J o i n t Venture Proposal Galore Creek

B r i t i s h Columbia

Jan E. C h r i s t o f f e r s e n , P. Eng. Q £ 1 7 7 C. President U U U J J

Pass Lake Resources L t d .

1.0 INTRODUCTION Pass Lake Resources has assembled a l a r g e c l a i m h o l d i n g (101.5 sq. km. or 39.2 sq. mi.) i n the emerging Galore Creek gold camp i n north western B r i t i s h Columbia ( F i g 1). The Company b e l i e v e s t h a t Galore Creek has the p o t e n t i a l t o host economic precious-metal deposits equivalent t o the high-grade Delaware and S k y l i n e vein-type orebodies j u s t 50 km (30 miles) t o the south. This proposal c o n s t i t u t e s an i n v i t a t i o n f o r an incoming p a r t y t o p a r t i c i p a t e i n the e a r l y e x p l o r a t i o n phase of c e r t a i n c l a i m blocks h e l d 100% by Pass Lake. 2.0 REGIONAL SETTING Galore Creek l i e s i n the centre of B r i t i s h Columbia's most e x c i t i n g gold b e l t , which extends at l e a s t 300 km (180 miles) from the Stewart camp i n the south t o the Golden Bear mine i n the north ( F i g 2). Major developing mines i n the b e l t i n c l u d e Silbak-Premier (Westmin), Sulphurets (Newhawk - Granduc), Doc (Echo Bay - Magna Ventures), Reg ( S k y l i n e ) , Snip (Cominco - Delaware) and Golden Bear (Chevron - North American M e t a l s ) . T o t a l contained g o l d i n these d e p o s i t s exceeds f i v e m i l l i o n ounces based on known ore reserves. Several other promising s i l v e r - g o l d p r o p e r t i e s are a t v a r i o u s stages of e x p l o r a t i o n . Most of the d e p o s i t s occur i n an Upper T r i a s s i c volcano-sedimentary assemblage along the eastern f l a n k of the Coast C r y s t a l l i n e Complex, which comprises p l u t o n i c rocks of Upper T r i a s s i c t o T e r t i a r y age. Several of the v e i n gold deposits are s p a t i a l l y r e l a t e d t o Upper T r i a s s i c a l k a l i c i n t r u s i o n s ( s y e n i t e , monzonite, d i o r i t e ) . A genetic r e l a t i o n s h i p i s a l s o s t o n g l y suspected. 2.1 Gold Deposit Types Four types of de p o s i t s are recognized w i t h i n the b e l t , porphyry gold-copper, volcanogenic massive sulphides (Cu-Au, Cu-Pb-Zn-Au), vein/shear replacement (Au-Ag-base metals) and skarns (Cu-Au-Ag). (1) Porphyry Gold-Copper

These l a r g e low-grade deposits are t y p i f i e d by the Galore Creek gold-copper body owned by S t i k i n e Copper (Kennco - 60%, Hudson Bay

Mining and Smelting - 35%, Cominco - 5%). This deposit alone contains 125 m i l l i o n tons grading 1.08% copper and 0.012 ounces/ton gol d , equivalent t o 1.5 m i l l i o n ounces of gold. Higher-grade gold s e c t i o n s ( l e . up t o 0.10 ounce/ton) are b e l i e v e d t o e x i s t w i t h i n the much l a r g e r low-grade body. The r e c e n t l y announced discovery of Western Canadian Mining at Sulphurets (66 m i l l i o n tons of 0.84% copper and 0.01 ounces/ton gold) i s another good example. Both of these and s e v e r a l sm a l l e r porphyry prospects ( i e TREK) alona; the b e l t are c h a r a c t e r i z e d by t h e i r a l k a l i c - s u i t e a f f i n i t i e s - s y e n i t e , monzonite porphyries. These a l k a l i c i n t r u s i o n s are b e l i e v e d t o be subvolcanic e q u i v a l e n t s of the Upper T r i a s s i c v o l c a n i c assemblage i n which they occur. (2) Volcanogenic Massive Sulphides

The importance of t h i s type has been recognized only r e c e n t l y i n the b e l t . Two v a r i a n t s e x i s t .

The f i r s t i s gold-copper r i c h and i s a s s o c i a t e d w i t h mafic t o intermediate v o l c a n i c rocks of Upper T r i a s s i c age. This subtype i s ex e m p l i f i e d by the G u l l y Zone on Pass Lake's TREK property at Galore Creek. The G u l l y Zone was discovered i n the summer of 1988 and c a r r i e s 4-5% copper w i t h 0.2 ounces/ton gold over widths of 2 - 4 metres. I t s s t r i k e l e n g t h c o u l d reach 800 metres (2600 f t ) .

