VenCan holds a 100% interest in 43 claims in the Wawa area, Ontario and a 3% net smelter royalty in 3 adjoining claims.

The history of the property is outlined below:

Location and Access

Vencan Gold Corporation's Edwards Property consists of 4 patented and 39 staked claims and is located some 30 miles (50 kilometres) northeast of Wawa, Ontario, Canada.  The Edwards Property adjoins the three claims of the Edwards Gold Mine and is easily accessible by a well maintained all season road.  A Great Lakes Power Line traverses the property, supplying power to the Edwards, Magino, and Patricia mine sites.

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Regional and Property Geology

Vencan's 43 contiguous claim Edwards Property lies within the Goudreau-Localsh area of the Wawa Greenstone Belt, which is comprised of a major succession of supracrustal rocks of Archean age, represented by several cycles of volcanic activity and a series of sedimentary rocks.  The claims are located within the Goudreau Lake Deformation Zone (“GLDZ”) as defined in the Ontario Geological Survey.  The majority of the known deposits in the area are located along this 18 mile (30 kilometre) by 2.5 mile (4 kilometre) east-northeast trending arcuate zone.  Structural controls appear to be the most important factor in the localization of gold-bearing quartz veins in this area, and the GLDZ hosts numerous, systematically oriented shear zones.

The Edwards Property is underlain predominately by mafic lavas, with various felsic dikes intruding the host rock.  The Edwards/Cline shear zone is the dominant controlling feature in the area, extending across the entire property at about 085 degrees and dipping approximately 55 to 70 degrees north.  Auriferous quartz veining has been found typically as dilatant zones comprised of tension shears and fractures, branching obliquely from the Edwards/Cline shear zone, striking between 110 and 140 degrees, and generally dipping steeply north.

Although gold bearing zones have been discovered that display other trends, Vencan's exploration has focused on those striking between 110 and 140 degrees, as these vein systems have exhibited excellent continuity and have yielded proven economic returns when mined.

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Early Mining and Exploration

During the 1920's, gold was originally discovered in veins outcropping on the north side of the Edwards/Cline shear zone.  In 1934 an incline shaft was sunk on the old Edwards Mine site to a depth of 300 feet (90 metres), with approximately 1,000 feet (300 metres) of underground development work completed on three levels.  A 75 ton per day amalgamation mill was used to process some 1,573 tons of vein material at a grade of 0.31 ounces of gold per ton (10.6 grams per tonne).  Immediately to the east, the Cline Mine produced 63,328 ounces from 331,842 tons mined from 1938 to 1942, for an average grade of 0.191 ounces of gold per ton (6.53 grams per tonne).

The Edwards Property lay dormant after World War II until the 1960's when Shaynee Consolidated Mines Ltd. (Shaynee) completed 6,009 feet (1,800 metres) of surface diamond drilling, intercepting five discrete auriferous zones:  four zones were discovered in the immediate area of the old Edwards Mine on the north side of the shear zone, but another was discovered over 700 feet (215 metres) southwest of the old workings.  This latter zone was the first to be discovered south of the Edwards/Cline shear and was appropriately named the Shaynee Zone.  However, the initial drilling direction used by Shaynee Consolidated Mines Ltd. was not perpendicular to the strike of the newly discovered Shaynee zone, and as a result, their geologists had a difficult time establishing its strike and location.  From the late 1960's to the early 1980's several other companies performed various geophysical, geological and diamond drilling programs in the area, all of which appear to have been undertaken in a search for massive sulphides.

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Vencan's Exploration – 1986 to 1988

Vencan assembled their claim block during 1986 and 1987 and subsequently performed various geophysical and geological surveys.  Initially, much of the work involved mapping the property, followed by basal till sampling and geophysical surveys.  The main area of interest near the old Edwards Mine shaft was stripped, channel sampled, and mapped in detail.  The first diamond drill program undertaken by Vencan in early 1988 was also successful in intersecting high grade gold sections on the south side of the shear zone, resulting in great excitement for the Company.  However, the challenge still remained how to accurately locate and define the indicated high grade gold zones.

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A New Exploration Model – 1989 to 1993

Independent geologists, Peter Vamos (P.Eng.) and Bruce Edgar * (HBSc) were engaged by Vencan to solve the mystery of where and how gold might be deposited on the south side of the Edwards/Cline shear zone.  After re-logging the core and studying the geology of the area, Vamos and Edgar devised a new strategy that would change the drilling direction to a southwesterly direction.  Drilling was resumed in late 1988 and every hole was successful in striking gold bearing zones on the south side of the shear, with excellent high grade values

*  Mr. Bruce Edgar joined Vencan's Board of Directors in 2000

being attained on a daily basis.  In late 1989 and early 1990 more drilling succeeded in defining and proving the continuity of several high grade gold bearing zones to a depth of 600 feet (180 metres).  Subsequent drill programs from 1991 through 1993 succeeded in establishing reserve and resource estimates, and defining the location of three major high grade zones (the Shaynee, the Porphyry and the Carbonate) down to a depth of 1000 feet (330 meters).

A total of 175 drill holes and over 100,000 feet (30,000 metres) of diamond drilling were completed by Vencan from 1988 to 1993.  All the Edwards Property drill programs undertaken by Vencan were classified as very successful.  Through 1993, the Company had discovered and defined three significant high grade gold zones on the south side of the shear by drilling along just a 700 foot section.

