HALIFAX, TUESDAY, FEBRUARY 21, 2006

STANDING COMMITTEE ON RESOURCES

1:15 P.M.

CHAIRMAN

Mr. John MacDonell

MR. CHAIRMAN: What we'll do is introduce the committee. After that you can kick off your presentation.

[The committee members introduced themselves.]

MR. CHAIRMAN: You may begin.

MR. WILLIAM FELDERHOF: Thank you very much, ladies and gentlemen, for inviting me to the Standing Committee on Resources, Nova Scotia. I'm very pleased to have this opportunity to come to speak to you and to tell you about Acadian Gold's activities in the province. I think you will find that we've done a lot here in the last three years, and we have a lot ahead of us. It's an exciting future, given the current gold prices.

Acadian Gold, we're building gold mines in Nova Scotia. I might add that Nova Scotia is our focus, we're not involved in any other province at this point in time. I think that's unique to Acadian Gold. We trade under the symbol ADA on the TSX Venture Exchange, and in December of last year we were recently on the Frankfurt Exchange in Germany, trading under the symbol C2Z. That reflects the growing interest in resources in that country and, also, we see that as a country to raise additional capital. In fact a lot of our capital has come out of Europe already.

We consider ourselves a leading company in Nova Scotia goldfields for four reasons. First of all, we have the greatest number of advanced gold projects; secondly, we have the largest landholding at over 200,000 acres of mineral claims; thirdly, we have the largest resource base, which I'll speak to in a moment; and, fourthly, we believe we're the closest to production of all the companies that are active in the province today.

Some corporate statistics. A recent share price, 48 cents; our high and low, 62 cents and 14 cents. Shares outstanding, 62.9 million shares; fully diluted, 75.7 million. Our market capitalization is $30 million. Insiders control 39 per cent of the company, and included in that would be an institution in London, UK, that controls 10 per cent.

So why Nova Scotia goldfields? First of all, the properties are located in Canada and, best of all, in Nova Scotia. The reason for that is the security of title to our mineral claims. That's a very important aspect for a small company. There are many places in the world which are geologically attractive to be in, but some of those places are not a great place to be from the point of view of security of title to your mineral claims. There are problems with regime changes, politically unstable areas are anathema to junior mining companies. Shareholders do not want to wake up in the morning and find out that their mineral claims are gone. That's one of our principal assets, the mineral claims in the company. Without those, there are no assets.

Secondly, Nova Scotia is a recognized gold camp. The first gold mines in Canada started in Nova Scotia in 1860, and we believe the province has multi-million ounce potential. Thirdly, we had the opportunity to acquire advanced gold databases. This is what I spoke to earlier, regarding Seabright, which had generated this huge database at a cost, I would estimate, in the region of $35 million. Fourthly, the opportunity to utilize a central processing strategy. This is a key feature of our go-forward strategy in Acadian Gold, and I'll describe that later.

Fourthly, the shallow depth of the historic gold mines in Nova Scotia. This provides to the company great depth potential, and this is also an important aspect of our multi-million ounce potential in the Nova Scotia goldfields. And lastly, the potential for bulk tonnage deposits in Nova Scotia, which is a new feature, which has only recently been recognized as a feature in the Nova Scotia goldfields, I think we're at the forefront of it and we'll be hearing more about that as time progresses.

Our corporate objectives. First of all, to expand our current resource base of 550,000 ounces in the measured and indicated category; over 900,000 ounces in the inferred category. Secondly, to establish mining operations at multiple sites, and process this ore in a central facility. Thirdly, to become the dominant gold producer in Nova Scotia. We believe we're well positioned for that because of our advanced projects and because of our large pipeline of mineral properties. Fourthly, we aim to fast-track Acadian Gold from a development company to producer status, and we think we're able to do that with the recent announcement of the acquisition of ScoZinc from HudBay, and I'll speak to that a bit later as well. Lastly, to identify additional gold deposits amenable to open pit mining.

We've come a long way since we started in March 2003. We've raised in excess of $10 million to date. We have acquired 100 per cent control of four advanced gold projects, plus 39 others, as I indicated, the largest land position in the Nova Scotia goldfields with

over 200,000 acres of mineral claims, our current resource base, which I spoke to earlier, and growing.

The four advanced projects have two modern shafts and three ramps, which provide us considerable underground infrastructure that was put in by previous companies and which will be of benefit to us. I might add here that one of these ramps is of no use to us because it's on Beaver Dam, and we're looking at developing Beaver Dam as an open pit. Scoping studies have commenced on these four projects, and that's an ongoing exercise as we determine the operational parameters that we might envisage in these projects.

We have a joint venture with Atlantic Gold out of Sydney, Australia, on the Caribou structure, and we're looking for bulk tonnage-type deposits there. That's a new project that got underway last year, and you'll hear more about that in press releases coming up in the next quarter. Lastly, we signed a letter of intent in December of last year with HudBay Minerals out of Winnipeg, Manitoba, to acquire ScoZinc from them for $7.5 million, and I'll speak to that a bit later.

This slide shows our principal holdings, specifically Beaver Dam, Forest Hill, Goldenville and Tangier. Those are our four key projects at the moment, our four key goal projects. They're the resources that you see here, of 278,000 ounces measured and indicated at Beaver Dam, inferred 311,000 ounces. We just made a resource announcement on this project on January 5^th of this year. This resource is growing. There's a drill on this property at the moment. Forest Hill, 182,000 ounces indicated and 172,000 ounces inferred. Goldenville, 40,000 ounces indicated and 259,000 ounces inferred. Tangier, 51,000 ounces indicated and 167,000 ounces inferred.

I want to point out that all of these resources you see here were calculated or estimated by independent consultants here in Dartmouth, Mercator Geological Services, and all of these resources are backed by 43-101 compliant reports that are filed with the regulators. At the back of my presentation, I'll show you some tons and grades that match these ounces.

All these properties are 100 per cent owned. There's a sliding scale royalty on this property to a company that owned the property in the past. A prospector has a 2.65 per cent royalty here. We can buy back 0.65 per cent, leaving 2 per cent. There's no burden on these two properties, although there's a 30 per cent back-in by Erdene Gold; however, we'll be talking to them about that in the near future. I might add here that the ScoZinc acquisition includes the Scotia Mill, which is located here.

This is a close-up view of the principal holdings, Forest Hill, Goldenville, Beaver Dam and Tangier in red. Some of our other holdings are in green. There's the Scotia Mill that is part of the ScoZinc assets. I want to point out a couple of other things here. This purple here is a joint venture with Atlantic Gold of Sydney, Australia. More importantly, this yellow

spot, this white one and this yellow one here are the three sites in the province right now that are being investigated for the potential for bulk tonnage gold deposits. Moose River resources are being developed by Atlantic Gold out of Sydney, Australia. They have 60 per cent. A private Nova Scotia company, Moose River has 40 per cent. There's our Beaver Dam project. We own that 100 per cent, and this one here is owned by Orex Exploration out of Quebec.

MR. CHAIRMAN: Can you define bulk tonnage?

MR. FELDERHOF: Bulk tonnage deposits are basically deposits that have wide drill intervals of low-grade material as opposed to narrow drill intervals of higher-grade material. Underground operations tend to be narrow, and open pits have a tendency to be very wide. We're talking widths in the order of anywhere between 30 to 60 metres wide, something that lends itself to bulk tonnage removal from surface with excavators and removal by trucks as opposed to sinking a shaft or going underground with a ramp.

This is an aerial view of our Beaver Dam project. You're looking at about two kilometres here. We actually control about 4.8 kilometres of favourable geology here. There's our resources I spoke to earlier. This is supported by over 256 drill holes with over 47,000 metres of diamond drilling. The bulk of this resource is in the main zone, in this area here outlined by these two red lines. This is a 500-metre interval between 650 east and 1,150 east. The yellow spots represent some of the numerous historic holes that were put in by Seabright in the 1980s. These red ones represent some of our own holes that we've drilled. You see 16 of ours here. We're actually on drill hole No. 54 now. In the package you'll see results for about 30 holes that we released. The resources you see here only include 18 of our holes, so as you can see, the resources are very likely to grow as our assets continue to come forward for our drill holes that are coming in.

MR. GERALD SAMPSON: You have measured and indicated, and then you have inferred. What's the difference?

MR. FELDERHOF: What that means is the level of confidence we have in those numbers. Inferred would have a lower confidence than measured, and indicated would have a lower confidence level than measured. So this is the lowest confidence level, that's the highest, that's the second highest. All that relates to is the density of sample points. If you have a drill hole that's over here, another one that's 500 metres on this side with nothing in between, then you would say these two holes are inferred resources because we don't know what's in the middle. As you fill that in, and the geologist has confidence that there's continuity in the mineralization, then all of a sudden he can get into indicated and into measured. That's very important from the point of view of going into a feasibility study. You can't go into a feasibility study with inferred resources, you need measured and indicated. That's why it's important.

MS. MICHELE RAYMOND: Could inferred resources also be bulk tonnage ones, or do they have to be concentrated?

MR. FELDERHOF: No, they could be part of the inferred resources. Once we do our pit design on this property, the inferred resources would have to be brought into indicated, otherwise what happens is you get dilution.

This is the area we're focusing on right now. We believe there's potential to expand the deposit to the west to the next pit zone and to the east in the east zone, particularly in the east zone. We think this is particularly prospective here. As far as Blue Sky is concerned, we're looking at the mill shaft zone in this area, in the north zone here where there is some similar geology to the main zone. We haven't done any drilling here ourselves yet, but we believe this has potential for additional mineralization, or what we call satellite deposits.

The next slide I'm going to show you is a slice through the deposit along here, what we call the 1,100 line, that's 1,150 east, this is the 1,100 line. There's the gold zone, extending from the surface down to the depth of 350 metres. What you're looking at here, these purple lines or blue lines are drill lines or drill holes that were put in by Seabright. Those green intervals are drill grades that they reported. What you see here in red are drill results that we've reported, Acadian Gold.

Acadian Gold is focusing on the open pit target, which is from zero to 150 metres. We see this as the interval below surface that has the most potential for an open pit. It could well be more shallow than that once we finish our drilling, but we see 150 metres as probably the ultimate limit. Below that is the underground target, and we will not be drilling that at this point in time. If an open pit becomes feasible at Beaver Dam, and once the open pit is mined out, then we would look at ramping down from the bottom of the pit to access these underground resources.