The second v a r i e t y i s represented by the Calpine g o l d - s i l v e r (lead-zinc) d i s c o v e r y at Eskay Creek announced i n November, 1988. D e t a i l s of t h i s f i n d are sketchy at t h i s stage but the dep o s i t i s s a i d to be a s s o c i a t e d w i t h f e l s i c v o l c a n i c s . A volcanogenic o r i g i n has been po s t u l a t e d by Calpine g e o l o g i s t s although the ore i s not thought to be massive i n nature. (3) Vein/Shear/Replacement

This c l a s s of de p o s i t has r e c e i v e d the most a t t e n t i o n i n recent years due t o the p o t e n t i a l f o r bonanza ore grades. T y p i c a l deposits are Snip (1.65 m i l l i o n tons of 0.65 ounces/ton Au) , Reg (1.0 m i l l i o n tons of 0.72 ounces/ton Au), Sulphurets (1.6 m i l l i o n tons of 0.34 ounces/ton Au and 22.9 ounces/ton Ag), S i l b a c k Premier (4.7 m i l l i o n tons of 0.39 ounces/ton Au and 8.8 ounces/ton Ag) and Doc (207,000 tons of 0.35 ounces/ton Au). Several of these ore bodies occur p e r i p h e r a l to porphyry gold-copper systems a s s o c i a t e d w i t h s y e n i t i c i n t r u s i v e bodies. (4) Skarns

This type i s a s s o c i a t e d w i t h the contact of i n t r u s i v e rocks and carbonate-bearing rocks. The carbonate hosts may l i e w i t h i n the Upper T r i a s s i c volcano-sedimentary assemblage or o l d e r P a l e o z o i c limestones which underly much of the v o l c a n i c b e l t . Examples i n c l u d e the Gulf I n t e r n a t i o n a l property i n the Iskut R i v e r d i s t r i c t and Pass Lake's TREK property. In the l a t t e r i n s t a n c e , l e a d , z i n c and s i l v e r (30% Pb-Zn, 49 ounces/ton Ag) have been found i n epidote-garnet-bearing skarn f l o a t .

Taken as a whole, the e n t i r e Upper T r i a s s i c package i n north western B r i t i s h Columbia appears t o have been remarkably productive f o r precious and base metals throughout the e v o l u t i o n of the b e l t from e a r l y volcanism and sedimentation (volcanogenic deposits) through l a t e - s t a g e plutonism (porphyry gold-copper, skarn g o l d , v e i n g o l d - s i l v e r ) . 3.0 GALORE CREEK CAMP 3.1 Overview

Wi t h i n the l a s t year, Galore Creek has been recognized as a n a t u r a l northward extension of the Stewart, Sulphurets and I s k u t gold camps t o the south. Major gold e x p l o r a t i o n p r o j e c t s c u r r e n t l y underway include C o n t i n e n t a l Gold's Trophy p r o j e c t and Pass Lake/Lorica's TREK j o i n t venture. A major s t a k i n g rush during 1988 i n v o l v i n g both major and j u n i o r companies promises t h a t the 1989 season w i l l witness a much higher l e v e l of a c t i v i t y ( F i g 3). Pass Lake's c l a i m holdings now comprise e i g h t w e l l - l o c a t e d blocks (406 u n i t s ) of which seven are a v a i l a b l e f o r j o i n t venture p a r t i c i p a t i o n i n four packages. 3.2 Geology and Ore Deposits

The Galore Creek camp i s u n d e r l a i n by Upper T r i a s s i c intermediate to mafic flows and b r e c c i a s and r e l a t e d sediments deposited on a basement of P a l e o z o i c carbonates and f i n e grained c l a s t i c rocks ( F i g 4 ). The Coast C r y s t a l l i n e Complex of mainly J u r a s s i c and younger g r a n i t o i d i n t r u s i o n s dominates the western margin of the map sheet. The l a r g e Galore Creek a l k a l i c complex forms the core of the camp. S t r u c t u r a l l y , the reg i o n i s very complex, being dominated by major steep-angle f a u l t s t r e n d i n g north west, north east and north. Thrust f a u l t s are b e l i e v e d t o be much more extensive than i n d i c a t e d on the map.

