SGS Lakefield Research Limited Mineralogical Services

Microdiamond Extraction, Selection and Description

submitted by

Rainer Skeries, P. Geo.LR2401345 MI0008-MAY04

"RECEIVEDJUN -9 200^

GEOSCIENCE ASSESSMENT

NOTE: This report refers to the samples as received.

The practice of this Company in issuing reports of this nature is to require the recipient not to publish the report or any part thereof without the written consent of SGS Lakefield Research Limited.

SGS Lakefield Research Limited

Lakefield ResearchP.O. Box 4300, 185 Concession Street, Lakefield, Ontario, Canada KOL 2HO Tel: (705) 652-2000 Fax: (705) 652-6365 www.lakefield.com www.sgs.comMember of SGS Group (Societe Generate de Surveillance)

21 May 2004

31M04NE2041 2.27839 SOUTH LORRAIN 010

Microdiamond Extraction, Selection and Description Mineralogical Services Rainer Skeries SGS Lakefield Research Ltd. LR2401345/MI0008-MAY04———^^^^—^^—^^-—————-^————^——..^^^^—

Summary

Microdiamond Extraction, Selection and Description

Microdiamond extraction, selection and description was performed on a single sample (VL-04-

01). The caustic dissolution residue was collected on a 150 mesh (100 |j.m) screen, and then

submitted for Frantz magnetic separation to concentrate the microdiamonds into the non-

paramagnetic fraction. The results of the diamond selection process are reported as a

Certificate of Analysis in Appendix A.

As part of our on-going commitment to providing a high quality service and to monitor the

recovery efficiency of sample material in each kiln pot, we put spikes in each sample and

recovered these spikes at the end of the process during microdiamond selection. The recovery

of relatively coarse, 35 mesh spikes was 10007o whereas the recovery of relatively fine, 80 mesh

spikes was 8007o.

A detailed description of the microdiamond extraction process, as well as a generalized

processing flow sheet, may be found in Appendix B.

SGS Lakefield Research Limited

Bruce Craig Jago, Ph.D., P. Geo. Group Leader - Diamond Services

26 May 2004

Technical Support: Rob Gill, Scott Young, Elena Valeyeva, Zakia Al Haddad and Maria Mezei.

Microdiamond Extraction, Selection and Description Mineralogical Services Rainer Skeries SGS Lakefield Research Ltd. Lr240134MMI0008-MA Y04______________________________________________

APPENDIX A

CERTIFICATE OF ANALYSISRESULTS OF MICRODIAMOND

EXTRACTION, SELECTION AND DESCRIPTION

SGSSGS Lakefield Research LimitedP.O. Box 4300 -185 Concession St.Lakefield - Ontario - KOL 2HOPhone: 705-652-2019 FAX: 705-652-3123

Rainer A. SkeriesAttn : Rainer A. Skeries, P.Geo

563 Murray St.Timmins, Ontario - P4N 7A8CanadaFax : (705) 266-3654

Lakefield Thursday,May20,2004

Date Ree. : LR. Ref. : Project:

13 May 2004MI0008-MAY04LR

CERTIFICATE OF ANALYSISSample ID

1:VL-04-01

*Login Wt kg

10.72

*# Pours

2

*Dia #0

*Dia (ct)

0.000

Bruce Jago/Pn.D., P. Geo Group Leader - Diamond Services

Page l of lThe tests included in this report are within the scope of this accreditation. Accredited parameters are indicated by an asterisk '*'. Data reported represents the sample submitted to SGS Lakefield Research.

Reproduction of this analytical report in full or In part is prohibited without prior written approval.

