zone exploration work was completed under Exploration Permit MX-10-189 as
amended July 27, 2006.
Development consists of a 5m x 4m decline collared at 706m elevation and to a final
elevation of 685m. The original design included a cross cut on either side of the access drift
for diamond drilling. These where not driven and diamond drilling was completed from the
access drift. Ventilation was provided via two 75 hp axial vein fan on surface and 36” vent
duct. A third 75 hp fan was installed at the midpoint as a booster fan. The portal is currently
gated and locked and the heading is flooded.
Site Access
The mine site is accessed by road from the town of Quesnel. Quesnel is located on
Highway 97, and has an airport with regularly scheduled flights to and from Vancouver.
Roads
Access to the QR Mine is via the Quesnel-Hydraulic Road (Highway 97), 3 km south of
Quesnel, B.C. The road is maintained by the Ministry of Highways (MOH) from Quesnel to
3 km past the Gravelle Ferry Bridge, which crosses the Quesnel River 30 km along the
Quesnel-Hydraulic Road. From there, 16.5 km of the road follows the 2700 FSR where it
connects with the 500 FSR at Km 527. The mine site is located at Km 559. Road
maintenance outside of the MOH jurisdiction is performed by West Fraser Mill Ltd. of
Quesnel.
A gate is installed at the entrance to the active mine site and the public must report to the
mine office on entering the mine area. QR Mine is responsible for road maintenance from
536.5 km to the mine.
Camp
In 2006 Cross Lake constructed a 45 person camp including a mess hall and recreation
room for the out of town employees and contractors. Transportation of crews from
Quesnel was provided via 15 passenger crew buses. Light vehicles were also used by Cross
Lake and Mining Contractor personnel as required. Additional access to the site was by
helicopter with a Helipad located on the hilltop above the administration office. Helicopters
were used weekly to transport gold doré. Helicopter access is also available in the event of a
medical evacuation situation. The transportation system will be maintained by 0847423 BC
Ltd.
General Site/Administration Offices
Administration, engineering, geology and environment offices are located adjacent to the
main gate and are in working condition.
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Potable Water
Potable water use is estimated at 70 cubic metres per day from a well at Geoff Creek. The
water is pumped via a 13-hp submersible pump and a 2” poly pipe to the mine site where
the water is then stored in 2500 liter water tanks located in the process/fire pump building.
Potable water is treated by exposure to UV lamps prior to distribution.
Process Plant Water
The milling process is estimated to use an approximate average of 805 cubic metres per day
of water based on the 2008 mill inflow of 294,187 cubic metres total water usage. It is
estimated that 87% is supplied via the reclaim barge and the remaining make up water is
pumped from the Main Zone pit.
Diesel Storage
Mill and mine supplies, along with diesel fuel and propane, form the majority of heavy loads
that will be hauled to site and stored in the fuel farm. Fuel is hauled approximately once a
week and reagent haulage is estimated at 3 loads per week when the plant is fully
operational. Permitted fuel storage is currently available and adequate for the proposed
operations.
Maintenance Shop
The maintenance shop is a Quonset style building set up between the mill complex and the
assay lab. The electricians shop is located opposite from the maintenance building.
Additional shop facilities are located at the West Zone and may be used by the mining
contractor, during operation. All shops are in working condition.
Assay Lab
The assay lab can process up to 150 samples per day which include samples from mining
and the mill as well as ABA characterizations and other environmental requirements. The
lab has sample preparation facilities as well as fire assay and atomic absorption units.
Compressed Air
Prior to shutdown, three 200hp, 1,000cfm electric compressors supplied air to the Midwest
Zone underground mine. Only two were required to be in operation at any given time,
while the third was used as backup. During West Zone underground mining, a similar
system of portable compressors will be installed at the portal, using diesel compressors.
Compressed air for the mill is provided by three 500cfm electric compressors located at the
Northwest end of the Mill complex.
Dry Facilities
The main dry for underground, mill and surface crews is located adjacent to the Northwest
corner of the mill complex. A separate women’s dry facility is provided in the same
complex. During operation, the dry facilities are plumbed with potable water and discharge
waste water into the sewage lagoon.
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Explosives Magazine
The explosive and detonator magazines are located down a no through access road to the
south of the NAG pad storage area.
Fire Protection
A dedicated 6” pressurized fire line provides water for fire protection purposes on site. The
line runs from the Main Zone pit pump station to the process water tank. The system is
automated so as to maintain sufficient water in the tank at all times. In the case of a power
interruption, the Main Zone pit pump station is equipped with a stand by generator to
maintain feed to the process water tank. One in-line booster pump located in the process
water building maintains 100 psi pressure to fire mains located strategically throughout the
site. In the case of a power interruption the system is equipped with a diesel powered pump
that automatically starts operation should pressure drop.
Regular crew training in the proper use of equipment and procedures should be conducted
to provide a trained crew on each shift.
Sewerage
The Site septic system comprises of 4 main septic tanks:
• Camp Bunk House area;
• Managers Trailer;
• Mine Office; and
• Mine Dry Facility.
Grey water from all 4 tanks report to a 3 inch dedicated line and is gravity fed to the tailings
pond. Black water and solids are cleaned out on a regular basis under contract and taken off
site to Quesnel for disposal.
Power
Electrical power to the QR Mine site is supplied by BC Hydro Corporation. BC Hydro
supplies 3.0 Megawatts to the site over a 25,000 Volt transmission line originating from the
Graven Lake Substation.
A substation southeast of the process facility steps power down to 480 volt for distribution
to the mill and surface installations. Standby power generation is supplied for the mill by a
1MW genset located at the mill complex. Camp and office standby power is supplied by a
75 kW genset located at the camp.
Electrical power for the West Zone development and production mining will be supplied by
a 750 kW diesel genset as this area is not on the main distribution grid. Generated 600 volt
power will be distributed underground and on surface as required for operations.
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19.5 MANPOWER
The total manpower estimate including administration, mine and mill is 78. It should be
noted that the mill has four crews and the mine has three crews, allowing for an average of
31 people working on site during the daytime of a weekday.
Process Plant
The mill will run seven days per week, 24 hours per day. There will be four mill crews each
working 12 hour shifts for a period of fourteen days followed by fourteen days off. Once in
operation, it is estimated that required personnel for the project will consist of
approximately 45 people, six in Administration/Technical Services and a total of 39 people
as part of the four mill crews (Table 35).

