THE NUGGET EFFECT

The gold distribution at Goldboro is subject to a “nugget effect”. In the case of Goldboro, gold appears as large nuggets, fine disseminations within or bordering arsenopyrite crystals and fine gold grains associated with carbonaceous material. This particular distribution of gold grains may explain the fact that regular assaying methods (e.g. fire assays) yield lower gold values than a metallurgical balance from mill-tests.

As outlined in the 2006 43-101 technical report, a comparative analysis of metallurgical tests done in 1989, 1990 and 2005 and historical fire assay (FA) results showed that the assays significantly underestimated the recoverable gold content and the Mineral Resources due to the nugget effect brought on by assaying smaller size core samples.

Date # of Samples Composite Weight

Assayed

Gold Grade

Metallurgical

Gold Grade

Ratio
April 1989 425 FA 1,284 kg 1.06 g/t Au 15.41 g/t Au 14.54 x
November 1989 66 FA 5 kg 2.94 g/t Au 9.21 g/t Au 3.13 x
April 1990 153 FA 6,000 kg 1.96 g/t Au 3.00 g/t Au 1.53 x
April 1990 153 FA 5,000 kg 1.27 g/t Au 4.00 g/t Au 3.15 x
August 2005 285 FA 1,440 kg 1.94 g/t Au 2.85 g/t Au 1.47 x
Total 1,082 FA 13,729 kg
Weighted Average 1.62 g/t Au 4.51 g/t Au 2.78 x

image13