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Mine Development – 1990's

Vencan's discovery of a new high grade and apparently economically feasible gold ore body at its Edwards Property generated great interest within the Canadian mining industry, but ironically, not from the investment sector.  In the early 1990's the financial investment community had become enamoured with the potential of discovering large but low grade epithermal type gold deposits in tropical countries.  Without the required capital to develop its Edwards discovery into a mine, Vencan joined the popular movement south in 1993, and undertook well financed exploration programs in Venezuela and Honduras.

In 1996, with the ambivalent sentiment for developing a Canadian underground gold mine still prevailing, Vencan struck a development and mining deal for its three Edwards Mine claims with an Ontario gold producer, River Gold Mines Ltd.  The deal between the two companies included a $500,000 cash payment to Vencan and called for a 50% split of mine profits after recovery of development costs.  In 1997 River Gold developed an underground mine ramp and installed the necessary underground and surface infrastructure.  Commercial mine production started in 1998.  At an arbitration hearing in 1999 to resolve a dispute over profit calculation, River Gold agreed to purchase the three Edwards Mine claims from Vencan for $1,500,000 and granted an irrevocable 3% net smelter production royalty on future Edwards Mine production.  Through 2001, Vencan generated over $3,000,000 cash income from its share of profits, net smelter royalties, and the sale proceeds for the three mine claims.  Vencan today still retains a perpetual 3% net smelter royalty interest in the three Edwards Mine claims, and holds a 100% interest in its adjacent 43 claim Edwards Property.

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Edwards Mine Production

River Gold reported that for the four years 1998 through 2001, the Edwards Mine produced in excess of 130,000 ounces of gold with a gross value of over CDN$50,000,000.  Average recovered grade from 430,000 tons mined over the four years exceeded 0.30 ounces per ton (10.25 grams per tonne).  The three zones that were mined, the Shaynee, the Porphyry and the Carbonate, were all developed down to the 1000 foot (300 metre) level.  All Edwards Mine ore was transported by truck 100 miles to the Eagle River mill where it was batch processed.  River Gold ceased mining in late 2001 when the existing underground mine ramp no longer provided an economically feasible way to transport ore from the 1000 foot level to surface.

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Mineralization and Structure

The first three auriferous quartz veins discovered and mined on the south side of the Edwards/Cline shear zone ranged from several inches in width to 10 feet or more, but averaged 1 to 3 feet.  Sometimes occurring in multiple sets with significant over-all width, the veins generally contained 1 to 3% pyrite with very minor amounts of pyrrhotite, chalcopyrite, sphalerite, and galena.  Visible gold was common in both exploration drill core and mined ore, and could be seen as discrete specks and grains, often as clouds or clusters, sometimes amounting to 1% or more of the quartz vein inclusions.  Margins of the veining contained up to 15% sulphides, but assay results showed that very little gold is present outside of the quartz veining.

The Shaynee, Carbonate and Porphyry zones were the first gold zones to be mined on the south side of the northerly dipping (55° to 70°) shear zone.  This meant that the three zones were located on the “hanging wall” side of the shear, and would not be ultimately terminated at depth by the shear zone itself.  In fact, at the mine level of 1,000 feet (300 meters), where River Gold ceased mining, all three zones still remain open for further vertical development.

In contrast, because of the shear zone's steep dip angle to the north, all the veins discovered and developed on the north side of the shear by the Edwards and Cline mines were terminated when they intersected the shear zone at relatively shallow depths.

The significance of Vencan's discovery of gold bearing zones on the south side of the shear zone is therefore clear:  greater vertical potential for ore tonnage and little chance of termination by the shear zone at depth.  This feature was made very obvious in the actual mine production in the immediate area:  just 334,000 tons of ore were produced from shallow veins on the north side of the shear, but over a span of one mile (1.6 kilometers);  while 430,000 tons of ore was produced from the deep veins on the south side of the shear, along a span of just 700 feet (215 meters).

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Metallurgical Investigations

Composite drill core samples were initially tested in 1991 by Lakefield Research under the supervision of Strathcona Minerals Services Ltd.  This testing indicated that a gold recovery rate of 93% to 97% with conventional milling and cyanide extraction could be expected, and that 70% of the gold could be extracted by gravity concentration alone.  These test results were ultimately proven to be accurate, with an average 96% gold recovery rate realized in the actual milling of Edwards Mine ore by River Gold Mines Ltd.

Analyses of the material and process liquor after leaching did not indicate any potential environmental concerns.  The ore is highly compatible with the process technology employed by mills in the immediate area (Hemlo, Eagle River, Magino and Kremzar).  Both the Eagle River and Kremzar mills are located within a 100 mile (160 kilometres) radius, and both are state of the art facilities.  Custom milling services at either of these mills allow feasible ore trucking economics, and would preclude Vencan from having to invest in its own milling facilities.

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Mining Methods

The Shaynee, Porphyry, and Carbonate zones exhibited near classical examples of steeply dipping, near parallel and vertical (80 degrees), gold in quartz veins.  These characteristics typically occur in competent volcanic ground conditions.  The Edwards Mine ore body was therefore amenable to relatively low cost conventional shrinkage stope and long-hole mining methods, thereby facilitating narrow mining widths of five to ten feet.