SGS Lake field'ResearchSGS Lakefield Research Limited 185 Concession St., Box 4300 Lakefield, Ontario KOL 2HO, CANADA

Tel: (705) 652-2112 Fax:(705)652-3123 Email: bjago@lakefield.com

DIAMOND RECOVERY BY CAUSTIC DISSOLUTIONProject: LR2401345 Client: Rainer A. Skeries

Date: May 20, 2004 LMS No. MI0008-MAY04

Sample No. VL-04-01

Mesh

+6

-6+20

+150

-20+150

-20+150

-20+150

-20+150

Fraction

Ferromagnetic Non-mag

Ferromagnetic Non-mag

Ferromagnetic Mag

Paramagnetic Mag (0.1 amp)

Paramagnetic Mag (0.3 amp)

Diamagnetic Mag (0.5 amp)

Diamagnetic Non-mag (0.5 amp)

Dissolution Residue Description

Not applicable

Not applicable

Oxides and silicates

Not applicable

Not applicable

Oxides and silicates

Oxides and silicates

Sample Weight: 10.72 Kg Number of Syndites: O

Total Weight (carats)*: 0.000 Number of Diamonds: O

* Total Weight (carats) was calculated from mg weights. All reported mg weights are measured to within 0.002 mg.

Selection and Description Elena Valeyeva Mineralogy Technician

* Quality Control JdL Zakia AL Haddad r/ Mineralogy Technician

Note:SGS Lakefield Research Limited is not responsible for the determination of the origin, quality or value of any diamonds recovered. Each +S5 mesh (Tyler sieve; +0.420 mm) stone was individually weighed, and the -35 mesh stones were weighed in groups. Stone dimensions are limited to accuracy of three dimensional measurements of irregular shapes using a petrographic microscope.

Accredited by the Standards Council of Canada to the ISO/IEC Guide 25 standard for specific registered tests.

SGS Lake field'ResearchSGS Lakefield Research Limited 185 Concession St., Box 4300 Lakefield, Ontario KOL 2HO, CANADA

Tel: (705) 652-2112 Fax:(705)652-3123 Email: bjago@lakefield.com

DIAMOND RECOVERY BY CAUSTIC DISSOLUTIONProject: LR2401345 Client: Rainer A. Skeries

Date: May 20, 2004 LIMS No. MI0008-MAY04

Sample No. VL-04-01

"S ^

Stones Described ai Weighed Individual

Stones Described Individually 7 Group Weighed

Diamond Size Fractions

+ 4.75 mm-4.75 7 + 3.35 mm-3.35 7 + 2.36 mm-2.36 7+1. 70 mm-1.70 7+1. 18 mm- 1.187 + 0.85 mm-850 7 + 600 urn-600 7 + 425 \im-425 7 + 300 urn-300 7 +212 urn-2127+150^-1507+105 urn

TOTAL

Number of Stones in Group

000000000000

0

Group Weight (mg)0.0000.0000.0000.0000.0000.0000.0000.0000.0000.0000.0000.000

0.000

Group Carats (calculated)

0.0000.0000.0000.0000.0000.0000.0000.0000.0000.0000.0000.000

0.000

Sample Weight: 10.72 Kg Number of Syndites: O

Total Weight (carats)*: 0.000 Number of Diamonds: O

* Total Weight (carats) was calculated from mg weights. All reported mg weights are weighed to within 0.002 mg.

Selectiorf and Description Elena Valeyeva Mineralogy Technician

ControlTakia AL Haddad

Mineralogy Technician

Note:SGS Lakefield Research Limited is not responsible for the determination of the origin, quality or value of any diamonds recovered. Each +3S mesh (Tyler sieve; +0.420 mm) stone was individually weighed, and the -35 mesh stones were

weighed in groups.Accredited by the Standards Council of Canada to the ISO/IEC Guide 25 standard for specific registered tests.

