The valuation of the Potter Mine Property, Munro Township, Ontario, (the "Property") was prepared by Southampton Associates Inc. ("Southampton") at the request of Millstream Mines Ltd. ("Millstream"), as of July 31, 1998.

The Property was purchased by Millstream on April 3, 1998, from Harrison Mining & Engineering Corporation ("HM&EC"), the beneficial owner, for $4,600,000. HM&EC retains a 2.5% Net Smelter Return ("NSR") royalty.

Southampton is not an insider, associate or affiliate of either Millstream or HM&EC and neither Southampton nor its affiliates have acted as an advisor to either company or their affiliates in connection with the purchase of the Property.

The Property consists of 13 patented claims comprising 16 units and 12 contiguous leased claims comprising 12 units in the Larder Lake Mining Division, Ontario. Circa 1930, copper mineralization was discovered on the Property. During the ensuing four decades extensive surface and underground exploration and mining was carried out by various interested parties. This work included 110 surface drill holes (16,813.7 metres), 280 underground drill holes (14,439.9 metres), shaft sinking (387.7 metres), drifting (4,643.0 metres), crosscutting (469.1 metres) and raising (2,613.7 metres). During the period from 1967 to 1970, the Potter Mine milled 327,007 tons of ore producing 422 ounces of gold, 36,883 ounces of silver and 9,834,826 pounds of copper. The mine closed in 1972.

The Property is located in the Abitibi Greenstone belt, within the Kidd-Munro sequence of volcanic rocks, one of the most productive sequences within the belt and which includes the Falconbridge Kidd Creek Mine.

On the Property, the main rock types recognized include Archean komatiitic and basaltic volcanic rocks, gabbro, peridotite and pyroxenite of intrusive and/or extrusive origin, and mafic fragmental volcanic rocks. These rocks form relatively continuous stratigraphic units that trend west-northwest to east-west across the Property. The sequence is folded about west-northwest trending axes and is displaced by northwest, north and northeast trending faults.

Plans of the underground workings at the Potter Mine show that massive to disseminated sulphides form a number of bodies, mainly within the upper part of the mafic fragmental unit. These bodies are lenticular 1 to 3 metres down dip (70) within the mafic fragmental unit. The ore shoots resemble the fingers of a glove in that they thicken and coalesce downward forming larger bodies of mineralization. One of the best ore shoots was on the 6th (260 metre) level approximately 30.5 metres west of the shaft. This ore shoot measured approximately 3.5 metres by 30.5 metres and reported grades of 5% copper (Cu) and 2% zinc (Zn).

Recent exploration of the Property commencing in 1996 to the present was funded by Millstream. This work included line cutting, ground geophysics and 28 surface diamond drill holes totaling 11,274.8 metres including 9 holes greater than 600 metres in length and totaling 6,948.9 metres. These deep holes were designed to test the highly prospective area, at depth, below the previously mined ore shoots. The significant results of this deep drilling are presented below:
 
 

It appears that this mineralization represents the downward extension of the mineralization mapped on the 8th level at the 8-4 stope. This stope averaged 2.26% Cu, and 7.22% Zn over the 103.6 metre long stope that averaged 5.0 metres wide.

The valuation of a mineral resource property without reserves is difficult because along with the value added component of the past expenditures a significant portion of the value of the Property is based on the valuator's opinion of the resource/reserve potential and the value placed on that potential.

Records at the Ministry of Northern Development and Mines document the historic exploration and development work completed on the Property to 1972 as noted above. Southampton estimates the cost of this work, in 1998 dollars, to be $12.5 million. Recent exploration costs from January 1996 to July 1998 are approximately $2.6 million. The aggregate total for the past expenditures being $15.1 million. Southampton estimates the value added component of these expenditures to be approximately $6.5 million.

Southampton believes that the Property has excellent resource potential and has assigned a value of $4,320,000 to this potential; which when added to the value added component of the past expenditures results in a fair market value of $10,879,000.

Furthermore, based on the encouraging results to date, the Property is, in our opinion, an attractive "farm-in" opportunity for a knowledgeable exploration company. Southampton believes that a knowledgeable explorationist would be prepared to fund the next phase of exploration to bring the Property to the reserve definition stage to earn a 50% interest in the Property. The cost of this work has been estimated to be $4,320,000. Therefore, the fair market value for 100% of the Property would be deemed to be $8,640,000.

