Lebon Gold Mines Limited CNQ Listing Statement Form 2A by qrh20207

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									                                                       Lebon Gold Mines Limited
                                                        CNQ Listing Statement
                                                              Form 2A

                                                         TABLE OF CONTENTS


1. Table of Contents.............................................................................................................................1
2. Corporate Structure..........................................................................................................................1
3. General Development of Business...................................................................................................1
4. Narrative Description of the Business .............................................................................................2
5. Selected Consolidated Financial Information ..................................................................................22
6. Management Discussion and Analysis ............................................................................................23
7. Market for Securities .......................................................................................................................27
8. Consolidated Capitalization .............................................................................................................27
9. Options to Purchase Securities.........................................................................................................27
10.Prior Sales ........................................................................................................................................27
11.Escrowed Securities.........................................................................................................................28
12.Principal Shareholders .....................................................................................................................28
14.Capitalization ...................................................................................................................................33
15.Executive Compensation .................................................................................................................35
16.Indebtedness of Directors and Executive Officers...........................................................................36
17.Risk Factors .....................................................................................................................................36
18.Promoters .........................................................................................................................................38
19.Legal Proceedings............................................................................................................................38
20.Interest of Management and Others in Material Transactions .........................................................38
21.Auditors, Transfer Agents and Registrars........................................................................................38
22.Material Contracts............................................................................................................................38
23.Interest of Experts............................................................................................................................38
24.Other Material Facts ........................................................................................................................38
25.Financial Statements ........................................................................................................................39
                                 Lebon Gold Mines Limited
                                  CNQ Listing Statement
                                        Form 2A

1.    Table of Contents

2.    Corporate Structure

2.1   Lebon Gold Mines Limited

      Registered and Head Office:

      Suite 1750
      580 Hornby Street
      Vancouver, British Columbia
      V6C 3B6

2.2   Lebon Gold Mines Limited (the “Company”) was incorporated under the Business
      Corporations Act (Ontario) (the “Act”) by Letters Patent certified effective April 24,
      1945. The Company was dissolved on March 16, 1976 pursuant to subsection 251(3) of
      the Act for default in complying with section 134 of the Securities Act (Ontario). The
      Company was revived on June 29, 1988 pursuant to the Lebon Gold Mines Act, 1988. By
      articles of amendment certified effective January 15, 1991, the objects of the Company
      were deleted, the restrictions on business were removed and the authorized capital was
      amended to provide for an unlimited number of common shares. Due to lack of any
      records at the Ministry of Commercial and Business Services (Ontario), the Company
      filed restated articles of incorporation certified effective June 7, 2005. The Company is a
      reporting issuer in Ontario and was registered as an extra-provincial company under the
      Business Corporation Act (British Columbia) by Certificate of Registration certified
      effective June 24, 2005.

2.3   The Company has no subsidiaries.

2.4   The Company is not proposing an acquisition, amalgamation, merger, reorganization or
      arrangement.

2.5   The Company’s constating documents do not differ from Canadian corporate legislation
      with respect to corporate governance principles.

3.    General Development of the Business

3.1   The Company has historically been engaged in the acquisition and exploration of mineral
      properties. The Company is a reporting issuer in the Province of Ontario.

      The Company currently holds mineral property interests located in the State of Nevada,
      USA and its principal business activities include the exploration of natural resource
      properties.
                                             -2-

3.2   MinQuest Inc. (“MinQuest”) and the Company entered into an Option Agreement on March
      7, 2004, covering the Sheep Mountain Property in Yavapai County, Arizona, U.S.A..
      Under the terms of the Option Agreement, the Company, as optionee, may earn a 100%
      interest in the property by March 7, 2010, by making a series of cash payments to
      MinQuest, the optionor, totaling US$95,000, incurring exploration expenditures totaling
      US$1,350,000, and allotting, and issuing to MinQuest, 500,000 free trade common shares in
      the capital stock of the Company. Upon completing the option requirements, the Company
      will retain the one-time right for 60 days to purchase 1.5% Net Smelter Royalty (“NSR”)
      for US$5,000,000 from MinQuest.

3.3   The Company is in the process of exploring its mineral properties and has not yet
      determined whether these properties contain reserves that are economically recoverable.
      The Company has not earned significant revenues and is considered to be in the
      development stage. The recoverability of amounts recorded for mineral properties and
      related deferred costs is dependent upon the discovery of economically recoverable
      reserves, confirmation of the Company’s interest in the properties, the ability of the
      Company to obtain necessary financing to complete the development, and future
      profitable production or proceeds from the disposition thereof.

4.    Narrative Description of the Business

4.1   The principal business of the Company is the acquisition, exploration and development of
      mineral properties.

4.2   The Company has no asset-backed securities outstanding.

4.3   The following is a description of the Company’s principal mineral property:

      Geologist’s Report

      Set forth below is management’s summary of certain portions of a technical report
      entitled “Sheep Mountain Property, Yavapai County, Arizona – NP 43-101 Technical
      Report” (the “Report”), prepared by Edwin Ullmer, BA, MSc – Geology (the qualified
      person within the meaning of National Instrument 43-101-Standards of Disclosure for
      Mineral Projects (“NI 43-101”)). The Report was prepared in accordance with NI 43-
      101. The full report is available on the Internet at www.sedar.com comprising a part of in
      the Company’s documents filed on SEDAR.

      Property Description and Location

      The Sheep Mountain Property is located in south-central Yavapai County in central Arizona,
      about 30 miles (50 kilometers) due north of City of Phoenix. The property is centered on
      latitude 3402’00”N and longitude 112022’30”W. The oxide copper mineralization occurs
      on the southeast flank of Sheep Mountain, a cluster of modest peaks and ridges rising to
      about 4000 feet in elevation. Thus far, copper mineralization of interest to the Company has
      been found in Sections 8, 17, 18, 19, 20, 21, 28, and 29 of T8N, R1 W and Section 13 of
      T8W, R2W.
                                       -3-

Much of the Sheep Mountain area is federally owned land and open for staking. Ownership
is split on the H.M. Flood parcel; the surface is privately owned and mineral rights are
federally owned. Originally homestead lands, the owners of claims on the Flood parcel
have guaranteed access to these lands pursuant to Bureau of Land Management regulations.
The Champie Ranch parcel is fee land and no exploration agreement has been reached with
the owner at this time. State section 29 is Arizona surface and minerals and MinQuest
currently has the minerals exploration permit.

The lode claims discussed below are designed to secure the known anomalies and potential
cupiferous ground exposed in basement rock windows composed of Precambrian
(Proterozoic) rocks and possible later lithologies such as Laramide intrusives. The claims
also cover the post-mineralization Tertiary volcanics covering the basement rocks between
the windows. Fault structures have been identified from geophysics and surface mapping,
are projected under the volcanic cover portions ofwhich are sufficiently shallow here to
strip if adequate grades of copper mineralization are found. These fault zones are also
deposition controls for copper oxide and sulfide mineralization.

A total of 104 unpatented lode claims, covering an area of 2148.64 acres (869.89 hectares)
in sections 7, 8, 17, 18 19 ,20, 21, and 28 of T8N, R1 W and R2W comprise the Sheep
Mountain Property as controlled by MinQuest-Lebon. The annual assessment fees for each
of the claims, (2005: $9,000) have been paid and the payment for the 2005-2006 year was
made on August 29, 2005 to the U.S. Department of the Interior at the Division of Mining
Claims – Bureau of Land Management, Arizona State Office, 222 North Central Avenue
Phoenix, AZ 85004-2203, and the documents were also filed at the Yavapai County seat in
Prescott, Arizona. The claims are valid until September 2, 2006, when the next annual
payments are required. MinQuest located the latest block of 40 claims, Ray 168A through
Ray 207, on March 10-16, 2006, but registration documents confirming their legal location
are not available as of the date hereof.

Table 1 shows filing information for lode claims comprising the Sheep Mountain Property.
The Mule 59-63 and Jackpot claims were initially located on February 1, 1996. The
remaining Mule claims and Mal claims were located on February 12-14, 2004. Ray 132
through Ray 168 (discontinuous series) were located on June 2, 2004. The claims are
recorded as 1,500 feet by 600 feet, the maximum dimensions allowed for lode claims under
the General Mining Laws of the United States of America, United States Code (Titles 30
and 43), as amended.

MinQuest petitioned for the mineral resources on Arizona State Section 29 in T8N, R1W in
2005, and the mineral exploration permit was granted under permit no. 08-108978 on
November 22, 2005 for the 635 acres (257.1 hectares) comprising the entire section A
$3,000 bond for reclamation and damage was posted.
                                                   -4-

                                     Table 1
                      MinQuest Inc. Lode Claims as Optioned
                           by Lebon Gold Mines Ltd
        Claim Name               Claimant’s           AMC                                 No.
                                     Name              Nos                               Claims
        Mule 45-48           MinQuest Inc          361058-61                                4
        Mule 54-58           MinQuest Inc          361063-67                                5
        Mule 59-63           MinQuest Inc          339247-51                                5
        Mule 59A             MinQuest Inc          361068                                   1
        Mule 64              MinQuest Inc          361069                                   1
        Mule 99              MinQuest Inc          361062                                   1
        Mule 201             MinQuest Inc          361070                                   1
        Jackpot 12-16        MinQuest Inc          339242-46                                5
        Mal 11-14            MinQuest Inc          361071-74                                4
        Ray 132-168          MinQuest Inc          362143-79                               37
        Ray 168A-207         MinQuest Inc                                                  40
       Desert Pacific Exploration is listed as claimant on two claim groups in Exhibit A, Appendix 1.
       Claimant’s name now changed to MinQuest Inc. as shown on Table.



Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Sheep Mountain Property is located in south-central Yavapai County in central Arizona,
about 30 miles (50 kilometers) north of the fringe of the City of Phoenix. The region is
rugged Sonora desert terrain with sparse vegetation consisting of cacti, grasses, and low
shrubs. Elevations range from 4100 feet on the ridge crests and peaks of Sheep Mountain to
about 2800 feet in creek valleys. Scattered permanent and part-time residents live along
Castle Creek within a few miles of the Sheep Mountain Property. The federal and state
land is permitted for cattle grazing and the Champie cattle ranch headquarters is located in
section 22.

The site can be reached by driving north on U.S. Highway 17 to the Arizona State
Highway 74 (Carefree Highway). Continue west on 74 for eleven miles to the Castle Hot
Springs Road, turn right and proceed past the Lake Pleasant recreation area. Continue west
on the Castle Hot Springs Road for about 11 miles. The road passes Castle Hot Springs
and follows Castle Creek which is typically dry. When the road crosses Castle Creek on
the river bed, turn right onto the river bed and drive a few hundred feet past the county
maintenance yard to the jeep trailhead that leads up the hill on the north side of the creek.
The jeep trails on Bureau of Land Management and State land provide local access to the
Sheep Mountain Property. These trails are rugged and typically better negotiated with all-
terrain vehicles (ATVs). These local roads existed prior to the acquisition of the Sheep
Mountain Property; some were permitted and built by earlier mineral exploration
companies. MinQuest is currently restoring them for drilling vehicles.

The climate is typical for the arid Sonora desert. Temperatures often exceed 1000 F in the
summer and are mild in the winter. Mining operations can comfortably continue
throughout the year. Rainfall is typically below 13 inches a year, but sporadic, short,
intense storms can cause local flooding and gully washes.

Water for mining operations would likely come from groundwater sources. For mining
operations a large labor pool of expertise is readily available from the nearby City of
                                        -5-

Phoenix. Electric power lines lead to the few scattered residences and ranches along
Castle Creek Road and a line could be shunted the few miles to mining operations. A
heavier transmission line would likely have to be installed by the power company. There
have been no identified environmental restrictions or concerns thus far that would
interfere with or severely inhibit continued exploration or development work on the claims.
New roads and drill sites will have to be examined for any sensitive archeological and
environmental conditions by appropriate government agencies.

History of Exploration

Discovery and Prior Exploration

Copper oxide mineralization, primarily malachite with lesser cuprite and chrysocolla et
al, on outcrop was first discovered by prospectors many decades ago in Precambrian
rocks in Section 18, T8N, and R1W. A shallow shaft and short adit near Red Creek that
explored subsurface copper anomalies in Precambrian rocks are all that remain of this
early activity. These workings are currently within the present bounds of Sheep Mountain
claims.