These grades are excellent grades for underground. For an open pit, we're looking at grades in the order of 2.3 grams per ton, overall. This is a good grade for open pit mining. To put this into a dollar perspective, one gram of gold today is worth $20 Canadian. So if you multiply the grams you see here by $20, you'll get an idea of what one ton of rock is worth. So if you see 2.41 grams, that's worth $48 Canadian. In other words, we have to take that rock out and make money on $48. We think we can make money, and depending on how big the pit is going to be, between 0.6 and 0.8 grams is our break-even. Underground would be much higher of course. Underground, we'd be looking at somewhere between 3.5 grams to 5 grams, possibly. Underground mining is more expensive.

[1:30 p.m.]

This is our second advanced project, Forest Hill. This is an underground project. You are looking at 2.5 kilometres here, and we actually control about 12 kilometres of strike

length here. Once again, our resources that I spoke to earlier, supported by 324 drill holes with over 34,000 metres of diamond drilling. The property also boasts a modern shaft that was sunk in the 1980s by Seabright. They sank the shaft to 230 metres and completed 10 kilometres of underground development work. This is a substantial amount of underground infrastructure that we get the benefit from once we're underground. They also put a small ramp in on this eastern part of the property.

The resources you see here are depicted with the gold ellipses, and one over here as well, and also here is the new discovery that we made in 2004 with our own drill program. I'll show you a slice through that, the next slide. This is a slice through that new discovery. This is a distance of 500 metres. The red spots represent drill hole penetration points. These are the gold zones that extend from surface to depth, they're still open, and we still have to drill these areas here. The average grade here is 12.63 grams per ton uncut, and at $20 per gram you're looking at a $250 rock.

This is our Tangier property, our third advanced project, and we're looking at 1.5 kilometres here. The red lines represent some of the numerous gold-bearing quartz veins in the property. We control about 7.5 kilometres of strike length in this project. The resources you see here, once again, supported by 199 drill holes with over 20,500 metres of drilling. The resources are primarily in this area here, called the Blueberry Hill mine, in this area. This is a little spot that marks the ramp that accesses the mine that was put in by Coxheath Gold in the 1980s. The resources that we've outlined, the underground workings there all stop at this little squiggly line, what we call the Copper Lake Fault.

This is interesting for us, because this yellow spot and these two here and this one here are four drill holes that were actually put in by the Department of Natural Resources in 1990 for geological investigations. They were archived, fortunately, in Stellarton at the Core Library, and the company was able to access these holes. Now we've logged and sampled those. Assays are coming in now, and we expect to have all the assays in within the next three weeks.

This is important to us, and I'll show you why on the next slide, because I'm going to show a cut, longitudinally through here, on one of the veins. This is a distance of one kilometre, and this is some of our resources that we've outlined in this particular vein. This shows some of the underground workings. The yellow spots represent drill hole penetration points. There's the Copper Lake Fault. As you see, the workings and our resources stop at the fault. There are the three holes drilled by DNR and one over here. So you can see that if we hit in these holes, if we get good assays in here, this area would be very high potential for us for additional resources, as well as over here in the Kent Shaft area.

One other thing I'd like to point out here is the shallow depth of the workings. It's only 200 metres, very shallow. Just to put that in perspective, I want to point out that the Macassa mine operated by Kirkland Lake Gold in Kirkland, it's down over 3,000 metres,

currently operating at that depth. So that's very shallow, it makes the impact of how shallow mining has been in Nova Scotia.

This is a diagrammatic cross-section through the ramp at Tangier. The ramp starts at surface, spirals down to 145 metres below surface, from which there is five kilometres of underground development work. Once again, a great advantage to us from a cost-savings perspective and also a time perspective to access the gold mineralization.

This is Goldenville, this is our fourth advanced project. This is how it looked in 1940. It was last operated by Guysborough Mines, which was a wholly owned subsidiary of Ventures Limited. Ventures was a predecessor company to Falconbridge, and everybody has heard of Falconbridge. That was the last company that was in Goldenville. All these buildings are now gone. I want to point out this is the largest past producer in Nova Scotia. Over 212,000 ounces of official reported production. That's a substantial resource. What's important here is that it all came from within 200 metres of surface, so it's still very shallow. That equates to over 1,000 ounces per vertical metre of depth on this mine.

In the 1980s, considerable drilling was done here, and also total rehabilitation of the mine shaft here, which is called the Stuart Shaft by Nova Gold Resources. The next slide, I'll show you an aerial photograph, and here's the Stuart Shaft that we saw in the previous photo. This is a distance of 3.2 kilometres, you see here, and we control about 10 or 12 kilometres in this area. Our resource is over 299,000 ounces in the two categories you see here; 40,000 indicated, 259,000 inferred. Clearly we want to move more of these inferred ounces into indicated, and to that end we have a drill on-site there now, and we're on drill hole No. 4. We have a first-phase drilling program underway there now for about 2,000, 2,500 metres of drilling.

But the resources you see here now are supported by 142 drill holes with over 28,700 metres of drilling. Most of those holes you see here in blue, the red ones are the ones we're currently drilling. The resources are primarily in this zone called the Stuart zone, which is a distance of 800 metres, and to a lesser degree over here in the Bluenose zone. We're particularly interested in this area here. Lots of potential for expanding the resources here at depth, as well as in the areas well to the east and well to the west on this structure which runs northeast-southwest.

There's a cross-section of the Stuart shaft, down to 190 metres. There's some of the drill hole penetration points and some of the veins with some of the grades. Excellent underground grades. So from zero to 200 metres past-production was over 200,000 ounces. Our current resources: indicated 40,000 ounces, inferred 259,000 ounces. So if you add that up, you can do the math yourself and see how many ounces you might have through 200 metres and the potential that you would have below that.

This is what we call a depth potential slide in Nova Scotia. Here are our four key properties: Beaver Dam, Tangier, Forest Hill and Goldenville. This is just a crude outline of where this pit would be if it went 150 metres. There's the 200-metre line below surface. The question always arises, many people bring it up, well, how do you know the gold mineralization continues at depth? Well, here's why we know, these black spots represent drill holes that were put in below the 200-metre level. This one here, at 650 metres below surface is the deepest drill hole in the Nova Scotia goldfields. This demonstrates the continuity of gold mineralization at depth in Nova Scotia and gives us the confidence to keep going here.

I want to add here, once again, all our drilling that we're doing at this point in time is all focused above 200 metres, so we're not even looking below 200 metres at this point in time. Nevertheless, the potential is there. As I indicated, at the Kirkland Lake Gold property, they're mining at 3,000-plus metres.

Here's our gold resource slide, and you can see the growth. We started with zero, as we put our resources on the board with our 43-101 reports, through time you can see the resources growing, inferred and gold, and you can see our measured and indicated gradually creeping up. We expect this will continue to grow as our drill results come in.

This slide describes our central milling strategy. What we aim to do here is have a central mill. Originally I had planned it for Beaver Dam, but now that we've entered into this agreement with HudBay to acquire ScoZinc, there's a big mill with that, and that's located about 60 kilometres west of Beaver Dam. It's capable of doing 1,500 tons a day, not 2,000 tons, but this is what we'd like to operate at. We would envisage scaling the plant up a bit to get up to 2,000 tons per day.

But just to explain the strategy here, what we aim to do is have one mill instead of four mills. You can see the advantages of having one mill. You only have to buy one mill or construct one mill instead of four, you only have to put personnel in one instead of four, and, importantly, from our point of view, you would only have to permit one instead of four. I think from the environment point of view, you only end up with the tailings down at one site instead of different tailing sites everywhere.

There are considerable advantages on all sides to operate from one mill. Of course there are extra costs because we're trucking ore now, we're trucking ore from one site to another. So that's what we aim to do. From Beaver Dam, we're looking at that as an open pit project, and if it all comes together as we expect it to, or as we hope it to, we would look to operating in the range of 1,300 tons per day. Forest Hill would be underground, and so would Goldenville and Tangier, much smaller operations as you can see, at a rate of about 200 to 275 tons per day. There are the distances that these trucks would have to go to go to the mill.

One last advantage, which I'd like to point out, which is also a very important one, is that the nice thing about having a number of multiple sites operating, if you have a hiccup at one of the operations, if you've got a problem at Goldenville, if all of a sudden you get some problems with the underground equipment or the geologist is having some difficulty tracking the ore, while he's sorting that out, you still have material coming from the other three sites. So everything doesn't come to a grinding halt. The plant just keeps going. This is a key aspect of multiple-site mining.

MR. CHAIRMAN: What's the location of your mill? You said 60 kilometres . . .

MR. FELDERHOF: That's Gays River. I'll show you a picture of that, momentarily. So the ScoZinc acquisition, this is a letter of intent, which I spoke to earlier, that we've entered into with HudBay. We still have to sign it. There has been a purchase and sale agreement with that company that's coming here shortly, and following that we have to close the acquisition by delivering the purchase price.

Here's why it's important to us. It comes equipped with a 1,500-ton per day mill and an open-pittable lead-zinc deposit. The reason why I say that at this point in time is because we know the lead-zinc deposit is there, it was drilled off by Esso Minerals in the 1970s. Current lead-zinc prices have escalated considerably since China has now taken up 35 per cent of all the zinc production in the world.

Secondly, it's going to enable the company to fast-track through production, because ScoZinc has most of the necessary permits in place to start that operation up fairly quickly. Thirdly for us, it's important because if we get this operation up and running as planned, the cash flow from this operation is expected to finance the gold project to production. This is important for our shareholders from the point of view that we hope not to have to do any equity financing after that and, therefore, the shareholders shouldn't suffer any further dilution.

Here's an aerial photograph of the ScoZinc situation. There's the mill, the tailing dam that exists there now. There's the dam here and there's some tailings from the operations in the 1980s. They put about 800,000 tons of material through there during that period. Those are the support buildings, offices and maintenance building. There's a close-up view. An excellent operation which we can get up and running fairly quickly. As you can appreciate, we're paying $7.5 million for this asset, which is the lead-zinc deposit and the mill. For us to build that mill new today, we'd be looking in the order of $35 million. So it's a huge savings for the company. As I indicated, because of the permitting that's in place, we should be able to get that up and running fairly quickly and get the company into a cash flow situation.

I just put this slide in there. This is off www.kitco.com and shows the zinc prices, what they've done in the last three years. They've gone from 35 cents to over 90 cents now.