It is our opinion that the fair market value for the Property, as of July 31, 1998, would be in the range of $8.0 to $10.0 million.

Subsequent to the valuation date, Millstream initiated a deep drilling program to further define the resource potential indicated by the 1998 deep drilling program.

On March 25, 1999, Millstream reported that DDH S99-01A intersected the downward continuation of the Cu-Zn-Co sulphide mineralized mine horizon, 305 metres below the previously drilled massive sulphide intersection. The significant intersections cut by DDH S99-01A are summarized below:
 

It is our opinion that the results of this hole are encouraging and adds further support for our valuation but does not materially change our valuation.

INTRODUCTION

Southampton Associates Inc. ("Southampton") has been retained by Millstream Mines Ltd. ("Millstream") to provide an opinion as to the Fair Market Value of the Potter Mine Property, Munro Township_, Larder Lake Mining Division, Ontario, Canada (the "Property") as at July 31, 1998, (the "Valuation Date").

The Property was purchased by Millstream on April 3, 19981 from Harrison Mining & Engineering Corporation ("HM&EC"), the beneficial owner, for $4,600,000. HM&EC retains a 2.5% Net Smelter Return ("NSR") royalty.

Southampton has been told that its opinion is required in connection with the purchase of the Property.

ENGAGEMENT OF SOUTHAMPTON

Southampton was retained by Millstream. The terms of reference for the assignment are outlined in an engagement letter, dated April 23, 1998, and include the preparation of an independent valuation report (the "Valuation Report").

The engagement letter contains an estimate of Southampton's professional fees to complete the Valuation Report of approximately $20,000.00. The professional fees are based on time expended in accordance with Southampton's current fee schedule. The disbursements are invoiced at cost.

RELATIONSHIP BETWEEN SOUTHAMPTON & THE COMPANIES

Southampton is not an insider, associate or affiliate of HM&EC or Millstream, and neither Southampton nor any of its affiliates has acted as advisor to either company or their affiliates in connection with the proposed purchase of the Property.

The fee payable to Southampton for this valuation opinion is not dependent on any prior agreements or understandings concerning the valuation conclusions to be reached, nor are there any undisclosed understandings concerning any future business dealings.

QUALIFICATIONS OF SOUTHAMPTON

Southampton is a firm of consulting geologists and engineers incorporated in the Province of Ontario in 1995. The firm has been authorized by Professional Engineers Ontario to engage in the business of providing services that are within the practice of Professional Engineering in the Province of Ontario in accordance with the provisions of the Professional Engineers Act. Southampton provides a comprehensive range of services to the domestic and international mining industry. David G. Wahl, P.Eng., President of Southampton, and its associates have prepared a significant number of valuations and other investigations in connection with mergers and acquisitions around the world.

The valuation conclusions expressed in this report were prepared by David G. Wahl, P.Eng., President of Southampton, with 30 years experience in the mining industry, including 20 years designated as a consulting engineer. Mr. Wahl has also been designated as a specialist in exploration and development.

SCOPE OF WORK

In preparing its Valuation, Southampton reviewed and relied upon, among other things. exploration reports, geological and geophysical maps, and internal company memoranda as listed under the heading "Sources of Information" at the end of the report.

Mr. Wahl visited the Property on April 29, 1998. During the site visit Mr. Wahl examined the diamond drill core from the recently completed 1997-98 diamond drilling program and held discussions with Mr. Edward Bettiol, P.Eng.., Vice President, Mining at Millstream, and Mr. Dave Gamble, Millstream's consulting geologist, concerning the project who readily provided all requested information.

At no time did Millstream exert undue influence on Southampton or its associates with respect to the valuation process or its conclusions.

ASSUMPTIONS & DISCLAIMER

In preparing our Valuation we have assumed that all of the information and technical documents reviewed in the preparation of the aforementioned report are accurate and complete in all material aspects. While we have carefully reviewed all of this information, we have not conducted an independent investigation to verify its accuracy and completeness.

Our Valuation is restricted to the Property. Southampton examined the underlying agreements concerning the Property but did not independently verified the legality of the agreements.

We reserve the right, but will not be obligated to revise our report and conclusions if additional information, especially any that may have a material effect on our Valuation conclusions, becomes known to us subsequent to the date of our Valuation.