Exploration information records on the greater Sheep Mountain properties begin in the
early 1960s after renewed interest by exploration companies in the copper oxide shows as
surficial indicators of possible underlying porphyry copper mineralization. A map of all
exploration borings known to MinQuest that were subsequently drilled by the various
companies with their accompanying anomalous copper intervals are shown on Figure 5.
Phelps Dodge Mining Company (“PD”) of Phoenix, Arizona (home office) explored the
greater Sheep Mountain area from 1963 to 1967 with an IP survey and 38 drill holes
totaling 44,000 feet. PD found significant mineralization in Proterozoic rocks beginning at
200 feet in their first boring, SM-1, in the Proterozoic window of section 21, which is now
within the current MinQuest claim block. Following this discovery they drilled a series
ofborings to the east through the extensive Tertiary volcanic cover into the Proterozoic
section. After numerous borings, PD discovered a deep, completely concealed porphyry
copper-molybdenum deposit with a supergene copper sulfide blanket under the post -
mineral volcanics. The deposit is covered by 1500 to 2200 feet of Tertiary volcanics. The
mineralization is associated with a Laramide quartz monzonite stock, and the adjacent
Precambrian rocks are also mineralized. This deposit is about three miles east of the
MinQuest-Lebon copper oxide targets and the PD discovery hole, SM-1. PD’s remaining
core holes concentrated on the evaluation of the Castle Copper-Molybdenum deposit,
named after nearby Castle Hot Springs.

Particularly important for the Sheep Mountain project, four of PD’s exploration holes,
SM-1, SM-2, SM-3 and SM-4 were collared in sections 20 and 21, T8N, R1W very near
MinQuest-Lebon’s current property holdings. The original discovery hole SM-1, in
section 21 about 100 feet north of MinQuest’s Ray claim block near an area of oxide
copper exposures, had intervals of 40 feet of 0.43% and 70 feet of 0.15% copper (mostly
as chalcocite). SM-1 appears to be collared just east of the South Red Creek fault. PD
considered the area defined by the above holes plus SM-6 and SM-9 as a separate
exploration target (Area “B”). These holes define a broad area about a mile across of
subeconomic mineralization under the volcanic cover that “constitutes an area of significant
sulfide introduction.” It is not certain whether this mineralization has its own Laramide
intrusive source or if it is a part of the Castle stock.
                                        -6-

Following PD’s effort, Bear Creek (Kennecott’s exploration arm) drilled three shallow
RC assessment holes in 1967, two of which were collared on the Sheep Mountain
Property claims in section 18. These holes were less than 100 feet deep and did not
penetrate the post-mineral volcanics. Bear Creek’s casing remnants are still found in
section 18.

From 1968 to 1982 Utah Construction Company (“UC”), a division Utah International
Corp., drilled 22 rotary and/or core holes for a porphyry coppermolybdenum target, four of
which were collared on or near the present Sheep Mountain Property claims in section 18.
These holes include UC-2, the first deep hole drilled on the Red Creek Proterozoic
window, and the discovery boring that encountered significant copper and molybdenum
mineralization including 0.60% copper from 250 to 270 feet and 0.18% copper from 270 to
524 feet. The upper interval represents supergene enrichment. The claims optioned by PD
and UC were dropped in 1984 because of low copper prices and the excessive depth of the
porphyry mineralization.

In 1989 Orcana Resources Ltd. reviewed the potential of the Castle Copper-Molybdenum
deposit and drilled two borings before ceasing work by 1994. Neither of these holes was
located near the Sheep Mountain Property.

Cyprus Metals Company briefly examined the copper oxide prospects of Sheep Mountain
in 1995 but, after gathering surface samples and making a preliminary resource estimate,
decided that potential reserves were too small for the low price of copper at the time.
Cyprus carried out no further field work on the Sheep Mountain Property.

In the mid-late 1990s surface grab samples were collected by MinQuest. In contrast to the
porphyry copper-molybdenum sulfide target in most of the previous exploration work,
MinQuest’s interest in Sheep Mountain Property is primarily the oxide copper potential
apparent from surface exposures. The renewed interest is sustained by the recent increase
of the price of copper and a potential large low grade source of leachable copper.

Although much of the copper mineralization found in the few PD and UC drill holes on or
near the MinQuest property is below 500 feet in graben blocks, good intervals in two holes,
UC-2 and SM-1, are between 200 and 300 feet in horst blocks and copper oxides are
present in Precambrian rocks from the surface down. Neither of these holes is collared on
fault zones. The secondary sulfide mineralization is relatively shallow at Sheep Mountain
compared to Castle deposit ore because the Proterozoic is exposed on the surface on horst
blocks or buried by much less volcanic cover. The proximity of mixed sulfide and oxide
mineralization at depth indicates greater copper oxide potential between the surface and the
sulfides as well as the potential of a viable, relatively shallow supergene and hypogene
sulfide resource which has not yet been identified from the few exploration borings drilled
thus far.

Resource Evaluation

A reliable resource evaluation for Sheep Mountain Property cannot be currently carried
out that would satisfy requirements for the NI 43-101 Technical Report using the data
from the limited exploration drilling carried out on the Sheep Mountain Property. The
evidence needed for a reliable estimate of resources will involve real-time data
verification procedures, far more additional subsurface sampling data and coverage and
                                        -7-

information on geologic controls of mineralization. Cyprus Metals Company’s
preliminary assessment of resources using two of UC’s drill hole intercepts (UC-2, UC-
20) and sampled surface exposures around the Red Creek window in section 18 resulted
in estimating a geologic potential of 40 to 50 million tons of ore grade copper oxide rock
with a 2:1 stripping ratio. This is a conceptual estimate. There has been insufficient
evidence to define a mineral resource and it is uncertain if further exploration will result
in the target being lineated as a mineral resource.


Geology

Regional Geology

The Sheep Mountain Property lies in a northwest-trending belt composed of early to middle
Proterozoic supracrustal rocks of the Yavapai Series and middle Proterozoic plutonic rocks
of the Bradshaw complex within the Bradshaw Mountains in central Arizona (Karlstrom and
Conway, 1986). This belt forms a transition zone between the Colorado Plateau province to
the northeast and the Basin and Range province in the southwest. Coincidently, the
property also sets within a geochronological boundary zone between older Proterozoic
rocks to the southeast dating from 1700 to 1800 Ma and a younger set of lithologies to the
northwest ranging from 1600 to 1700 Ma. The boundary zone extends nearly normal to the
northwestward transition zone. This geochron boundary zone contains greenstones,
metasediments, felsic metavolcanics and calcalkaline plutons having metamorphic grades
ranging from greenschist to amphibolite facies. These rocks are thought to belong to an
ancient orogenic zone (greenstone belt), perhaps a plate suture with metal concentrations
typical of such belts in other Precambrian terrains. For instance, the Proterozoic-aged
United Verde copper deposit at Jerome occurs within this Proterozoic boundary zone about
30 miles to the west. The metal concentrations in these rocks are also available for
remobilization during later thermal/orogenic events (i.e., the Laramide orogeny).

The Sheep Mountain copper oxides and the neighboring Castle porphyry copper sulfide
mineralization are hosted by the Proterozoic gneissic granitoid complex within the
Bradshaw Mountains lithologic complex. The Castle copper and molybdenum
mineralization is related to a Laramide (late Cretaceous-early Tertiary) composite quartz
monzonite porphyry/quartz latite porphyry stock that has intruded into the Proterozoic
complex. Other Laramide quartz latite porphyry dikes crop out in Precambrian rocks a mile
northeast and two miles southwest of the Castle deposit.

Local Geology

Lothologies

On the Sheep Mountain Property middle Tertiary volcanics unconformably overlie
Proterozoic granitoids. Tertiary units are gently dipping rhyolite, latite and andesite
volcanic flows, pyroclastics, volcaniclastics, and dikes as well as minor sediments. Andesite
feeder dikes cut the Proterozoic as well as the nearby Castle deposit Laramide stock and
related rocks discussed below. These volcanics are all post-mineralization. Exposed horst
windows of Proterozoic rocks are composed of foliated/gneissic alaskite and related
pegmatitic phases and other granitoids, aplite dikes, and lesser diorite of the Bradshaw
                                        -8-

complex. These rocks are in turn intruded by later Proterozoic diabase dikes. A local
Laramide (late Cretaceous-early Tertiary) igneous event is substantiated by the composite
quartz monzonite/latite porphyry stock associated with the nearby Castle porphyry copper-
molybdenum mineralization. Laramide intrusions have not yet been confirmed on outcrop
or in the subsurface in the immediate vicinity of the Sheep Mountain Property.

Eleven surface grab samples were chosen for petrographic examination when MinQuest
geologists collected surface geochemical samples for analyses in 1999. Table 2 lists the
petrography sample numbers that correspond to sample sites where a sample was also
collected for analysis. The samples were collected in the Precambrian windows in sections 8,
17, and 18 where there are copper oxide occurrences. All belong to Bradshaw complex
felsic plutonic rocks ranging from quartz monzonite to quartz diorite compositions. All the
samples appear to have undergone some later epizonal alteration. General comments on
alteration are as follows.


•      Except for SM15 and SM23, and the adit face sample, alteration on the Red Creek
       window samples (section 18 - SM2, SM5, SM6, SM9, SM15, SM23, and the adit
       face sample) is mild to moderate with plagioclase partially altered to sericite that
       becomes more intense near quartz veining. Biotite may be partially or wholly
       bleached to white mica. Where moderately altered there are pockets of kaolinite
       with iron oxide from oxidation of pyrite. Fine Pyrite grains are scattered in quartz
       veins and within orthoclase (K-feldspar). In contrast to the above, the alteration in
       SM15, SM23 and the adit face sample is rated by the petrographer as strong with all
       plagioclase altered to sericite and some or all orthoclase partially replaced by
       kaolinite, smectite, and some sericite. Fine fractures and stringers contain
       chrysocolla with minor remnant chalcocite and tenorite (CuO), chlorite, clay, fine
       sulfides, and iron oxides. SM15 and SM23 come from the west side of the window
       in Red Creek fault zone that may have provided a conduit for altering hydrothermal
       solutions. This is where alteration should be the strongest if sulfide mineralization
       were controlled by the fault structure as at the Castle ore deposit. The fractures with
       copper oxides are part of the brittle deformation near the Red Creek fault zone. In
       the adit sample plagioclase has been totally replaced by sericite and kaolinite.
       Biotite has been bleached. The few pyrite grains have been oxidized. Chrysocolla,
       tenorite, and possible turquoise are present in some samples.

•      Alteration in Ash Creek window samples (sections 8 and 17 - E3, E4, and E7) is
       rated by the petrographer as weak to strong. Alteration characteristics are generally
       similar to above. The potassic alteration occurs in selvages around quartz veins
       where some K-feldspar metasomatism has occurred. Most or all of the plagioclase
       has been replaced by sericite. Fine disseminated pyrite is common but most is
       oxidized. Chrysocolla and conichalcite (CaCu(AsO4)(OH)) are also identified. The
       Ash Creek window has yet to be carefully mapped for structures that might be
       linked to the alteration.

•      Sample SM12 from the extreme southwest corner of 18 has undergone relatively
       strong alteration. Much of the plagioclase has been replaced by orthoclase, the rest
       by sericite. Biotite has been bleached and replaced by white mica or sericite. There
       are minor scattered pockets of kaolinite. All pyrite has been oxidized or leached.
                                               -9-

In general, the petrography describes persistent, weak to strong, retrograde hydrothermal
effects. The changes of alteration intensity between the various samples may be largely
controlled by the presence of faulting (i.e., such as major northwest fault zones) and fine
fracturing which also control the introduction of copper and other anomalous metals. Where
present in these samples, some of the kaolinite and chlorite may be of secondary origin, and
the oxidation products are related to the later processes that produced the secondary oxide
minerals including the copper oxides as well as supergene enrichment.


