The Company is focused on development of the Island Gold Mine, located 14 kilometres east of Dubreuilville and 50 kilometres northeast of Wawa, Ontario, consisting of 108 patented and leased mineral claims and 197 staked claims that comprise the Kremzar, Lochalsh, and Goudreau properties. The Project is a joint venture with Richmont Mines Inc. (“Richmont Mines”) who has a 55% interest in the project and is the operator.

In 2006, the joint venture invested a total of $23,378,339 into advanced exploration and development work at the Island Gold property. The exploration included 28,149 meters of underground drilling at the Island Zone which was a combination of both step-out and in-fill drilling. This program successfully increased the confidence level in the Island Zone resource and extended the Island Zone mineralization to depth. In addition, a program of over 10,000 meters of surface drilling was completed at the Lochalsh and Goudreau Zones which are located on strike from the Island Zone.

Throughout 2006, significant underground infrastructure development continued. This work included extending the ramp, drifting in ore and waste, and test stoping. Currently the ramp has a vertical depth of 315 metres and is being extended to Level 340 in order to give access to the zones at depth. The underground development work provides access to strategic locations for the mining operations and for underground exploration. In addition, the work completed made it possible to evaluate the mineralization in more detail within a long-term operational context and to put the site into commercial production more quickly once a decision to this effect has been made.

The mill was put into operation in September 2006. As of December 31, 2006, approximately 41,500 tonnes of mineralized material had been processed. In all, 2,151 ounces of gold from the Island Gold project were sold in 2006 at an average price of US$633. The parameters identified and the metallurgical results obtained are currently being used to calculate the reserves.