It actually peaked at about $1.07, and once again reflects the shortages of zinc in the zinc inventories worldwide. That reflects, of course, what's happening in India and China. Once again, lead has gone from 23 cents to over 55 cents, it peaked at 64 cents, 65 cents. Once again, short inventories. We see shortages continuing for the next couple of years, so we expect some good prices over the next couple of years, which is very important for the company.

Going forward, what are we doing in 2006? Well, we're going to close this acquisition with HudBay. We have to raise $7.5 million to complete that acquisition. We're going to complete a feasibility study on the lead-zinc deposit, and actually we have a lot of work underway on that at the moment. Permitting, we have to look at all the permits that are in place now and see where we're deficient, and get that up to speed. Lastly, stockpile ore, providing all our permits are in place sometime this year, and then we would immediately start stockpiling ore to start the plant up next year. We would like to stockpile ore for about six months in advance of starting up the plant.

Beaver Dam, we have a diamond drilling program that's still underway. We're on drill hole No. 54 or 55 at the moment, and we have at least another 15 or 20 planned. There will be a new resource estimate coming out probably in the second quarter of this year, reflecting drill results that we're getting now. A scoping study is underway - that's underway in all our projects as we're working and going forward, as we fine-tune our numbers going into a pre-feasibility study.

Forest Hill, we finished all our surface drilling here, and we've now asked the engineers to provide us with a detailed mine plan. Once that's in place, we'll look at the funding required and determine whether or not we'll go underground this year or not to do an underground drilling program. The reason why I say underground drilling is that where our resources are now, there are other excellent targets in that area, at 200 metres and slightly below that, and rather than drill through all that same ground again from the surface, it's much cheaper for us to do that from underground. We can establish drills on the 200-metre level, underground, and then drill from there. So that saves us all that 200 metres above us, to re-drill at great cost. It's a cost savings for us, for the underground drilling.

Goldenville and Tangier, we're drilling at Goldenville right now. We've got more surface drilling to do on both of those projects, as you saw earlier. We have a lot of inferred resources that we need to move up into the indicated and measured category, and to get that additional confidence we have to do more drilling and tighten up the numbers. As that is done, as the results come in, of course, we expect new resource estimates to complement that. Scoping studies will be ongoing as this work progresses.

With respect to other properties and our Atlantic Gold joint venture, there will be limited exploration drilling and other exploration-type work that we'll be doing on those projects. We see our other properties as a pipeline of projects to come forward as our senior

properties progress into production. In 2007, in QI, I have a mill startup and production that of course hinges entirely on whether or not the feasibility study is positive. We're optimistic on that, obviously, otherwise we wouldn't be acquiring this asset. Also, it depends on funding and permitting.

[1:45 p.m.]

Our gold projects, we expect to do pre-feasibility studies and pre-production development and permitting on those projects as well, specifically Beaver Dam and Forest Hill as those are the two most advanced projects.

In summary, then, we now have over 550,000 ounces in the measured and indicated category, over 900,000 ounces inferred and it's growing, as I indicated, there's two drills on the properties. We have four advanced gold projects, one bulk tonnage deposit, that's Beaver Dam. I think we have multi-million ounce potential on these projects, and that's demonstrated both at depth and also in the shallow, zero to 200-metre interval. We're targeting gold production of 120,000 ounces per year, but once again I probably shouldn't have that in there at this point in time but that's our target for the future. We have to have a target of where we want to be, and that's just a target only. Clearly, we have a lot of work to do before we get there.

We're pursuing a multiple-mine central processing strategy, and we think this is a key to successfully developing the gold projects in Nova Scotia. We took a giant step forward with the pending ScoZinc acquisition. We expect cash flow from the open pit lead-zinc mine will finance the four gold properties to production. We aim to raise approximately $25.5 million in late April in debt and equity. This is required for the purchase price and for working capital and some capital expenditures on the properties. We believe that if this is successful, then we should not have to do any subsequent equity financing, but of course, depending on what happens, there may be requirements going forward. This is what we see at the moment.

I think we've made exceptional progress since we started in 2003. We're very focused on our goals here in Nova Scotia. As I indicated earlier, we are only in the Nova Scotia goldfields. It is our focus. We believe we're fast-tracking to production. A lot of companies say that, but we can actually say it because we actually have a mill that's coming in as an acquisition and a lead-zinc deposit which we think is going to be a feasible mine. We're delivering for shareholders, and we think that, today, we still represent exceptional shareholder values.

This is a little slide that was put together by Craig Miller, an analyst at BMO Nesbitt Burns. He shows - on this bottom line here, you see market cap in U.S. millions of dollars, and on this side gold, gold ounces in millions of ounces. Here you see a little spot for ADA, which is our ticker symbol for Acadian Gold. We're valued at $18 per ounce of gold in the

ground. So what he has done is he's added our ounces together and shows us here at around 1.4 million ounces of gold. He has determined that we're worth $18 per ounce, that's what the market is valuing us at today, up to a $30 million market cap. This is in U.S. dollars, and when I say $30 million, I'm talking Canadian.

But what's important here is - I should explain these lines a bit further. That would be the $20 ounce in the ground, that's $40 per ounce and that's $100 per ounce. You see a lot of our peers at between 0.5 million ounces and the 2 million-ounce range. Most of the group is in here. We expect that we should be in here as well at some point in time. We believe we're still significantly undervalued. Built into this price, as well, and what Craig doesn't realize, is the market recognition of our ScoZinc field. There's a bit of a zinc value in there as well.

There are resources at the one-gram cut-off at 5.53 and 9.10, and the next slide you'll see a 3.5-gram cut-off which basically excludes everything below 3.5 grams. It comes down to 5.27 and 8.26, but the grades go up, and you can see the tonnages we're talking about. In this column here, you'll see the various press releases we made.

That's the story of Acadian Gold. I think it's an exciting company going forward. I'm very pleased to be the president and leading it. It's something I've always looked forward to doing in my career. Just to give you a bit of background on myself, I graduated from Dalhousie University in geology in 1972, and have worked internationally for quite a few years. I ran a consulting office in Johannesburg for three years, between 1979 and 1982, and that was for ACA Howe International. I worked in many countries in South Africa at the time. Then I came to Toronto and ran their office in Toronto for two or three years. Following that I got involved in the junior resource business with a company called Jascan Resources, which I led from 1984 to 1990. That got taken over by Conwest Limited in 1989.

I moved back to Nova Scotia in 1990, and did various things, privately, both in the province and also in Mexico and Brazil. This is my first public company endeavour since 1997. I ran a company called East Indies Gold for about two years, in 1996-97. So I am very pleased to be back in Nova Scotia and leading this effort. I personally have a strong belief in the potential of Nova Scotia goldfields and I'll take great personal pleasure out of seeing one of these gold properties coming to production and proving to the rest of the country that this province actually has potential to host gold mines that are economically viable. That's my story.

MR. CHAIRMAN: Well, thank you very much. I have some members who would like to ask some questions but I'm going to start with the member for Halifax Atlantic to introduce herself. We've had three members come in since you got started.

MR. FELDERHOF: Right.

MR. CHAIRMAN: You can be seated, if you like. We won't grill you so hard that you might want to get up and run. (Laughter) Michele.

MS. RAYMOND: Yes, hi. Thank you very much and welcome back to Nova Scotia. I'm glad that you've seen fit in your field to come back. I'm certainly well aware of the historic interest in the goldfields of Nova Scotia.

First off, I have to say, I'm no miner so an awful lot of what you've said has gone over my head. But something that you did mention, you said something about the economic threshold at which recovery per gram . . .

MR. CHAIRMAN: Michele, can I just get the other members to introduce themselves and then I'll come back, you're at the top of the list for questions.

Mr. Parker.

MR. CHARLES PARKER: Thank you. Charlie Parker, MLA for Pictou West. Will, I think you're a fellow Pictonian, aren't you?

MR. FELDERHOF: Yes, I am. We have certainly met. Nice to see you again.

MR. CHAIRMAN: Michele.

MS. RAYMOND: Okay, I will restart. (Laughter) You said something about the economic threshold, the recovery that you need from a ton of gold-bearing rock. Did you say something around $48 a ton?

MR. FELDERHOF: Oh, I had looked at one grade here that came up. It said 2.4 grams and I said, well, one gram today is worth $20 Canadian, so that means that one ton of rock with that grade is worth $48.

MS. RAYMOND: Okay. You weren't saying that that's economically viable?

MR. FELDERHOF: Well, I think it will be.

MS. RAYMOND: Really?

MR. FELDERHOF: Yes, 2.4 grams per ton, I think, is very viable in Nova Scotia, provided it all hangs together and we get good continuity in our drilling. For instance, the Moose River project, which is being developed at Atlantic Gold, I believe their grade is even less than that at two grams and I think they believe that to be viable, their feasibility right now.

MS. RAYMOND: Just roughly, what are the component costs in mining - moving, paying royalties, handling, tailings, everything? What are the components - not specific numbers, but what are the component costs in handling a ton of rock?

MR. FELDERHOF: Well, you just identified most of them right there. (Laughter)

MS. RAYMOND: Anything else, though?

MR. FELDERHOF: First of all, you have to drill and blast, whether it's open pit or underground. Then you've got to load it into a truck, or if you're underground, load it into an ore car. Then you've got to truck it to the plant.

Then it goes into the plant and it goes through a jaw crusher that crushes it down to gravel size, or smaller. Then that goes into a mill and then grinds it down to almost fine sand size. Usually, there's a gravity circuit that picks out the coarse gold. It will run through a piece of equipment that takes advantage of the differences in density between the sand, which is very light, and the gold which is very heavy. Gold has a specific gravity of 19.1 and the quartz rock would have a specific gravity of about 2.5, so that density contrast enables you to take advantage of that and separate the two.

Now, very fine gold will stay with that sand and sometimes there's a bit of sulphide in it and it will stay with that. Then it goes into a flotation circuit and you've got special reagents that will float the gold off and it will float off the different sulphides.

Once it has gone through the flotation circuit, once again, the gold will be precipitated out on a zinc precipitation unit, and then the sulphides that come out, that still have gold with them would be treated with intense cyanidization within the plant or shipped away for treatment. That's how the gold is recovered.

The costs vary depending on if it's open pit or underground because open pit, you're dealing with trucks and excavators, and underground, you're dealing with smaller equipment and it's tight quarters, so you're dealing with very specialized equipment and you can only move small tonnages, not like the open pit.