                                         TABLE 2
                                SHEEP MOUNTAIN PROPERTY
                                  PETROGRAPHY SAMPLES

                                                                    Analysis       Analysis
            Sample     Location-    Precambrian                        Cu             Mo
              ID       Section #      Window           Lithology     (ppm)          (ppm)
                SM-2       18         Red Creek    Granodiorite        165             55
                SM-5        18         Red Creek     Granodiorite      216             38
                SM-6        18         Red Creek     Granite           1108           166
                SM-9        18         Red Creek     Leuco-tonalite    184             27
              SM-12         18         Red Creek     Qz Monzonite      5220            93
              SM-15         18         Red Creek     Qz Monzonite     12600            94
              SM-23         18         Red Creek     Qz Monzonite     13300           2
                   E-3      17         Ash Creek     Granodiorite       86             19
                   E-4       8         Ash Creek     Qz Monzonite       66             20
                   E-7       8         Ash Creek     Qz Monzonite      5510            13
             Adit face      18         Red Creek     Qz Monzonite      3270            90
              Note: Lithology IDs based on composition. They are all Proterozoic
                       and have undergone regional metamorphism.


Structure

Geologic mapping, drill hole intersections, and the 1963 resistivity and IP survey combine to
locate a number of northwest trending faults. These faults are near-parallel to the Cow
Creek fault zone that controlled much of the ore grade mineralization at the Castle deposit.
At Sheep Mountain faults are important because of their role in horst and graben movements
that ultimately created the Proterozoic windows and provided ground preparation (open
spaces) for conduits to channel secondary and possiblyprimary mineralizing solutions, as
well as localizing later (Laramide?) intrusive activity. High resistance signatures were
detected along several projected fault zones by the IP-resistivity survey.

According to UC geologists, some or all of these northwest faults have been periodically
active since the Cretaceous and probably back to the Precambrian. Evidence for episodic
movement is apparent along the Cow Creek fault zone, and can be also applied to the
northwest faults on the Sheep Mountain Property. The Cow Creek fault zone with attending
normal offsets, trends approximately N45 0W and passes along the east side of the Castle
Laramide stock. The broad fracture zone has significantly influenced the emplacement of
the stock and has controlled the distribution of much of the best grades of copper-
molybdenum mineralization at the Castle ore body. A post-mineral, mid-Tertiary andesite
dike has been sheared by movement along this fault indicating later adjustments. The offset
of a cross-fault interpreted as a shear from lateral movement along the Cow Creek zone
                                         - 10 -

suggests a left lateral shift along the Cow Creek fault as well as normal movement. Another
fault limiting the southwestern side of the stock is nearly parallel to the Cow Creek fault
zone. The association of much of the better grades of mineralization with the Cow Creek
fault zone provides important criteria for exploration at Sheep Mountain.

West of the Cow Creek fault within the Sheep Mountain Property, offsets along similar,
near-parallel, northwest normal faults have formed horsts and grabens and possible hinge
blocks that have “brought up” blocks of Proterozoic rocks to be exposed as windows. The
Ash Creek fault trends N500W and has normal movement on the east side. The Tertiary
volcanics have dropped down against the Proterozoic section thus helping to create the Ash
Creek Proterozoic window on the west side of the fault The Ash Creek fault continues to
the southeast, and evidence from PD boring SM-9 indicates an eastward dipslip offset on
the order of 1400 feet. The other northwest structures along Proterozoic windows such as
the Red Creek, South Red Creek and Burro Spring fault zones also infer alternating normal
offsets to create the relative “upward” movements needed for the existence of the
Proterozoic outcrops. Evidence of wide zones of brittle deformation and multiple parallel
faults can be observed in Proterozoic rocks and volcanics along the Red Creek window.
Along the Red Creek fault and South Red Creek fault zones the broad patterns of fracturing
in the Tertiary and Proterozoic rocks likely include slivers of volcanics at different levels of
displacement. UC-2 is collared on the Proterozoic bedrock east of the Red Creek fault zone
at an elevation of approximately 3100 feet. Comparisons of the elevations of Tertiary-
Proterozoic unconformity intersected to the west and east in UC-16 and UC-20 reveal
minimal offsets of 1000 and 400 feet on the west and east side of the Red Creek window,
respectively. To the northeast, UC-20, collared on volcanics, intersected Proterozoic rocks
at 742 feet (elevation about 2800 feet). UC-16, located southwest of UC-2, intersected the
Proterozoic basement 1780 feet (elevation about 2150 feet). A 300-foot normal offset
probably occurs between UC-16 (down) and UC-19, 500 feet to the north of UC-16 (log
UC-19 has legibility problems). The direction of this fault trend is uncertain. Steep offsets
are also implied to the south adjacent to the South Red Creek window, but no lithology logs
have been located from PD core holes SM-1 through SM-4. The Tertiary/Proterozoic
contact is implied from the beginning sample footage in each hole. The Tertiary volcanics
in all these holes was never sampled by PD. Hundreds of feet of normal movement are
indicated within a half mile of the Proterozoic window.

Deposit Types

Castle Deposit Model

An exploration model for Sheep Mountain mineralization involves mineralization controls
and hydrothermal and secondary effects associated with the Castle porphyry copper deposit.
The fluctuating copper grades in borings between the Castle deposit and the Sheep
Mountain Property claims suggest that an additional distinct, coeval Laramide
hydrothermal system (or systems) and intrusion (or intrusions) may be responsible for the
sulfide mineralization at the Sheep Mountain Property. Some relevant comparisons of the
Castle deposit can apply to Sheep Mountain geology as have been variously discussed
elsewhere. The following are cogent features of the Castle deposit that can apply to
exploration on Sheep Mountain.
                                    - 11 -

•   At the Castle ore zone, deeper hypogene mineralization comprises a typical
    porphyry copper sulfide suite of chalcopyrite, molybdenite and pyrite. In PD hole
    SM-20, the primary ore grade averages 0.49% copper and 0.076% MoS2 for an
    interval of 390 feet. Above this zone the former hypogene sulfides have been
    replaced by supergene mineralization with up to 1.7% copper and 0.06% MoS2 in a
    blanket layer averaging 90 feet thick. Chalcocite, pyrite and lesser covellite,
    molybdenite, native copper and minor malachite with three to six percent sulfides
    comprise the supergene zone. The effect of weathering on the ore body consists of a
    200-foot zone composed of an oxide zone that grades to mixed oxide/supergene
    mineralization with one to three percent sulfides. These two zones consist of green
    copper oxides, native copper, and remnant minor chalcocite and pyrite.

•   The significant oxidized zone over the Castle ore zone must have developed before
    emplacement of over 1700 feet ofmiddle Tertiary volcanics that currently overly the
    deposit. At the ore zone the faulting helped provide a wide, permeable conduit for
    migration of leaching solutions and the elevated sulfide composition of the primary
    ore created strong acidic leaching solutions which contributed to the depth of the
    secondary alteration and the rich supergene ore.

•   The Castle deposit mineralization is spread over four square miles with common
    intervals of 0.04% to 0.08% copper in Proterozoic rocks. The best mineralization
    (ore grade) is found in or adjacent to the Laramide composite stock with most hosted
    by Proterozoic rocks adjacent to the eastern contact of the stock. The Laramide
    intrusive complex is strongly altered but contains less sulfide mineralization than the
    adjacent Proterozoic rocks. Laterally, the sulfide content typically drops to less than
    one percent beyond the zone of sulfide enrichment around the stock. The overall
    mineralization has a low sulfide content.

•   Porphyry copper deposits are often nested in groups of two or more intrusive
    centers as at Superior-Globe, Arizona and Ray, Arizona. The Orcana and Utah
    International exploration programs followed the concept that the widespread
    mineralization mentioned above indicates the possibility of one or more additional
    centers west of the Castle deposit in the vicinity of the Sheep Mountain Property.
    The trend to higher copper and molybdenum grades in some holes at Sheep
    Mountain Property suggests an undiscovered intrusive center (or centers) in this
    area.

•   There is strong primary alteration at the Castle ore deposit with well developed
    potassic, argillic, propylitic and phyllic assemblages. Phyllic alteration (quartz,
    sericite, pyrite) is wide spread and occurs erratically throughout the greater Sheep
    Mountain area and is largely fracture controlled.

•   The Cow Creek fault bounds the east side of the Laramide stock and another
    parallel fault cuts the western side of the stock. The best mineralization averaging
    greater than 1% supergene copper follows the Cow Creek fault zone for 2500 feet.
    Parts of the Castle supergene blanket also occur outside of the fault zone. PD and
    UC geologists believe that the Cow Creek fault was largely instrumental for the much
    of the thickest and higher grades of supergene copper enrichment as well providing
    a control for the emplacement of the Laramide intrusions and much of the primary
    mineralization.
                                         - 12 -

Sheep Mountain Application

The oxide copper zones on the Sheep Mountain Proterozoic outcrops are the leached
remnants of the original low sulfide Laramide mineralizing system. Sparse weathered
sulfide remnants on outcrops on the Sheep Mountain Property such as boxworks and
oxidation minerals reflect the relatively low former pyrite content in the host rock as has been
described for distal areas around the Castle deposit. The oxidation of former copper sulfides,
mostly chalcocite without abundant pyrite, would have yielded insufficient acid during
weathering to leach all the copper thus leaving green copper oxides behind.

The exposed Proterozoic rocks on the horst windows at Sheep Mountain Property have
been subjected to weathering and attending oxidation since the former volcanic cover was
eroded off. The rocks were also likely subjected to weathering and oxidation during the
prevolcanic period when the Proterozoic was previously exposed at the Castle deposit. The
oxide zone on the Red Creek window is deep. UC-2, collared east of the Red Creek fault on
the Proterozoic outcrop, penetrated 200-foot oxidized zone and a 20-foot thick chalcocite
blanket (0.60% copper).

The longer period for weathering and leaching of mineralization on the exposed Proterozoic
horst windows and bounding fault zones (i.e., Red Creek, South Red Creek, Ash Creek, and
Burro Spring windows and faults) may translate to greater concentrations of copper in the
oxide or the mixed oxide/sulfide zones or as supergene deposits in zones of structural
preparation along the northwest fault zones. Former post-volcanic water table conditions in
the horst blocks and bounding fault zones would have differed from conditions at an
unconformity located deep in the grabens, and episodic groundwater fluctuations could have
provided opportunities for multiple oxidation and reduction environments leading to
mixtures of chalcocite and oxides such as seen in UC-2.

As with the high grades of chalcocite/copper oxides in the Cow Creek fracture zone, the Red
Creek, South Red Creek, Ash Creek and Burro Creek fracture zones offer similar
opportunities as conduits for supergene mineralization and oxidation of chalcocite to copper
oxides as the water table rose and fell within the wide fault zones. The Castle deposit
model demands that the Red Creek fault zone and the other northwest fault zones mentioned
above be examined for oxide copper and secondary copper sulfides that would have
accumulated under favorable structural controls offered by the fault zone. Expectations
from field evidence are that secondary copper (and molybdenum) mineralization at the
Sheep Mountain Property will be largely disseminated within fine vein networks such as
stockwork or crackle zones. The copper oxides would tend to remain in the fault zone
because of low pyrite-low acid leaching conditions. The faults and cross-fault intersections
may also provide preferred loci for emplacement of additional Laramide intrusions as at the
Castle deposit.

As mentioned previously, the best grades of copper mineralization at the Castle deposit are
within the Cow Creek fault zone close to the Laramide stock complex. Here the primary
alteration of Proterozoic rocks is most intense. At the Sheep Mountain Property on the Red
Creek Window, rock samples with the strongest sericitation and other retrograde
mineralogy are located on the Red Creek fault zone. This could indicate proximity to a
primary mineralization source with hydrothermal fluids controlled by the advantageous
ground preparation along the fault. Enhanced hypogene copper-molybdenum
mineralization grades would be subjected to oxidation and secondary deposition.
                                         - 13 -

The copper mineralization found in UC-2 between 250 feet and TD indicates zoning from
supergene copper enrichment at 250-270 (0.60%) through a mixed supergene/oxide zone to
about 525 feet and then into protore to 976 feet. The vertical zoning in the upper portions of
SM-20 at the Castle ore zone is similar from the oxide through the supergene zones. In UC-
2 chalcocite is the prominent copper sulfide in the supergene and mixed zones. In the South
Red Creek window area, a spike in copper grade in SM-1 indicates supergene enrichment
from 200 to 240 feet. In each of these intervals a copper spike occurs at the beginning of
significant copper grades.

The relatively thin oxidation zones encountered in drilling under the unconformity at the
Sheep Mountain Property (SM-1, SM-2, SM-3, UC-16,) and other holes distal to the Castle
ore zone may, in part, reflect the fact that the rocks at these locations do not reflect the ore
zone conditions described above (fractured ground preparation) at the Castle deposit.
Alternatively, the local prevolcanic oxidizing, leaching and water table conditions may
have been different at Sheep Mountain generally, or, perhaps, part of the oxidized zone was
weathered away prior to the emplacement of volcanic cover.

