Results of Operations
Management is extremely pleased with the success of the Company’s surface exploration program during the
second quarter which has identified and expanded upon a new high grade ore zone, called the “Hinge” that was
discovered earlier this year. The new zone is near surface, appears to have better grades and intersection widths
than areas previously mined at the Rice Lake mine and is in close proximity to existing surface infrastructure and mill
facilities. The company expects to have completed an initial NI 43-101 resource estimate for this new discovery by
the end of 2008. Drilling at the new zone from surface will continue in the third and fourth quarter of 2008. During
the second quarter the company initiated a new mine development towards this high potential target area. The new
mine access is called the “Hinge”. A new underground portal was collared and the company began development of a
tunnel towards the new zone to allow for delineation drilling of the ore zone from the underground and to provide the
opportunity to extract an underground bulk sample by the fourth quarter of 2008. Concurrently the company has
accelerated the underground exploration program at the main Rice Lake mine by engaging a contractor (“Forage
Orbit”) and mobilizing them to site during the second quarter. Underground drilling at Rice Lake mine is required to
improve definition of new mining zones that have been identified in the last year.
The company is still lacking sufficient experienced conventional miners and technical staff but several key staff were
added during the quarter. During the quarter the company continued to utilize a mining contractor (“Dumas Mining”)
to supplement the Rice Lake workforce and continue with the development of the main decline in the deep part of the
mine below 32 level. Utilization of the mining contractor has allowed the company to accelerate developments and
provide some new stoping opportunities. Continued use of mining contractors will be dependent on the company’s
ability to increase production using internal capacity from the Rice Lake work force. Several new initiatives were
implemented during the quarter that are expected to contribute to better attraction and retention of skilled mining
personnel. The company is currently in the process of increasing camp capacity and will move to a 14 days in and
14 days out work schedule for the majority of mine personnel by the end of the third quarter. In addition the company
has introduced a more competitive wage and bonus program to provide incentives for experienced miners to join the
company as well as point of hire travel compensation. The company remains committed to building a strong loyal
work force with residents of southern Manitoba and surrounding areas.