MS. RAYMOND: So you have some costs then that are somewhat fluid in all of this? I mean, I would imagine that the costs of fuel, labour and possibly of environmental handling are things which are subject to change beyond your control, is that right?

MR. FELDERHOF: Yes, but that's something that the engineers deal with. I mean, they do sensitivity analyses on those various cost centres and we determine which ones are going to be most sensitive to the viability of a project.

MS. RAYMOND: Okay, so are there costs associated with remediation at all that you have factored into this?

MR. FELDERHOF: Of course, oh, absolutely. Before you even commence mining you are required to put a bond up and it's a very significant bond. There's constant monitoring of effluent from the plant to make sure it's within the guidelines. There are people specialized in that.

MS. RAYMOND: So is the bond at the ceiling of your possible cost or it's only a deposit against your costs?

MR. FELDERHOF: No, the deposit is always changing, depending on what's happening on the site.

MS. RAYMOND: Yes, okay.

MR. FELDERHOF: If we're reclaiming as we're going along, the bond might be reduced but if the bit is getting bigger and bigger, then the bond has to be increased.

MS. RAYMOND: Yes. Just one last question. Do I have a couple of minutes?

MR. CHAIRMAN: Yes.

MS. RAYMOND: Okay. Are there other cost recoveries that come out of that ton of rock? You mentioned zinc and lead, and the gold, itself. Are there other . . .

MR. FELDERHOF: No. There's a bit of silver with the gold deposits here in Nova Scotia but it's not meaningful from a financial point of view in the projects.

MS. RAYMOND: Yes, okay. So gravel, rock, soil and so on are not any element.

MR. FELDERHOF: No, on an open pit operation, what you normally do is remove the soil first, store that in one spot, and then you remove the rest of the overburden and store that in another spot. So then when you're finished, you reclaim it and you put the soil back on top so it's capable of supporting trees and plant life.

MS. RAYMOND: Okay. So silver, zinc, lead and gold are pretty well it?

MR. FELDERHOF: Yes.

MS. RAYMOND: The only question that I had, also, was, the HudBay mill that you would be buying. That was built in what year?

MR. FELDERHOF: It was 1978-79.

MS. RAYMOND: Okay. And you say it's somewhere around 25 per cent of the cost of new construction, the replacement value?

MR. FELDERHOF: Yes.

MS. RAYMOND: Is the permit also that old?

MR. FELDERHOF: No, the permit was renewed, I think, by the previous company called Savage Resources, I believe, in the year 2000. So the environmental assessment has been completed, it's my understanding. We haven't closed this deal yet but we're just looking at all the papers now and that's what I understand.

MS. RAYMOND: Okay.

MR. FELDERHOF: But I understand it needs an industrial approval, so we have to do what's required there. We've engaged a local company in Dartmouth. It used to be called MGI but they've changed their name to CRA, or something, they call themselves.

MS. RAYMOND: But it has been verified within the last five years as being somewhere within the range of modern environmental status and so on, as well?

MR. FELDERHOF: Oh, yes. But before . . .

MS. RAYMOND: You're waiting for industrial approval?

MR. FELDERHOF: No question. And before we start they will be looking at the plan and telling us what sort of a bond they require.

MS. RAYMOND: Okay, yes. Well, thank you very much.

MR. FELDERHOF: Oh, you're welcome. Thank you.

MR. CHAIRMAN: Mr. Langille.

MR. WILLIAM LANGILLE: Thanks for coming in.

MR. FELDERHOF: You're welcome.

MR. LANGILLE: I enjoyed your presentation. I have been down gold mines before and base metal mines. I don't know a lot, but I know a bit. Anyway, I see most of your holdings are over old claims, mine claims?

MR. FELDERHOF: Yes, old gold districts.

MR. LANGILLE: Yes. Do you have any new ones that you've discovered yourself?

MR. FELDERHOF: Not really. I mean, that's one of the nice things about Nova Scotia, is that most of the discoveries have been made. This is a great place to start because we know where they've been mining in the past. Some of the most difficult things to do sometimes is to find new deposits. From our point of view the discovery has been made for us so we're following up on that.

MR. LANGILLE: How close are you to opening a mine?

MR. FELDERHOF: That's a difficult one to answer at the moment. We have to take all these gold projects through to feasibility first. As indicated, my go-forward strategy is to do some pre-feasibility studies next year. That will give us a better feeling for when we can actually go into production.

There are different things that come into play here, not the least of which is funding; and secondly, is permitting, right? So assuming that we've drilled off a deposit, say Beaver Dam, and we know that it's going to be economically feasible at gold prices that we're happy with, then we have to make sure we have the capital to bring it into production, and also, the permits are coming forward. I don't anticipate any problems with either one of those but for me to say, yes, they'll be in production in 2007, and then if it doesn't happen until 2008, then my credibility is gone, so I would hate to put a year on it. Maybe 2008.

MR. LANGILLE: The mill itself, you purchased the mill already, did you?

[2:00 p.m.]

MR. FELDERHOF: Not yet, no. As I indicated earlier, we have to sign the definitive purchase and sale agreement. We signed the letter of intent, that's the first step. The second step is to get the definitive purchase and sale agreement signed. The lawyers are just fine-tuning that now. Once that's signed, then we have to raise the capital to close the acquisition which is $7.5 million. That's scheduled to be May 5^th. That's the target date.

MR. LANGILLE: I guess that's where it's going because I thought you had already purchased it and I wondered why you purchased a mill prior to opening a mine. It just wouldn't make sense to me.

MR. FELDERHOF: No.

MR. LANGILLE: But I'm glad you straightened that out.

MR. FELDERHOF: I probably should have pointed out on the slide there as well. I'll go back to it quickly here. The lead-zinc deposit sits approximately like this in here. It obviously doesn't show - I just got these slides.

The lead-zinc deposit that we aim to open pit would be in this area here. It was operated as an underground mine at one time but we think an open pit makes more sense.

Interestingly enough, I think just over here off the map there's another lead-zinc deposit that was drilled by Getty Minerals in the 1970s as well. This is under closure by the government right now. So, clearly, from our point of view, if we're successful in closing this acquisition and bringing this into production, then the mine life or the life of this plant could be extended considerably, this deposit, this over here, sitting with the government under closure at the moment.

We approached DNR already on this and indicated our interest. As you can appreciate, if we close this then it makes more sense for the owner of this property to have access to resources next door. That's assuming these resources are actually economically viable which we don't know yet. We just know that there is a deposit there.

MR. LANGILLE: Just speaking about base metals, you don't mention any copper.

MR. FELDERHOF: No.

MR. LANGILLE: There's no copper in Nova Scotia per se?

MR. FELDERHOF: I think there's some copper prospects, primarily in Cape Breton Island, and I think in the North Shore of Nova Scotia, in what we call the carboniferous sandstones, there's some copper, but I don't think anybody has ever outlined anything yet that can be considered economic yet. In Antigonish, as well, there's one called - I think it's Copper Lake, that some drilling has been done there.

MR. LANGILLE: But you think there is potential for base metal mining in Nova Scotia. Obviously, you would, you're open pit.

MR. FELDERHOF: Oh, yes, for sure. I think this is it. This is the closest. There's something like 1,600 different drill holes put in there, in this property. There was a lot of drilling done there, close to 1,000 drill holes on the surface and 600 from underground, so it's a big database.

MR. LANGILLE: Yes. The other question, Canada is a very big country and, of course, you have Quebec, Ontario, B.C. and Alberta which is largely Crown-owned. Then you have Nova Scotia which is 70 per cent private and 30 per cent Crown. Of that, you've

got your wilderness areas taken off that and that reduces it more. To get leases in Nova Scotia, are you having any problems with that?

MR. FELDERHOF: No. Well, the mineral licences are issued by the Crown. Like, surface rights and mineral rights, as you know, are segregated here but for us to access lands, of course, we have to go to landowners. For this situation, of course, it's something like 1,400 acres of land that comes with the acquisition so that's not an issue for us.

At Beaver Dam, we're looking at land that's owned by Neenah Paper. They've given us access for drilling which we pay for. We've approached them to purchase the land and, of course, a block of land that's suitable for us. They're dealing with that now. So that's what we do. I mean, if we're in private lands, we buy access, we get approval for access from the landowner, and then if we go to production or want to go to production, we reach an agreement on purchasing the land.

MR. LANGILLE: I guess where I'm going with this is, Nova Scotia has little Crown land - it is a very small province, landmass-wise - compared to other provinces in Canada.

MR. FELDERHOF: Yes.

MR. LANGILLE: Your window of opportunity would appear to me to be very small when it comes to. . .

MR. FELDERHOF: Yes, it is. It is certainly a smaller area to look at than, say, in Ontario. Certainly, we're concerned from the industry point of view about having lands sterilized, whether they be for green zones or for urbanization. There's no question. I mean, there's a couple of good gold districts that have now been developed to the point where this is totally sterilized from the point of view of mining. Two of those are Waverley and Montague. There's high potential for economic gold deposits that's now unavailable. This is where land planning comes into place, of course.

Also, in Meat Cove, there's a lead-zinc deposit up there which is in the middle of nowhere but for some reason or another, now it's in some sort of a park so it can never be accessed, which is a bit unfortunate from the industry point of view because gold deposits or base metal deposits are, in a sense, a freak of nature. It's not like logging where you can go into an area and plant trees and you have trees. I mean, lots that can be economically extracted for the metals is a rare thing. To sterilize these without fully. . .

MR. LANGILLE: I'm looking at the northern part of Gully Lake which is a protected area now. There was some exploration going on there and they were getting a little bit excited but that was years down the road. How do you find the Nova Scotia Government for doing business? How would you rate them?

MR. FELDERHOF: Excellent.

MR. LANGILLE: They are, are they?

MR. FELDERHOF: They're excellent. They're very supportive. The staff at the DNR have been very supportive of what we're doing. They're very proactive in Toronto. They always show up at the Prospectors and Developers Association.

MR. LANGILLE: I heard one of my colleagues say it's a loaded question. It wasn't a loaded question. I was looking for an answer, by the way. I never discussed that with anybody else prior to this. Anyway, I think that's about it. I have other things but that's good, thank you very much.

MR. FELDERHOF: Thank you.

MR. CHAIRMAN: Hopefully, we'll get back to you, Mr. Langille.

Mr. Colwell.

MR. KEITH COLWELL: I see you do a lot of trucking, moving material around. What size trucks, what kind of trucks do you plan to use?