Mineralization

The majority of copper oxide minerals found on outcrop are malachite (Cu2CO3(OH)2 and
lesser cuprite (Cu2O), chrysocolla ((Cu,Al)2H2Si2O5(OH)4.nH2O) and minor conichalcite
(CaCu(AsO4)(OH)) and turquoise (CuAl6(PO4)4(OH)8.5H2O). Cuprite often forms alteration
rims around malachite. Copper oxides are found in networks of fine fractures in the
crystalline host rocks and typically form thin crusts on rock surfaces. Molybdenum is often
present in higher concentrations following copper but molybdenum minerals have not yet
been recognized. The scattered clusters of green copper mineralization occur in local
concentrations in the Proterozoic gneissic alaskite windows which are also variously
described as quartz monzonite, granodiorite, and granite. The Tertiary volcanic rocks
surrounding the Proterozoic windows almost never have copper oxides except at a few spots
at the exposed unconformity or fault contact where copper has mobilized from the
Proterozoic host and redeposited as stains on basal volcanics. Minor copper is found on the
basal volcanics along Burro Springs fault in the extreme southwest quarter of section 18.

The few surface samples petrographically examined at Sheep Mountain exhibit primary
hydrothermal (retrograde) alteration ranging from weak to strong. The alteration
assemblages at the Castle ore deposit include strong phyllic (quartz, sericite, pyrite),
potassic, and prophylitic halos. The strongest, mostly phyllic (sericitic) alteration on the
Red Creek window is found along the Red Creek fault zone. Hand specimens exhibit
common quartz veinlets in the vicinity of copper oxide outcrops indicating hydrothermal
fluids carrying silica were introduced, but pervasive zones of silicification have not yet been
found. Notable quartz vein stockwork occurs on the Burro Spring window in the southwest
corner of section 18. Only a trace of copper oxide was found in these stockwork veins, and
there are only minor iron oxide remnants from weathered sulfides. No samples for
multielement analyses have been collected of these veins. The stockwork occurrence is
likely related to veining in brittle deformation along the Burro Spring fault.

Core hole UC-2 in section 18 is located on Proterozoic alaskite, and it advanced through
various Bradshaw complex gneissic granitoid types. Oxide copper mostly as malachite is
found on surface rocks nearby and it was logged down to 90 feet, below which the log is
                                         - 14 -

barely legible. Significant intervals of copper and molybdenum sulfide mineralization
were found below 250 feet. Cyprus evaluated the Sheep Mountain Property for oxide
copper reserves from UC-2 data and surface rock samples and determined that copper
oxides are present in sufficient quantities to calculate reserves.

The analytical results for copper and molybdenum from surface samples were collected by
MinQuest and Cyprus in the 1990s are presented on Table 3. Some MinQuest samples also
included gold and silver analyses. Cyprus’ sample suite included ten additional metals. Not
all the samples contained visible copper; some were selected for other characteristics such
as alteration and veining. As can be seen on the Table, molybdenum is often anomalous
with copper as might be expected with a relationship with porphyry copper mineralization.
Gold and silver are never significant. Cyprus’ surface samples were also analyzed for Au,
Ag, As, Bi, Cd, Hg, Pb, Sb, Se, and Zn. These element concentrations remain uneconomic
and most are not particularly anomalous. Sporadic spikes were found with As (arsenic) in
the company of elevated copper, Hg (mercury) in a couple of samples, and one Zn (zinc)
above 100 ppm, and other samples remained typically below 20 ppm. Where a comparison
can be made between zinc concentrations on the surface oxide zone and in the sulfide zone
(from UC-20), it appears that most of the zinc has been leached from the surface
environment. At the Castle deposit, other than copper and molybdenum, most metals
including zinc and lead are usually only found in trace or weakly anomalous quantities.
MinQuest knows little of specific details of the mineral or depositional controls of the
sulfide mineralization because of the poor quality of the drilling logs and the absence of
petrographic reports from core samples. PD holes SM-1, SM-2, SM-3 and SM-4 and UC
holes UC-2, UC-16, and UC-20 are located within or very near (within a half mile)
MinQuest claim blocks in proximity of surface copper oxide exposures, but the actual
mineralogy and lithologic character has to be largely inferred from analytical data until
MinQuest-Lebon’s drilling program commences.

Copper and molybdenum assays are available for the Proterozoic sections as are other
selected elements from some holes variously including Au, Ag, base metals, S, F and K.
Sulfur was determined for every fifth sample in the four PD holes and the values indicate
fairly low sulfide content for most copper-mineralized rock. Gold and silver in samples
from the PD holes and UC-20 were never significant. Only the analyses from one hole,
UC-20 included Au, Ag, Pb, Zn, Rb, F, and K. Zinc and fluorine were anomalous (zinc at
or near 100 ppm and fluorine ranging from 1500 to 6800 ppm.).

                                      TABLE 3
                              SHEEP MOUNTAIN PROPERTY
                    ANALYTICAL RESULTS - SURFACE GRAB SAMPLES
                       Precambrian  Analytical Cu    Analytical Mo
   Sample ID   Sampler   Window      Method    (ppm)  Method (ppm)              Notes
   SM1         Minquest   Red Creek        4029 AA   180    4042 AA   39
   SM2         Minquest   Red Creek        4029 AA    165   4042 AA    55
   SM3         Minquest   Red Creek        4029 AA   4860   4042 AA    30
   SM4         Minquest   Red Creek        4029 AA    337   4042 AA    36
   SM5         Minquest   Red Creek        4029 AA    216   4042 AA    38
   SM6         Minquest   Red Creek        4029 AA   1108   4042 AA   166
   SM7         Minquest   Red Creek        4029 AA    782   4042 AA   128
   SM8         Minquest   Red Creek        4029 AA    186   4042 AA    89
   SM9         Minquest   Red Creek        4029 AA    184   4042 AA    27
   SM10        Minquest   Burro Spring     4029 AA     82   4042 AA    14
                                             - 15 -

                                     TABLE 3
                             SHEEP MOUNTAIN PROPERTY
                   ANALYTICAL RESULTS - SURFACE GRAB SAMPLES
                      Precambrian  Analytical Cu    Analytical Mo
Sample ID     Sampler   Window      Method    (ppm)  Method (ppm)                                  Notes
SM11          Minquest    Burro Spring          4029 AA        79      4042 AA       25
SM12          Minquest    Burro Spring          4029 AA      5220      4042 AA       93   pC/vol. unconform.
SM15          Minquest    Red Creek             4029 AA     12600      4042 AA       94
SM16          Minquest    Red Creek             4029 AA      5700      4042 AA        9
SM17          Minquest    Red Creek             4029 AA     30500      4042 AA      120
SM18          Minquest    Red Creek             4029 AA      3270      4042 AA       90   adit-drift sample
SM19          Minquest    Red Creek             4029 AA       393      4042 AA      106   adit-drift sample
SM20          Minquest    Red Creek             4029 AA       963      4042 AA       51   adit-drift sample
SM21          Minquest    Red Creek             4029 AA       180      4042 AA       48   adit-drift sample
SM22          Minquest    Red Creek             4029 AA     46000      4042 AA        5   adit-drift sample
SM23          Minquest    Red Creek             4029 AA     13300      4042 AA        2
SM24          Minquest    Red Creek             4029 AA     76800      4042 AA        7   stockwork
SM25          Minquest    Red Creek             4029 AA     26500      4042 AA       72
SM26          Minquest    Red Creek             4029 AA       463      4042 AA       21   adit dump
 E1           Minquest    Ash Creek             4029 AA        42      4042 AA       24
 E2           Minquest    Ash Creek             4029 AA       577      4042 AA       19
 E3           Minquest    Ash Creek             4029 AA        86      4042 AA       19
 E4           Minquest    Ash Creek             4029 AA        66      4042 AA       20
 E5           Minquest    Ash Creek             4029 AA        96      4042 AA       18
 E6           Minquest    Ash Creek             4029 AA      3010      4042 AA       27
 E7           Minquest    Ash Creek             4029 AA      5510      4042 AA       13
 E8           Minquest    Ash Creek             4029 AA      2430      4042 AA       10
 6294A        Cyprus      Red Creek                  AA        12           AA        1 Tertiary rhyolite
 6295A        Cyprus      Red Creek                   AA   >10000          AA        23
 6296A        Cyprus      Red Creek                   AA     9100          AA        56
 6297A        Cyprus      Red Creek                   AA      112          AA        42 qz stockwork
 6298A        Cyprus      Red Creek                   AA     4050          AA       119
 6299A        Cyprus      Red Creek                   AA       82          AA        38 qz stockwork
 6300A        Cyprus      S. Red Creek                AA       25          AA        18
 6301A        Cyprus      S. Red Creek                AA   >10000          AA        52 pC gran+dike+qz vns
 SM95-01      Cyprus      S. Red Creek                AA       92          AA         1
 SM95-02      Cyprus      S. Red Creek                AA   >10000          AA         2
 SM95-03      Cyprus      S. Red Creek                AA      205          AA        12
 SM95-04      Cyprus      S. Red Creek                AA       21          AA         1
 see note     Minquest    S. Red Creek                        260                         No analytical cert
 see note     Minquest    S. Red Creek                         85                         No analytical cert
 see note     Minquest    S. Red Creek                        270                         No analytical cert
 see note     Minquest    S. Red Creek                        250                         No analytical cert
 see note     Minquest    S. Red Creek                        165                         No analytical cert
 see note     Minquest    S. Red Creek                         85                         No analytical cert
 see note     Minquest    S. Red Creek                        400                         No analytical cert
 see note     Minquest    S. Red Creek                       1000                         No analytical cert
 see note     Minquest    Red Creek                           580                         No analytical cert
 see note     Minquest    Red Creek                           264                         No analytical cert

Note: The legend Inc. laboratory analytical sheet has been misplaced for the unnumbered samples. They were
collected in 1999 as a single batch, and analyzed for copper and molybdenum by methods 4029 and 4042, as E1-E8.
                                       - 16 -

Exploration

The Arizona Department of Mining and Mineral Resources in Phoenix and other private
sources have supplied MinQuest with an incomplete set of drill logs and assay data and
other surface data from earlier exploration on the Sheep Mountain Property. To date,
MinQuest’s field efforts have primarily involved some broad scale surface sampling and
mapping and securing an adequate property base to allow the planning and execution of an
appropriate exploration program. Thus far, MinQuest and MinQuest-Lebon have not
drilled, trenched, carried out any geophysical surveys, or mapped detailed geology since
claiming the ground. The potential of the Sheep Mountain Property is largely based on the
results of earlier surface and subsurface work carried out by major mining companies from
the early 1960s through 1995 and field observations and sampling by MinQuest geologists.

•      The IP-resistivity survey contracted by PD on the Sheep Mountain Property
       identified the South Red Creek window fault in section 21 and the Red Creek fault
       on the west side of the Red Creek window in section 18. Resistivity highs correlate
       with fault contacts. An increasingly high IP response associated with low
       resistivity volcanics east of section 20 and 21 indicates that thickness of volcanics
       generally increase eastward which is corroborated by drilling.

•      Generalized geologic mapping was carried out in part on the Sheep Mountain
       Property from field observations and the IP survey. The mapping further details a
       series of northwest faults with normal offsets producing horsts of Proterozoic rocks in
       juxtaposition with Tertiary volcanics.

•      Core drilling by PD and UC at or near MinQuest claims on sections 20, 21 and 18,
       T8N, R1W and section 13, T8N, R2W identified significant subeconomic copper
       and molybdenum mineralization in Proterozoic granitoids of the Bradshaw
       complex. Continued drilling by PD east of MinQuest-Lebon’s area of interest
       resulted in the discovery of a significant Laramide porphyry copper deposit related
       to a quartz monzonite stock. The similarity of the sulfide mineralization at the
       Sheep Mountain Property indicates that it is also part of a related Laramide
       hydrothermal system.

•      Bear Creek and Orcana carried out small drilling programs of three and two core
       holes, respectively, in the greater Sheep Mountain area. Bear Creek’s RC borings
       were did not advance through the volcanics and are of no use to MinQuest-Lebon’s
       exploration program. Orcana’s borings are not within the Sheep Mountain area of
       interest.

•      Cyprus and MinQuest collected surface samples to evaluate the copper oxide
       potential.


