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NI 43-101 TECHNICAL REPORT AND MINERAL RESOURCE ESTIMATE ON THE LEMARCHANT DEPOSIT,

SOUTH TALLY POND VMS PROJECT, CENTRAL NEWFOUNDLAND, CANADA

For

PARAGON MINERALS CORPORATION

Suite 1500 – 701 West Georgia Street

Vancouver, BC

V7Y 1C6

Prepared by:

Independent Qualified Persons

Dean Fraser, B.Sc., P.Geo.

Gary H. Giroux, M.ASc., P.Eng.

And

Qualified Persons

David A. Copeland. M.Sc. P.Geo.

Christine A. Devine, M.Sc., P.Geo.

Effective Date: March 2nd, 2012

Technical Report and Mineral Resource Estimate on the Lemarchant VMS Deposit

Paragon Minerals Corporation

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TABLE OF CONTENTS 1.0 SUMMARY .................................................................................................................................. 1 2.0 INTRODUCTION ......................................................................................................................... 7 3.0 RELIANCE ON OTHER EXPERTS .............................................................................................. 8 4.0 PROPERTY DESCRIPTION AND LOCATION ........................................................................... 8

4.1 Harpoon Property Agreement .................................................................................................. 9 4.3 South Tally Pond Property Agreement ..................................................................................... 9 4.3 Paragon Staked Claims ............................................................................................................ 9

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ....................................................................................................................... 13

6.0 HISTORY.................................................................................................................................... 14 6.1 Regional Exploration ............................................................................................................. 14 6.2 South Tally Pond Block ......................................................................................................... 16

6.2.1 Rogerson Lake Prospect ................................................................................................ 16 6.3.2 Lemarchant, Bindon’s Pond and Spencer’s Pond Prospects ........................................... 17

7.0 GEOLOGICAL SETTING AND MINERALIZATION ................................................................ 18 7.1 Regional Geology .................................................................................................................. 18 7.2 South Tally Pond Project Geology ......................................................................................... 21

7.2.1 Stratigraphy .................................................................................................................. 21 7.2.2 Structure and Metamorphism ......................................................................................... 26 7.2.3 Alteration and Mineralization ........................................................................................ 27

7.3 Lemarchant Deposit ............................................................................................................... 30 8.0 DEPOSIT TYPES ........................................................................................................................ 36 9.0 EXPLORATION ......................................................................................................................... 37

9.1 Soil Sampling ........................................................................................................................ 37 9.2 Airborne Geophysical Survey ................................................................................................ 38 9.3 Ground Geophysical Surveys ................................................................................................. 39

9.3.1 Titan24 ......................................................................................................................... 39 9.3.2 Deep Penetrating Electromagnetics (DPEM) ................................................................. 40

9.4 Borehole Geophysical Surveys............................................................................................... 41 9.4.1 Lemarchant Main Zone ................................................................................................. 42 9.4.2 North Target area .......................................................................................................... 42 9.4.3 South Target Area ......................................................................................................... 42

10.0 DRILLING .................................................................................................................................. 43 10.1 Methodology ........................................................................................................................ 43 10.2 Drilling Results .................................................................................................................... 44

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ....................................................... 60 11.1Sample Collection, Control Samples and Shipping ................................................................ 60 11.2Sample Preparation ............................................................................................................... 60 11.3Analytical Methods and Procedures ....................................................................................... 61

11.3.1 Analytical Methods .................................................................................................... 61 11.3.2 Analytical Procedures ................................................................................................. 61

12.0 DATA VERIFICATION .............................................................................................................. 62 12.1 Paragon Quality Control Data ............................................................................................... 62

12.1.1 Analytical Standards .................................................................................................. 62 12.1.2 Analytical Blanks ....................................................................................................... 70 12.1.3 Check Assays and Duplicates ..................................................................................... 73

12.2 Density Data ........................................................................................................................ 75 12.3 Independent Data Verification and Site Visit ........................................................................ 76



