Operations

Goldwedge

Summary

Goldwedge is recognized as having the best underground development potential in the Manhattan district. The primary resource covers a strike length of approximately 1,100 feet, with a drill tested vertical extent of over 500 feet. The system is open along strike down-dip and down-plunge toward the northwest. Development includes a crushing plant, gravity recovery facility, leach pads and over 2000 feet of decline. Test mining of more than 70,000 tons is underway as we advance towards feasibility. Underground exploration and surface drilling continues to encounter new mineralization.

Spectacular Drill Results Point to Carlin-Style Mineralization

Drilling over the past few years has encountered significant, high-grade gold. Results include 225 feet grading 0.357 ounces of gold per ton, 265 feet grading 0.257 opt at relatively shallow depths (<600'). Clearly there is potential for Carlin-style gold mineralization. Our exploration shows the gold mineralization may be expanding in overall width and thickness at depth (typical of Carlin-style deposits) with a down-plunge toward the north.

In November 2004, we reported a number of "bonanza" grade drill intersections (News Release 11-29-04). Included were drill hole #72, with 5 feet grading 4.797 opt Au and 5 feet grading 4.854 opt. Hole #64 included 30 feet grading 1.890 opt, 5 feet grading 5.118 opt and 5 feet grading 4.541 opt. All were encountered at depths of less than 500 feet. These exceptionally high values offer even further evidence of Carlin-style mineralization at depth.

Development Strategy

Our strategy is to initially produce gold on a relatively small scale to fund exploration and development as we move deeper into the resource. Initial output from test mining is forecast to be approximately 20,000 ounces of gold annually at a cash cost of US$ 150/oz. We have secured a fully-bonded mine permit for an underground mine and built a mill facility to process 500 tons per day.

Rich Mining History

The Manhattan mining district has produced an estimated 1,000,000 ounces of gold. This rich history includes the nearby Manhattan mine (1974-1990), an open-pit operation that produced 236,000 ounces of gold at an average grade of 0.08 opt. The adjoining Echo Bay East and West Pit deposits operated in the early 1990s, producing 260,000 ounces at an average grade of 0.06 opt. The Kinross/Barrick Round Mountain Mine is situated eight miles north. The district's recorded placer production totals about 150,000 ounces, while small-scale lode mines produced another 100,000 ounces.

Current Goldwedge Resource – High Grades

Based on information available from prior work, a March, 2005 Technical Report estimated the current Goldwedge resource at 330,000 tons grading 0.310 opt gold based upon a geostatistical (kriged) estimate. Manual resource calculations have indicated a larger measured and indicated resource with substantial inferred resources. The gold system is open along strike, down-dip and down-plunge toward the northwest. An updated resource, along with metallurgy and recovery statistics, should be available as test mining continues into 2007.

Resource Expansion

Goldwedge offers excellent potential to expand beyond current inferred resources. We will continue our underground exploration, along with diamond drilling, to investigate the current resource down-plunge and down-dip below the main zone. We will also explore the northwest extension of the main zone and southern margin of the Manhattan caldera. Future work will include magnetics and induced polarization across the entire structure.

Additional Targets

The current exploration model suggests the Goldwedge deposit and extensions may contain additional gold resources containing very high-grade gold values at depth near the contact with the Manhattan Caldera margin. There are more resources at depth below the Zanzibar and the Gold Hill formation. We began drill testing this area during the underground feasibility and test production of the central zone development in July 2005.

Geology

The Goldwedge deposit occurs at the intersection of north and northwest trending faults, including the Reliance fault. This key structure trends north, where northeast fractures are mineralized in the Ordovician Zanzibar, thin bedded limestone and siltstone formations. The Zanzibar limestone is a very favorable host rock preserved in the upper plate of a thrust fault. Echo Bay's Manhattan mine, located along strike and adjacent to the southeast, occurs in the Cambrian Gold Hill siltstone which underlies the Zanzibar limestone. RSM has evaluated pertinent drill data as part of a detailed inventory of the deposit geometry, size and overall grade.

See Technical Report for detailed geology discussion.