MR. FELDERHOF: Well, it's too early to tell but they would probably be tractor-trailers or B-trains. We recognize, of course, that there are times of the year when you have road weight restrictions and, obviously, you have to take that into account when you stockpile an order, while that's in place. As you can see, not a lot of trucks. I mean, at Beaver Dam we had the biggest one but that's fairly close. But at the other site, the underground sites, you're looking at 200, 300 tons per day which is six, seven, eight truckloads.

But, nevertheless, I just want to point out that mining - if we're successful in what we're doing and we get all these operations up and running, we could conceivably employ upwards of 400 people on these various operations. So, I mean, I think they're significant for the economy. One of the things about mining is that they're usually high-paying jobs. Unlike coal mining, hard rock mining is a much simpler and safer type of mine.

MR. COLWELL: You said earlier there's no by-products in gravel or anything you can get out of this.

MR. FELDERHOF: That's not quite true. At Beaver Dam, I know that Gallant Aggregates is taking sand out of there right now. There's an overlying sand deposit. It wouldn't have any serious impact on our bottom line from the point of view of earnings out of the gravel. I mean, when you look at the metals value, anything you could sell as aggregate

or sand would be 1 or 2 per cent of revenues. That wouldn't be anything that would drive the company forward, put it that way.

MR. COLWELL: No significant thing.

MR. FELDERHOF: No, not really.

MR. COLWELL: If you apply, are you going to tend to apply for any funding from the province?

MR. FELDERHOF: I hadn't given it any thought. I've raised over $10 million in equity finances in Canada and overseas. Most of the money is actually coming from overseas now, Switzerland, England, Luxembourg, France. We plan to raise $25 to $26 million for this acquisition. I would like to do 75 per cent debt, 25 per cent equity. If the province thought that they would want to assist us in any way, or if I thought there was any potential they might assist us on the debt side, we would be happy to talk to them.

MR. COLWELL: Okay, but you had no . . .

MR. FELDERHOF: No, no immediate plans. I hadn't thought about going to the government.

MR. COLWELL: That's good, actually. (Laughter) It's nice to see companies come in and finance themselves as they go through the process.

MR. FELDERHOF: I feel that if we do a bankable feasibility study, the project should be able to carry itself. If you can't find the necessary capital in the marketplace, then there's something wrong and you should be taking a second look at your project. If the marketplace doesn't want to finance it, it deserves a second look.

MR. COLWELL: What about when you do open pit mining, what reclamation activities would you take?

MR. FELDERHOF: This is a question that would be better for my engineers, actually, but for instance, at a place like ScoZinc, or the Scotia lead-zinc mine here, what would happen is that I think they actually start reclaiming it as they are proceeding in the pit, if they're going, say, from southwest to northeast, as they mine out here they would put that on the surface. But as they go forward, some of that waste material would fill in behind them.

Whatever the environmental consulting companies would be recommending for us to do, that's what we will be following. That will, of course, be part of the plan that the engineers would supply to the government. I'm the president of the company and I rely on

engineers to come up with all these plans and make sure that they're acceptable to the various departments here. We will comply with those, obviously.

MR. COLWELL: Have you had any discussions yet with the Department of Environment, provincially or federally?

MR. FELDERHOF: We have met with them on the one window - meetings, as to indicate to them what we're doing, sort of to give them a heads-up where we're going, so they know what we're about. I presented to them, maybe, about a year ago. That will come up again sometime here soon, I would expect.

MR. COLWELL: You don't expect any problems with any of that?

MR. FELDERHOF: No, I don't think so. I don't think there's any reason for it. One of the nice things about the lead-zinc mine, in particular, is that it is acid-consuming. The host rock to the lead-zinc is what we call carbonate. Carbonate actually neutralizes acid so there will be no acid waters generated here. That's one of the nice things about the lead-zinc. Now, the gold ore is a bit different, probably somewhat acid-generating because there are sulphides there. That would have to be mitigated. Once again, I rely on the engineers to advise on how that's best done. That's not my expertise.

MR. COLWELL: Okay. Those are all my questions for now.

MR. CHAIRMAN: Thank you. Well, I have a couple, I guess. I'm curious, you probably can't tell from that slide but I was a rodman on that job for a surveying company when they were building that mine. Just to let you know that all of my projects are on the level when you meet me. (Laughter) I'm curious, you mentioned there was a tailings pond there, I think. In that slide there's a dam there.

MR. FELDERHOF: That's it right here.

MR. CHAIRMAN: Can you explain how that works?

MR. FELDERHOF: Well, after the waste material comes from the plant, it's pumped to this pond here and it settles in there. It gradually fills in, as you can see.

MR. CHAIRMAN: So the role of that would eventually - if you had enough material, it would be to fill that in.

MR. FELDERHOF: Exactly.

MR. CHAIRMAN: Okay. So would you have to create another settling pond, potentially?

MR. FELDERHOF: Potentially, yes.

MR. CHAIRMAN: Okay. I want to come to, I guess, Mr. Colwell's question around reclamation. I'm thinking that if you haul this material to one site, to one mill, then obviously that's not going to be part of your reclamation, you're not going to haul that back?

MR. FELDERHOF: No, the other sites are underground so there will be very little to reclaim there. You won't see anything because it's invisible, it's underground.

MR. CHAIRMAN: Okay, so there's only one of these that is open pit then?

MR. FELDERHOF: This one in Beaver Dam. Beaver Dam, we wouldn't have to reclaim some in some fashion - contour it, you know.

MR. CHAIRMAN: Okay. Yes, I was thinking of the four gold-mining sites. I wasn't necessarily thinking of . . .

MR. FELDERHOF: Now, bear in mind, when you're open-pitting, you're not just taking out ore, you're taking out waste as well, so that when you put the waste back in to reclaim, it more or less brings some of the contour of the land back to what it was.

MR. CHAIRMAN: You mentioned, probably, six or eight trucks a day. Now, is that on the four sites?

MR. FELDERHOF: Six to 10, maybe, on each, depending on the size of the operation.

MR. CHAIRMAN: So that could be the possibility of 40 trucks a day on the four sites.

MR. FELDERHOF: Yes, or 50.

MR. CHAIRMAN: Okay. Do you know where, in the transportation route, all four of those - what part of that route would have all four from the mill - would carry the loads of all four?

MR. FELDERHOF: I can't answer that yet, unfortunately. I don't know the roads that well.

MR. CHAIRMAN: Okay. If my memory serves me correctly, there was a water problem at this site?

MR. FELDERHOF: Yes, that was underground.

MR. CHAIRMAN: Right.

MR. FELDERHOF: They had a considerable problem when they were operating underground. The water was coming in faster than they could pump it out. That's one of the advantages of having an open pit. It won't be a problem anymore. What we hope to do is (Interruption) Sorry?

MR. CHAIRMAN: Well, I'm thinking - are you saying that because you think it will be so shallow . . .

MR. FELDERHOF: Well, you can get pumps and they can deal with it for the open pit, much simpler, and has a tendency to drain away a bit as you're open-pitting.

MR. CHAIRMAN: Okay.

MR. FELDERHOF: That's what the engineers tell me. Once the open pit is down to its ultimate limit - and that will be the economic limit dictated by lead-zinc prices - then what we will look at doing from there is potentially mining underground. But then we expect to be above the water problem, for the most part, because the pit would act as a sump. So you would confine your underground mining activities to above the sump level.

[2:15 p.m.]

MR. CHAIRMAN: Okay. I'm trying to think if - I guess they probably know the source of the water but I was wondering if it was Gays River.

MR. FELDERHOF: That, I can't tell you. I don't know enough about this project but I'm sure that has been addressed by the people who did the environmental assessment work on this.

MR. CHAIRMAN: Yes. Now, it wasn't clear to me in Mr. Langille's question around buying the mill without being sure of the feasibility of any of the sites, except maybe you're sure of the feasibility of this one, I mean, as far as lead and zinc.

MR. FELDERHOF: Well, that's a good question. We, obviously, are trying to position ourselves, knowing where we were going on these gold projects. I had originally approached another company called ONTZINC which had this prior to Hudson Bay. What happened was I was speaking to ONTZINC, now, all of a sudden, ONTZINC did a deal with Hudson Bay Mining and Smelting, whereby HudBay became a publicly-traded company by taking over ONTZINC. So that put the whole scenario of mine negotiations on the shelf while they figured out what they all had and what they were going to do with it all. So that, basically, resulted in my putting it off until December of this year until I got a deal done with HudBay.

MR. CHAIRMAN: Okay.

MR. FELDERHOF: But I recognized at the time, though, when I did the deal that there was considerable potential there for lead-zinc as well. At the time I did the deal, I think zinc was at 70 cents. So, I mean, you can be sure I did my own numbers. I knew what the resources were here that were reported by ONTZINC publicly in a press release on January 21, 2004. That's on SEDAR. I'm sure you're all aware of this regulatory filing site called SEDAR. Every public company must file their press releases and material change reports, et cetera, on this regulatory site that's in Ontario called sedar.com.

So I looked back in HudBay and went back to the original company called ONTZINC and they had a press release there outlining the resources on this particular project. Then they reported - and these are not 43-101 compliant resources, these are historical resources, but nevertheless, done by professional people. I take that to be very reliable when I see the source of it. They reported 5.5 million tons of 5.5 per cent zinc and 2.45 lead.

They indicated prior to that - they called it a reserve which was minable, so I did my own numbers on that which obviously are not numbers that are releasable but are numbers that a company and a president like myself would look at and say, this is something that is worth acquiring for my shareholders. I was, obviously, bullish in the price of zinc going up and proved to be correct because I did the deal on 70 cents and now zinc is at 90 cents-plus.

MR. CHAIRMAN: Okay. I'm curious about jobs. What do you think the numbers are going to be - and you've talked about engineers a fair bit but I just wonder in what categories, I guess . . .

MR. FELDERHOF: Well, the jobs are in various categories. There will be people in the mill, people in the open pits, people on the excavators, people on the trucks, moving ore from the pit to the plant. There's going to be people moving concentrates to whatever smelter we sell to and we're looking at smelters in New Brunswick, Quebec and the States, and might even look at the smelters overseas. There will be people in the labs. We're constantly doing quality checks on the ore so people will be doing that. Underground we're going to have miners. There will be surveyors and we will be looking at 24-hour day operations so you're looking at multiplying whatever it is by three - maybe eight-hour shifts, presumably.

MR. CHAIRMAN: Yes.