VALUATION DEFINITION, DATE_, CURRENCY & UNITS

Value, for the purpose of this Valuation, means Fair Market Value which is defined as the highest price available in an open and unrestricted market between informed and prudent parties, acting at arm's length, and under no compulsion to act, expressed in terms of money or money's worth.

Exploration properties are not often traded by way of up-front cash payments. It is more likely that a property interest will be earned by expenditures on exploration and frequently, some cash payment.

The Valuation conclusions reached are effective as of July 31, 1998, (the "Valuation Date"). These conclusions are expected to change over time and with the acquisition of additional information from ongoing exploration, changes in market conditions, commodity, and other technical and economic factors. Throughout this report we have quoted dollar amounts in Canadian dollars unless otherwise stated.

For the most part metric units are the preferential units in this report; however, because of the historical standing enjoyed by the Potter mine all of the old mine records are based on an imperial mine grid which has been superimposed by a metric surface grid. We have tried to reach a balance between the use of imperial and metric units and we apologize for any confusion this may cause.

LOCATION & ACCESS

The Property is located in north-central Munro Township in northeastern Ontario.

The Property is readily accessible by car from Matheson by proceeding east along Highway 101 for approximately 25 kilometers; at which point, the all weather gravel Hedman Resources Ltd. road is followed northerly for approximately 8.2 kilometers and at that point the Potter mine road is followed westerly for approximately 2 kilometers to the Potter mine headframe (Figure 1).

DESCRIPTION & OWNERSHIP

The Property consists of 13 patented claims comprising 16 units and 12 contiguous leased claims comprising 12 units and covers a total of 448 hectares (Figure 2 and Table 1).

The Property is owned by Millstream. (Southampton does not include the optioned claims that are included below in chart)

TOPOGRAPHY, CLIMATE & LOCAL RESOURCES

The topography is generally flat with less than 25 meters of relief. The western portion of the Property exhibits lower topographic relief and is poorly drained with numerous beaver ponds, bogs and alder swamps.

The climate is typical of northeastern Ontario with below freezing temperatures (-5⁰C to -40⁰C) from November to April and brief periods of hot weather in the summer (10⁰C to 30⁰C).

Precipitation averages 80 centimeters per year with a substantial portion in the form of snow averaging 2.4 meters per year.

Skilled labor for mining and exploration is available in the communities of Matheson, Kirkland Lake and Timmins. Timmins and Kirkland Lake are major supply and service centers for the mining industry.

Communications and power are available along highway 101.

The Perry Lake Lodge on Highway 101 provides accommodations and meals for seasonal tourists.

HISTORY & PRIOR WORK

Unless otherwise specified, the following information was obtained from the assessment and exploration files, Resident Geologist's Office, Kirkland Lake.
 

REGIONAL GEOLOGY

In late August, 1996, Dr. K.D. Card, president of Card Associates, Geosearch mapped the Potter Mine Property. The following was extracted, in part, from his report entitled "Geology of the Potter Mine Property_, Millstream Mines Limited, Munro Township, Ontario" and dated October, 1996. Southampton concurs with Dr. Card's findings.

The Potter Mine Property is located in the eastern part of the Kidd-Munro assemblage of the Abitibi Greenstone Belt. The Kidd-Munro assemblage is a fault-bounded package of ultramafic and mafic volcanic rocks, subvolcanic intrusions and thin felsic and mafic fragmental volcanic units that extends some 130 kilometers westward from Timmins to east of Matheson. Isotopic age determinations indicate these rocks are about 2,715 million years ("Ma") old and are considered to represent deposits of an ancient volcanic arc or back-arc basin that were tectonically accreted, along with older and younger assemblages of similar origins, during the Late Archean orogenic events that resulted in the formation of the Superior Province of the Canadian Shield. The Abitibi greenstone belt is the world's largest, best-preserved greenstone belt, and is also one of the most mineral-rich. The Kidd-Munro sequence hosts a number of mineral deposits, including the world-class Kidd Creek volcanogenic massive sulphide deposit, the Dundonald and Alexo komatiitic nickel deposits and several major lode gold deposits. In Munro Township, copper and zinc-bearing massive sulphides have been mined at the Potter Mine and the Potter-Doal Mine_, gold at the Croesus Mine and asbestos at the Munro Mine. The Potter Mine Property is thus located in one of the most productive lithological assemblages in the Abitibi greenstone belt.

