Property tour report: Kodiak Exploration July 8-10th 2008.

The following is a detailed account of my observations during a recent property tour with Kodiak Exploration Ltd. I am a shareholder of KXL. I attended the tour as an invited guest, and my direct travel expenses were paid by the company. I received no form of compensation for my participation, nor will I receive any compensation for my time and for the presentation of this report. The information in this report is believed to be accurate, but may have errors or omissions. It is not to be interpreted as anything more than a personal opinion and must not be considered a recommendation nor advice for individual trading decisions. I purchased more shares of KXL on the day before the tour commenced, and I have voluntarily committed to refrain from trading shares in KXL for several weeks until all of the information that was presented during the tour has been fully disclosed by the company.

I arrived at Geraldton municipal airport via private plane from Thunder Bay, ON, as part of a larger group including mining analysts, journalists, and senior management personnel for Kodiak Exploration. Our group traveled by truck through town and I had the opportunity to meet several residents of the town during a short visit. Every person that I spoke to was very positive about the resurgence of mining activity in the district, and the direct interaction with Kodiak as a business. I have been advised that whenever possible the company makes every effort to redirect employment and purchasing through to the local community, and that is consistent with my own discussions.

Infrastructure and access throughout the project areas was excellent, with all weather roads, hydroelectric lines running right through much of the property, and community services in close proximity. Most of the property area is suitable for year-round exploration activity.

The first stop on the tour was the Bush Lake corporate offices and camp, where many of the field staff resides. The core shack is located there, and a great deal of development work has been completed since my first visit in October. The offices are modern and fully equipped to allow planning and direction of exploration activity in real time, and just 20 minutes from the project area at Hercules.

We were provided the opportunity to walk through the core shack while core logging and photographing of the core samples was underway. To preserve sample integrity we were not permitted to remain in the building while the samples were cut and prepared for shipment to assay labs.

A detailed presentation on the project geology for Hercules was provided by VP-Exploration Brian Maher, with a full question and answer session. The exploration work is ongoing and new information is being learned everyday in real time. The highlight of the discovery has been the Golden Mile zone and it remains the focus of the drilling work, but many new structures have also been highlighted from the interpretation of Magnetic geophysical imaging that is a very effective exploration tool.

We were able to review a Mag image of the property, identifying the extent of the Elmhurst Lake intrusion, and indicating the veins that have been mapped so far. Many of these veins have already been stripped and surface sampled with positive results to verify the effectiveness of the process, and drilling work was ongoing at several of them.

Kodiak has now evolved from being a discovery story, to a resource definition story. As such, individual drill core data – even high grade assays – are less important to the overall evolution of the program. Therefore the company has made the decision to release assays in large batches as they relate to entire discovery zones. This may lead to disgruntled impatient investors but it is more appropriate for the program to present significant milestones instead of just local drill data going forward.

We could clearly see some very interesting targets on the maps that were shown, where drills will be working as the summer continues. Everything is being done in a systematic process, and not just to generate exciting high grade numbers for investors. Therefore a regular step out laterally and to depth is ongoing, and this is also bearing dividends in terms of outlining new info and a few surprise discovery zones from the original veins.

One thing that stood out during the entire presentation is the high degree of knowledge represented by the project geologists, and the tremendous confidence that they have for success going forward. The fact that such high caliber individuals have chosen to work with Kodiak is a validation of the potential for the company. All geos share a desire to be part of a world class discovery and they will gravitate towards the projects that have the best potential to achieve that.

Many thousands of meters of core are on storage at Bush Lake and we could review drill cores that have been previously reported, observing the wide intervals of mineralization and at least two samples with visible gold in the core. The company is preparing a much larger core storage area, sufficient to handle many hundreds of thousands of meters of core. This is an indication of the commitment for Kodiak to be very active in the region for a long time to come.

We also toured the main field barracks for the company, where employees can stay for several weeks at a time in close proximity to the properties. This is a former motel that has been purchased by the company and refurbished to allow a large group to live in comfort. There is a large kitchen area staffed with a professional chef, a weight room, showers, and a common area with a big screen television. The purchase of this facility has allowed the company to save hundreds of thousands of dollars in operating costs per year and it is an excellent investment for a company that has committed to this project area for many years into the future.