MR. FELDERHOF: Trucking from the gold mine sites to the plant. I might add, if you look at the mining industry, most of these jobs are fairly high-paying jobs. There are a lot of Nova Scotians who have left Nova Scotia to seek jobs in the mines in Ontario, Quebec, Northwest Territories and B.C. and a lot of those people are hesitant to come back unless they have another mining job to come back to. The reason why is because the lifestyle they lead, where they are living they are making anywhere between $60,000 to $120,000 a year,

you know, you're not going to come back to a $30,000 job here, right? So they'll come back to another mining job but they won't come back to a job that doesn't pay as well.

MR. CHAIRMAN: Any notion of the numbers of people?

MR. FELDERHOF: Yes, well, like I said earlier, if all our operations are going you could be looking at somewhere in the region of 400 people. Job by job and site by site, the engineers have given it to me but I don't have it in my head, unfortunately.

MR. CHAIRMAN: Well, I won't hog all the show here but I do have one more question. This is Renfrew gold and I just wondered if you have any notion of that site, you know, the history of it and the potential for anything there.

MR. FELDERHOF: Well, it's another gold district and has potential, and it's close to our ScoZinc mill. It's difficult for me to go into these details, because it's a publicly-traded company and I can't give out inside information. Of course I'm interested in various other gold sites in the province, and that could be one of them, as well.

MR. CHAIRMAN: Mr. Sampson.

MR. GERALD SAMPSON: I welcome you home to Nova Scotia.

MR. FELDERHOF: Thank you.

MR. GERALD SAMPSON: I live in the heart of reclamation mining, strip mining or whatever down in Boularderie Island, to preface my questions, so you'll know where I'm coming from. When you drill these holes, are they very large?

MR. FELDERHOF: Diameter-wise?

MR. GERALD SAMPSON: Yes.

MR. FELDERHOF: No, we drill what we call NQ core, and that's 1 7/8 inches.

MR. GERALD SAMPSON: So it's just core samples that you drill, then?

MR. FELDERHOF: Yes.

MR. GERALD SAMPSON: But if it proves that it's feasible, you said that you have to drill and blast.

MR. FELDERHOF: Yes.

MR. GERALD SAMPSON: Is there any opposition to the drilling and the blasting in regard to environmental concerns from local residents, or are you far enough out in the middle of somewhere that that's not a question for you?

MR. FELDERHOF: I can't answer that question for Gays River. I don't see a lot of houses in the area. Beaver Dam, it's in the middle of the woods, so there's nobody within a good six or eight kilometres, I don't think. The other ones, Forest Hill is also way back in the woods, and Tangier, there's probably a few homes in the area, but that would be an underground situation, so there would be minimal impact there. Likewise at Goldenville, there's a few houses there, but once again it looks like underground, so it would be minimal.

MR. GERALD SAMPSON: You talked about reclamation, and you were talking about where your runoff would eventually fill in the pond there. So there's no objection to any of that?

MR. FELDERHOF: Not that I'm aware of. I don't know the details of the plan that's been filed with DNR at this stage, but I'll look at that. Maybe there's something there that I don't know about. Maybe they're going to be moving part of it. I can't tell you at this stage, unfortunately.

MR. GERALD SAMPSON: We have the tar ponds, maybe you'll have the gold ponds.

MR. FELDERHOF: Once again I want to point out that we're talking carbonate tailings, very friendly. It's this kind of water that fish like to live in, because the pH levels are neutral as opposed to acid.

MR. GERALD SAMPSON: Well, that's good to hear. Given the recent allegations made towards the Department of Environment and Labour regarding their hiring procedures, what precautions in hiring processes do you use to ensure that you have the most qualified people? What you're doing there, as you said, is quite a specialized process so they would have to know what they're doing.

MR. FELDERHOF: Absolutely. I think the way I would deal with that is that what we need in my company now is some engineers. I'm a geologist by training, and I'm looking for a very experienced engineer at this point in time, a mining engineer. We do need some additional personnel who would be in charge of hiring the miners and necessary personnel that we need. Certainly they'll be looking at applications of people who have taken all the required courses. There's going to be no question that they have to have the required courses before they work on the site, or they'll have to have training before they're allowed to use whatever equipment it is they're supposed to be using.

MR. GERALD SAMPSON: You mentioned about taking over various mining sites that have already been mined and whatnot. You're very positive about looking at what you're doing and taking over sites that have already been pre-mined. Why are these companies selling out when you're so positive that you can move in there and do a better job than they could?

MR. FELDERHOF: Well, I think that in the 1980s one of the things that happened in 1987, I think it was October 19^th, we had the stock market crash, and I think it was very difficult for companies to raise funds after that. You might recall that was also the heyday of flow-through shares. Flow-through shares was a tax incentive form of financing, and basically what happened was the investor bought shares in a publicly-traded company and the tax pools were flowed through to the investor. So it was a cost to the company because the company was losing tax pools that were passing on the investor.

Where I'm coming from here, where I'm going with this is that in those days most of the flow-through was raised between October, November, December, in those months, and the requirement was that it all be spent by the end of February. What happened was that these companies would do a lot of flow-through financing and spend it all by February, because they had to have it spent by then, otherwise they had to give it back to the investor. So a lot of money was spent in a fashion that was too fast and then the market crashed, so they were out of cash come February, the market crashed in October 1987, they ran out of cash by February 1988. Unless you were well-connected and were able to really convince people of the merits of your project, you had difficulty raising funds. That's basically what happened.

Seabright, of course, was a different cup of tea. As you know, Western Mining came in and took over Seabright in a hostile takeover bid for $92 million. Seabright was claiming they had 700,000 ounces of coal at Beaver Dam, and Western Mining came in and said, no, you don't, and sued the directors. It turned out to be the longest civil court case in Nova Scotia history. I think it was in 1990-91. Western Mining lost that case, and the Seabright directors were vindicated and awarded costs and damages and the whole bit, but in the meantime the damage had been done. Western Mining has pulled back out of Nova Scotia, and left and gone back to Australia.

Now, I looked at the Beaver Dam project before I acquired it, and I thought, well, okay, there are some technical problems here, but it's certainly not as bad as what they think it is. I knew it might not be 700,000 ounces at that point in time, but I knew it was something in between. I might add here that also on that particular deposit it was targeted as an underground project, that's why they put the ramp in. We're looking at it as an open pit, which is a different way of looking at a deposit. We're looking at it as one big massive rock that you take out instead of trying to follow individual veins.

The reason why we're able to do this is because the gold is not only in the quartz veins, but it's also finely disseminated in some of the intervening wall rock, which we call

argulite. That sample I passed around with the black - Charlie, do you see that sample, could you hold it up? You can see the black colour, that's what we call argulite. There's also fine gold in some of the argulite. So what happens is that the whole package is mineralized. It ranges in widths of up to 60 metres, which is a good width. The grades are lower, we're looking at two to three grams per ton, but the volumes are larger. The volumes are such that you can bulk mine it. That's what makes it attractive.

I think Seabright started to catch on to that towards the end of their program, but it was too late at that point. And why Western Mining didn't proceed with it, I don't know. I suspect that with the institution of the lawsuit they pretty well couldn't go forward with trying to prove that was still a decent deposit if they were, on the other hand, suing the directors. I think that's what happened at Beaver Dam. I like Beaver Dam, I think it's an excellent project.

MR. GERALD SAMPSON: In the trucking of your product, is it going to be company trucks that will truck it, or will you tender that out to private contractors to offer a tendered bid on it?

MR. FELDERHOF: I'm not sure. I would rely on the engineers to advise me on that one. They'll do a costing on it to determine what's going to be the most effective way of doing it for the company, whether that's contracting or whether that's doing it with our own fleet. I don't know. In either case, there's still going to be trucks on the road, so somebody has to drive them.

MR. GERALD SAMPSON: Mr. Chairman, just one final one. Just to go back to the reclamation, when you reclaim the land, can you foresee that it just won't be hydro seeded and be green one year and dead the next, but will you be maybe putting compost on that land or plowing it up so that you have eight to 10 inches of arable soil that will grow trees rather than just grow grass for a year and die? This is one of the complaints I get down in my area where they've reclaimed the land and back drag it, it's quite hard. They turn it green, but then it dies off as soon as the fertilizer has been consumed by the grass.

MR. FELDERHOF: I'm not too sure what sort of plan has been filed here, I'd have to take a look at it. I'd like to think it was a good plan. I'm afraid I can't answer that until I take a look at it. It's still too early.

MR. CHAIRMAN: Mr. Parker.

MR. PARKER: Will, I guess we share Pictou County in common and certainly in our area there's a lot of prospectors who get the gold fever. I know several of them, probably similar to ones you would know. I used to hang out with Bud MacKenzie, you know Bud. At Fifteen Mile Stream, we'd go out there looking for gold. He seemed to have gold fever, I think. I guess you get that at times.

MR. FELDERHOF: Yes, once you've seen it.

MR. PARKER: How about yourself? Would you say you have gold fever, maybe on a bigger scale?

MR. FELDERHOF: I've had gold fever since I left university. I find the mining industry extremely exciting, mind you I've worked in more than just gold. Gold is very exciting, there's no question.

MR. PARKER: You're fairly confident that there's gold here worth mining, and it's a viable prospect, for sure.

MR. FELDERHOF: We're trying to prove that it's viable. As you can see from my presentation, I've raised over $10 million. I believe in it myself, otherwise I wouldn't go out to raise that kind of money. I've been able to convince investors in Canada and overseas that these are viable projects, not commercially viable yet but projects that merit the money that's being raised to spend on them to bring them forward. As we go forward the risk decreases.

[2:30 p.m.]

MR. PARKER: So you raise money both by selling shares on the market, on the Toronto Exchange, but you also raise money otherwise? You're getting loans?

MR. FELDERHOF: Not yet, but we will be. You can't raise debt capital on projects like this until you've completed a bank feasibility study. You have to be able to demonstrate to the lenders, here's your mine life and here's the cost of producing an ounce of gold and here's the revenues and here's the profit margin and here's how you're going to get paid back and here's how long it's going to take you to pay it back. That's what a bank feasibility study is all about. There's no debt financing until you can put that document in front of them.

MR. PARKER: Do you feel your shares are - I think I read in the prospectus here - an exceptional value, going nowhere but up?

MR. FELDERHOF: That's my view. Some people in the market aren't saying that, because they're selling.