Page 1

SGS LAKEFIELD RESEARCH LIMITEDP.O. Bag 4300,185 Concession Street, Lakefield, Ontario KOL 2HO

Phone: 705-652-2112 E-mail: bjago@lakefield.com Fax: 705-652-3123

May 20, 2004

DIAMOND RECOVERY BY CAUSTIC DISSOLUTION

Project: LR2401345

Client: Rainer A. Skeries

LIMS No. MI0008-MAY04 Sample No. VL-04-01

Sample Weight: 10.72 Kg

No. Stone Dimension, mmX

+ 4.7S00

Y zWeight

mg Carats Colour ClarityPercent

PreservationStone Description

Morphology

mm fraction

0.0000.0000000.000000 Sub-Total

-4.75 / * 3.35 mm fraction00 0.000

0.0000000.000000 Sub-Total

3.35 /-t- 2.36 mm fraction00 0.000

0.0000000.000000 Sub-Total

-2.36 7 * 1.70 mm fraction00 0.000

0.0000000.000000 Sub-Total

-1.70 1 + 1.18 mm fraction00 0.000

0.0000000.000000 Sub-Total

-1.18 1 + 0.85 mm fraction00 0.000

0.0000000.000000 Sub-Total

-850 1 * 600 vm fraction00 0.000

0.0000000.000000 Sub-Total

-600 1 * 425 \im fraction00 0.000

0.0000000.000000 Sub-Total

Page 2

SGS LAKEFIELD RESEARCH LIMITEDP.O. Bag 4300, 185 Concession Street, Lakefield, Ontario KOL 2HO

Phone: 705-652-2112 E-mail: bjago@lakefield.com Fax: 705-652-3123

May 20, 2004

DIAMOND RECOVERY BY CAUSTIC DISSOLUTION

Project: LR2401345

Client: Rainer A. Skeries

LIMS No. MI0008-MAY04 Sample No. VL-04-01

Sample Weight: 10.72 Kg

No. Stone Dimension, mmX Y z

Weightmg Carats Colour Clarity

Percent Preservation

Stone DescriptionMorphology

-425 1 + 300 iJm fraction00 0.000

0.0000000.000000

1Sub-Total

-300 / * 212 \im fraction00 0.000

0.0000000.000000

1Sub-Total

-212 /* 150pm fraction00 0.000

0.0000000.000000

1Sub-Total

-1 50 / * 105 urn fraction00 0.000

0.0000000.000000 Sub-Total

LIL o.oooooo ITOTAL

Note 1: Diamond Fragments - No Crystal Faces - Preservation (Resorption) cannot be estimated.

Page 3

Microdiamond Extraction, Selection and Description Mineralogical Services Rainer Skeries SGS Lakefield Research Ltd. Lr240134MMI0008-MA Y04________________________________________________

APPENDIX B

EXPLANATION OF MICRODIAMOND EXTRACTION AND SELECTION PROCEDURE AND FLOWSHEET

Microdiamond Extraction, Selection and Description Mineralogical Services Rainer Skeries SGS Lakefield Research Ltd. Lr2401345MI0008-MA Y04

DIAMOND EXTRACTION BY CAUSTIC DISSOLUTION

Introduction

Caustic dissolution of exploration samples efficiently produces a concentrate from which diamonds can readily be extracted during microscopic examination. The process takes advantage of diamond's property of high resistance to caustic soda (NaOH), eliminating diamond size reduction and loss that often occurs during extraction procedures that rely on crushing and attrition milling.

Procedure

The samples are processed according to the attached flowsheet. Very few minerals survive the harsh chemical attack, therefore weight reductions commonly exceed 9907o of the initial sample weight.

As-received samples are divided into equally sized charges of less than 8 kg. Smaller charge sizes are necessary if the sample contains a high proportion of carbonate minerals, which are vigorously reactive with NaOH (the carbonate content is evaluated by an acid test prior to charge preparation). If a high proportion of the sample is composed of fragments larger than 8 cm, simple breakage, crushing or attrition milling may be required for an effective dissolution, or the length of the dissolution process may be increased. Client consultation and approval is necessary before any size reduction of the sample is initiated.

After digestion in molten caustic soda, the sample is poured onto a large-diameter 200 mesh (74 jim) screen. The + 200 mesh residue is liberated from the NaOH by washing the sample in a series of water and acid leach (HCI) baths. Once all of the NaOH is dissolved and removed, the concentrate is dried and screened on a 6 mesh screen to remove undigested material. The undigested material is examined microscopically by a mineralogist. If a significant amount of +G mesh remains, or if the material consists of possible diamondiferous rock fragments, further digestion may be required. If the undigested material is of insignificant size or not considered as a possible source of diamonds, the -6 mesh residue is further processed by a two (possibly three if the residue is large) stage magnetic separation procedure utilising a permanent magnet and a Frantz Barrier Magnetic Separator.