Several mineral occurrences are shown on the map d a t i n g from the e a r l y days of porphyry copper e x p l o r a t i o n i n the camp during the 1950's and 1960 * s. Foremost among them i s the Galore Creek porphyry gold-copper d e p o s i t (occurrence 2) as p r e v i o u s l y described.

Other s m a l l e r p o r p h y r y - s t y l e prospects i n c l u d e Copper Canyon (occurrence 12) h e l d by Canamax and Goat (occurrence 15) comprising a small c l a i m b l o c k h e l d by Consolidated S i l v e r Standard and completely encompassed by Pass Lake's TREK property.

The JW (occurrence 11) i s reported t o have returned g o l d assays up to 2 ounces/ton from a quartz v e i n sampled i n the e a r l y days of e x p l o r a t i o n i n the region. Recent r e p o r t s by the present property owners (Sarabat, B e l l e x ) confirm high-grade g o l d (4-6 ounces/ton) from quartz-sulphide v e i n s on the claims.

The P a y d i r t property (occurrence 13 - formerly Ann and Su) of Consolidated S i l v e r Standard/Longreach Resources has d r i l l - i n d i c a t e d reserves of 204,000 tons grading 0.12 ounces/ton gold i n s i l i c i f i e d and s e r i c i t i z e d v o l c a n i c rocks adjacent t o a s y e n i t e stock.

3.3 Current E x p l o r a t i o n A c t i v i t y

1988. Two major e x p l o r a t i o n p r o j e c t s were i n i t i a t e d i n the camp during

C o n t i n e n t a l Gold expended over $1,000,000 on i t s l a r g e Trophy property (184 sq. km/ 71 sq. m i l e s ) . D r i l l i n g focused on two or three wide zones of g o l d - s i l v e r m i n e r a l i z a t i o n . Prospecting i s b e l i e v e d to have i d e n t i f i e d at l e a s t a dozen other s i g n i f i c a n t precious-metal prospects, which w i l l be followed up i n the 1989 f i e l d season.

On Pass Lake's TREK claims (111 u n i t s / 28 sq. km) immediately to the south of the Trophy block, L o r i c a Resources spent $100,000 i n the f i r s t f u l l season of e x p l o r a t i o n on the property. The program y i e l d e d f i v e base/precious-metal t a r g e t s of s i g n i f i c a n c e . Of these, the G u l l y Zone i n i t i a l l y appears t o be the most i n t e r e s t i n g . I t i s a volcanogenic massive sulphide deposit w i t h a p o t e n t i a l s t r i k e length of 800 metres (2600 f t ) based on geophysics and geochemistry. Where exposed over a 60-metre length, two channel samples assayed as f o l l o w s :

Width (m/ft) Cu % Au (oz/t) Ag (oz/t) 3.6/11.8 2.0/6.6

5.31 4.11

0.26 0.10

0.42 0.36

The G u l l y Zone l i e s w i t h i n mafic and intermediate v o l c a n i c b r e c c i a s p e r i p h e r a l t o a small porphyry gold-copper deposit a s s o c i a t e d w i t h s e v e r a l stocks of a l t e r e d s y e n i t e and monzonite. 4.0 JOINT VENTURE PROPOSAL

Pass Lake Resources wishes to enter i n t o a j o i n t venture w i t h an incoming p a r t y t o undertake a thorough e x p l o r a t i o n program on i t s mineral claims (per appendix "A o u t l i n e d as f o l l o w s : attached). F i n a n c i a l terms are

Upon s i g n i n g Year 1 Year 2 Year 3 T o t a l s

Cash $10,000

Shares Expenditure Commitment 50,000 50,000 50,000 50,000

$10,000 200,000

$60,000 140,000 300,000 $500,000

For the expenditure of $500,000 and s a t i s f y i n g the other c o n d i t i o n s , the incoming p a r t y w i l l earn a 51% i n t e r e s t i n the cl a i m s . A f t e r v e s t i n g , funding w i l l be on a pro r a t a b a s i s w i t h p r o v i s i o n f o r d i l u t i o n i f e i t h e r p a r t y e l e c t s not t o c o n t r i b u t e i t s share of the cos t s . The incoming p a r t y w i l l have management of the p r o j e c t during the v e s t i n g p e r i o d and a f t e r v e s t i n g provided i t maintains over 50% i n t e r e s t i n the p r o j e c t .

