Mountain Lake - Falls Grid

Falls Grid Gold Project

Current Status

On December 12, 2007 Mountain Lake announced it had entered into an option agreement to acquire a 100% interest in the Falls Grid Gold Property (the “Property”).

Project Location

The Property consists of 87 mining claims and the centre of the claim group is located approximately 10 kilometers (kms) west of the city of Bathurst, New Brunswick.

Infrastructure

The Property infrastructure is excellent with numerous roads affording access into the Property from the main road along the southern boundary of the claims. The land surface comprises forests and cut over areas, and power lines exist on the southeastern portion of the claim group.

Ownership

The Property was optioned from local prospectors, Mr. Claude Willett and Mr. Lorenzo Noel (the “Optionors”). To maintain the Option in good standing and earn its 100% interest in the Property, Mountain Lake must make scheduled payments to the Optionors of C$ 185,000 and 125,000 Mountain Lake shares over a four year period. The Optionors will retain a 2.0% net smelter returns royalty (“NSR”), and have granted the Company the exclusive right and option to acquire a 1.0% NSR for $Cdn1,000,000.

History

Gold was first discovered on the property in 2003 by the Optionors). Numerous gold values in grab samples of over 20 gpt (up to 39 gpt) were reported from locally derived float and in trenches excavated by the Optionors.

Follow up drilling and trenching by a previous operator focused exclusively on an area of roughly 100 metres by 100 metres. Several narrow, gold bearing intervals were encountered in the drilling in the vicinity of the trenches including 4.1 metres of 2.8 gpt and 3.5 metres of 2.4 gpt, as well as some wider low grade intervals of 52.5 metres of 0.41 gpt and 19.5 metres of 0.58 gpt but the remainder of the 6.3 km long property was not explored.

Xstrata Zinc subsequently picked up the property in 2006, exclusively for its base metal potential, as several high grade boulders had been discovered on the property (one similar to the ore at nearby Brunswick #12 containing 12% zinc, 4% lead and 0.7% copper) and the host rocks to the world class orebody are situated near the southern boundary of the Property. Xstrata covered the claim block with airborne magnetic and electromagnetic surveys, as well as wide spaced soil sampling along the trend of the massive sulphide boulders. One of the three drill holes completed by Xstrata encountered a 25 metre wide zone of carbonate alteration with fuchsite. This alteration zone is thought to extend over more than 4 kms based on the results of the soil geochemistry as illustrated by strongly anomalous nickel, chromium and calcium. Anomalous arsenic and gold are also associated with this trend (see soil survey maps at right). Xstrata dropped the Property having been unable to find the source of the high grade base metal boulders.

Geological Features

During Mountain Lake’s property visit, an outcrop with strong carbonate alteration and fuchsite was found roughly 250 metres in front of one of the Xstrata drill holes giving support to the presence of a major alteration zone. Carbonate +/- fuchsite alteration is present in some of the most prolific gold camps of the world including the Motherlode area of California and the Destor Porcupine and Larder Lake breaks in the Abitibi Region of Ontario and Quebec. No such geochemical anomalies occur in the soil survey in the vicinity of the initial gold discovery on the Property.

Objective

Mountain Lake President and CEO Gary Woods stated, “The exploration work completed by Xstrata during their base metal exploration has indicated that the best potential for gold mineralization is located in a > 4 km long, east-northeast trending zone situated 1 km south of the original gold mineralization discovered on the Property. Mountain Lake’s exploration efforts will concentrate on this newly recognized area for gold potential.”