On the Potter Mine Property, the main rock types recognized include Archean komatiitic and basaltic volcanic rocks, gabbro, peridotite and pyroxenite of intrusive and/or extrusive origin, and mafic fragmental volcanic rocks. These rocks form relatively continuous stratigraphic units that trend west-northwest to east-west across the Property. The sequence is folded about west-northwest trending axes, and is displaced by northwest, north and northeast trending faults. The Archean rocks and structures are cut by Proterozoic mafic dykes of two ages, an older (2,450 Ma), north-striking Matachewan swarm and a younger (2,167 Ma), northeast-striking Biscotasing swarm (Figure 3).

J.A. Satterly and his associates (Satterly_, 1951) produced a very accurate map of the area at a scale of 1:12,000. The komatiitic volcanics and associated layered complexes, have been described in detail by MacRae (1969), Pyke et al (1973), Arndt (197b), and others. Paul Coad (1976) did a University of Toronto MSc. thesis on the Potter mine, and more recently M. Shore and R. Theriault, University of Ottawa, completed MSc. theses on the Pyke Hill komatiites and the Centre Hill Complex respectively.

PROPERTY GEOLOGY

Bedrock exposures constitute approximately 30 percent of The Property, mainly in the northeastern and southeastern parts of the area. The remainder is covered by thick, poorly drained overburden with numerous beaver ponds, bogs, and alder swamps. The main rock types, Archean komatiitic and basaltic volcanic rocks, gabbro, peridotite, and pyroxenite, and volcanic fragmental rocks, form an apparently simple lithostratigraphic sequence comprising a lower basaltic volcanic unit, a layered gabbro-peridotite-pyroxenite complex, the Centre Hill Complex, a thin mafic fragmental unit, a peridotite unit, and an upper komatiitic volcanic sequence. This succession is exposed on the northern and southern limbs of a major fold, the Centre Hill Syncline, and is cut by Proterozoic mafic dykes.

Lower Mafic Volcanic Unit

Mafic volcanic rocks are exposed in the southern part of the Property in the axial part of an anticlinal structure adjacent to the Centre Hill Fault. They consist of massive and pillowed basalt which near the fault are sheared and altered to chloritic and amphibolitic schists. Outside the Property, Satterly (1952) mapped thick sequences of basalts and andesitic volcanics with minor dacite-rhyolite layers and mafic and ultramafic sills and dykes. Massive. pillowed, amygdaloidal and spherulitic lavas are present as are units of flow-top breccia, pillow breccia and hyaloclastite There are also thick mafic units with coarse gabbroic or diabasic textures that may be intrusive sills or thick ponded flows.

Centre Hill Complex

The Centre Hill Complex is a layered mafic-ultramafic complex that forms Centre Hill in the south and is repeated on the north limb of The Centre Hill Syncline in the northern part of the Property. The complex is approximately 450 meters thick consisting of a lower cyclical sequence (200 meters) of interlayered peridotite, and pyroxenite units 10 to 50 meters thick and an upper_, 250 meter thick, gabbro member. The ultramafic rocks display well-developed magmatic layering and typically have poikilitic textures with large pyroxene phenocrysts.

The primary textures and mineralogy of these rocks are generally well-preserved except for minor serpentinization.

Mafic Fragmental Unit

Satterly (1952) mapped a number of thin volcanic fragmental units which he described as rhyolite agglomerate and tuft consisting of angular grey rhyolite fragments up to 0.5 meters in length. He noted that these rocks are commonly heavily mineralized with disseminated and massive sulphides. In The Potter Mine Property and surrounding area, the fragmental rocks are mafic, not felsic, consisting of basaltic rock fragments and have a composition intermediate between olivine basalt and picritic basalt. The mafic fragments are commonly silicified and have a bleached, greyish cherty appearance.

The mafic fragmental unit, which is host to the Potter mine "ore", is approximately 40 to 70 meters thick and is exposed over a strike length of about 1.5 kilometers in the southern part of the Property. West of the Potter mine, the unit can be traced in outcrop to the middle of Lot 6, Con V, where it is dragged southward along north-trending faults and possibly by folding to the southern boundary of Concession V. Sulphide mineralization is exposed in several old pits in the area.