TABLE 35: PRELIMINARY MILL MANPOWER ESTIMATE FOR 700 TPD OPERATION
Item Amount
Administration
General Manager 1
Assistant Manager 1
Safety/Environmental Officer 1
Clerk 1

Technical Services
Assayer 1
Bucker 1

Mill Per Shift

Superintendent 0.5
General Foreman 0.5
Shifter 2
Metallurgist 1
Crushing 6
Grinding 2
Gravity 0.25
Leach/CIP 2
Maintenance 5
Total Employment 45

Underground Mine
The underground mine will run seven days per week, 24 hours per day. There will be six
employees working day shifts seven days a week. There will be three underground mining
crews each working 10 hour shifts for a period of 28 days followed by fourteen days off to a
total of 27 people (9 people per shift). See Table 36 for the manpower breakdown.
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TABLE 36: AVERAGE UNDERGROUND MINE MANPOWER REQUIREMENTS

Item Amount
Underground Mine
Superintendent 1
Engineer/Planner 1
Surveyor 1
Geologist 1
Electrician 1
Master Mechanic 1

Per Shift
Foreman 1
Mechanic 2
Jumbo Operator 1
Development Miner 2
Raise Miner 0.5
Longhole Driller 1
Production Mucking Crew 1.5
Total Procon Employment 33

19.6 WATER BALANCE

The site water balance was completed by Klohn Crippen Berger Ltd. (Klohn) under a
separate report. This report concludes that the tailings facility will need to have seepage
rates of 4.5 L/s or below, in order to maintain a cover of 1 m of water above tailings in
perpetuity (see Section 19.8). This water cover is necessary under the reclamation plan, in
order to avoid oxidation and subsequent production of acid from the tailings. Due to
seepage through the main TSF Dam (North Dam), the current seepage rate (6.3 L/s) would
have to be reduced by 1.8 L/s to maintain an adequate water cover on the tailings. It is the
estimate of the Klohn report that at the current state, the tailings will be exposed to
oxidation in 8.6 years. It is probable that seepage rates will increase once the facility is
reactived and new tailings are deposited in the facility. The increase in the seepage rate has
not been quantified at this time.
Golder Associates Ltd. (Golder) provided a report for the Company that details some
common fixes to this type of dam seepage, which include:
• Promoting the deposition of fine tailings against the dam face and over the PAG
rockfill to provide an additional zone of low hydraulic conductivity. This may require
revisions to the tailings deposition plan.
• Install a geomembrane liner on the tailings beach to reduce the hydraulic gradient across
the dam. This would need to be installed in the relatively near future to be effective.
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Sufficient exposed beach would be required to enable installation, which may preclude
this option.
• Perform grouting of the areas of the dam or abutments in which the highest rates of
seepage are observed. This could be performed at closure.
• Install a cut-off wall through the dam core, in the section in which the highest rates of
seepage are observed. There are several feasible options for installing such a wall. This
could be performed at closure.

19.7 TAILINGS STORAGE FACILITY (TSF)

The remaining capacity of the tailings storage facility is approximately 100,000 m3.
However, the QR mill has been permitted to add one more lift onto its tailing storage
facility embankments, if necessary, which would provide an additional 200,000 m3 of tailings
and water capacity. In reference to the Klohn report (2009), it is suggested that 0847423 BC
Ltd will need to increase the current capacity of the tailings facility to provide enough
storage for the tailings from the West Zone and design storm events. This increase in height
would still be covered under the company’s permit.
Raising of the TSF Dam and Cross Dyke structures was approved under Permit M-198. It
states that the tailings dam and cross dyke can be increased to 1031 m elevation. At present,
the elevation of the TSF Dam and Cross Dyke are 1028.25 m, however the elevation of the
spillway invert is 1027.6 m. The elevation of the tailings, including water cover, is 1026.4 m
as of July 2009 (Golder, 2009), while the existing maximum elevation of the tailings without
water cover is 1023.6 m. It should be noted that the tailings surface is not flat and
bathymetry will vary across the surface of the facility.
Golder suggested that tailings associated with mining 180,000 tonnes of additional ore from
the West Zone would increase the current height of the tailings solids by approximately 1 m
(Golder, 2009). Bathymetry measurements need to be conducted to accurately model the
height of the tailings solids as they are now, to allow for a more precise forecast of the final
height of the tailings at the end of mining.
Reactivation of the tailings storage facility will necessitate the decommissioning of the
current spillway and re-establishment of the cross-dyke crest. Further monitoring and
analyses of the quantity and quality of the current seepage from the TSF Dam will need to
be undertaken to determine if remedial measures are required.