The magnetically characterised residue is then submitted for microscopic examination and diamond selection. In addition to diamonds, the residue may contain partially undigested indicator minerals, colourless to opaque spinel, garnet, ilmenite, graphite, moissanite, zircon and kyanite. Each of the magnetic fractions is examined at a magnification of 40x using a binocular microscope. Grains of questionable mineralogy are examined using a scanning electron microscope equipped with an energy dispersive spectral (SEM-EDS) analyser. Although each magnetically characterised fraction is examined, particular emphasis is given to the diamagnetic portion.

The X, Y and Z dimensions of selected microdiamonds are measured in millimetres. Macrodiamonds are weighed individually while microdiamonds are weighed in groups of 20 or 30, with the milligram weight, in each case, converted to carats. The colour, clarity and morphology of each diamond are determined and all observations reported in a Certificate of Analysis. Synthetic diamonds released into a sample by diamond drill bits are selected and reported as "syndites" on the diamond description sheet.

Microdiamond Extraction, Selection and Description Mineralogical Services Rainer Skeries SGS Lakefield Research Ltd. Lr240134MMI0008-MAY04

Quality Control

Routine quality control tests are utilised to evaluate the efficiency of the caustic dissolution processing technique. Since the beginning of 2004, we have started reporting SGS-LR spike recoveries together with diamond results. During 2003, we experimented with the addition of two sizes (80 and 35 mesh) of synthetic diamond spikes with great success including one project, which ran for approximately six months, in which one of our clients used "Congo Rounds" as natural diamond spikes. Diamond spikes recoveries for our client's spikes ran at 9507o whereas recoveries for our 35 and 80 mesh synthetic diamond spikes were 96 07o and 9307o, respectively.

In addition to the above aspect of Quality control, each caustic dissolution residue is picked twice by separate diamond pickers. Questionable grains are examined by SEM-EDS for verification.

Every effort is made at each stage of sample handling during caustic dissolution, residue preparation and diamond picking to eliminate the possibility of contamination. These steps include:

* A rigorous sample tracking procedure.* Dedicated screens and equipment for each sample during sample processing.* Replacement of screens between each sample after pouring caustic soda.* Thorough washing and scrubbing of all sample containers.* Thorough cleaning of equipment used to prepare caustic residues between each

processed sample.* Sandblasting of each kiln pot between clients projects to ensure the removal of any

microdiamonds or indicator minerals.

Customized flowsheets for sample processing utilising caustic dissolution and other sample preparation techniques (magnetic, gravity, flotation, acid leaching, etc.) can be developed, in consultation with the client, to meet specialised requirements.

SGS Lakefield Research Limited is not responsible for the determination of the origin, quality or valuation of any diamonds recovered unless otherwise instructed by the client.

Microdiamond Extraction, Selection and DescriptionRainer SkeriesLr24013457MI0008-MA Y04_______________

Mineralogical Services SGS Lakefield Research Ltd.

Caustic Dissolution for Microdiamond Recovery

SAMPLE PREPARATION(as instructed by client,

includes drying)

iDISSOLUTION (Molten NaQH)

Collect Residue (200 mesh screen)

WATER WASH AND ACID LEACH RESIDUE

DRY AND REMOVE FERROMAGNETICS

FRANTZ MAGNETIC SEPARATION

iMICROSCOPEEXAMINATION

DIAMOND SELECTION

ONTARIO MINISTRY OF NORTHERN DEVELOPMENT AND MINES

Transaction No:

Recording Date:

Approval Date:

W0480.00899

2004-J UN-09

2004-JUN-21

Work Report Summary

Status: APPROVED

Work Done from: 2004-MAY-08

to: 2004-JUN-08

Client(s):173133

179076

Survey Type(s):

