Mineral Exploration Report on the Work carried out on Claims Karhu 1 and Karhu 6, Kaavi

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1 Mining Law 19 1 Mineral Exploration Report on the Work carried out on Claims Karhu 1 and Karhu 6, Kaavi Mining Register numbers: 7791/1 7815/1

2 Mining Law 19 2 Introduction This report describes diamond exploration work carried out by on the claims Karhu 1 and 6. The claims were granted to on May 17 th, 2004 and August 25 th, The claims expired on May 17 th, 2009 and August 25 th, Coordinate system and projection applied to all information in this report and appended digital data is Finnish KKJ Zone 4. Location The claims Karhu 1 and 6 are located in the Kaavi area on the map sheets , approximately 50 km NE of the city of Kuopio in Central Finland. Coordinates (middle points) and other details for the claims are presented in Table 1. Claim Name Map sheet Easting Northing Surface area Applied Approved Expired 7791/1 Karhu , /1 Karhu , Table 1. Claim details Personnel Managing Director of Ilmari Exploration Oy, Roy Spencer, has been in overall charge of exploration work carried out on the property. Dr Hugh O Brien consulted for Ilmari Exploration from fall 2000 through to the end of the year His main task has been the petrology, mineralogy and chemistry of the rock types discovered and indicator mineral-based mantle studies. Terhi Tulenheimo worked from January 2002 to May 2005 and Heini Laine from June 2004 to September The GTK has provided geotechnical services, including sampling, sample processing, drilling, and geophysical surveys.

3 Mining Law 19 3 Geology The area of the relinquished claims in belongs to the southwestern part of the Archean Karelian Craton (Figure 1.) Approximately twenty classical Group I kimberlites are known from the district. The pipes have intruded Archean basement gneisses and allochthonous Proterozoic metasediments. The intrusions range from purely hypabyssal kimberlite dykes to multiphase pipes of diatreme fasies rocks. The Kaavi-Kuopio kimberlites generally contain abundant diamond indicator minerals and almost all of them contain at least trace amounts of microdiamonds. Claim rationale Several companies have found approximately 20 kimberlite bodies in Kaavi-Kuopio area. A number of kimberlite indicator minerals have also been identified in the same area. The area within these claims contained possible up-ice sources of indicator fans and was therefore taken under claim so that more detailed work could be accomplished. Work carried out and survey methods Sampling and processing A total of 29 till samples were collected in the claim area in Methodology in excavator sampling was adopted from Hirvas & Nenonen (1990). The concentration of <1.0 mm indicators was based on a GTK modified 3 Knelson concentrator (Chernet et al., 1999), the final concentrates being liberated through heavy medium separation (d = 3.3 g/cm -3 ). Till samples are listed in Table 2 and sample locations are presented in Figure 2. Sample data is included in the digital database, along with sampling results. Diamond drilling No holes were drilled.

4 Mining Law 19 4 Figure 1. Simplified geological map of Finland showing the known kimberlite locations in the eastern and northern parts of the country (Lehtonen, 2005).

5 Mining Law 19 5 Figure 2. Till samples

6 Mining Law 19 6 Digital database Digital database appended to this report includes the report text and the results of till sampling carried out on the claims Karhu 1 and 6. Conclusions / reasons to relinquishment No diamonds were detected and the claims were considered not to be prospective to warrant any follow-up work. References Chernet, T., Marmo, J., Nissinen, A., Technical Note. Significantly improved recovery of slightly heavy minerals from Quaternary samples using GTK modified 3"Knelson preconcentrator. Min. Eng. 12, Hirvas, H., Nenonen, K., Field methods for glacial indicator tracing. In: R. Kujansuu & M. Saarnisto (Eds.) Glacial indicator tracing. Rotterdam: A. A. Balkema, Lehtonen, M., Kimberlites in Finland: Information about the mantle of the Karelian Craton and implications for diamond exploration. O Brien, H., Draft report for European Diamonds PLC. Petrology, Mineralogy and Geochemistry of Kimberlitic rocks from the Lentiira Kimberlite-Lamproite Province. Camilla Vickström

7 Mining Law 19 7 Appendix Table 2. Till samples

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