19.8 RECLAMATION AND CLOSURE

In accordance with the BC Mines Act and the Health, Safety and Reclamation Code for Mines in
British Columbia, the primary objective of the Reclamation Plan is to “Excluding lands that are
not to be reclaimed, the average land capability to be achieved on the remaining lands shall not be less than
the average that existed prior to mining, unless the land capability is not consistent with the approved end
land use.”
0847423 B.C. Ltd. is the fourth owner of this property and has many comprehensive studies
to draw upon and to follow to return the reclaimed land to approximate what existed prior
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to mining. Starting in 1989, Rescan designed and carried out an environmental base line
assessment for QPX Minerals Inc. This study documented predevelopment land use and
conditions of the aquatic and terrestrial ecosystem. During Kinross Gold Corps’ ownership
they commissioned T.W. Higgs Associates Ltd. to provide a Reclamation Plan in 1994 and
an Effluent Monitoring Plan in 1995. A report by C.E. Jones and Associates in 1995
included a baseline assessment of the soils and presented a plan for soil salvage and
reclamation. Once Kinross decided to shut the mine down, David Morrey and Associates
LLC. Designed a Reclamation and Closure Plan in 1999 to fulfill the obligations and
responsibilities of Permit-198, a Permit “Approving Work System and Reclamation
Program”. Kinross carried out the plan as scheduled, until Cross Lake bought the property
with the intention of bringing it back into production. At that time, Cross Lake took over
the ongoing environmental monitoring program and the current owner (0847423 B.C. Ltd.)
is continuing the program.
These documents provide the foundation upon which the operational and post-closure
monitoring programs are based and reclamation activities developed, such that the land may
be reclaimed to approximate its original capability once mining has ceased. Environmental
monitoring will continue, fulfilling both the requirements of the M198 permit by Ministry of
Energy and Mines (MEM) and the effluent permit PE 12601 by the Ministry of Water, Land
and Air Protection (MWLAP).
The current reclamation program for the QR Mine is directed to the primary end land uses
of wildlife habitat and commercial forestry. Reclaimed areas will be capable of supporting
secondary uses of the wildlife resource, such as hunting, trapping and outdoor recreation.
Perpetuating, and, if possible, enhancing biodiversity is an important wildlife consideration.
The current reclamation plan for the tailings facility states that the tailings shall be kept
submersed by at least one metre of water in perpetuity. The need to maintain the one meter
water cover would necessitate an on-going surveillance and maintenance program for the
constructed embankments. The ability to maintain this program for perpetuity will need to
be discussed with BC MoE, MWLAP and MEM to determine if this is the preferred closure
scenario.
For purposes of this report, it has been assumed that the water cover will be implemented
as the preferred closure and reclamation plan.
The water balance developed by Klohn Crippen Berger (Klohn) in 2009 indicates that given
current climatic conditions and TSF dam seepage rates, the depth of the water cover would
continue to reduce until the tailings were exposed 8.6 years after mine closure. Golder has
prepared a report outlining probable mitigation strategies that can be implemented by the
Company in order to lower seepage from the main tailings dam. Klohn’s water balance
indicates that the reduction in seepage rates would allow the on-going maintenance of a
permanent one metre water cover in accordance with the reclamation plan. Some of the
standard seepage reduction techniques outlined by Golder and their estimated costs of
implementation are listed below:
• Promoting the deposition of fine tailings against the dam face and over the PAG
rockfill to provide an additional zone of low hydraulic conductivity. This may require
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revisions to the tailings deposition plan, which may result in a slightly higher cost of
tailing disposal.
• Installation of a geomembrane liner on the north tailings beach to reduce the hydraulic
gradient across the main TSF Dam. This would need to be installed in the relatively near
future to be effective. Sufficient exposed beach would be required to enable installation,
which may preclude this option. Based on a cost of $15 m2 for the geomembrane and
estimated TSF dam dimensions of 425 m long by 25 m wide beach, the estimated cost
for geomembrane liner installation is $175,000. However, this method would require
partial draining of the pond which may not be feasible.
• Perform grouting of the areas of the dam or abutments in which the highest rates of
seepage are observed. This could be performed at closure. The estimated cost for grout
installation is $110 m2 plus the additional cost of site mobilization/demobilization. This
option would require further field work to determine the extent of the required grouting
and associated cost.
• Install a cut-off wall through the dam core, in the section which the highest rates of
seepage are observed. There are several; feasible options for installing such a wall. This
could be performed at closure. The western part of the dam is the area of highest
seepage and has the approximate dimensions of 200 m long by 20 m deep. The
estimated cost for grout installation is $110 m2 plus the additional cost of site
mobilization/demobilization. The estimated cost of implementing the grout cut-off wall
option would be $500,000.
If seepage from the TSF dam can not be reduced to the required flow rate to maintain
the one metre of water cover using one of the above mentioned techniques, alternative
methods for closure and reclamation of the tailings facility would need to be examined.
One such option would be the use of an engineered cover over the existing tailing pond.
The availability of suitable local materials, groundwater conditions, climatic conditions,
the geotechnical characteristics of the tailings and the stability of the current
embankments would need to be closely assessed in order to determine the validity and
cost of this option.
The estimated cost associated with the current site reclamation plan is $686,258. The
additional costs related to implementing an appropriate seepage reduction strategy are likely
in the order of $500,000.
Current Reclamation bonding in place is $1,830,000 being held in security for the purpose
of the M-198 permit, including $1,230,000 in cash bonds ($930,000 at the VanCity Credit
Union and $300,000 at the Royal Bank) and $600,000 held as asset security over certain
assets in the mill. A total of $32,000 in security is held for the MX-10-189 permit including
$2,000 at the Royal Bank and $30,000 at VanCity Credit Union.
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19.9 RECOVERABILITY
The design gold recovery at QR on ore mined from the Main Zone and the North Zone
was 93% based on the historical laboratory work. Limited laboratory studies performed
both historically and in 2009 show a similar recovery can be achieved for West Zone,
depending on mineralogy and feed grade of ore to the mill.
Actual plant recoveries may not match recoveries based on laboratory studies due to
variation in procedures, mineralogy or grade as was used for the test work samples. Actual
plant recoveries may also decrease due to process issues in the operating circuits. The
reported gold recoveries for the last five months of operation at QR varied from 32% to
95%, and averaged approximately 83%. Part of this, lower than design, recovery may be
explained by plant equipment performance and maintenance issues.
Assuming optimum mill performance, an average feed grade of 4.85 g/t and mill feed
mineralogy that matches those of the laboratory testwork, the gold recoverability is
estimated to remain at 93% for the West Zone.

19.10 MARKETS AND CONTRACTS

While a project of this size does not require absolute knowledge of the intricacies associated
with markets and contracts, the Company should be well aware of the risks and benefits
provided through different strategies. If the Company lacks knowledge in areas of
marketing, finance and law, as well as freight; contract management; payment procedures;
insurance; surveying of loading and discharge; sample, weight and assay control; title
transfer; hedging; and contractual legal issues such as force majeure, notices, suspension of
quotations, arbitration, and other such events, then it should consider the use of an outside
consultant with background and expertise in the preceding matters.
Transportation and Refining Agreements
The doré will be stored in a vault until a helicopter arrives on site to collect and transport it
to a commercial refiner. Agreements will need to be set up with a nearby refinery to sell
doré and produce bullion.
Under the terms of the Gold Sales Agreement, the Lender will pay 100% of the gold value,
excluding gold ounces pledged for the Prepayment and any Gold Options exercised by the
Lender. The gold price will be at the Lender’s choosing on or before 4:00 pm EST on the
day of Payment, from either the London Gold Market AM Fixing Price, or the Comex (1st
Position) Settlement Price on the Quotational Period, less $0.50 per troy ounce. The
quotation price will be at the Lender’s selection on or before the day of Payment, any day
during the last 20 business days of the month following the month of delivery.