MOSES, JOHN ROSS

PALMAY, FRANK

OGEOT

Work Report Details:

Perform Applied Claim* Perform Approve Applied Approve

G 8000933 51,692 51,692 SO SO

L 3002170 SO SO S1.200 51,200

Assign ReserveAssign Approve Reserve Approve Due Date

51,200 1,200 S492

SO O SO

5492

SO 2005-JUN-18

S1.692 51,692 S 1,200 S1.200 51,200 51,200 S492 S492

External Credits:

Reserve:

SO

S492 Reserve of Work Report*: W0480.00899

S492 Total Remaining

Status of claim is based on information currently on record.

31M04NE2041 2.27839 SOUTH LORRAIN 900

2004-Jul-19 09:24 armstrong-d Page 1 of 1

Ministry ofNorthern Developmentand Mines

Date: 2004-JUN-22

Ministere duDeveloppement du Nord et des Mines Ontario

GEOSCIENCE ASSESSMENT OFFICE 933 RAMSEY LAKE ROAD, 6th FLOOR SUDBURY, ONTARIO P3E 6B5

JOHN ROSS MOSES 705-401 QUEEN'S QUAY WEST TORONTO, ONTARIO M5V 2Y2 CANADA

Tel: (888)415-9845 Fax:(877)670-1555

Dear Sir or Madam

Submission Number: 2.27839 Transaction Number(s): W0480.00899

Subject: Approval of Assessment Work

We have approved your Assessment Work Submission with the above noted Transaction Number(s). The attached

Work Report Summary indicates the results of the approval.

At the discretion of the Ministry, the assessment work performed on the mining lands noted in this work

report may be subject to inspection and/or investigation at any time.

If you have any question regarding this correspondence, please contact STEVEN BENETEAU by email at steve.beneteau@ndm.gov.on.ca or by phone at (705) 670-5855.

Yours Sincerely,

Ron C. GashinskiSenior Manager, Mining Lands Section

Gc: Resident Geologist

John Ross Moses (Claim Holder)

Assessment File Library

John Ross Moses (Assessment Office)

Frank Palmay (Claim Holder)

Rainer Alexander Skeries (Agent)

Visit our website at http://www.gov.on.ca/MNDM/LANDS/mlsmnpge.htm Page: 1 Correspondence 10:19538

movtHCMU. HMINO

Mining Land Map

g

10 J

Wo

M

O

to o o

6160006 619000E

S231000N

62WOOON V'

S228QOON

S22TOOON

822SOOON

S/W30CON

9221000N

UTM Zone 17 1000m grid

S230000N

S229000N

H23000N

611000E 619000E

r nw* w wing lo w "W irtnwgclBiira ihauM tumuli wtlh the PmuKcl*i MUMmj raMtmWtt' Ofllca el ihoMtnBtrycrf Uxllxttn tuw

Mornutlan nayiltc- U obWkxm IWv*jh lin knt! Untf Tittso 5f Resttlry Oflso.ot i)n Mi-rttrv ol Mnlunl flsuJUfWS

General Information and LimitationsTun nwp rmy no|ino*unniQ*wnai lint tnnum nni tm^ivsit* In UiH vviiMfng onuin IWH-MI, tsoiwri,

QBW, Alio wrtaln Mrri Wnuw and Un4 UMA IM milnet *r pKoHM tieo antry ISDteh, 11**^ cUhm

Date / Time of Issue: Wed Aug 11 09:33:29 EOT 2004

TOWNSHIP l AREA PLAN SOUTH LORRAIN 6-3448

ADMINISTRATIVE DISTRICTS l DIVISIONS

Mining Division Larder LakeLand Titles/Registry Division TIMISKAMINGMinistry of Natural Resources District NORTH BAY

TOPOGRAPHIC land Tenure

f J] Surface Amt Mlnfrw m

....... NintiolGail'ipoWw

- , . , . UUM**

f'|l SwfciceAnuM^inaBi

L^j *

H o*""""*"""pjj d—r^t!