APPENDIX "A" JD 1, 2 AND PL 1 GROUP

4.1 Geology and P r i o r Work The group comprises 60 u n i t s (15 sq.km) i n two separate blocks s t r a d d l i n g Scud R i v e r ( F i g 5). According t o the GSC, they are u n d e r l a i n by P a l e o z o i c c l a s t i c sediments/greenstones and carbonates ( u n i t s 2 and 3) 15 km north west of the Galore Creek porphyry gold copper d e p o s i t . On PI 1, the sedimentary rocks have been in t r u d e d on the west s i d e by a g r a n o d i o r i t e p l u t o n ( u n i t 17) of u n c e r t a i n age. I t i s t o be noted, however, t h a t there are known s e r i o u s i n a c c u r a c i e s i n the GSC mapping such t h a t the c l a i m geology must be considered t e n t a t i v e at the present time. D e t a i l e d mapping i s c l e a r l y r e q u i r e d . P o t e n t i a l t a r g e t s on these claims are volcanogenic massive sulphide, skarn and v e i n d e p o s i t s .

There i s no record of e a r l y work on the JD c l a i m s . During 1988, Pass Lake conducted p r e l i m i n a r y heavy-sediment, s o i l and rock sampling and p r o s p e c t i n g on p a r t s of the property. Three of four heavy-sediment samples c a r r i e d between 700 and 3720 ppb Au i n the main creek d r a i n i n g the n o r t h - c e n t r a l p a r t of the block. Of the 15 s o i l samples c o l l e c t e d , one returned 40 ppb Au i n the same area. Ten of 15 rock samples returned anomalous gold of 70 - 9620 ppb, s i l v e r of 3.6 + over 200 ppm and base metals, a l s o i n the n o r t h - c e n t r a l s e c t o r . Five of these exceeded 34 00 ppb Au. Selected rock geochemical anomalies were confirmed by four f i r e assays, which gave 0.102 - 0.270 ounces/ton Au and up t o 6.25 ounces/ton Ag.

No p r i o r work i s known to have been c a r r i e d out on the PL 1 c l a i m , which was staked by Pass Lake i n mid-October, 1988. However, the u n d e r l y i n g geology i s considered to be favourable and the ground l i e s only one k i l o m e t e r north west of a high-grade g o l d showing l o c a t e d on Jack Wilson Creek.

In c o n c l u s i o n , the JD 1, 2 and PL 1 claims o f f e r a unigue opportunity t o p a r t i c i p a t e i n a promising g o l d p r o j e c t i n an emerging gold camp. The presence of gold and s i l v e r i n rock has been demonstrated on the JD claims i n the course of a very p r e l i m i n a r y e x p l o r a t i o n campaign and the PL 1 c l a i m i s s i t u a t e d c l o s e t o a known high grade v e i n occurrence. A major e x p l o r a t i o n program i s needed to e s t a b l i s h the mine-making p o t e n t i a l of the p r o p e r t i e s .

APPENDIX "A" PL 2, 3 AND PL 4, 5, 6 GROUP

The group comprises two blocks t o t a l l i n g 75 u n i t s (19 sg. km) l y i n g t o the west of the Galore Creek porphyry gold-copper d e p o s i t ( F i g 5). The PL 2, 3 claims are shown as e n t i r e l y u n d e r l a i n by g r a n o d i o r i t e ( u n i t 17) of u n c e r t a i n age. However, i t i s known t h a t the contact between the p l u t o n and Upper T r i a s s i c v o l c a n i c rocks ( u n i t 9) t r a v e r s e s the eastern s i d e of the block. PL 4, 5 and 6 are u n d e r l a i n by Upper T r i a s s i c v o l c a n i c rocks on the margin of the Galore Creek a l k a l i c complex ( u n i t 12). P o t e n t i a l t a r g e t s on these claims are volcanogenic massive su l p h i d e s and v e i n d e p o s i t s .

No p r i o r work has been recorded on these c l a i m s , which were staked by Pass Lake i n mid-October, 1988. In 1964, Conwest h e l d a l a r g e c l a i m block t o the north but t h e i r work focused on the porphyry-copper p o t e n t i a l of the t e r r a i n west of the l a r g e Galore Creek gold-copper deposit. P r e l i m i n a r y prospecting i n 1988 on the Consolidated S i l v e r Standard claims immediately t o the west of the PL 4, 5, 6 block i s reported t o have encountered gold-bearing v e i n m a t e r i a l grading up to 1.5 ounces/ton.