19.11 TAXES AND ROYALTIES

Effective Taxation Scheme
Canadian mining operations are subject to an essentially three-tiered tax system and any
subsequent vendor royalties:
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Federal income tax is levied on an operation’s taxable income, generally net of operating
expenses, depreciation on capital assets and deduction of exploration and pre-production
costs.
Provincial income taxes are based on the same taxable income.
Provincial mining taxes, duties and royalties are levied on a separate measure of production
profits or revenues.
In British Columbia, the provincial mining tax is referred to as the Mineral Tax. The
Mineral Tax has two components, a Net Revenue Tax based on 13% of profits in excess of
a normal return in investment over the life of mine, and a Net Current Proceeds Tax based
on 2% of operating cashflow from production done in each year. Note that the Net Current
Proceeds Tax can be deducted from the Net Revenue Tax (Government of British
Columbia, 2006).
The tax rates as per Statute are:
Federal income tax 29.1% (Natural Resources Canada, 2005).
Provincial income taxes 13.0% (Price Waterhouse Coopers, 2007)
Allowances effectively reduce the 29.1% Federal income tax rate to 21.57% (Government
of Canada, 2006).
British Columbia has no resource or processing allowances in the calculation of provincial
taxes (Government of Canada, 2006).
Federal Income Tax
Federal income tax will be levied on taxable income produced from operation of the
proposed mine. The proportion of taxable income of these properties will generally be
determined by the net operating profits, including deductions for any provincial or
territorial royalty or mining taxes paid, less deductions for financing costs and discretionary
deductions for capital cost allowance, Canadian Exploration Expenses (CEE), and Canadian
Development Expenses (CDE).
Bill C-13 which passed third reading on June 6, 2006, proposes to reduce the general
corporate tax rate to 19% for 2010 and subsequent years. Bill C-13 also eliminates Federal
Large Corporation Tax effective January 1, 2006. Federal income taxes will be reduced by
any available investment tax credit balance on qualifying pre-production mining
expenditures. The investment tax credit on qualifying pre-production mining expenditures
is 10%.
Capital assets acquired for the purpose of producing income from a mine will be included in
Class 41, allowing for a deduction from taxable income of 25%, calculated on a declining
balance basis, and subject to a 50% reduction on assets acquired or disposed of during the
year. In addition, an increased capital cost allowance is permitted in certain circumstances
equal to the lesser of the remaining undepreciated capital cost balance and the income from
the mine for the year. CEE consists of exploration expenses incurred for the purpose of
determining the existence, location, extent or quality of a mineral resource in Canada. CEE
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also includes any pre-production expense of bringing the mine into production, including
sinking a mine shaft. The CEE costs are accumulated in a Cumulative CEE pool and
eligible for deduction up to 100% of the unclaimed balance each year. CDE consists of any
expense incurred after attaining production of reasonable commercial quantities in sinking
or excavating a mine shaft, haulage way or other underground work for a mine in a mineral
resource in Canada, including the cost of acquiring Canadian mining properties. The CDE
costs are accumulated in a Cumulative CDE pool and eligible for deduction up to 30% of
the unclaimed balance each year.
British Columbia Provincial Taxes
Under the BC Mineral Tax Act, taxes are imposed in a two stage process, a 2% “net current
proceeds” tax followed by a 13% “net revenue” tax.
The 2% net current proceeds tax is a minimum tax levied mine-to-mine; it is applied to
every mine and cannot be transferred over to another mine owned by the same operator to
alleviate taxation. Net current proceeds is defined as gross revenue, less operating expenses
(excluding exploration) and a deduction for non-capital reclamation costs. This tax is
creditable against the 13% net revenue tax.
The 13% net revenue tax is levied against net revenue, less capital costs, exploration costs
and pre-production development costs which can all be carried forward to the point where
the mine makes a net revenue. If the net revenue calculation results in a negative amount, it
can be added to the “cumulative expenditure account” (CEA) of the mine, which in turn
will be carried forward indefinitely (Price Waterhouse Coopers, 2007).
Mining Taxes and Crown Royalties
All provinces and territories having significant mining activities impose mining taxes and/or
mining royalties and/or mineral land taxes on mining operations within their jurisdictions.
This is a third level of taxation, separate and distinct from federal and provincial/territorial
income taxes. These mining levies are intended to compensate the province or territory for
the extraction of non-renewable resources owned by it.
The provinces of British Columbia, Manitoba, Ontario, Quebec, New Brunswick, Nova
Scotia, and Newfoundland and Labrador – and the federal government in respect of mines
in the Yukon, Nunavut and Northwest Territories – all impose mining taxes on defined
mining profits. With the exception of the British Columbia Mineral Tax Act, the mining
taxes are conceptually levied on profits derived from the operations at the mining stage
only. Practically, since no fair market value of production can reasonably be established at
the mining stage, the starting point of the tax computation is generally the profits from both
mining and processing operations, with the deduction of a processing allowance that
removes from taxable profits a given return on the investment in processing assets. The
processing allowance is computed as a given percentage (representing the allowed rate of
return on processing investment) of the original cost of the processing assets. There are
provisions that the allowance cannot exceed a stated percentage (usually 65%) of the
combined mining and processing income calculated before the processing allowance. In
some cases, a minimum percentage of mining and processing profits is allowed when this
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calculation yields a higher deduction than the one given by the application of the allowed
percentage of processing asset cost (Natural Resources Canada, 2007).
Property Royalties
Revenue is subject to a Net Smelter Return (NRS) royalty of 1% originally payable to the
Placer Dome Group, now payable to Barrick Gold Corporation.
Pursuant to the terms of the QR Asset Transfer Agreement dated June 1, 2009 between
Cross Lake (now 0373849 BC Ltd) and QR Subco (known as 0847423 BC Ltd) which
provides for the transfer of the QR Property from Cross Lake to QR Subco, the QR Mine
and Mill are subject to a 2% net profit royalty in favour of Cross Lake.
There is a 2.5% net operating profits royalty on production from the QR Mine that was
originally payable to Fox Geological Consultants Ltd. and is now payable to Foxcorp
Holdings Ltd. The terms of the agreement state that royalty payments are made after all pre-
production expenses have been deducted in full. Due to the high costs already incurred at
the QR Mine, it has been assumed that no net operating profits royalty payments will be
made.
There was a 2.5% net operating profits royalty agreement between Orbex Minerals Ltd.,
later known as Internet Identity Presence Company Inc. (Internet Identity), now known as
Revolution Technologies Inc. This agreement was annulled by a deal between Internet
Identity and Cross Lake Minerals Ltd.

19.12 CAPITAL COST ESTIMATE

Re-commissioning of the QR Mine, specifically the West Zone, will require minimal capital
outlay in comparison to a mine of similar size that is a start up project (green fields). The
majority of capital costs will be allocated towards the mill and tailings dam.
No costs are included for mining equipment, as mining equipment will be supplied and
operated by Procon Mining and Tunneling Ltd. (Procon).
Capital costs were supplied by Procon and verified by EBA.
A contingency of 10% was added to all capital costs.
The major capital costs incurred in the first three months of operation are found in Table
37.
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TABLE 37: INITIAL CAPITAL COST ITEMS

Item Costs
Mill Refurbishment $1,447,577
Mill Start-up and Commissioning $150,000
Mill Care and Maintenance $270,000
Mine Mobilization & Setup $250,000
Working Capital $883,083
Total Capital Costs w/o Contingency $3,000,660
Contingency @ 10% $300,066
Total Capital Costs w/ Contingency $3,300,726
Stope Development (OPEX) $3,002,000

Working Capital
Working capital is often defined as the difference between current assets and current
liabilities or the “cash conversion cycle” of a company which represents how much longer it
takes to receive payment for sales of a product, from the time at which it incurs costs to
produce this product and cash is paid out. For this report, working capital has been
estimated at half of the monthly average operating expenses, equal to $883,000. Working
capital has been defined as a capital expense incurred at the beginning of the project that
will be redeemed in full following the end of production.

