Lefa Corridor Gold Project – new acquisition in Guinea

The Lefa Corridor project will have a targeted production rate of 320,000 – 350,000 ounces of gold in 2007 and, when this target is met, it will be the most productive of our gold assets.

In December 2005, the Corporation acquired Guinor Gold Corporation, the operator, through subsidiaries, of the Lefa Corridor gold project. The government of Guinea held a 15% stake in the Lefa project initially, but this stake was acquired by Crew by the end of the 2006 fiscal year.

We are undertaking a CIP plant expansion at Lefa and, after commissioning – which is expected in December 2006 – the Lefa Corridor project will have a targeted production rate of 320,000 – 350,000 ounces of gold in 2007. When this target is met, it will be the most productive of our gold assets. As our strategy for 2007 is to become a mid-tier producer, the acquisition of Lefa will put us well on the way to achieving that status. It follows then that management’s focus since acquisition has been to develop the project so that its full potential will begin to be realized in 2007.

The principal concession, governed by the Convention de Base, which governs our mining rights, covers an area of approximately 1,500 square kilometers and is known as the Dinguiraye Concession. The Société Minière de Dinguiraye (SMD) – a 100% owned subsidiary of the Corporation – undertakes many of the operational functions, such as mine planning and quality control.

Lefa has a further six contiguous properties over which the Corporation has rights derived from six prospecting permits not governed by the Convention de Base, and these bring the total project area to approximately 2,379 square kilometers.

Location and geology
The Lefa Corridor Gold Project is located approximately 700 kilometers northeast of Conakry, the capital of Guinea.

The Lefa Corridor lies within the Siguiri Basin, part of the Birimian volcano-sedimentary series, which dominates the basement geology of the West African Shield. A collisional environment resulted in the development of dominantly greenschist facies metamorphism and regional northeast to northwest-trending deformation zones. These are considered to be fundamental to the development of gold mineralization in the Siguiri Basin.

Mineralization is preferentially developed in the more permeable, altered, coarser-grained sediments of the concession area, within and adjacent to east-northeast oriented structures and north to north-northwest trending fracture zones. Mineralization is localized by a combination of lithological and structural controls. The dip and strike of mineralized zones and, to a lesser extent, the style of mineralization vary considerably between deposits.

Overview of Operations

Lefa Gold Project – new acquisition in Guinea

Gold mineralization is predominantly associated with stockwork and sheeted quartz-carbonate-sulphide veining, stockworks of
albite-carbonate-sulphide veinlets, or as sulphidic haematitic breccia. Pyrite is the dominant sulphide species. Gold is largely developed within fractures in pyrite grains, rarely larger than 50 microns, and is non-refractory.

Extensive weathering and lateritization of the mineralization and surrounding host rocks has resulted in the development of economic laterite and saprolite gold deposits. Both transported and residual laterites, up to 15 m thick, host economic gold mineralization, which typically averages 1g/t to 2g/t gold over extensive lateral areas. Saprolite mineralization tends to be higher grade (1.5g/t to 5g/t gold), but is generally developed over more restricted zones between 2 m and 30 m wide.

Reserves
The table below sets out the mineral reserves estimated on the Dinguiraye Concession as at 31 December 2005, assuming a gold price of US$525 per ounce of gold.

Mining
All the open pit mining practices adopted follow modern mining techniques. The mining method for the development of the open pits is a conventional excavator-truck operation allowing for selective mining of the ore grade material. Pit design parameters are in keeping with established mining practice for excavator-truck operations.

Mineral Reserves
(as at 31 December 2005)

	Proven			Probable			Total Reserves
Deposit	Tonnes (Mt)	g/t	Million ozs	Tonnes (Mt)	g/t	Million ozs	Tonnes (Mt)	g/t	Million ozs
Lero Karta	12.0	2.1	0.84	9.3	1.7	0.51	21.3	1.9	1.35
Fayalala	12.7	1.4	0.58	6.3	1.3	0.26	19.0	1.4	0.83
Others	0.2	2.3	0.01	7.1	1.4	0.31	7.3	1.4	0.33
Total	24.9	1.7	1.43	22.7	1.5	1.08	47.6	1.6	2.51

(1)

Based on a gold price of US$525

(2)

The above table has been extracted from the reserve estimate compiled from drilling data in accordance with the Canadian National Instrument 43-101 and reported to the 2004 CIM Definition Standards ( Mineral Resources and Mineral Reserves) by the independent consulting group, RSG Global of Perth, Australia under the supervision of Mr Brent Gossage. The estimate has been verified by Brent Gossage, the “Qualified Person” as defined by NI 43-101. A copy of the report can be obtained from www.sedar.com and is incorporated by reference herein.

Ore from the Fayalala pit will be hauled directly to the process plant ROM pad by the primary haul fleet. Ore from the Lero Karta operation will be trucked to a ROM pad and primary crusher facility in the vicinity of the Lero-Karta pit entrance for subsequent crushing and conveying to the main process plant at Fayalala.

The acquisition of Lefa has put us well on the way to achieving our strategy for calendar year 2007 of becoming a mid-tier producer. Management’s focus since acquisition has been to develop the project so that its full potential will be realized in calendar year 2007.

Ore processing
Lefa has been a heap leach operation since mining began, 11 years ago, but is now converting to a CIP plant through a US$169 million expansion. Once the CIP plant is fully operational, cash costs of production are expected to be in the range US$240 – 280 per ounce before royalties, based on a current reserve grade of 1.7 g/t.

During the 2006 fiscal year, management took the decision to continue the Lefa heap leach operation, in spite of high costs, as part of its social responsibility of providing employment for staff and training them for the new CIP plant. Although the quantity of ore processed could have been increased during the year, the Corporation decided to process only enough to generate cash to cover Lefa’s operating costs. The balance of the ore has been stockpiled for processing through the higher-recovery CIP process.

CIP plant expansion
The installation of the CIP plant expansion at Lefa has progressed on schedule during the year. Commissioning is scheduled to be complete by the end of December 2006.

The overall capital cost of the expansion to commissioning is presently anticipated to rise from the 2005 estimate, at the time of acquisition, of $145 million to $169 million. To June 30, 2006, $127.9 million in capital costs had been incurred in connection with the expansion, including $56.4 million incurred prior to the Corporation’s acquisition of the project.

Protection of the environment
SMD is obliged under the Convention de Base to protect the environment and reforest any areas disturbed at the end of the project. This liability is recognized in the accounts of the Corporation at June 30, 2006 amounted to approximately US$1.1 million on a discounted basis.

Socio-economic development
The direct support that the Corporation provides in the form of taxes and royalties is supported by the provision of employment to over 500 residents and a multitude of initiatives – including a new school and other educational support – that improve their living standards.

New infrastructure exists in the form of roads, a carefully monitored potable water supply, and an efficient sewerage system. The Corporation, in collaboration with the government and another mining company, has undertaken to provide electricity to the town. A clinic has been built and is staffed with nurses and doctors employed by the Corporation. Recreation facilities for mine workers and their families have been supplied in the form of various community centers that host sporting and other events.