East of the Potter mine, the mafic fragmental unit can be traced in outcrop to the eastern part of Lot 6, Con V, where it is displaced southward along north-trending faults and is exposed again near the Lot 5 - Lot 6, Con V -Con IV corner. Sulphide mineralization is exposed in several pits and there are geophysical anomalies in this area.

In the northern part of the Property, the south-dipping, south-facing sequence is similar to that in the south, consisting of massive gabbro overlain by a mafic fragmental unit which is in turn overlain by peridotite and komatiitic flows. The mafic fragmental unit is exposed over a strike length of about 2.5 kilometers and is approximately 15 to 40 meters thick. As In the south, it commonly contains sulphides and graphite and is locally silicified and chloritized.

The mafic fragmental unit consists mainly of tuff breccia and tuff, some possibly of hyaloclastic origin, and a variety of graphitic, chloritic, siliceous and sulphide-rich rock that probably represent altered tufts, epiclastic rocks and chemical (exhalative) sediments.

The tuff-breccia and tuff consist mainly of close-packed basaltic fragments ranging from millimeters to 0.5 meters in maximum dimension; most are 2 to 5 centimeters. Crude stratification is imparted by variations in fragment size, packing and alignment of the long axes of the fragments₁ Layer-parallel foliation is present in some localities. The mafic fragmental rocks generally contain disseminated sulphides, commonly 1% to 5% pyrrhotite and pyrite, and not uncommonly, chalcopyrite. Massive sulphides, which occur sporadically in meter-scale pods, consist of layered pyrrhotite, pyrite, chalcopyrite and sphalerite.

The mafic fragments and matrix are commonly silicified and have a bleached, greyish, cherty appearance. Zones of chlorite alteration are present₉ notably in the Potter mine area. Massive sulphide mineralization, notably with chalcopyrite and sphalerite, may correlate with zones of silicification and chloritization.

There are also altered mineralized gabbroic rocks within and marginal to the fragmental unit. The upper part of the gabbro unit commonly contains 1 - 2% sulphides and the mafic minerals are chloritized. There are sill-like and dyke-like bodies of gabbroic rocks within the mafic fragmental unit. The mafic fragmental rocks and the gabbro are compositionally similar, closely spatially related and probably genetically related. No good evidence was found to suggest that the gabbro-mafic fragmental contact is a fault. The mafic fragmental unit is probably a breccia or hyaloclastite formed at the top of a large ponded mafic extrusive complex.

Upper Peridotite and Komatiitic Volcanic Rocks

The massive peridotite above the mafic fragmental unit probably represents the base of a thick succession of komatiitic volcanics that overlies the Centre Hill Complex. The peridotite is generally serpentinized. The komatiitic volcanic rocks have been described in detail by Pyke et al (1973). They consist of a series of ultramafic flows 0.5 meters to 15 meters thick with chilled, fracture type and well-organized internal structure comprising lower olivine-cumulate and upper olivine-spinifex zones.

STRUCTURAL GEOLOGY

The structure of the Abitibi greenstone belt, though complex at regional scales, is probably relatively uncomplicated at local scales. Regionally, the belt consists of a large number of juxtaposed panels with differing isotopic ages, and structural and metamorphic histories. Within these fault bounded panels, however, the rocks are relatively unstrained and commonly have simple, open folds and well preserved primary structures and textures.

The Potter Mine Property lies in the central part of one of these panels, bounded on the south by faults of the Porcupine-Destor system and on the north by faults of the Lake Abitibi system.

On the Potter Mine Property, the dominant structure is the Centre Hill Syncline, here interpreted as a simple, upright fold with limbs dipping at 70 degrees and a subhorizontal axis striking west-northwest. The southern limb of the fold, and a satellitic anticline, are truncated by the Centre Hill Fault.

The Centre Hill Fault strikes west northwest and has apparent left-lateral displacement of unknown magnitude. It is probably a member of the Porcupine-Destor-Lake Abitibi fault system.

There are also north, northwest and northeast trending cross faults. In the south, north-striking faults at either end of Centre Hill displace the mafic fragmental unit southward approximately 100 meters. In the north, the mafic fragmental unit is offset approximately 200 meters by a northeast striking fault with left-hand apparent displacement.