19.13 OPERATING COST ESTIMATE

Basis of Estimate
The operating cost estimate was created by Procon and verified by EBA and is summarized
in Table 38.
• Ore = 193,465 tonnes
• Waste = 31,584 tonnes
• Mining rate = 700 tonnes per day
• Milling rate = 700 tonnes per day
• Mine life = 1 year
• Contingency of 10%
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TABLE 38: OPERATING COST SUMMARY

Item Cost/Value Type
Drilling $5.33/t Procon/EBA verification
Blasting $2.85/t Procon/EBA verification
Hauling from East Lobe $22/t Procon/EBA verification
Hauling from North Lobe $26/t Procon/EBA verification
4 m x 4 m Development $4000/m Procon/EBA verification
Processing $31.02/t Procon/EBA verification
General & Administrative $12.45/t Procon/EBA verification
Mill Recovery 93% Testwork
Mining Recovery 85% Estimate
Stope Dilution 10% Estimate
Development Dilution 5% Estimate
Au Price US$850/oz Estimate
Discount Rate 5% Standard
CDN/US Exchange $0.90 Estimate

Mining Operating Costs

Mining operating costs were derived from detailed cost estimates provided by Procon.
These costs were then cross-referenced against actual historical costs incurred by Procon
whilst mining previously at QR during 2007 and 2008. EBA has viewed invoices from
Procon to Cross Lake Minerals to verify that costs presented actually match historical costs.
Procon provided a memo stating that these costs are representative to those when Procon
acted as a Contractor and not owner. Mining costs are $5.33, $2.85 and $22 per tonne for
drilling, blasting and hauling from the East Lobe respectively to a total of $30.18/t. Hauling
from the North Lobe will cost approximately $26/t to a total of $34.18/t.
Processing Operating Costs
The processing operating costs are based upon historical results. These costs have been
verified by EBA by comparison to actual costs incurred historically. These costs are equal to
$31.02/t of ore processed.
General and Administrative Costs
General and Administrative costs include administration expenditures, salaries (all salaries
that aren’t covered in the mining and milling operating costs), mobile equipment, safety and
security, site maintenance, communications, bullion transport, insurances, property taxes,
mining lease, camp operations and travel. These costs have been estimated at $12.45/t of
ore processed.
 December 2009
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19.14 ECONOMIC ANALYSIS

Economic Analysis Summary
At a discount rate of 5%, this project yields a positive net present value of $2.95 million
(before tax) with an internal rate of return of 55% (before tax) under the base case scenario
of $850/oz Au, 700 tonnes per day. Table 39 shows an economic summary of the project at
different prices of gold.

TABLE 39: ECONOMIC SUMMARY BY GOLD PRICE

Before-Tax
Average Gold Before-Tax NPV @
Before-Tax Cash Flow Internal Rate of
Price US$ 5% Discount
Return %
Minimum 650 $(3,283,835) N/A $(3,302,788)
Low 750 $145,823 2% $(178,201)
Base 850 $3,575,481 55% $2,946,385
Current -
950 $7,005,139 111% $6,067,985
Low
Current -
1050 $10,434,797 166% $9,178,785
High
High 1,150 $13,864,454 220% $12,289,586

Discount Rate
A base case discount rate of 5% was used for this study. 5% was deemed a suitable discount
rate as it is the common discount rate used for recent gold mining projects in North
America (discount rates typically range from 0% - 10%). Table 40 presents the NPV of the
project at varying discount rates.

TABLE 40: NET PRESENT VALUE BY DISCOUNT RATE

Discount Rate Net Present Value
5% 2,946,385
8% 2,616,713
10% 2,414,296
12% 2,224,539
15% 1,961,593

Metal Prices
Metal prices have a significant effect upon the profitability of the project. It is not part of
this study to be speculating as to the direction that gold prices will be moving in the future,
 December 2009
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however a general market outlook and overview has been provided in the market analysis,
Section 19.15. Figure 30 provides historic price of gold over the last 5 years. Currently
$850/oz is the generally accepted price of gold when financing through a bank and is
therefore the price that was used to evaluate this project. There is always inherent risk in
investing in a mining project because it is uncertain where metal prices will be in the future.
A gold price of $850/oz is used by EBA to value this project but it should be known that
metal prices will fluctuate in the future.

Base Case Cash Flow Model

Economic Criteria
Revenue
• 700 tonnes per day of ore
• Recovery of 93% gold with no credits for silver
• Exchange rate 0.90 USD – 1.00 CAD
• Metal price of $850/oz Au
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• Revenue is recognized at the time of production

Costs
• Initial capital cost is $3,300,000 (including mill refurbishment, mobilization
and working capital, excluding stope development, raising of the tailings dam
and grouting of tailings dam to lower seepage )
• Stope development prior to the start of production mining is 3,002,000
(occurs over the first 3 months of mine life) and carried as a mine operating
cost
• Shutdown Costs incl. Reclamation is $2,582,000 (including mine
demobilization, mill shutdown, reclamation activities, grouting of tailings
dam to lower seepage and post-closure monitoring)
• Working capital is $883,000 (estimated at average operating expenses per
month)
• Working capital and mill asset recovery is $1,800,000 (this is considered a
positive value to the firm, as working capital can be recaptured and
equipment from the mill can be sold at the end of the mine life)
• Average operating cost / tonne of ore over the mine life is $61.41
The project has an estimated cash operating cost of $US 680 / oz Au. With capital, the total
cash cost is estimated at $US 821 / oz Au.
Table 41 has a summary of the Base Case Cash Flow Model.

TABLE 41: BASE CASE CASH FLOW SUMMARY BEFORE TAXES

Calendar Quarter 1st 2nd 3rd 4th Total
Ore Mined (t) 10,354 78,398 68,203 36,510 193,465
Ore Milled (t) 0 63,000 63,000 67,465 193,465
Waste Development (t) 15,174 16,410 0 0 31,584
Gold Grade Milled (g/t) 0 4.77 5.05 4.85 4.85
Ounces Produced after
93% Recovery 0 8,980 9,512 9,541 28,033
Quarterly Cash Flow ($) $(6,303,717) $549,052 $4,254,281 $5,075,864 $3,575,481
Cumulative Cash Flow
($) $(6,303,717) $(5,754,664) $(1,500,383) $3,575,481 $3,575,481
Operating Cash Cost /
tonne ($/t) 290.02 70.16 36.30 24.67 61.41
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Sensitivity Analysis
Sensitivity analyses have been conducted on the economics of the project and have revealed
that the project’s Net Present Value is most sensitive to the price of gold, the Canadian
dollar exchange rate, recovery, operating costs, amount of reserves and ore grade on a
percentage basis. The NPV is least sensitive to capital costs. The before tax NPV of the
different scenarios is located in Table 42.