Drilling

The historic combined reverse circulation/diamond drill borings drilled on or near the Sheep
Mountain Property are shown on Figure 5 of the Report. Figure 4 of the Report shows, in
part, locations of exploration borings, topography, and the general geology of the Sheep
Mountain Property. The holes are vertical, but hole and core sizes are unknown. At least in
                                         - 17 -

UC borings, Tertiary volcanics were drilled with a reverse circulation rotary rig and the
Proterozoic sections were then cored. The PD holes were also cored in the Proterozoic. In
both UC and PD holes, the Tertiary section was not sampled and most were not carefully
logged. The relevant borings with data available to MinQuest were drilled prior to 1982, and
the personnel and exploration offices involved with exploration of the project are no longer
available. It is important to note that none of the drill holes have penetrated that fault zones
at Sheep Creek.

The results of the first three PD core holes, SM-1 through SM-3, totaling 3044 feet support
the copper potential at Sheep Mountain and encourage further exploration in sections 20
and 21. These holes were drilled on fee land in the northwest quarter of section 21. This
land is not currently available to exploration by MinQuest-Lebon or any other mining
company. All holes advance through a section of Tertiary volcanics. SM-1 was located
about 100 feet north of MinQuest’s Ray claim block in section 21 near the Proterozoic
outcrops with copper oxides. Unfortunately there are no geological logs available for these
holes to identify the copper minerals present. The downhole sampling data at 10-foot
intervals begins upon entering the Proterozoic section which establishes a depth for the
volcanic/Proterozoic contact. The depth to the Proterozoic is relatively shallow in SM-1,
about 180 feet, and a supergene enriched zone is present from 200 to 240 feet of 0.435%
copper. Grades quickly fall off below this zone, and most 10 -foot intervals below 270 feet
are less than 0.1 % copper. Slightly higher grades averaging 0.15% occur in an isolated
zone from 580 to 650 feet. This hole was either located within slivers of the South Red
Creek window fault zone or just east of the fault zone. Holes SM-2 and SM-3 are located in
the graben block northeast of the South Red Creek fault and intersected the Proterozoic
contact and copper mineralization at much deeper intervals. Sampling data of SM-2 begins
at 857 feet (the unconformity) and in SM-3 at 759 feet. There is minor supergene
enrichment at SM-2 from 867 to 877 feet. Nearby hole SM-4 intersected the Proterozoic at
506 feet, but all copper grade assays but one remained less than 0.08%.

A second prospective area, the Red Creek window in Section 18, is also enhanced by
previous UC drilling. Core hole UC-2 is located directly on the Proterozoic rocks of the
window east of the Red Creek fault zone. UC-16, UC-19 and UC-20 were collared east and
west of the Proterozoic window where Tertiary volcanics had to be penetrated to reach the
Proterozoic. Sampling intervals in UC-2 are variable and depend on lithologic
characteristics; in UC-16 and 20 samples are collected at 10-foot intervals. UC-2 advanced
through minor copper mineralization from the surface to 250 feet. The copper grades in
UC-2 to 209 feet are 0.09% or less and increase marginally from 209 to 250 feet averaging
about 0.11%. The few notes discernable on the log indicate the copper at the upper levels of
the hole were oxides with some chalcocite. Abruptly the grade increased to 0.60% from
250 to 270 feet which represents a 20-foot zone of supergene enrichment. After a drop off
the copper grades increase from 325 to 525 feet averaging 0.3%. Molybdenum grades rise
and fall with copper grades. This zone appears to be a mixed oxide/sulfide zone indicating
possible fluctuating water table conditions. Below 525 feet copper remains anomalous but
most grades are less than 0.1% (protore) to the bottom of the hole at 976 feet. UC-20,
located about 2500 feet east of UC-2, penetrated 742 feet of Tertiary volcanics before
entering the Proterozoic section indicating a minimal normal down-drop of 400 feet east of
the Red Creek fault. Copper grades remain anomalous but below 0.1% throughout the
Proterozoic to TD at 976 feet except for 0.78% from 920 to 930 feet. Molybdenum grades
appear independent of copper and most are below 0.004%. UC-16, about 2000 feet west of
                                        - 18 -

UC-2, cut the Proterozoic contact at 1788 feet for a minimal normal offset west of the Red
Creek window of 1000 feet. Copper grades range from 0.43% to 0.022% from 1786 feet to
TD at 1840 feet. The eleven feet of 0.43% is just under the unconformity is appears to be
supergene enrichment. Molybdenum values remain below .0025% and do not appear to
follow copper values. In UC-19 copper values remain below 0.071% and most are less than
0.04%. Molybdenum grades were slightly higher on average than those from UC-16 and
UC-20. Most sampling footages are not discernable on the log. However, samples were not
collected continuously down hole, probably because the observed mineralization was
sporadic.

Sampling Method Approach

The only samples collected by MinQuest were grab rock chip samples for broad, initial
examination of the copper oxide exposures. Both copper and molybdenum were digested
in cyanide (samples SM1-SM12) or agua regia (SM15-SM26, E1-E8). When determined,
gold was assayed by the fire assay/atomic absorption (AA) method.

Cyprus assigned their surface rack samples to Chemex Labs, Inc. of Sparks, Nevada for
analysis. Copper and most other elements were digested by HNO3-agua regia and finished
by AA. `

The analytical methods and procedures for the historical drilling in the 1960s and 1970s
have not been located. Rock chips and core from UC drill holes were analyzed at Skyline
Labs of Tucson, Arizona. Documents showing analytical procedures are not available. The
PD drill hole data copies are missing title headers and procedural details. Thus the
laboratory identity and methods are not available for this report.

Sample Preparation, Analyses and Security

Other than grab rock chip samples MinQuest has not carried out any geochemical surveys,
drilling, or mine/mine dump sampling. The rock chip samples were bagged by MinQuest
geologists and delivered to Legend, Inc. (assay laboratory) in Reno, Nevada. Legend, Inc.
has since discontinued their laboratory business and currently is involved with supplying
mining equipment.

Data Verification

Unfortunately, the copies of historical reports and data that have been used extensively for
this report do not adequately describe or verify sampling procedures and results, nor is there
quality control information available. However, the historic exploration sampling data are
from major, reputable mining companies including Phelps Dodge Mining Company, Utah
International Corp. (merged with General Electric Corp. in 1976) and Cyprus Metals
Company. From the author’s experience, it was (and still is) a habit with these companies
that their sampling methods from drilling and other surveys are compatible with standards to
prove a credible case in the public market place for reliability and continued mine financing.

The data from UC and PD can indirectly be given credence by comparing drill intercepts of
mineralization from UC and PD borings on the Castle porphyry copper-molybdenum deposit.
UC gave the PD results sufficient scrutiny to use the data to calculate ore reserves for mine
                                       - 19 -

feasibility. The drill hole reliability would also follow for the holes related to Sheep
Mountain Property.


Adjacent Properties

The nearby Castle porphyry copper deposit, as the model for the development of another,
similar mineralization system at Sheep Mountain, is an important factor for a positive
potential for oxide copper and sulfide mineralization. The Castle deposit exhibits mineable
potential if stripping ratios were favorable. Utah Construction has calculated a drill-
indicated mineral inventory for the neighboring Castle porphyry copper-molybdenum
deposit. Using mineralized intervals in five holes, SM-20, SM-28, SM-32, SM-39 and UC-
1, the “inferred reserves” (report language) have been calculated as 91 million tons of
0.74% Cu and 0.065% MoS2. (Figure 5 for location map of borings). Another estimate for
Orcana Resources developed a tonnage and grade estimate from ore intervals in four drill
holes,UC-1, SM-20, SM-32, and SM-39. From these, a total of 39.4 million tons of 1.27%
Cu and 0.044% MoS2 were calculated. The latter totals are compiled from proven, probable
and possible resource criteria.


Mineral Processing and Metallurgical Testing

There have been no specific metallurgical tests for Sheep Mountain oxide ore. However,
copper recovery from such ore is a fairly standard procedure by heap leaching using sulfuric
acid, solvent extraction, and electrowinning technology (“SX-EW”). Copper oxides are less
expensive and typically more environmentally friendly to process than copper sulfides.


Mineral Resource and Mineral Reserve Estimates

As previously stated in Section 8.4, all estimates of “resources” and/or “reserves” from past
exploration are not considered to satisfy the requirements of National Instrument 43-101 or
the U.S. Securities and Exchange Commission (“SEC”). Currently, the combination of
previous exploration results and surface sampling do not provide sufficient data for
credible, confirmable reserve estimates, only for ore reserve speculation if future
subsurface exploration develops as hoped.


Interpretation and Conclusion

Principal conclusions are:

1.     The Sheep Mountain Property is essentially at the beginning of the post-discovery
       stage of exploration. The surface copper oxide areas have been identified but not
       characterized at depth. Copper-molybdenum sulfide anomalies have been found at
       depth but have not been assessed in any detail for a larger, unified deposit.
       Available historic data is spotty and incomplete.

2.     The copper oxides are remnants of secondary copper sulfides that were ultimately
       generated from Laramide porphyry copper-molybdenum mineralization similar to
                                     - 20 -

     the neighboring Castle porphyry deposit. The Castle mineralization is hosted by
     Proterozoic granitoids of the Bradshaw complex and much of the ore is largely
     controlled by fracturing along the northwest-trending Cow Creek fault.

3.   Primary alteration of Proterozoic granitoids within the oxide zone is weak to strong
     and includes sericitization, minor to moderate potassic alteration, bleaching of
     biotite, some chlorite and kaolinite and scattered quartz veinlets. A pronounced
     zone of quartz stockwork veins is found on the Burro Spring window near a zone
     copper oxide zone. The overall alteration of surface rocks at Sheep Mountain
     suggests they are at a distal position to a mineralizing center. Some of the kaolinite
     is associated with the secondary oxidation of sulfides.

4.   The Tertiary volcanics covering much of the Proterozoic granitoids hosting
     mineralization are post-mineral. Isolated Proterozoic windows within the Tertiary
     cover are horst blocks bounded mostly by northwest normal faults that parallel the
     Cow Creek fault. The faults may have been periodically active since the
     Precambrian. The brittle deformation along these fault zones in Proterozoic rocks
     likely prepared the rocks for later Laramide mineralization.

5.   Copper oxides, primarily malachite, chrysocolla, and cuprite, are found in discrete
     locations within four areas of Proterozoic rocks known as Red Creek window, South
     Red Creek Window, Ash Creek Window, and the Burro Spring window. The oxides
     occupy networks of fine fractures in gneissic alaskite and other metamorphosed
     granitoid subtypes.

6.   The oxide remnants of other sulfides such as pyrite are relatively minor on outcrop
     and suggest an original low sulfide content that would not have produced sufficient
     acid to leach all the copper, thus leaving oxide copper behind but sufficient enough to
     deposit secondary chalcocite in supergene blankets at a former water table.

7.   The supergene sulfide zones in UC-2, UC-16, SM-1 and SM-2 are evidence of
     copper leaching and redeposition. The oxidation and leaching on the exposed horsts
     could have occurred after the volcanics were eroded away and prior to the
     emplacement of the volcanics in the early-mid Tertiary. The supergene enrichment
     in grabens below the volcanics/Proterozoic unconformity likely happened prior to the
     volcanic cover as likely did the supergene enrichment at the Castle deposit.

8.   In UC-2 below the chalcocite blanket there is a mixed zone of sulfide and oxide
     copper that extends for at least 250 feet. Former fluctuating water table conditions
     have likely caused multiple episodes of leaching and redeposition of secondary
     copper sulfides and copper oxides and substantially enriched grades above protore
     conditions. As at the Castle ore deposit, the broad Red Creek and South Red Creek
     fault zones bounding the horst window may also control leaching and subsequent
     redeposition for enhanced grades of secondary copper mineralization. Thus far
     drilling has not targeted the fault zones at Sheep Mountain.

9.   At Sheep Mountain the northwest faults and associated horst and graben structure
     have brought blocks of the mineralized Proterozoic section to the surface or under
     less volcanic cover than at the nearby Castle porphyry deposit. The excessive depth
     to Castle mineralization has rendered the deposit economicallyunattractive to mine.
     At Sheep Mountain the horsts have brought sulfide and oxide mineralization close
                                       - 21 -

       to the surface for shallow mining and permitted a longer period of weathering,
       oxidation and supergene enrichment.