SULPHIDE MINERALIZATION

Most of the sulphide mineralization in the area occurs within the mafic fragmental unit, which generally contains 1 to 5% sulphide minerals, mainly pyrrhotite with some pyrite, and, locally chalcopyrite and sphalerite. These are; however, a great variation in sulphide mineral content. For example, east of the Potter mine, the mafic fragmental unit is poor in sulphides, generally containing 1% or less pyrrhotite. West of the Potter mine, the unit is more heavily mineralized with disseminated and massive sulphides. In the north, the mafic fragmental unit generally contains 1 to 5% sulphides and there are meter-scale pods with 25% or more sulphides. The sulphide minerals, mainly pyrrhotite and pyrite with minor chalcopyrite, occur as disseminations in altered (chloritic, graphitic, silicified) rocks and as massive lenses which commonly have millimeter-scale banding.

Graphite is associated with sulphide mineralization and may be present in amounts of 5% to 10% or more. In the graphitic rocks, pyrite and pyrrhotite commonly form framboids, zoned circular to elliptical bodies up to 3 centimeters in diameter. Zones of chlorite alteration and silicification are also closely associated with sulphides, notably in the Potter mine area.

Plans of the underground workings at Potter mine show that massive to disseminated sulphides form a number of bodies, mainly within the upper part of the mafic fragmental unit. These bodies are lenticular 1 to 3 meters thick, 40 to 100 meters long, and extend for at least several hundred meters down dip (70 deg.) within the mafic fragmental unit. The ore shoots resemble the fingers of a glove in that they thicken and coalesce downward forming larger bodies of mineralization. It appears that there is considerable mineralized material in the lower levels of the mine and that even more may exist at depth. One of the best ore shoots was on the 6th (850') level, approximately 30.5 meters west of the shaft. The ore shoot measured approximately 3.5 meters x 30.5 meters and reported grades of 5% copper and 2% zinc.

RECENT EXPLORATION

The recent exploration of the Property was carried out during 1996, 1997, and 1998. This exploration included diamond drilling a 3-D Borehole TEM survey and a Real Section IP survey.

DIAMOND DRILLING PROGRAM

During the period of recent exploration twenty-eight holes totalling 11,274.8 meters were drilled and were surveyed with a Sperry Sun Gyroscopic instrument for accurate location control. Drill hole information is presented on Table 2.

During 1997 and 1998 deep drilling programs were carried out to test the prospective area down dip from the old stopes and the mineralization exposed on the bottom level of the Potter mine.

The shaft center is located on the imperial underground mine grid at 10,015 ft. N and 9,315 ft E. This also corresponds to 13+65mW and 3+74mS on the surface metric grid. The drill holes have provided geological information west of the Potter shaft from approximately 15+00mW section (8,800 ft. E mine imperial grid) to 17+25mW section (8,100 ft. E mine Imperial grid) and from 1+00mS to 6+75mS on the surface metric grid.

The following geological interpretation was' prepared, in part, by Mr. D. Gamble, geological consultant to Millstream.

The geological setting as defined by the currently drilled area of the mine consists of an east to east-southeast striking and -85 deg. north dipping assemblage of komatiitic ultramafic to mafic layered volcanic flows, volcaniclastic and/or hyaloclastite fragmentals, and minor intercalated carbonaceous mudstone sedimentary intervals. The entire mine sequence

stratigraphically faces north and lies on a south limb of a regional synclinal structure. The trace of synclinal axis transects the Property north of the mine.

The immediate mine geology can be divided into three main lithostratigraphic regimes. The first stratigraphic regime is a "lower" komatiitic layered ultramafic flow sequence with gabbro intrusives that form a stratigraphic footwall assemblage south of the mine.

The second stratigraphic regime is the "middle" sequence, that hosts both the past producing Potter mine and the larger currently identified mine sequence mineralized corridor. This "middle" mineralized corridor is host to the previously mined areas of the Potter mine as well as the new ore grade intersections currently drill defined beneath the old underground workings. The lithologies consist of a series of conformable to semi-conformable stacked horizons of sulphide mineralized mafic to siliceously altered hyaloclastite and/or volcaniclastic fragmental rocks. The hyaloclastite horizons are interbedded with minor thin carbonaceous mudstone to argillaceous horizons. The hyaloclastite units are volcaniclastic in character and exhibit black carbonaceous argillaceous chips and fragments that indicate a re-working and re-sedimentation of the hyaloclastite in some sections. Intervening to the staked hyaloclastite intervals are ultramafic to mafic flow horizons and high level mafic sills and/or dikes. The hyaloclastite intervals host a large volume of matrix style sulphides that consists primarily of pyrrhotite and lesser chalcopyrite and sphalerite. The concentration of sulphides in the hyaloclastite intervals can vary from low concentrations up to massive sulphide proportions.