TABLE 42: NET PRESENT VALUE USING BASE CASE VARIATIONS

Economic Scenario Before-Tax Net Present Value (CAD)
Base Case $2,946,385

CAD/USD +10% $(1,682,960)

CAD/USD -10% $9,206,049

Ore Grade +10% $5,602,284

Ore Grade -10% $290,487

Capital Cost +10% $2,533,899

Capital Cost -10% $3,358,871

Operating Cost +10% $993,205

Operating Cost -10% $4,899,565

Recovery @100% $4,945,448

Recovery @86% $947,322

Reserves +10% $4,742,651

Reserves -10% $1,150,119

All capital and operating costs are to a Pre-feasibility level and were established using
quotes, experience, and factored industry standard numbers. Costs are to a +/-20%
accuracy as is typical for this level of evaluation.
Payback
The payback period for this project is estimated at 10 months under the Base Case scenario.
This indicates that after operating the mine for 10 months, all initial capital costs from the
beginning of construction will have been redeemed and the company will have broken even
(not including exploration sunk costs and expected returns).
 December 2009
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19.15 MARKET ANALYSIS

Gold has tremendous electrical conductivity, is very malleable, and is resistant to corrosion,
making it a very desirable material for industrial use, aside from its aesthetic appeal in
jewelry. A breakdown of the gold demand by industry is presented in Table 43 (Bullion
Vault, 2008).

TABLE 43: GOLD INDUSTRY BREAKDOWN AS OF JULY 2008

Industry Gold % Demand
Jewelry 68.23
Industrial 11.46
Investment 18.66
Other 1.64
Total 100

Jewelry has historically been the most common use of gold. It should be understood,
however, that not all gold jewelry is bought for the same purpose as that of jewelry’s
traditional function as an appealing visual accessory. Some gold sold as jewelry is purchased
to act as an investment because it will move on the same economic course as the spot price
of gold, whether it is a gold ring or gold bullion. Due to this relationship, it is difficult to
pinpoint exactly how much of the jewelry demand is really investment demand in disguise.
During tough economic times, consumer non-essentials (such as jewelry) spending should
go down, however that will not effect investor spending on gold through jewelry.
Historically, investor demand has increased during tough economic times when there has
been uncertainty in the markets. With the decrease in jewelry demand and increase in
investment demand, it can often be difficult to pinpoint what will become of overall gold
demand. This causes gold to act in unpredictable ways when confronted with uncertain
economic conditions (Bullion Vault, 2008).
Industrial uses of gold are common in, but not limited to, computers, televisions,
telephones and lasers. Gold is also an essential metal for many types of equipment used in
the dental and medical industries (The National Mining Association, 2008).
The gold supply available in the market place is not only from new production, but can also
be heavily influenced by the drawdown of government reserves and other institution’s
reserves.
The main players in the global market production of gold are international corporations
with assets in a variety of gold producing countries. In 2007, the world’s largest gold
producing companies were Barrick Gold, Anglogold, Newmont and Goldfields, accounting
for close to 30% of the global gold production collectively (Table 44).
 December 2009
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TABLE 44: 2007 GOLD PRODUCTION BY COMPANY

Country Millions of Ounces Produced
Barrick Gold 8.0
Anglogold 5.5
Newmont 5.3
Goldfields 4.0
Total 22.8

The major consumers of gold over the past decade have been the United States, India and
China, respectively.
Due to the non-reactive and durable nature of gold, nearly all of the gold ever mined, still
exists today. The large amount of gold in the possession of the public, government and
corporations creates the potential that some of this gold will make its way back onto the
market increasing the market supply above production. Demand for gold generally exceeds
annual production, keeping the increase in supply from placing downward pressure on the
value of gold. This does mean, however, that due to the large quantity of stockpiled gold,
compared to annual production, the price of gold is more greatly affected by changes in
sentiment, rather than changes in annual production, making it unique compared to other
types of metals.
The outlook for the price of gold is heavily debated and is commonly linked to the state of
the international economy as a whole. There is a general consensus among institutional
analysts, including those from Royal Bank of Canada and the Bank of Montreal, that gold
will stay within its current general range and most likely have modest increases in the
second half of 2009 and into 2010. Some analysts are bearish on the commodity due to their
general gloomy outlook on the economy as a whole. However, some bullish analysts believe
that the rescue plan, created by the American Government and other Governments around
the world, will force liquidity back into world markets and create an environment for
unprecedented monetary inflation. Only time will tell if this is the case, however, should this
be true, the explosion in money supply and inflation should propel gold higher
(MarketWatch, 2008).

19.16 MINING LIFE

The lifespan of the mine is variable dependent mainly upon the establishment of more
resources with subsequent reserves through exploration, an increase or decrease in the price
of gold, changes in production costs or a change in the production rate. Under current
conditions it is estimated that the life of mine will be 1 year.

19.17 EXPLORATION POTENTIAL

The North Zone is a faulted extension to a lower depth of the Main Zone which was mined
out by open pit in 1998, see Figure 7. Some drilling has been conducted in this zone and has
 December 2009
94

determined that the geologic character is similar to that of the Main Zone. The North Zone
is the only zone on the QR property not limited by faulting
Promising results from the drill program in the North Zone on the QR Mine warrant
additional programs. The North Zone has potential to host significant tonnage and further
drilling is required to establish continuity of the mineralization zones. Favorable results
from subsequent drill programs may lead to the establishment of more resources and
reserves.

20.0 INTERPRETATION AND CONCLUSIONS

This study shows a positive economic benefit at current gold prices to justify potentially
reopening the QR Mine and Mill. Based on the constraints of this study, EBA believes that
this project is economically viable.

21.0 RECOMMENDATIONS
Given the current rise in gold prices and the positive economic analysis on the QR Project,
development and production is recommended based on this study.
Costs of recommended initial development are stated in tables 6 and 37 and summarized
below:
• Initial capital cost is $3,300,000 (including mill refurbishment, mobilization and working
capital, excluding stope development, raising of the tailings dam and grouting of tailings
dam to lower seepage )
• Stope development prior to the start of production mining is 3,002,000 (occurs over the
first 3 months of mine life) and carried as a mine operating cost
• Working capital is $883,000 (estimated at average operating expenses per month)
Several areas require further work as stated below.
• Proper QA/QC and assaying should be conducted on the ten surface holes completed
on the West Zone in 2008. Due to lack of quality control, these holes could not be used
in grade estimation of the resource.
• No routine check assays or duplicate sample assays were carried out on the 2007 West
Zone underground drill program. It is recommended that 5% of the samples be
analyzed by fire assay at a secondary independent laboratory.
• It is recommended that more drilling be conducted on the North Zone of the project to
establish mineral resources in that area. QA/QC of drilling and sampling in the North
Zone should be conducted to NI 43-101 standards. If substantial mineral resources are
defined in the North Zone, it is recommended that engineering studies and feasibility
work be conducted to create mineral reserves and increase overall project economics.
 December 2009
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• A geotechnical study will need to be completed for the requirement of a crown pillar in
the West Zone North Lobe prior to mining of the West Zone North Lobe. 0847423 BC
Ltd. has initiated this work.
• For metallurgy of the West Zone, both the historical and more recent laboratory studies
are limited in scope. Relating the leach characteristics to variations in the resource
mineralogy, as well as to sample age concerns should be undertaken during feasibility.
Grind work index, and the tailing water quality also require further evaluation.
Generating operating data by comparing the West Zone ore to historical plant
performance can be considered to more accurately determine the process response.
Table 45 presents the estimated costs for recommended further studies. It should be noted
that North Zone drilling and the geotechnical study of the North Lobe do not need to be
completed prior to the milling and the project generating cashflow.