10.    A reliable resource evaluation for the Sheep Mountain Property cannot be currently
       carried out that would satisfy NI 43 -101 Technical Report requirements. Cyprus
       Metals Company’s 1995 preliminary assessment of the copper oxide potential at the
       Red Creek window resulted in a geologic potential of 40 to 50 million tons of ore
       grade copper oxide rock with a 2:1 stripping ratio. MinQuest has calculated a
       conservative resource prognosis of 20 million tons of copper oxide ore averaging
       0.75% copper for the Red Creek window area. Both of these estimates are
       conceptual, and it is yet uncertain whether the target will be delineated as a mineral
       resource. No resources have been estimated for the other copper anomalies.

11.    The copper oxide at Sheep Mountain has become an attractive ore target largely
       because of the rise in the price of copper over the last few years. Evaluation of the
       sulfide mineralization potential is also encouraged because of the rising price of
       molybdenum. The oxide ore processing costs would be relatively inexpensive
       compared with upgrading conventional sulfide ore.

Recommendations

Thus far, MinQuest’s work has included a re-evaluation of the earlier available exploration
data, field observations, and rock sampling. The evaluation has led to a commitment for a
program to assess the oxide copper potential as well as to examine the sulfide zone for
indications of an expanded and economic mineralized system. The following includes the
objectives and planned work that will be carried out for the first phase of exploration.

1.     Phase 1 exploration will emphasize subsurface assessment of mineralization and
       geology on the Red Creek and South Red Creek windows by drilling. The primary
       objective of the drilling program will to assess the grade and depth interval of the
       copper oxide zone and partial oxide/sulfide zone. Secondly, the borings, by
       necessity of advancing through the oxide zone, will extend through the supergene
       sulfide zone advance possibly to protore to assess grade, mineralization and
       alteration characteristics, geologic controls, and geochemistry. Thirdly the data will
       be scrutinized to determine a relationship of the mineralization within a larger
       porphyry copper deposit model. This will be done through an examination of
       alteration assemblages, geochemical signatures, and geological controls of the
       mineralization. Plans for Phase 2 will depend on the Phase 1 results.

2.     Two fences of three reverse circulation holes each are planned on the Proterozoic
       rocks of the Red Creek window and one fence of three holes is intended for the
       South Red Creek window. Holes depths will extend to 600 feet or penetrate an
       appropriate distance into sulfide mineralization. The holes will be drilled at angles
       to cross the near vertical, brittle structure zones that comprise the Red Creek and
       South Red Creek faults. The copper oxides are associated with these fracture zones.
       Drill roads to the sites are not completed, and the exact boring locations have yet to
       be determined.

3.     The Red Creek window holes will be located on the Proterozoic outcrop in the
       northwest quarter of section 18 in the vicinity of the Jackpot 16 and Mule 59, 60,
                                             - 22 -

              and 61 claims. The borings will be inclined to the southwest, near normal to the
              Red Creek fault zone.The projected oxide/supergene copper zone shown in the fault
              zone on Figure 8 will be emphasized as a drill target.

       4.     Holes on the South Red Creek window will be located in the southwest quarter of
              section 21 in the approximate area of the Ray 132 claim. Hole directions will be
              northeast at appropriate angles to intersect the South Red Creek fault zone.

       5.     Direct costs for Phase 1 exploration will include drilling, assaying, geology
              oversite, dozer work, bonding for land use, annual claim assessment fees, per diem
              costs for drill crew and geology staff, and miscellaneous costs. Estimated projected
              expenses for a 30 day drilling period are itemized on the table below. The drill
              assay costs include chip samples every 10 feet, a duplicate for every 25 samples,
              resampling as appropriate and selected multielement analyses.


                          Sheep Mountain, Phase 1 Cost Estimates
              Category            Units                                  Cost
              RC Drilling         54,00 fee @ $25/ft                $   135,000
              Assay Costs         620 samples @ $20/ea              $    12,400
              State bond          Roads, environ., etc              $    20,000
              Dozer cost          60 hours @ $150/hr                $     9,000
              Claim costs         Annual – 104 claims               $    14,040
              Geologist           35 days @ $300/day                $    10,500
              Per diem            4x30 days @ $75/day               $     9,000
              Miscellany                                            $     5,000

                                                            Total $ 214,940


4.4    The Company has no oil and gas operations.

5.     Selected Consolidated Financial Information

5.1    Annual Information

The information below should be read in conjunction with the management’s discussion and
analysis, the audited consolidated financial statements and related notes and other financial
information, all of which are available on the Internet at www.sedar.com. The following is for
the years ended:
                                                - 23 -

                                       Year Ended                Year Ended              Year Ended
                                      December 2005             December 2004           December 2003
                                                        $                         $                     $
Total Revenue                                       4,265                         -                     -
Profit (Loss) before income                         1,839                   (6,398)               (4,807)
taxes
Profit (Loss) before income                         0.001                   (0.002)               (0.002)
taxes per share
Profit (Loss)                                    1,839                      (6,398)               (4,807)
Profit (Loss) Per Share                          0.001                      (0.002)               (0.002)
Total Assets                                         5                           81                 2,009
Total Liabilities                               23,971                       25,886                21,421


5.2    Quarterly Information

       Summary of Quarterly Results

                                          YEARS ENDED DECEMBER 31
                          2006                                2005                             2004
                     Q1          Q2        Q1            Q2          Q3         Q4        Q3          Q4
                      $          $          $            $           $          $          $          $
Revenue                -          -          -           -           -        4,265        -         -
Net Income (loss)   (1,264)    (8,042)    (1,119)     (1,520)     (2,665)     1,839     (3,577)   (6,398)
profit
Net Income (loss)
profit per share    (0.001)    (0.001)    (0.001)     (0.001)     (0.001)     (0.001)   (0.001)   (0.001)


5.3    The Company has not declared or paid any dividends since its incorporation and does not
       foresee the declaration or payment of dividends in the near future. Any decision to pay
       dividends on the shares of the Company will be made by the board of directors of the
       Company on the basis of the Company’s earnings, financial requirements and other
       conditions existing at such future time.

5.4    The Company prepares its financial statements in accordance with Canadian generally
       accepted accounting principles.

6.     Management Discussion and Analysis

This discussion should be read in conjunction with the Company’s financial statements which
have been prepared in accordance with generally accepted accounting principles and are as
follows:

Results of Operations

The Company incurred a loss of $9,306 for the six-months ended June 30, 2006, compared with
a net lossof $1,520 for the six-months ended June 30, 2005.
                                             - 24 -


The Company did not incur management or consulting fees for the six-months ended June, 2006
or 2005. The 2006 numbers are expected to increase as the Company reorganizes its business
and hires individuals to manage the Company.

The Company did not incur shareholder information costs for the six-months ended June 30,
2006 or 2005.

Administration expenses increased to $1,500 for the six-months ended June 30, 2006 (2005:
$Nil).

Accounting and legal fees increased to $1,565 for the six-months ended June 30, 2006 from $750
in 2005. The increase is mainly due to accounting fees.

The Company incurred $1,145 in travel and promotion expenses during the period under review.

Office and general expenses increased during the period under review by $361 and Bank charges
and interest increased by $426 as a result of reactivating the Company.

Transfer agents fees increased to $3,789 for the six-months period compared to $Nil in 2005 due
to reactivation.

Management foresees significant changes to the expenses during the coming quarter due to
reactivating the Company. However, should the Company not receive the required funding all
on-going expenditures would have to be reviewed and appropriate action taken.

Related Party Transactions

During the six months ended June 30, 2006, the Company entered into the following transactions
with related parties:

(a)    Paid or accrued $1,000 (2005: $Nil) in administration expenses and $1,145 in travel and
       promotion to a director of the Company.

As at June 30, 2006, the Company was indebted to Arthur Jackson, a former director of the
Company, in the amount of $10,000.

As at June 30, 2006, the Company was indebted to Chartwell Capital Corporation, a corporation
controlled by the estate of Guy Ball, a former director of the Company, in the amount of
$10,000. The Company has agreed to convert the amount of the debt into 50,000 common shares
in the capital of the Company at a price of $0.20.

Changes in Accounting Policies including Initial Adoption

There were no changes in the accounting policies for the period ended June 30, 2006.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.
                                                          - 25 -

Financial Instruments and Other Instruments

The Company’s financial instruments consist of cash and cash equivalents, marketable securities,
sundry receivables, advance receivable and accounts payable and accrued liabilities. It is
management’s opinion that the Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments and that the fair values of these financial
instruments approximate their carrying values.

Other Information

Additional Disclosure for Venture Companies without Significant Revenue

                                                           Six Months Ended           Year Ended               Year Ended
                                                             June 30, 2006         December 31, 2005        December 31, 2004
 Mineral Properties
   Capitalized mineral properties and deferred
   exploration expenditures                                     $    117,635             $          5             $           5

      Corporate expenses                                        $      9,306             $      1,712             $      1,932

      Total assets                                              $    266,798             $          5             $           5

                                                             June 30, 2006         December 31, 2005        December 31, 2004
                                                              Capitalized             Capitalized              Capitalized
 Mineral properties and deferred expenditures
 Acquisition Costs                                              $     11,643             $          5             $       -
 Exploration expenditures,
   Geological expenses                                          $    105,995             $          5             $       -

                                                                $    117,638             $          5             $       -

 Corporate Expenses                                          June 30, 2006         December 31, 2005        December 31, 2004

 Stock-based compensation                                       $          -             $           -            $          -
 Office and general                                                      361                          -                    487
 Professional Fees (Accounting, audit, legal)                          2,065                    1,712                    1,445
 Administration expenses                                               1,500                        -                        -
 Bank charges and interest                                               446                        -                        -
 Transfer agents fees                                                  3,789                        -                        -
 Travel and promotion                                                  1,145                        -                        -

                                                                $      9,306             $      1,712             $      1,932

 Outstanding share data                                      June 30, 2006         December 31, 2005        December 31, 2004

 Issued and outstanding common shares                               5,041,072                2,286,072                2,286,072
 Outstanding options to purchase common shares                              -                        -                        -
 Outstanding warrants to purchase common shares                      1,900,00                       -(1)                      -
 Issuable and conversion of debt                                            -                 450,000(2)               450,000(1)

Notes:
(1)       Does not include 1,190,000 common share purchase warrants issued after December 31, 2005. Each warrant entitles
          the holder to acquire one common share at a price of $0.20 on or before May 2, 2008.
(2)       The Company has previously agreed to issue 450,000 common shares in the capital of the Company to satisfy certain
          indebtedness.
                                                - 26 -


The following table sets forth a breakdown of material components of the general and
administration costs, capitalized or expensed exploration and development costs of the Company
for the periods indicated.

                                       Twelve month period     Twelve month period       Twelve month period
                                       ended December 31,    ended December 31, 2004   ended December 31, 2003
                                              2005


General and administrative:
Accounting and Audit fees                $          1,712 $                  1,445 $                   1,712
Realty Taxes and Expenses                             674                    4,385                     2,897
Office and general                                      -                      487                        65
Bank Charges and Interest                              40                       81                       133

Exploration Expenditures

The Company has not conducted any exploration work on its mineral properties during the past 3
years.

Exploration Activities

The Company’s mining claims, which include the former Barry-Hollinger Gold Mine and
tailings, are valued at a nominal value. All expenditures required to keep the claims in good
standing are expensed as incurred.

Stock-Based compensation

The Company does not currently have a stock option plan and no options to purchase common
shares of the Company are currently outstanding.

Dividends

The Corporation has neither declared nor paid any dividends on its common shares. The
Corporation intends to retain its earnings, if any, to finance growth and expand its operation and
does not anticipate paying any dividends on its common shares in the foreseeable future.

Cautionary Note Regarding Forward Looking Statements

This Quotation Statement include "forward-looking statements", within the meaning of
applicable securities legislation, which are based on the opinions and estimates of management
of the Company and are subject to a variety of risks and uncertainties and other factors that could
cause actual events or results to differ materially from those projected in the forward looking
statements. These forward looking statements are based on current expectations and involve
risks and uncertainties that could cause actual events or results to differ materially from
estimated or anticipated events or results reflected in the forward looking statements. Examples
of such forward looking statements include statements regarding financial results and
expectations for 2006, including, but not limited to, forecast levels of exploration, demand for
metals, currency exchange rates or may be based on assumptions and/or estimates related to
                                                          - 27 -

future economic, market and other conditions. Factors that could cause actual results,
developments or events to differ materially from those anticipated include, among others, the
factors described or referred to elsewhere herein, and include unanticipated and/or unusual
events. Many of such factors are beyond Lebon’s ability to control or predict. Actual results
may differ materially from those anticipated. Readers of this MD&A are cautioned not to put
undue reliance on forward looking statements due to their inherent uncertainty. Lebon disclaims
any intent or obligation to update publicly any forward looking statements, whether as a result of
new information, future events or results or otherwise. These forward looking statements should
not be relied upon as representing management’s views as of any date subsequent to the date of
this MD&A.