The intervening ultramafic flows within the mineralized corridor also host significant massive Cu-Zn sulphide horizons at flow/flow contacts. The massive sulphides seen to date contain a minor carbonaceous mudstone component suggesting subaqueous sea floor accumulation typical of VMS style deposits.

In contrast, the matrix style sulphides appear to be a massive replacement in the interstices of the porous hyaloclastite that has effectively acted like a large sponge or favorable trap for sulphide fluid circulation and replacement sulphide deposition. In addition, subaqueous sea floor accumulation of sulphides are also associated with thin intercalated carbonaceous sedimentation in the hyaloclastite horizons.

At the stratigraphic top of this mineralized corridor is a remarkable siliceous chert cap (less than 1 meter in thickness) of finely laminated chert that exhibits delicate exhalative less than millimeter lamellae of brown sphalerite, and pyrrhotite plus or minus chalcopyrite thin seams at the upper most contact. The presence of this mineralized exhalative layer coupled with thc grey bleaching and silicification seen in both of the hyaloclastite and associated sill-like intrusions is evidence for a silicification event having taken place during and at the close of the mineralizing event. In addition to the late stage cherty exhalite cap, the massive sulphides also carry a very fine grey cloudy microcrystalline quartz indicating that silica rich fluids were also present at the time of sulphide formation.

Throughout the hyaloclastite stratigraphy synvolcanic mafic basalt sills (or dikes) and a grey altered silicified equivalent have injected as high level sills into their corresponding extrusive hyaloclastite. These high level sub-seafloor intrusions have injected in a cannibalistic way into their own extrusive hyaloclastite that at the time were water saturated and easy to intrude. Intrusive breccia contacts, bleached and chilled irregular contacts, and peperitic textures near contact margins have been produced that are typical of high level subsurface magma interaction with wet sediment or in this case wet hyaloclastite. Some of the dike and sill magma may have also made their way to the sea floor to form either flows and/or more hyaloclastite.

The "middle" mineralized stratigraphic corridor is presently drill defined as 440 meters along strike and varying from 170 meters - 270 meters in stratigraphic thickness and is open in both directions along strike and as well is open to depth. The dimensions of this mineralized corridor₁ with an impressive stratigraphic thickness of sulphide mineralization seen to date, suggests that a large mineralizing system was in place and makes this corridor a prime exploration target for the discovery of additional lenses of economic sulphides.

The third stratigraphic regime is an "upper" komatiitic layered flow sequence, a hanging wall sequence to the "middle" mineralized corridor. This upper assemblage similar to the lower assemblage consists of multiple layered ultramafic to mafic flows exhibiting good spinifex flow textures, polysuturing, cumulate olivine and intercumulus to oikocrystic pyroxene represents the variability of hanging wall sequence that overlies the mineralized mine/hyaloclastite corridor. Throughout the ultramafic komatiitic flow sequences of both the "upper" and "lower" ultramafic assemblages serpentinization of olivine varies in intensity from unaltered olivine to completely serpentinized olivine. During the serpentinization of olivine magnetite is formed that creates a magnetic deviation problem with magnetic bearing drill hole survey equipment. It is for this reason that all drill holes have been gyroscopically surveyed.

The best results of economic Cu-Zn sulphides occur in DDH's S97-08A, S97-09, S98-01, S98-05, and S98-06 (Table 3 and Figure 4 through 14). The thickest interval occurs in S98-06 where 2.57% Cu, 1.68% Zn, 0.082% Co, 0.61 oz./t Ag occurs over 26.76 meters and includes 4.34% Cu, 2.18% Zn, 0.122% Co and 0.94 oz./t Ag over 11.60 metres and occurs some 225 meters below the 335.2 meter (1, 100 foot) or 8th level of the mine at 550 meters below surface. The highest tenor intersected to date was in S98-01 where 7.81% Cu, 4.76% Zn, 0.096% Co, 1.69 oz./t Ag over 5.25 meters occurs some 259.1 meters below the 8th level of the mine at 594.4 meters below surface.