TABLE 45: COSTS FOR RECOMMENDED PROGRAMS

Program Description Co. Time Cost
2008 Surface Hole QA/QC performed by a Qualified
Geosim 40 hours $6,500
Assay QA/QC Person at site
Re-assay of 5% of samples from 2007
2007 Drill Program
program. 15 holes, totaling close to Lab 3 weeks $12,000
Fire Assay
1100m
Dependent upon extent of
North Zone Drilling Procon 3 months $1,000,000
mineralization encountered
West Zone North Lobe
Drilling has been completed,
Geotechnical Study - Consultant 2 months $80,000
interpretation is required
Desktop Study
Grind work index, tailing water quality
Metallurgy F. Wright 1 month $50,000
tests
Total $1,148,500

22.0 REFERENCES
American Gold Exchange. November 6, 2008. Gold Stabilizing After Universal Selloff.
(http://www.amergold.com/newsroom/gma.shtml) accessed December 2008.
Boon, A., February 10, 2009. QR Mill Status and Recommended Repairs, Cross Lake
Minerals Ltd., Quesnel BC (Unpublished internal report prepared for Cross
LakeMinerals Ltd.)
Bullion Vault. Gold, Silver & Platinum – Tuesday October 14th, 2008.
(http://goldnews.bullionvault.com/gold_silver_platinum_metals_precious_metal_10
1420081) accessed December 2008
 December 2009
96

David Morrey and Assoc., Conceptual Reclamation and Closure Plan for the QR Mine,
1999, Prepared for Kinross Gold Corporation.
Fortin, J. 1988, Kinross Gold Corporation, QR Mine, Reserve and Resource Evaluation.
May 1 1988. Internal Kinross Gold Corp. Report
Fox, P., Cameron, R.S. 1995. Geology of the QR Gold Deposit, CIM Special Volume 46
Gillstrom, G.,2003 Revised Technical Report, QR Property, Prepared for Cross Lake
Minerals Ltd.
GOLDSHEET Mining Directory - World Gold Production. Gold Production History.
(http://www.goldsheetlinks.com/production.htm.) accessed December, 2008.
Infomine. Gold Price Comparisons of Different Time Periods.
(http://www.infomine.com/Investment/HistoricalCharts/ShowCharts.asp?c=gold)
accessed December 2008.
Kinross Gold Corporation, QR Mine, Status Report, 1999, Internal Kinross Gold
Corporation.
MarketWatch. Gold could hit $1500 says Merrill Analysts.
(http://www.marketwatch.com/news/story/gold-could-hit-1500-
say/story.aspx?guid={A5996AE5-3242-4F5B-AFF6-1A46E86D44AD}&) accessed
December 2008.
Mineweb. Gold Analysis.
(http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=74927&sn=
Detail) accessed December 2008.
The National Mining Association. The Uses of Gold.
(http://www.nma.org/publications/gold/uses_gold.asp) accessed December 2008.
Natural Resources Canada, June 4, 2009 Overview of Main Tax Instruments
http://www.nrcan-rncan.gc.ca/mms-smm/busi-indu/mtr-rdm/omt-vpf-eng.htm
accessed July 2009.
Price Waterhouse Coopers, 2007. Canadian Mining Taxation (2007).
http://www.pwc.com/ca/en/mining/canadian-mining-taxation.jhtml accessed July
2009.
Simpson, R.G.,2005 Update on Resources, QR Project, Prepared for Cross Lake Minerals
Ltd.
Sveinson F.J., Chide, F. Exploration Proposal for the QR Property, Cariboo Mining
District, BC, Prepared for 568674 British Columbia Ltd.
 December 2009
97

23.0 CERTIFICATE OF QUALIFICATIONS

N. ERIC FIER
I, N. Eric Fier, C.P.G., P. Eng., as an author of this report entitled “Technical Report on
the Pre-Feasibility Study of the Quesnel River (QR) Mine, Quesnel, British Columbia,
Canada”, prepared for 0847423 BC Ltd. and International Wayside Gold Mines Ltd., and
dated December 16 2009, do hereby certify that:
1) I am the Director of Mine Planning Services for EBA Engineering Consultants Ltd.
My office address is 9th Floor, 1066 West Hastings Street Vancouver, B.C.
2) I am a graduate of Montana Tech, Butte, Montana, in 1984 and 1986 with a
Bachelor of Science degree in Geological Engineering and Mining Engineering,
respectively.
3) I am registered as a Certified Professional Geologist registered with the American
Institute of Professional Geologists (Reg.# 10622) and a Professional Engineer in
British Columbia (Reg.# 135165). I have worked as a geologist and mining engineer
for a total of 24 years since my graduation. My relevant experience for the purpose
of the Technical Report is:
a) Review and report as a manager and consultant on numerous exploration
and mining projects around the world for due diligence, operations and
regulatory requirements, including:
• Numerous reports on the Yellowknife Gold Project from January
2005 to present.
• Technical Report on the Courageous Lake Deposit, NWT.
• Geotechnical Preliminary Assessment of the Yellowknife Gold
Project, NWT
• Pre-Feasibility Study for the Bonanza Ledge Deposit, Well, BC
• Feasibility Study for the Minto Project, Yukon
4) 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 in NI43-101) and past relevant work experience,
I fulfill the requirements to be a "qualified person" for the purposes of NI43-101.
5) I visited the QR Mine on June 21-22, 2009.
6) I am responsible for all sections of the Technical Report.
7) I am independent of the Issuer applying the test set out in Section 1.4 of National
Instrument 43-101.
 December 2009
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8) I have had no prior involvement with the property that is the subject of the
Technical Report.
9) I have read National Instrument 43-101F1, and the Technical Report has been
prepared in compliance with National Instrument 43-101 and Form 43-101F1.
10) To the best of my knowledge, information, and belief, as of the date of the report,
the Technical Report contains all scientific and technical information that is
required to be disclosed to make the technical report not misleading.
11) I 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 the 16th day of December, 2009