In c o n c l u s i o n , the PL 2, 3 and P 4, 5 and 6 claims represent two p r i s t i n e p r o p e r t i e s w e l l l o c a t e d w i t h respect t o the Galore Creek gold-copper d e p o s i t and other gold-bearing p r o p e r t i e s i n the area. A major e x p l o r a t i o n program i s r e q u i r e d t o e s t a b l i s h the mine-making p o t e n t i a l of the ground.

APPENDIX "A" PL 7 - 11 GROUP

The l a r g e contiguous block of 100 u n i t s (25 sq. km) i s s i t u a t e d adjacent t o the P a y d i r t property of Consolidated S i l v e r Standard and Longreach Resources where d r i l l - i n d i c a t e d reserves of 204,000 tons of 0.12 ounces/ton g o l d have been announced ( F i g 5). Pass Lake's claims are shown as u n d e r l a i n e n t i r e l y by Upper T r i a s s i c v o l c a n i c rocks ( u n i t 9). A s m all g r a n o d i o r i t e stock ( u n i t 17) on the south-east edge of the c l a i m block i s s a i d to c a r r y some disseminated molybenite. On the P a y d i r t property, plugs of g r a n o d i o r i t e and a l s o s y e n i t e have been mapped, the l a t t e r l y i n g immediately north-east of the ore zone discovered on the property. S i m i l a r favourable i n t r u s s i v e rocks could e x i s t on the PL 7-11 c l a i m s , which have been p o o r l y mapped and explored.

L i t t l e p revious work has been done on the PL 7-11 c l a i m s , which were staked by Pass Lake i n the mid-October, 1988. In 1965, Bralorne-Pioneer Mines c a r r i e d out a program of g e o l o g i c a l mapping and s o i l geochemisty f o r copper on a small c l a i m block l y i n g west of S p l i t Creek near i t s confluence w i t h Porcupine R i v e r . R e s u l t s were i n c o n c l u s i v e .

In c o n c l u s i o n , the PL 7-11 claims represent a l a r g e p r i s t i n e property w e l l l o c a t e d i n the Galore Creek camp. S i g n i f i c a n t g o l d has been found on adjacent ground and the l a r g e Galore Creek porphyry gold-copper d e p o s i t l i e s only e i g h t k i l o m e t e r s t o the north east. A major e x p l o r a t i o n program i s r e q u i r e d t o e s t a b l i s h the mine-making p o t e n t i a l of the property.

APPENDIX "A" WISER 1, 2 AND CUTTY

These two c l a i m blocks c o n s t i t u t e 60 u n i t s (15 sq. km) lo c a t e d a short d i s t a n c e west and north of Pass Lake/Lorica's impressive TREK property and w i t h i n a rad i u s of 10 kil o m e t e r s from the Galore Creek porphyry gold-copper deposit ( F i g 5). The Wiser claims are u n d e r l a i n by Upper T r i a s s i c v o l c a n i c rocks ( u n i t 9) intruded by a g r a n o d i o r i t e stock ( u n i t 17) near the western boundary. The Cutty c l a i m i s un d e r l a i n by Upper T r i a s s i c v o l c a n i c s ( u n i t 8) and Permian limestones (un i t 4) i n f a u l t contact along a major north-south s t r u c t u r e . No previous work i s recorded f o r the two c l a i m b l o c k s . During 1988, Pass Lake conducted p r e l i m i n a r y heavy sediment (3 samples), s o i l (26 samples) and rock (13 samples) sampling and prospecting on the eastern part of the Wiser c l a i m s . One heavy sediment sample returned 53 0 ppb Au and one s o i l sample 370 ppb Au. F i v e rock samples c a r r i e d 35 -75 ppb Au w i t h one sample r e p o r t i n g 4.0 ppm Ag. Base metals were l o c a l l y s t r o n g l y anomalous. No work was done on the Cutty c l a i m .

In c o n c l u s i o n , the Wiser and Cutty claims represent an e x c e l l e n t opportunity t o p a r t i c i p a t e i n two w e l l l o c a t e d p r o p e r t i e s i n the emerging Galore Creek gold camp. The exi s t e n c e of anomalous gold and base metals has been e s t a b l i s h e d on the Wiser c l a i m s , and the Cutty c l a i m s i t s a s t r i d e a strong r e g i o n a l f a u l t . A major e x p l o r a t i o n program i s r e q u i r e d t o e s t a b l i s h the mine-making p o t e n t i a l of the p r o p e r t i e s .