MR. PARKER: They're selling at 60 cents?

MR. FELDERHOF: No, we're at 46 cents or 48 cents right now. One of the reasons for that, I might interject, is that in the last two financings I did there were some warrants attached to the issue. These warrants had strike prices ranging between 25 cents and 35 cents, so some of those are being exercised. As long as the share price is over that, some of these

warrants will continue to be exercised, and once that's finished, then I expect the shares should go higher. In the meantime, of course, it puts money in the company's treasury.

MR. PARKER: This prospectus was done here, I guess it's a speculative buy at this time, but you feel a good buy based on what you know.

MR. FELDERHOF: Absolutely, I do. I'm the president, so I'd be remiss if I said it wasn't.

MR. PARKER: You have to be a good salesman, that's for sure. Where do you think the stock will go, or how high can it go?

MR. FELDERHOF: That's anybody's guess. (Interruptions) What I can say is that, clearly, as we make additional announcements, we have a definitive purchase and sale agreement that's signed with HudBay, I think that's a positive event, putting the funding in place to complete the acquisition is a positive event, and if we have more drill results that are favourable, that will mean more positive events. That continues to support escalating share prices.

MR. PARKER: Your mines, they're all pretty much along the same fault, are they? They're running along the Eastern Shore, that way.

MR. FELDERHOF: Yes, I call it the eastern Nova Scotia goldfields. The reason why I like that particular part of the camp is because it's structurally fairly complex, from a geological perspective. I think that's important from the point of view of concentrating gold in economic quantities. Basically the goldfields here, what's important, as I see it as a geologist, is it has to be structure on structure, and what we have are these anticlinal structures and then cross-structures that go across them. Where you have that you have open spaces developed that permit the migration of fluids that carry the gold, and then you have these open spaces where that precipitates out. So it's important to have good structure.

MR. PARKER: Well, that's a different fault than the one that was mentioned by my colleague, the member for Colchester North, in the Gully Lake-Mount Thom area.

MR. FELDERHOF: That's the Cobequid fault, I believe.

MR. PARKER: That's a different fault, isn't it?

MR. FELDERHOF: Yes, that's a major fault.

MR. PARKER: I have one final question, Mr. Chairman. It has been raised already around the environmental impacts or permits you need to get for this project. Is there a stage

one environmental permit and a stage two - do you know what you have to go through in order to get permission to mine there?

MR. FELDERHOF: We're buying the company ScoZinc, and ScoZinc has a number of approvals in place already. My understanding is that we have to get industrial approval. There's an open pit plan that's already been filed, but we would be looking to, probably, modify that somewhat to what we would call re-optimize the pit. The reason for that is because the previous pit was designed around a 50-cent zinc price, and we'll probably be looking at designing a pit around a 70-cent zinc price.

I might add here, it's something that's nice about this particular project, the concentrates that come off this project are what we call a preferred concentrate. What that means is that it's very low in contaminants and low in iron, so it's a concentrate the smelters like to buy because they can blend it with some of the dirtier concentrates they get.

MR. PARKER: So you do have a market for the by-products then?

MR. FELDERHOF: The concentrate is what we're selling. That's our major product. The by-product is simply carbonate sand which goes to tailings. I might add one other thing here, and this is strictly blue sky and it may not mean a thing for the project, but part of the material that has to be stripped to get at the lead-zinc here is gypsum. There's a possibility that we may be able to market that, but that's a marketing exercise. That could, obviously, impact favourably on the project.

MR. PARKER: Thank you.

MR. CHAIRMAN: There are a couple of members who already asked questions, so I'm going to Mr. Hines ahead of those and then we'll come back.

MR. GARY HINES: I had the experience 25 years ago of working in the goldfields in the Yukon, placer mines. Back in those days you would walk into the camp and there would be five-pound buckets of gold nuggets sitting there, no guards on them or anything, and you could walk off with a bucket in the night if you were so inclined. I was back again two years ago and, as with everywhere else, the environmental awareness had become a reality. In Dawson City there were signs everywhere, to be environmentally conscious while these guys are still placer mining. Anyway, that's the reality of it. We're all in a situation where we have renewed interest in the environment, and rightly so.

MR. FELDERHOF: I agree.

MR. HINES: Your project, and I'm asking this as a realist, if this province were to adopt an open pit mining strategy that didn't allow open pit mining, could you go underground on that site and still make your projects feasible?

MR. FELDERHOF: At Beaver Dam, unlikely, and Gays River, we're dealing with a water problem, potentially not.

MR. HINES: That's one of the risks, I would suggest, with the renewed interest in the environment. Mr. Sampson has that in his area, that reality that if we develop a strategy that looks after the Boularderie Island and we make it a provincial strategy, then we've effectively rendered your project useless.

MR. FELDERHOF: That would be unfortunate, indeed, not just for the company but for Nova Scotia in general.

MR. HINES: I agree with you, but sometimes that's how legislation works. I just wondered if it would be feasible and if you could go underground on the other two sites and make your project still feasible?

MR. FELDERHOF: On this site and Beaver Dam, the two open pit sites?

MR. HINES: Yes.

MR. FELDERHOF: Not likely.

MR. HINES: You already answered that, that on one site you couldn't because of water conditions and . . .

MR. FELDERHOF: Beaver Dam, not likely. One of the problems at Beaver Dam that Seabright had was they would follow along a gold-bearing quartz vein for awhile and then the gold would stop, what happens was it sort of skipped over to the next quartz vein. So they were constantly trying to track this thing. With an open pit mine, it's not relevant anymore because you're taking the whole thing out. You don't have to worry about tracking veins anymore. That's putting it very simply, but that's basically why we see Beaver Dam as an open pit proposition.

MR. HINES: Further to that, the Gays River site, yes, the residents of Gays River who have been there for centuries probably have no problem with what you're doing. Traditionally what happens is you get access to the rural areas and you get new people coming in who start to make the noise and sound the noise. I would suggest that in your feasibility study that part of it will definitely be the environmental thing, but I would suggest that at every opportunity you bring it to the attention of the ministers involved and the government of the day, whoever it might be - hopefully it's still us - to make them aware of the economic potential that you have in gold in this province, because sometimes you get to a balance of what's right environmentally and try to do that balance. Presently the Ecology Action Centre has been good with the forest industry, in recognizing that there's economic

impact as well as to just cart blanche cutting a project. So make sure you get your dialogue going with the province.

MR. FELDERHOF: I appreciate that.

MR. HINES: I certainly will be a supporter of development that brings prosperity to the province, but I still have to be conscious of the environment.

MR. FELDERHOF: Of course. It's our goal, obviously, to be good corporate citizens, as well. There's no question. We have been talking to the respective communities already. I've made a presentation to the Municipality of Guysborough regarding Forest Hill, about a year and a half, two years ago. I'm due to go in again and give them an update. We've recently contacted the Chamber of Commerce in East Hants, and we're going to be going in and seeing them, giving them a presentation shortly. I've had correspondence from rural citizens in the Musquodoboit Harbour area, asking about when we're opening these operations. They're concerned about their schools closing, and they wanted a letter from me for support, indicating that these operations were planned for the future in the hopes that they could make a case to keep their schools open, which I did.

We are very cognizant of that. We're going to make sure that we go to the communities that are involved in these different projects that we do, we do see them early on and be very proactive. I also want to add that I think it was two weeks ago I had lunch with the Deputy Minister of Natural Resources, along with the executive director. Basically, it's interesting you brought this up, because they said the same things to me, that we'd be well advised to see everybody very early on to keep them apprised of what your plans are, so they know right from day one where you're going and what the benefits are to the community.

MR. HINES: I think that all three of the caucuses would be receptive to caucus presentations, as well as have new enlightening facts come on board and so on, so that the caucuses are up to scratch on what you're doing. I think awareness right now is the big saviour to trying to bring a project into this place, that everybody is aware and all the participants are aware, and developing an environmental strategy and so on. I know from experience in the Waverley area, having Dexter Construction there, that anytime you approve a permit to a mine or a quarry or any of those things that remediation becomes a big issue.

In that discussion on the expansion of the quarry operations in Waverley, that was one of the issues that we made sure we dealt with, the remediation aspect of the contractual agreement. It does more than just put rock and so on back in place, it does plant berms and it does provide topsoil, and also provides a schedule for remediation. You suggested that perhaps your remediation would follow your project. They have done that out there. And although you still have people in the community not happy with it, they're happy that was

recognized in the request to develop. I think you have to be really on top of those things in this day and age, which I'm sure you're aware of.

MR. FELDERHOF: Very much so.

MR. CHAIRMAN: Michele.

MS. RAYMOND: Thanks, for the second time. I was just looking at this. You have about 11,000 hectares of land.

MR. FELDERHOF: No, 80,000.

MS. RAYMOND: Oh, sorry, somewhere I was seeing - maybe it's in permitted areas, 10,960 hectares.

MR. FELDERHOF: No, we have about 80,000 hectares, 200,000 acres.

MS. RAYMOND: Okay, I must have been looking at an old - so it's 80,000, okay. I guess what I'm curious about is at current prices you would look at recovering about $67 million a year from gold, so this is the ideal.

MR. FELDERHOF: Where did this number come from?

MS. RAYMOND: Okay, 28 grams per ounce, $20 per . . .

MR. FELDERHOF: It's 31 grams per ounce. Can you go through the numbers with me?

MS. RAYMOND: All right. So it's 31 grams per ounce?

MR. FELDERHOF: Yes, 31.1 grams.

MS. RAYMOND: So it's actually a little bit better, it would be more like about $72 million - does that sound right - in gold recovery alone?

MR. FELDERHOF: Which one is this, for Beaver Dam?

MS. RAYMOND: No, you're talking about a target production of 120,000 ounces . . .

MR. FELDERHOF: Okay, that's all four projects and those are targets only. I want to stress that. This is what our goal is . . .

MS. RAYMOND: And that's just gold.

MR. FELDERHOF: Yes.

MS. RAYMOND: What would be your target revenue from lead and zinc? How much of your plan is in lead and zinc?

MR. FELDERHOF: It's probably a little bit early for me to go into that, but given the plant is capable of doing 1,500 tons per day, you could probably do the calculations yourself from the point of view that the grades that are reported are 5.5 per cent zinc and about 2.45 per cent lead. One of my problems is that the regulators don't want me talking too much about revenues at this point in time, because . . .

MS. RAYMOND: General percentage-wise, how much of this project is based on lead and zinc revenues as opposed to gold revenues? The overall, four fields.