__________________________________
N. Eric Fier, C.P.G., P. Eng.
 December 2009
99

Ronald G. Simpson
I, Ronald G. Simpson, P. Geo, residing at 1975 Stephens St., Vancouver, British Columbia,
V6K 4M7, do hereby certify that:
1) I am president of GeoSim Services Inc.
2) This certificate applies to the Technical Report entitles “Pre-Feasibility Study of the
Quesnel River (QR) Mine, Quesnel, British Columbia, Canada,” dated December
16, 2009.
3) I graduated with an Honous Degree of Bachelor of Science in Geology from the
University of British Columbia in 1975. I have practiced my profession continuously
since 1975. My relevant experience is as follows:
• 1975 – 1993: Geologist employed by several mining/exploration
companies including Cominco Ltd., Bethlehem Copper Corporation,
E&B Explorations Ltd., Mascot Gold Mines Ltd., and Homestake
Canada Inc.
• 1993 – 1999: Self employed geological consultant specializing in
resource estimation and GIS work.
• 1999 – Present: President, GeoSim Services Inc .
4) I am a member in good standing of the Association of Professional Engineers and
Geoscientists of British Columbia (Registered Professional Geoscientist, No. 19513)
and a Fellow of the Geological Association of Canada. I am a “qualified person” for
the purposes of National Instrument 43-101 (“NI 43-101”) due to my experience
and current affiliation with a professional organization as defined in NI 43-101.
5) I have visited the property on February 14, 2005 and on September 16, 2008.
6) I am independent of the issuer applying all of the tests in section 1.4 of NI 43 101.
7) I have had prior involvement with the property that is the subject of the Technical
Report. The nature of my prior involvement involves the preparation of a technical
report prepared for Cross Lake Minerals Ltd. dated December 15, 2005 and titled
“Update on Resources, QR Project, British Columbia, Canada.”
8) I am responsible for the preparation of Section 18 of the Technical Report.
9) I have read NI 43-101 and Form 43-101F1, and the Technical Report has been
prepared in compliance with that instrument and form.
10) As of the date of this certificate, to the best of my knowledge, information and
belief, the Technical Report contains all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
 December 2009
100

11) I 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 the 16th day of December, 2009

_____________________________
Ronald G. Simpson, P.Geo.
 December 2009
101

Frank Wright
I, Frank Wright, P.Eng. as an author of this report entitled “Technical Report on the Pre-
Feasibility Study of the Quesnel River (QR) Mine, Canada”, prepared for 0847423 BC Ltd.
International Wayside Gold Mines Ltd., and dated December 16th, 2009, do hereby certify
that:
1) I am principal of F. Wright Consulting Inc. My office address is 427 Fairway Dr.,
North Vancouver BC.
2) I am a graduate of the University of Alberta in 1979 with a Bachelor of Science in
Metallurgical Engineering and a graduate of Simon Fraser University in 1983 with a
Bachelor of Business Administration.
3) I am registered as a Professional Engineer in British Columbia (Lic.# 15747). I
have worked in my profession for a total of 27 years since my graduation. My
relevant experience for the purpose of the Technical Report is:
• 1979 – 1982: as a process engineer for Placer Dome Ltd., and
Syncrude Canada Ltd.
• 1984 – 1997: as a professional engineer for Giant Bay Resources,
Technology Resource Inc., Bacon Donaldson Ltd., and Applied Mine
Technologies.
• 1997 – Present: as a self employed consultant specializing in
metallurgical engineering and mineral processing flowsheet
development.
4) 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 in NI43-101) and past relevant work experience,
I fulfill the requirements to be a "qualified person" for the purposes of NI43-101.
5) I visited the QR Mill site on May 7 and 8, 2009.
6) I am responsible for Sections 17.0 and 19.3 of the Technical Report.
7) I am independent of the Issuer applying the test set out in Section 1.4 of National
Instrument 43-101.
8) I have had no prior involvement with the property that is the subject of the
Technical Report.
9) I have read National Instrument 43-101F1, and the Technical Report has been
prepared in compliance with National Instrument 43-101 and Form 43-101F1.
 December 2009
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10) To the best of my knowledge, information, and belief, as of the date of the report,
the Technical Report contains all scientific and technical information that is
required to be disclosed to make the technical report not misleading.
11) I 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 the 16th day of December, 2009

________________________
Frank Wright, P.Eng.
 December 2009
103

Scott Martin
I, Scott Martin, P.Eng. as an author of this report entitled “Technical Report on the Pre-
Feasibility Study of the Quesnel River (QR) Mine, Canada”, prepared for 0847423 BC Ltd.
International Wayside Gold Mines Ltd., and dated December 16th, 2009, do hereby certify
that:
1) I am a Senior Project Engineer for EBA Engineering Consultants Ltd. My office
address is #150, 1715 Dickson Avenue, Kelowna, BC.
2) I am a graduate of the University of British Columbia in 1995 with a Bachelor of
Applied Science in Geological Engineering.
3) I am registered as a Professional Engineer in British Columbia (Reg.# 24984). I
have worked as an engineer for a total of 14 years since my graduation. My relevant
experience for the purpose of the Technical Report is:
• Pebble Gold-Copper Project - Geotechnical Design Manager for
a 2.75 billion tonne gold-copper open pit mine in southwest Alaska.
Identified the preferred layout for mine facilities and carried out
feasibility level design and costing of mine facilities.
• Mirador Copper Project - Geotechnical Design Manager for an open-
pit copper mine in southeast Equador. Identified the preferred
layout for the waste management facilities and carried out feasibility
level design and costing.
• Britannia Mine Remediation, BC - Provided geotechnical
recommendations and design solutions for disposal of sludge. Also
reviewed natural hazards and risks associated with disposal options.
• Aur Resources, Cantung Mine, Tungsten, NT - Conducted annual
reviews of tailings dam stability for closed mine site.
• Rayrock Mine, NT - Conducted annual reviews of tailings dam and
mine workings stability for closed mine site.
4) 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 in NI43-101) and past relevant work
experience, I fulfill the requirements to be a "qualified person" for the purposes of
NI43-101.
5) I visited the QR site on June 21st and 22nd 2009.
6) I am responsible for Sections 19.7 and 19.8 of the Technical Report.
7) I am independent of the Issuer applying the test set out in Section 1.4 of National
Instrument 43-101.
 December 2009
104

8) I have had no prior involvement with the property that is the subject of the
Technical Report.
9) I have read National Instrument 43-101F1, and the Technical Report has been
prepared in compliance with National Instrument 43-101 and Form 43-101F1.
10) To the best of my knowledge, information, and belief, as of the date of the report,
the Technical Report contains all scientific and technical information that is
required to be disclosed to make the technical report not misleading.
11) I 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 the 16th day of December, 2009

_______________________________
Scott Martin, P.Eng.