7.        Market for Securities

7.1       There is currently no market through which the securities of the Company may be sold.

8.        Consolidated Capitalization

8.1       The following table sets out the authorized capital and the issued and outstanding share
          capital of the Company:

                                                                   Outstanding as at              Outstanding as at
 Designation of Securities         Amount Authorized               December 31, 2005               June 30, 2006
                                                                       (audited)                    (unaudited)

         Common Shares                   unlimited                     2,286,072(1)                    5,117,687
                                                                       ($181,740)                     ($449,740)
Notes:
(1)       Does not include 2,380,000 units comprised of one common share and one-half of a common share purchase warrant.


          As at June 30, 2006 the Company had no long term debt.

9.        Options to Purchase Securities

9.1       The Company does not currently have a stock option plan.

10.       Prior Sales

10.1      The Company is authorized to issue an unlimited number of common shares of which, as
          at the date hereof, 5,127,687 common shares are issued and outstanding.

10.2      On May 2, 2006 the Company sold 2,380,000 Units of the Company at a price of $0.10
          per Unit through private placement transactions. Each Unit was comprised of one
          common share in the capital of the Company and one half of a common share purchase
          warrant. Each whole warrant entitling the holder to acquire a common share at a price of
          $0.20 on or before May 2, 2008.
                                                           - 28 -


11.      Escrowed Securities

11.1     Pursuant to an escrow agreement dated October 6, 2006 between Robert Sibthorpe, Andrew
         Cook, Chris Irwin and Capital Transfer Agency Inc., an aggregate of 420,030 common
         shares were paced in escrow to be released as follows:

Name                  April 6, 2007       Oct. 6, 2007    April 6, 2008      Oct. 6, 2008    April 6, 2009       Oct. 6, 2008
Robert Sibthorpe             27,525            27,525            27,525             27,525             27,525          27,525
Andrew Cook                  30,000            30,000            30,000             30,000             30,000          30,000
Chris Irwin                  12,480            12,480            12,480             12,480             12,480          12,480

12.      Principal Shareholders

12.1     To the knowledge of the directors and senior officers of the Company, no person or
         Company beneficially owns, directly or indirectly, or exercises control or direction over,
         voting securities carrying more than 10% of the voting rights attached to any class of
         voting securities of the Company.

13.      Directors and Officers

13.1     The following table sets forth the names and municipalities of residence of the directors
         and officers of the Company, their positions held with the Company and their principal
         occupations.

                                                                                                          Shares Beneficially
                                                                                                         Owned or Controlled
    Name and                                                                                             Directly or Indirectly
   Municipality of      Position with      Principal Occupation for the past five                         upon completion of
    Residence           the Company                       years                       Director Since       the Transaction


Andrew Cook(2)          Director, Chief    Chief Operating Officer of Black Pearl     April 30, 2005            200,000
Vancouver, British      Executive          Minerals Consolidated Inc.
Columbia                Officer and
                        President

Robert Sibthorpe(2)     Director and       President, Centram Exploration Ltd.        April 30, 2005            183,500
Vancouver, British      Chief Financial
Columbia                Officer
                                                             - 29 -

                                                                                                            Shares Beneficially
                                                                                                           Owned or Controlled
       Name and                                                                                            Directly or Indirectly
      Municipality of      Position with     Principal Occupation for the past five                         upon completion of
       Residence           the Company                      years                       Director Since       the Transaction

                                             Mr. Irwin has been the President of
Christopher Irwin(1)(2)    Secretary and                                                 September 29,             83,200
                                             Irwin Professional Corporation, a
Toronto, Ontario           Director                                                          2006
                                             corporation providing legal services,
                                             since August, 2006. Prior thereto he
                                             was an associate of Wildeboer Dellelce
                                             LLP, Barristers and Solicitors, from
                                             January, 2004 to August, 2006. Prior to
                                             that he was an associate of Power Budd
                                             LLP, Barristers and Solicitors, from
                                             January, 2001 to December, 2003.
                                             Prior thereto he was an associate of
                                             Boyle & Company, Barristers and
                                             Solicitors from December, 1998 to
                                             December, 2000. Mr. Irwin holds an
                                             LL.B from the University of New
                                             Brunswick and has been a member of
                                             the Law Society of Upper Canada since
                                             1996.
Notes:
(1)        Mr Irwin was an officer of Black Pearl Mineral Consolidated Inc. which was subject to a cease trade order resulting
           from failure to file financial statements in July 2002 and was an officer of Straight Forward Marketing Inc. which was
           subject to a temporary management cease trade order resulting from failure to file financial statements in October
           2004.
(2)        Members of the Audit Committee;


13.2       State the period or periods during which each director has served as a director and
           when his or her term of office will expire.

           The term of the office of each of the present directors expires at the annual meeting, or
           until a successor is elected or appointed. Currently, the board of directors consists of
           three persons.

13.3       State the number and percentage of securities of each class of voting securities of the
           Issuer or any of its subsidiaries beneficially owned, directly or indirectly, or over
           which control or direction is exercised by all directors and executive officers of the
           Issuer as a group.

           466,700 common shares (9.1%) of the Issuer are controlled by the directors and executive
           officer of the Issuer as a group.

13.4       Disclose the board committees of the Issuer and identify the members of each
           committee.

           The Issuer has an Audit Committee composed of Andrew Cook, Robert Sibthorpe and
           Chris Irwin.

13.5       If the principal occupation of a director or officer of the Issuer is acting as an officer
           of a person or company other than the Issuer, disclose the fact and state the
           principal business of the person or company.
                                              - 30 -



       The principal business and association of each officer and director is stated in the chart in
       13.1 above and in 13.10(b) below.

13.6   If a director or officer of the Issuer or a shareholder holding a sufficient number of
       securities of the Issuer to affect materially the control of the Issuer, is, or within 10
       years before the date of the Listing Statement has been, a director or officer of any
       other Issuer that, while that person was acting in that capacity,

       (a)     was the subject of a cease trade or similar order, or an order that denied the
               other Issuer access to any exemptions under Ontario securities law, for a
               period of more than 30 consecutive days, state the fact and describe the basis
               on which the order was made and whether the order is still in effect; or

               No directors of the Issuer or shareholder holding a sufficient number of securities
               of the Issuer to affect materially the control of the Issuer, is, or within 10 years
               before the date of the Listing Statement has been, a director or officer of any other
               Issuer that, while that person was acting in the capacity was the subject of a cease
               trade or similar order, or an order that denied the other Issuer access to any
               exemptions under Ontario securities law, for a period of more than 30 consecutive
               days, with the exception of Chris Irwin, as set out in Note 1 to the chart in 13.1
               above.

       (b)     became bankrupt, made a proposal under any legislation relating to
               bankruptcy or insolvency or was subject to or instituted any proceedings,
               arrangement or compromise with creditors or had a receiver, receiver
               manager or trustee appointed to hold its assets, state the fact.

               None.

13.7     Describe the penalties or sanctions imposed and the grounds on which they were
         imposed or the terms of the settlement agreement and the circumstances that gave
         rise to the settlement agreement, if a director or officer of the Issuer, or a
         shareholder holding sufficient securities of the Issuer to affect materially the
         control of the Issuer, has

         (a)   been subject to any penalties or sanctions imposed by a court relating to
               Canadian securities legislation or by a Canadian securities regulatory
               authority or has entered into a settlement agreement with a Canadian
               securities regulatory authority; or

               None.

         (b)   been subject to any other penalties or sanctions imposed by a court or
               regulatory body that would be likely to be considered important to a
               reasonable investor making an investment decision.

               None.
                                                - 31 -


13.8    If a director or officer of the Issuer, or a shareholder holding sufficient securities of
        the Issuer to affect materially the control of the Issuer, or a personal holding
        company of any such persons has, within the 10 years before the date of the Listing
        Statement, become bankrupt, made a proposal under any legislation relating to
        bankruptcy or insolvency, or been subject to or instituted any proceedings,
        arrangement or compromise with creditors, or had a receiver, receiver manager or
        trustee appointed to hold the assets of the director or officer, state the fact.

        Not to the Issuer’s knowledge.

13.9    Disclose particulars of existing or potential material conflicts of interest between the
        Issuer or a subsidiary of the Issuer and a director or officer of the Issuer or a
        subsidiary of the Issuer.

        There are no existing or potential material conflicts of interest between the Issuer or a
        subsidiary of the Issuer and a director or officer of the Issuer or a subsidiary of the Issuer.
        Conflicts of interest may arise as a result of the directors or officers or management of the
        Issuer also holding positions of directors and/or officers of other companies. Some of the
        directors and officers have been and will continue to be engaged in similar business to the
        Issuer, and situations may arise where the directors and officers will be in direct
        competition with the Issuer.

13.10    Management — In addition to the above provide the following information for
         each member of management:

         (a)   state the individual's name, age, position and responsibilities with the Issuer
               and relevant educational background,

               Andrew Cook, 46, Chief Executive Officer and President of the Issuer, overseeing
               all aspects of company business. Mr. Cook has a degree from Capilano College
               and has passed the Canadian Securities Course and the registered representative
               courses for the IDA.

               Robert Sibthorpe, 58, Chief Financial Officer of the Issuer, overseeing the
               exploration of the Company’s properties. Mr. Sibthorpe has an M.B.A. and
               B.Sc.(Geol) from the University of Toronto.

         (b)   state whether the individual works full time for the Issuer or what
               proportion of the individual's time will be devoted to the Issuer,

               Andrew Cook: 50% of his time.

               Robert Sibthorpe: 20% of his time.

               Chris Irwin: 5% of his time.

         (c)   state whether the individual is an employee or independent contractor of the
               Issuer,
                                                      - 32 -

                Each of Andrew Cook and Robert Sibthorpe are independent contractors of the
                Company.

          (d)   state the individual's principal occupations or employment during the five
                years prior to the date of the Listing Statement, disclosing with respect to
                each organization as of the time such occupation or employment was carried
                on:

                (i)       its name and principal business;

                (ii)      if applicable, that the organization was an affiliate of the Issuer;

                (iii) positions held by the individual; and

                (iv) whether it is still carrying on business, if known to the individual;

ANDREW COOK:

                                 From            To                                  Affiliate   Still Carrying
Name of Company                                                   Position           to Issuer    on Business
                               MM    YY    MM         YY                               Y/N?            Y/N?
Black Pearl Minerals           09     04    PR    ES       Chief Operating Officer       N              Y
Consolidated Inc.
Rare Earth Metals Corp.        09     96    05        04   CEO, Chairman,               N              Y
                                                           Director
Centram Explorations Ltd.      05     03    **        04   CEO, Chairman,               N              Y
                                                           Director
Scorpio Mining Corp.           07     99    07        02   Chairman, Director           N              Y



ROBERT SIBTHORPE:

                                 From            To                                  Affiliate   Still Carrying
Name of Company                                                   Position           to Issuer    on Business
                               MM    YY    MM         YY                               Y/N?            Y/N?
Black Pearl Minerals           03     04    PR    ES       President and Director        N              Y
Consolidated Inc.
Ivanhoe Mines                  03     01    01        03   Senior Vice-President        N              Y
Cannacord Capital Corp.        01     00    03        01   Corporate Finance            N              Y



          (e)   describe the individual's experience in the Issuer's industry; and

                Andrew Cook has over 15 years experience in the mining industry.

                Robert Sibthorpe has over 30 years experience in the mining industry.

          (f)   state whether the individual has entered into a non-competition or non-
                disclosure agreement with the Issuer.
                                                            - 33 -


                      None of the directors or officers of the Issuer have entered into non-competition
                      or non-disclosure agreements with the Issuer.

