Historic Exploration

Gold mineralization was originally identified on the N2 property by Minnova Inc. in 1981. In 1983 Minnova decided to drop the property to focus on base metal assets and the property was acquired by Cyprus Canada Ltd.. Cyprus controlled the property and expanded on the originally Minnova discoveries. Cyprus owned the property until selling it, and the majority of their Canadian gold assets, to International Taurus Inc. , an exploration company under the management of ex-Cyprus employees, in 2001. American Bonanza Gold Corp. acquired the N2 property, along with the balance of Taurus's assets following Taurus's bankruptcy in 2005. Balmoral purchased Bonanza's Canadian assets in November of 2010.

The majority of the previous exploration work on the N2 property has been on the northern, Northway, portion of the property. Work includes a regional AEM helicopter-borne survey totaling 2,440 line-kilometres, 100-metre-grid ground-magnetic and HELM surveys and a 400-metre-spaced IP survey. Seventy reverse circulation drill holes and 145 diamond drill holes totaling 29,000 metres have been completed. Five zones of gold mineralization, related to shearing along volcanic-sedimentary rock contacts, have been identified. Drilling by the previous operators in 2009 has identified a potential 6th zone of gold mineralization.

On the southern, Noyon, portion of the property Kerr Addison conducted geophysical surveys over portions of the property in 1985. Two reverse-circulation overburden-drilling programs (113 holes) and 18 diamond-drill holes (3,539 metres) have been completed. Anomalous gold mineralization was intersected on the Noyon property adjacent the contact between mafic volcanic and ultramafic intrusive rocks a setting which has proven highly prolific throughout the Abitibi region.

Cyprus Canada Ltd. in 1994, following the last major drill campaign on the property, calculated an aggregate geological resource* of 18.2 million tonnes grading 1.48 grams of gold per tonne for the five known zones (RJ, A, RJ East, East and South) on the property. This calculation is pre-NI43-101 and proved here for information and historical context only. Preliminary metallurgical tests conducted on drill core from the A Zone recovered 91.7 percent of the gold in a flotation concentrate after a moderately fine-grind.

In 2007, Aginco-Eagle Mines Ltd. and the then owner of the N2 property, American Bonanza Gold Corp., entered into a co-development agreement to jointly develop the Vezza gold deposit and the gold resources on the N2 property. Small expansion and exploration drill programs in 2007 and 2008 by Agnico Eagle led to the discovery of a new zone of gold mineralization in the hanging wall to the RJ Zone with similarities to the mineralization at Vezza. Follow-up geophysical surveys outline down-hole geophysical anomalies associated with this zone which remain to be tested.

In late 2009, following the decision to sell the Vezza Property, Agnico Eagle terminated the co-development agreement and sold the Vezza Property to North American Palladium who at the time owned the nearby Sleeping Giant gold mine and mill complex.

The N2 property contains a historical geological resource estimate defined by Cyprus Exploration in 1994 based on near surface drilling of approximately 230 diamond drill holes. The estimate is historical and not in compliance with NI 43-101, and the category of "geological resource" does not conform to current CIM definitions. The historical estimate is not supported by a technical report. A qualified person has not done the work necessary to verify the historical estimate as a current estimate under NI 43-101 and the estimate should not be relied upon.