The field crews were well trained and highly motivated. It is very clear that the company takes very good care of their employees and the crews were active for long hours each day, rain or shine, year round. The environment in a mining camp can become stressed and it is important that the field crews are given the opportunity to relax and unwind whenever possible. The main camp area provides that. The meals served during our stay were the same meals that the employees ate, and it was excellent.

Two helicopters were contracted to allow us to tour many of the projects ongoing in the district. The most significant item from my perspective as an investor and journalist is the transformation of the company from a focus on one great project at Hercules, to the focus on an entire district that has only just begun to become appreciated as a world class gold camp. While Hercules itself is a huge project with tremendous potential, 100 percent controlled by Kodiak, the additional land that has been acquired in the surrounding district since then has also added great potential for the company.

We were shown a map where most of the property holdings are indicated, along with some of the individual projects that are underway within the district. It is clear that Kodiak has become a project generator and the entire management strategy is now directed at seizing the advantage of the dominant landholder in a huge prolific district. Rather than just have the company success defined by the success at Hercules, Kodiak is a vehicle offering investors leverage to many projects in several areas, with several minerals represented.

The geology of these targets is also diverse, with a classic mesothermal lode gold vein system at Hercules, which is intusive hosted. There is also a huge district of greenstone Archean age rock that has several well defined targets controlled by the company, along trend from several past producing high grade mines elsewhere in the district. We were also able to tour a banded iron formation deposit with well developed alteration at surface, and a separate project with a wide vein target that has the potential to host a bulk tonnage gold deposit.

Any of these prospects could become an extremely attractive flagship project for another junior that would be sufficient to support a full scale exploration program. To have so many great properties all within the same district, controlled by the same company, and with the same exploration team guiding exploration, is unique in the Canadian junior mining scene today.

I doubt that very many investors truly appreciate the significance of the property holdings for the company. I know I did not before my tour. The importance of this as part of the overall strategy is the management can direct and advance these projects individually up the value curve, with the option to develop them or vend them to another player at a huge profit for shareholders, and still have other great projects in early stages to pick up and replicate the process. It should also be pointed out that all exploration success in the district will build greater value for the other projects that are controlled.

Kodiak remains on the acquisition trail, and staking teams are active. The current property area compares well with the total property area of the entire Cadillac Break mining camp in Quebec, one of the most prolific mining districts in Canada. No single company controls more than a fraction of the Cadillac Break, but Kodiak is the dominant landholder of the Beardmore-Geraldton camp, and their holdings continue to expand. This ensures that Kodiak will be the operator that all other players will have to go to in order to secure a significant piece of this emerging district.

From the window of the helicopter, Kodiak property holdings extend from horizon to horizon as we flew for more than half an hour in any direction. We flew over several active exploration projects, where surface stripping was underway, or line cutting for geophysical surveys. Drills were seen at work on several properties, all separated by huge distances on the ground. This is definitely the largest coordinated exploration program underway in Canada at the current time.

Kodiak is well-funded to continue at this pace with more than $40 million in the company treasury. The combination of a highly motivated management team, competent exploration staff, a huge package of prospective land holdings, an extremely aggressive exploration and drilling program running around the clock, and a high budget to ensure no corners are cut, will ensure that the company is positioned to take full advantage of the great projects they have generated so far, and will likely continue to achieve in the future.

And I will point out that I have not discussed the potential for the other project areas in base metals and uranium. Each of these assets has value and can contribute to a higher share price in the future. I do not believe that the current market value of the stock discounts the true upside potential for all of the parts of this company.

My final observation is a personal comment, based on my experience with literally dozens of other companies and projects that I have investigated for several years. I believe that the management of this company is focused on delivering a world class discovery story in this district. Unlike many other juniors that have been created as a vehicle to make insiders rich, it is my opinion that Kodiak presents an opportunity for all shareholders to gain long term asset value appreciation. This company has not been created as a vehicle for quick profit. There are many hurdles and unknowns in the path. But I am convinced there is enough evidence that has been presented from the work so far to justify confidence going forward that far more significant upside remains for investors.

It is beyond the scope of my interest to issue trading advice. I do not have a crystal ball to grant me infallible guidance on what the future may hold. I will simply state that if the company is successful to prove up at least one major discovery from these projects, then shareholders can expect that a multiple of the current share price is going to be priced in for the stock. My personal strategy is to accumulate shares while I am able to do so at levels that I believe are far below the legitimate upside potential in the years ahead.

By: Mike Kachanovsky, aka Coach247