 14.       Capitalization
 14.1      Issued Capital
                                                        Number of        Number of        % of Issued           % of
                                                         Securities      Securities      (non-diluted)         Issued
                                                       (non-diluted)   (fully-diluted)                     (fully diluted)
Public Float

Total outstanding (A)                                5,117,687         6,861,087         99.8%            99%

Held by Related Persons or employees of the
Issuer or Related Person of the Issuer, or by
persons or companies who beneficially own or
control, directly or indirectly, more than a 5%
voting position in the Issuer (or who would
beneficially own or control, directly or
indirectly, more than a 5% voting position in
the Issuer upon exercise or conversion of other
securities held) (B)
                                                     420,030           476,630           0.2%             1%

Total Public Float (A-B)                             4,697,657         6,384,457         100%             100%

Freely-Tradeable Float

Number of outstanding securities subject to
resale restrictions, including restrictions
imposed by pooling or other arrangements or in
a shareholder agreement and securities held by
control block holders (C)
                                                     420,030           476,630           0.2%             6.9%
Total Tradeable Float (A-C)                          4,697,657         6,384,457         91.6%            92.1%

 Public Securityholders (Registered)

           Instruction: For the purposes of this report, "public securityholders" are persons other
           than persons enumerated in section (B) of the previous chart. List registered holders only.

  Class of Security

  Size of Holding                                 Number of holders                Total number of securities


  1 – 99 securities                                                     0                                            0

  100 – 499 securities                                                  0                                            0

  500 – 999 securities                                                 25                                       12,615

  1,000 – 1,999 securities                                             66                                       66,800

  2,000 – 2,999 securities                                              6                                       12,500

  3,000 – 3,999 securities                                              1                                         3,000
                                                  - 34 -

 Class of Security

 Size of Holding                        Number of holders               Total number of securities
 4,000 – 4,999 securities                                      5                                       21,300

 5,000 or more securities                                   31(1)                                    3,006,890

                                                             131                                     3,101,805
Notes:
(1)    includes CDS & Co. which includes 600,217 common shares which are held for various beneficial holders
       by 6 market participants.



Public Securityholders (Beneficial)

         Instruction: Include (i) beneficial holders holding securities in their own name as
         registered shareholders; and (ii) beneficial holders holding securities through an
         intermediary where the Issuer has been given written confirmation of shareholdings. For
         the purposes of this section, it is sufficient if the intermediary provides a breakdown by
         number of beneficial holders for each line item below; names and holdings of specific
         beneficial holders do not have to be disclosed. If an intermediary or intermediaries will
         not provide details of beneficial holders, give the aggregate position of all such
         intermediaries in the last line.
 Class of Security

 Size of Holding                        Number of holders               Total number of securities


 1 – 99 securities                                             0                                            0

 100 – 499 securities                                          0                                            0

 500 or more securities                                        0                                            0

 1,000 – 1,999 securities                                      0                                            0

 2,000 – 2,999 securities                                      0                                            0

 3,000 – 3,999 securities                                      0                                            0

 4,000 – 4,999 securities                                      0                                            0

 5,000 or more securities                                     17                                     2,693,075

                                                              17                                     2,693,075




Non-Public Securityholders (Registered)
         Instruction: For the purposes of this report, "non-public securityholders" are persons
         enumerated in section (B) of the issued capital chart.
                                                            - 35 -

 Class of Security

 Size of Holding                                Number of holders                    Total number of securities


 1 – 99 securities                                                         0                                             0

 100 – 499 securities                                                      0                                             0

 500 – 999 securities                                                      0                                             0

 1,000 – 1,999 securities                                                  0                                             0

 2,000 – 2,999 securities                                                  0                                             0

 3,000 – 3,999 securities                                                  0                                             0

 4,000 – 4,999 securities                                                  0                                             0

 5,000 or more securities                                                  3                                      420,030

                                                                           3                                      420,030


14.2     The following table details securities convertible or exchangeable into any class of
quoted securities of the Company:

Description of Security (include                     Number of convertible /              Number of quoted securities
conversion / exercise terms, incl.                   exchangeable securities               issuable upon conversion /
conversion / exercise price)                              outstanding                               exercise

Warrants entitling the holder thereof to purchase
one common share on or before May 2, 2008 at a                 1,180,000                              1,180,000
price of $0.20.


14.3       There are no quoted securities of the Company reserved for issuance other than as set out
           in Section 14.2.

15.        Executive Compensation

15.1

                                     Annual Compensation                       Long-Term Compensation

                                                                                 Awards               Payouts

                                                                        Securities
                                                                          Under        Shares or
                                                                         Options      Units Subject
      Name and       Year                                                 SARS         to Resale        LTIP         All Other
      Principal      ending    Salary       Bonus     Other Annual       Granted      Restrictions     Payouts     Compensation
       Position      Dec. 31      ($)        ($)      Compensation         (#)             (#)           ($)              ($)
Richard Kern(1)         2005       Nil        Nil          Nil             Nil             Nil           Nil            Nil
President and
CEO
Andrew Cook             2005       Nil        Nil          Nil             Nil             Nil           Nil            Nil
CFO(2)(3)
Notes:
(1)        Mr. Richard Kern resigned as a director, President and Chief Executive Officer of the Company on February 2, 2006.
                                                      - 36 -

(2)    Mr. Andrew Cook was appointed Chief Executive Officer and President of the Company on February 2, 2006.
(3)    Mr. Robert Sibthorpe was appointed Chief Financial Officer of the Company on February 2, 2006.


16.    Indebtedness of Directors and Executive Officers

16.1   No director or senior officer has been indebted to the Company since the beginning of its
       last completed fiscal year.

17.    Risk Factors

17.1   An investment in the securities of the Company is speculative and subject to certain risk
       factors, including the factors set out below:

       Marketability

       There is no trading market for the securities of the Company (the “Securities”). The
       Securities are speculative. The Company does not have a track record and there is little
       probability of short term profit. Subscribers may not be able to sell the Securities.
       Investors in the Securities should be prepared to accept the risks inherent in the natural
       resource exploration business and to risk losing all or part of their investment or to face
       the possibility of no return thereon.

       Environmental Regulations

       Environmental regulation is becoming increasingly stringent and costs and expenses of
       regulatory compliance are increasing. The mining industry in Canada and the United
       States is subject to legislation at both the federal and provincial levels concerning the
       protection of the environment. In particular, such legislation imposes high standards on
       the mining industry to reduce or eliminate the effects of wastes generated by extraction
       and processing operations and subsequently deposited on the ground or emitted into the
       air or water. Accordingly, the design of mines and mills and the conduct of overall
       extracting and processing operations is subject to the restrictions contained in such
       legislation. In addition, the construction, development and operation of a mine, mill and
       refinery typically entail compliance with applicable environmental legislation and/or
       review processes and the obtaining of land use and other permits, water licences and
       similar authorizations from various government agencies. In particular, legislation is in
       place for lands under federal jurisdiction or located in certain provinces which provides
       for the preparation of costly environmental impact assessment reports prior to the
       commencement of any mining operations. These reports entail a detailed technical and
       scientific assessment as well as a prediction of the impact on the environment of
       proposed development. Any failure to comply with the legislation referred to above may
       result in orders being issued thereunder which may cause operations to cease or to be
       curtailed or may require installation of additional facilities or equipment. Violators may
       be required to compensate those suffering loss or damage by reason of its mining
       activities and may be fined and/or imprisoned if convicted of an offence under such
       legislation.

       Base Metal, Gold Price and Volume Volatility
                                     - 37 -

The principal business of the Company is the exploration and development of base metal
and gold properties. The ability to attract capital to the Company is largely dependent on
movements in the price of gold. Gold prices fluctuate on a daily basis and are affected by
a number of factors beyond the control of the Company. If as a result of a sustained
decline in gold prices, financings were not available to meet cash operating costs, the
feasibility of continuing operations would be evaluated and if warranted, would be
discontinued. Although gold and base metal prices cannot be predicted with certainty, the
Company monitors supply/demand conditions, among other issues, all of which affect
world prices.

Nature of Mineral Explorations and Development Projects

Mineral exploration is speculative in nature, involves risks and frequently appears to be
non-productive. There is no assurance that the Company’s exploration efforts will be
successful. Success in establishing reserves and resources is a result of a number of
factors, including the quality of management, level of geological and technical expertise,
the quality of land available for exploration and other factors. Once mineralization is
discovered, it may take several years in the initial phases of drilling until production is
possible, during which time the economic feasibility of production may change.
Substantial expenditures are required to establish proven and probable reserves through
drilling and bulk sampling to determine the optimal metallurgical process to extract the
metals from the ore and, in the case of new properties, to construct mining and processing
facilities. Because of these uncertainties, no assurance can be given that the Company’s
exploration programs will result in the establishment or expansion of resources or
reserves.

Licenses and Permits

The operations of the Company require licenses and permits from various government
authorities. The Company believes that it holds all necessary licenses and permits under
applicable laws and regulations and believes it is presently complying in all material
respects with the terms of such licenses and permits. However, such licenses and permits
are subject to change in various circumstances. There can be no guarantee that the
Company will be able to obtain or maintain all necessary licenses and permits that may
be required to explore and develop its properties, commence construction or operation of
mining facilities and properties under exploration or development or to maintain
continued operations that economically justify the cost.

Critical Accounting Policies

Preparing financial statements requires management to make estimates and assumptions
that affect the reported results. Management’s estimates are based on historical
experience and other assumptions that are believed to be reasonable under the
circumstances. The Company’s accounting policies are those that affect the Financial
Statements of the Company and are summarized in the notes to the financial statements.
The Company’s critical accounting policy is the capitalization of exploration
expenditures and the recognition of impairment of those assets. The decision to capitalize
exploration expenditures and the timing of the recognition that capitalized exploration is
                                            - 38 -

       unlikely to have future economic benefits can materially affect the reported earnings of
       the Company.

18.    Promoters

18.1   Robert Sibthorpe and Andrew Cook may be considered promoters of the Company. The
       promoters have not received, directly or indirectly, any consideration or compensation for
       acting as the promoters.

19.    Legal Proceedings

19.1   There are no legal proceedings threatened or currently pending against the Company.

20.    Interest of Management and Others in Material Transactions

20.1 No person who has been a director or an officer of the Company at any time since the
     beginning of its last completed financial year or any associate of any such director or
     officer has any material interest, direct or indirect, by way of beneficial ownership of
     securities or otherwise, in any matter to be acted upon at the meeting, except as disclosed
     in this Listing Statement.

21.    Auditors, Transfer Agents and Registrars

21.1   The auditor of the Company is Katherine Plante, Chartered Accountant, 318 Mississauga
       Street West, Orillia, Ontario L3V 3C1.

21.2   The transfer agent and registrar of the Company is Equity Transfer Services Inc., Suite
       420, 120 Adelaide Street West, Toronto, Ontario M5H 4C3.

22.    Material Contracts

22.1   The only material contract entered into by the Company during the two years preceding
       the date hereof, other than in the ordinary course of business, is the Option Agreement
       dated March 7, 2004 between MinQuest Inc. and the Company relating to the Sheep
       Mountain Property in Yavapai County, Arizona, U.S.A;

       Copies of the foregoing agreement may be obtained from the Company upon request.

23.    Interest of Experts

23.1   No experts have any interest direct or indirect in the Company’s property.

24.    Other Material Facts

24.1   There are no additional material facts about the Company and its securities that are not
       disclosed under the preceding items. This Listing Statement contains full, true and plain
       disclosure of all material facts relating to the Company and its securities.
                                           - 39 -

25.    Financial Statements

25.1   The following financial statements are enclosed:

       (1)    audited financial statements of the Company for the years ended December 31,
              2005 and 2004; and
       (2)    unaudited interim financial statements of the Company for the three month period
              ended March 31, 2006 and the six month period ended June 30, 2006.
                                           - 40 -




CERTIFICATE OF THE ISSUER

Pursuant to a resolution duly passed by its Board of Directors, Lebon Gold Mines Limited,
hereby applies for the Listing of the above mentioned securities on CNQ. The foregoing
contains full, true and plain disclosure of all material information relating to Lebon Gold Mines
Limited. It contains no untrue statement of a material fact and does not omit to state a material
fact that is required to be stated or that is necessary to prevent a statement that is made from
being false or misleading in light of the circumstances in which it was made.

Dated at      Toronto

this   29th    day of September, 2006.




(Signed)                                            (Signed)
Andrew Cook, President                              Robert Sibthorpe, Chief Financial Officer

								
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