MR. FELDERHOF: Overall, lead-zinc is first, and we won't start the gold projects until the lead-zinc is finished. Now it's not a long mine life for the lead-zinc the way we see it at this point in time, we see it as four to six years. That could be expanded depending on what happens in some of the other outlying deposits that we know about, smaller ones. If the plant life is extended for zinc, then we would look at building a new mill for gold. That would be a nice problem for us to have. What we're looking at now is the lead-zinc first, then follow it up with a conversion to a gold plant. This plant was operated for gold by Seabright in the 1980s. So we would have to make a capital injection in the plant somewhere in the order of $5 million to scale it up and put the necessary additional pieces in to treat gold ores. It's not permitted for gold right now, it's permitted for lead-zinc. That would be starting the process over again.

MS. RAYMOND: So lead-zinc then is the primary thrust?

MR. FELDERHOF: Right now it will be, from the point of view, as I indicated on my first slide, we're the closest to production, the closest mine to production is the lead-zinc, and the reason for that is the mill is up and the mine plan has been approved.

[2:45 p.m.]

MS. RAYMOND: That was something I just wanted to clear up there.

MR. FELDERHOF: And that buys us time to do what we have to do in the gold projects, more drilling, pre-feasibility studies and feasibility studies, and pre-production development, which could take two to three years.

MS. RAYMOND: So it's geologists or engineers or both who will determine the feasibility?

MR. FELDERHOF: Both.

MS. RAYMOND: And you don't have any . . .

MR. FELDERHOF: Engineers, primarily.

MS. RAYMOND: You're still looking to hire engineers?

MR. FELDERHOF: The company is looking to hire engineers, but we use a lot of contract people. For instance, Mercator Geological Services in Dartmouth, that's probably about 90 per cent of the staff who are working on our project. They have at least six or eight people working for us.

MS. RAYMOND: So it's the contract engineers so far who have said to you that this may be a feasible gold project after the lead and zinc are exhausted?

MR. FELDERHOF: They provide us with the costing, and they do the scoping work for us, they do the financial analysis. We provide them with the information that we generate from the diamond drilling programs, here are the drill assays and here's the location of the drill holes, now you tell us if you can extract this rock at a profit, basically, in a nutshell, very simply put. Then they put it into a computer and they do a lot of 3D modelling - what we call block modelling - and they determine what part of that resource is economically viable.

MS. RAYMOND: So to date you don't have any on-staff engineers?

MR. FELDERHOF: No. Like I said, we will be looking; in fact, we need one now.

MS. RAYMOND: One other comment, question, whatever. You mentioned various areas of the province that, as you put it, are sterilized, which is kind of a neat term, from a mining potential. You said that some of that is park and some of it is also residential development and so on - now that's around Waverley, Montague Gold Mines and so on. I don't know how much of the province's gold potential would have been tied up in areas which are now residentially developed. There are two questions with that, is there any kind of way of tying mineral potential to municipal zoning procedures and so on? Is there any way of a municipal zoning looking at it and saying, oh, we have viable gold land here?

MR. FELDERHOF: I think it's very important to use planning exercises.

MS. RAYMOND: It doesn't exist though?

MR. FELDERHOF: I'm not sure if it does or not. It doesn't appear - I shouldn't say it doesn't appear to be, I know that up in Meat Cove there's a lead-zinc deposit, a small one which would never support a mill on its own, but potentially could be looked at from the point of view of maybe we can extract this resource and truck it to this mill, but that's not an option for us because it's now sterilized.

MS. RAYMOND: However, you have other areas which have been sterilized by residential development as well as by parkland?

MR. FELDERHOF: Exactly. For instance, we hold claims in the area called Lawrencetown or Mineville. Urbanization is rapidly creeping in there. I hesitated about actually acquiring those claims because of the creeping urbanization.

MS. RAYMOND: So urbanization is as much of a threat as . . .

MR. FELDERHOF: Absolutely, no question. Nobody wants mining activity in their backyard, because there is some disturbance, let's face it. You have trucks coming and going, and if you have kids playing hockey in the street, you can't have trucks going by. I think land developers - I think that's another issue. I'm interrupting here, and I digress, but I think land developers should be made aware, or maybe they should actually make their purchasers aware that the land they might be purchasing is in a mining district.

What we're seeing with some of these old gold mines, and as I said earlier some of these mines ended in 1905 and there's very little record for some of these, so people are acquiring land as they expand east and west from Halifax. In the old days, the prospectors and miners peppered the place with shafts. I know in Tangier there was something like 600 miners who showed up when they first found gold there, and there are shafts everywhere.

MS. RAYMOND: These two things are not actually incompatible, are they? You could have residential development post-mining and reclamation.

MR. FELDERHOF: Yes, no question.

MS. RAYMOND: It's just that you can't have mining post-urbanization.

MR. FELDERHOF: Exactly. I think what they need to do if a land developer acquires land over an old gold-mining district is to properly assess it to determine where the shafts are and where the stokes are - what we call stokes - that came to the surface. So then they know, okay, here's an area where we maybe have to do a bit of drilling to see where the holes are so we can fill them in. Once they're filled in, it's okay.

MS. RAYMOND: So essentially this kind of environmental and natural resources survey would be part of a healthy economic development plan for the province as well?

MR. FELDERHOF: Yes.

MS. RAYMOND: Okay, thank you very much.

MR. CHAIRMAN: Mr. Langille.

MR. LANGILLE: Nothing too much right here. Did you ever hear tell of the Mattabi Mines?

MR. FELDERHOF: Yes.

MR. LANGILLE: They're offering the Silver Dollar - actually there were three mines up there. In 1991, they closed their mine, their base metal mine, because the base metals bottomed out, zinc and lead and copper. The mine is flooded now, but it wasn't that they ran out. The metals are there in fairly large quantity. I don't know if they're up and running. They're not up and running now but there were a lot of these mines that closed up back then when the price of base metals bottomed out. There's an upswing now. How long do you project this upswing to keep occurring?

MR. FELDERHOF: There was a conference recently in Florida and I think I saw something in the papers recently where they addressed that aspect of the base metal industry. I thought they said they expected high prices for zinc for two more years. So that's about as far out as they can look. It all hinges on the economic activity. Places like the U.S., Europe and now China - as I said earlier, they're reporting that 35 per cent of the world's zinc production is being consumed by China. That's something that's very unusual and certainly not in our lifetime have we ever seen that before. They were always metal exporters, not metal importers. So that's a change. That's a whole new ball game and people are just trying to get their heads around it. You know, this could go on for 10 years. It's hard to know.

MR. LANGILLE: China is now consuming 50 per cent of your concrete, by the way. It's unbelievable.

MR. FELDERHOF: I'm not surprised. I mean, I haven't been to Beijing, myself, but I have some friends who have been there and they said it's just unbelievable, travelling to China and seeing the cranes everywhere. Construction is just unbelievable.

MR. LANGILLE: Getting into reclamation, I just want to point out, we have another colleague that worked in the gold mines, by the way. People might be surprised. Jamie Muir worked in Pickle Crow, after school.

MR. FELDERHOF: My wife is from Dryden, so she knows that area.

MR. LANGILLE: I also worked at Pickle Lake and Ignace, by the way, so I know Dryden very well.

MR. FELDERHOF: A famous gold camp.

MR. LANGILLE: Yes. I was interested, when I was up at Mattabi Mines, they had hired a person for reclamation. This was prior to the mines closing. There were three mines closed. Silver Dollar - you would know where Silver Dollar is.

MR. FELDERHOF: Yes, I've heard of it.

MR. LANGILLE: One thing that amazed me, this person was a horticulturalist. He actually grew grass on rocks. It went on for years and I was amazed at the technology that they could have up there and experimenting with that. I was really impressed, when you actually saw it, you know.

MR. FELDERHOF: I've not heard of that.

MR. LANGILLE: So reclamation is a big thing. We all know that once you start, you have to start paying into reclamation. It's all part of the project. It actually creates an industry after a mine closes, especially a big base metal mine because base metal mines are certainly a lot bigger than gold mines. Anyway, that's all . . .

MR. FELDERHOF: I know that what you said is correct about this reclamation issue and the funding of it. It's all built into the feasibility study right from day one. They estimate the cost of . . .

MR. LANGILLE: I guess where I'm going with that, there are checks and balances in place now, not compared to what there used to be.

MR. FELDERHOF: No, exactly. I think this is where the mining industry has a big problem these days, is that people have a tendency to look at the record and the record has not been too starry, but going forward, the mining industry has very strict guidelines and are very intent on being good corporate citizens, I would say, and want to comply. I mean, we all have to live in the community. I enjoy canoeing in Liscomb River. I do it every year. I wouldn't want to see tailings dumped in the Liscomb River. And I've got kids who want to enjoy the environment as well, so we're all very cognizant of that.

MR. LANGILLE: Thank you.

MR. CHAIRMAN: Any other questions by members of the committee? Okay, well, hearing none, Mr. Felderhof, I want to say thanks very much for letting us know what Acadian Gold Corporation is doing and what you're thinking. I'd be interested to kind of

follow your progress and see how the feasibility side of this lands. We really appreciate you coming to inform us. Thank you.

MR. FELDERHOF: I want to thank you for inviting me. I really appreciate the opportunity to come to talk to government because it's important, from our perspective, on the corporate side to make sure that the government understands where we're going, what we're thinking and what we want to do. I think it's a win-win situation for the people in the province and also for the company, if it's done correctly, and mines actually do come into fruition. The economic benefit, I think, is positive.

MR. CHAIRMAN: Maybe at some point down the road we'll get you back just to update us as to where you are.

MR. FELDERHOF: No problem, any time.

MR. CHAIRMAN: Good, thank you.

MR. GERALD SAMPSON: Mr. Chairman, if I might just interject, when Mr. Felderhof is invited back, if you could bring back some evidence of land that has been reclaimed as a result of previous mining sites, just so that we could see that that land is now usable, arable, or whatever, rather than being barren. That would be very much appreciated.

MR. FELDERHOF: Okay, I'll add that to my list and get my engineers working on that one.

MR. CHAIRMAN: For members of the committee, the next meeting is Tuesday, March 21^st. I guess you can see that on the agenda. April 4^th is the Grey Seal Research and Development Society. Time will depend on whether the House is sitting or not.

Thank you. The meeting is adjourned.

[The committee adjourned at 2:56 p.m.]