LAND TENURE WITHDRAWALS

Vtol !*)il*IK ftfft SWV^ Kr^H* WKrtflW.l

W* *j,(^ nvhu C-*i WMM*n Wl" ttfftj IWfl* (WiV *IM"M(!

Of Ar In OtwmJ! WWi*jr*!il 'JwesW'wi *ait** A'tl Wtnq kv#HiCWfiwtwvi

W'* d1Rl.Ml HKyiW(MWi*WJnM**

tt~":"l IMPORTANT NOTICES

LAND TENURE WITHDRAWAL DESCRIPTIONSK*m*i*( Typs Onto douriptbn

471* W.m J*n),2UOt RCGERVATtON Of OfK CHAIN TftdM HIOH WATER MARX TO BC UADC ON AU.PATENTS OF 1ANO5 SORDBWWi ON LAKE f [MtSKAMINS, OFF8CTIVE FBBRUAR

W-l-ai.'!* Wi Sup 'l?. IHift DCCWH,-3f(,'M MCR3EPT1?'!* ORO t.X.UT W-t-a'W W* ttov t?, I9*S W-L-B.'98 NCR OePT.ITr'W 8ROTOWER SITC DUCK M

2.27839 OGEOT

S ..^ ^ NH-00-

660.00S O.OOE AZ 360 DIP -55

-200 ft.

-400 ft.

-600 ft.

-800 ft.

-IGGQft

-1200ft

-1400 fi

01 Y

ill31MO'

CO o oiD

t

l*

\ ̂

V\

liINE2041 2

|

|

^^•' ^

\\

11127839

g O ,-j.

AZiMl

Sam282

V

^ ^* V* S,*?X***

x

IIISOUTH LOB

|TH 360 -T 2

pleVL.55-293

If,; ^b5 #V** X*

\ 4

\

III(RAIN

CO 0 O CM

LGQKIIMC

3995

-04-0180ft.

5——— ̂ ———

t*v/^ \cN?

D2

P WEST

,*

P^

^ ^* JPv^y ,\ ̂ \ ^

10

o oOD

0

l~f

S&*0V*

K ^

\

T

,*

\\

o oCM

2999

^

\ ^X

4

V*

\^z'

o o "fr^ Z

Oo to

N 600N

5 oe o O CM

EA

BAS

BAS

BA!

BAS

T;

T 29'

aAs a

BAi

-J*^*": StTHD

HD'HD M0 MD

MDMOHD |gHDiaMD HDKa HO**

BAS L ILBAS -^ BAS BAS 1S BASao^

•^ LAM

BASBAS *TOTO

MO BAS J* BAS-sg-

MD vi^ iBAS VNZ aoogf MB™: S Bil S

BAS^. L BAS -

BASMBASM V^ -

BAS Sf 300:-j* :HF 1

200'

BAS

————— MO™^

BAS

OVEN "

H-00-

660.00S O.OOEAZ 360 DIP -55

!999!oo™i

994

'W

??QQ f

Ho""oJ

isa, 1

'*wJ

SiW~,

: ; amj- —bi-01

1

v5*r

IUo oCM

———— . — -

UJ O

3

V) o0*3

h-

400N

200N

BLOO

200S

400S

600S

LEGEND

OVBN Overburden

BAS Basalt BASM Basalt - Massive/Flow TUFF Basalt - Tuff L Lamprophyre MD Mafic Dyke HD Haleyburian Diabase ID Intermediate Dyke HF Hammerstrom FZ VNZ Vein Zone VN Vein VAZ Vein Alteration Zone SZ Shear Zone FZ Fault Zone

fi O P# O -r", ^iftililf 9 /kstf iS" f"S T' '' ; ;, ^-'?

ALL UNITS IN FEET

25 080 9/tAg over feet^.59/1

0 50m 100m

0 100ft 200ft 300ft

GILEAD MINERAL CORP. South Lorrain Project

Veinlode Drilling DDH H-00-01 Section/Plan

June 2004