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13.0 MINERAL PROCESSING AND METALLURGICAL TESTING ............................................... 79 13.1 Sample Description, Preparation and Scope of Work ............................................................ 79 13.2 Master Composite Head Analysis ......................................................................................... 80 13.3 QEMSCAN Mineralogical Study.......................................................................................... 81

13.3.1 Mineralogy ................................................................................................................. 81 13.3.2 Copper Sulphide Association, Liberation and Theoretical Grade-Recovery ................. 81 13.3.3 Sphalerite Association, Liberation and Theoretical Grade-Recovery ........................... 83 13.3.4 Galena Association, Liberation and Theoretical Grade-Recovery ................................ 85

13.4 Bond Ball Mill Grindability Test .......................................................................................... 86 13.5 Gravity Testwork ................................................................................................................. 87 13.6 Flotation Testwork ............................................................................................................... 87

13.6.1 Duck Pond Flowsheet Evaluation ............................................................................... 87 13.6.2 CuPb Circuit Optimization ......................................................................................... 90

14.0 MINERAL RESOURCE ESTIMATES ........................................................................................ 91 14.1 Data Analysis ....................................................................................................................... 91 14.2 Composites .......................................................................................................................... 94 14.3 Variography ......................................................................................................................... 95 14.4 Block Model ........................................................................................................................ 95 14.5 Bulk Density ........................................................................................................................ 96 14.6 Grade Interpolation .............................................................................................................. 96 14.7 Classification ....................................................................................................................... 97 14.8 Model Verification ............................................................................................................. 102

15.0 MINERAL RESERVE ESTIMATES ......................................................................................... 105 16.0 MINING METHODS ................................................................................................................ 105 17.0 RECOVERY METHODS .......................................................................................................... 106 18.0 PROJECT INFRASTRUCTURE ............................................................................................... 106 19.0 MARKET STUDIES AND CONTRACTS ................................................................................ 106 20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT . 106 21.0 CAPITAL AND OPERATING COSTS ..................................................................................... 106 22.0 ECONOMIC ANALYSIS .......................................................................................................... 106 23.0 ADJACENT PROPERTIES ....................................................................................................... 106 24.0 OTHER RELEVANT DATA AND INFORMATION ................................................................ 106 25.0 INTERPRETATION AND CONCLUSIONS ............................................................................. 106 26.0 RECOMMENDATIONS ........................................................................................................... 109 27.0 REFERENCES .......................................................................................................................... 111 28.0 CERTIFICATE AND CONSENT OF THE INDEPENDENT QUALIFIED PERSON ............... 120 LIST OF TABLES Table 4-1: List of Mineral Licences. ................................................................................................... 9 Table 9-1: Pulse EM Programs at the Lemarchant Deposit 2007 to 2011. .......................................... 41 Table 10-1: Diamond Drill Programs at the Lemarchant Deposit 2007 to 2011. .................................. 43 Table 10-2: Drill Hole Locations and Descriptions – Lemarchant Deposit. ......................................... 47 Table 12-1: Comparison of original Paragon assays to replicate samples collected by the Independent

Qualified Person. ............................................................................................................. 77 Table 13-1: Master Composite Head Characterization. ....................................................................... 80 Table 13-2: Master Composite Gold and Silver Screened Metallics Analyses. .................................... 81 Table 13-3: Bond Ball Mill Grindability Test Results. ........................................................................ 86 Table 13-4: Gravity Test Results. ....................................................................................................... 87 Table 13-5: Batch Cleaner Test Conditions. ........................................................................................ 88



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Table 13-6: Batch Cleaner Test Results. ............................................................................................. 89 Table 13-7: CuPb Circuit Optimization Batch Cleaner Test Results .................................................... 90 Table 14-1: Sample statistics for assays within and outside the VMS solid.......................................... 93 Table 14-2: Cap levels for all variables. .............................................................................................. 93 Table 14-3: Sample statistics for capped assays within and outside VMS solid. .................................. 94 Table 14-4: Sample statistics for 2.5 m Composites within and outside VMS solid. ............................ 94 Table 14-5: Semivariogram parameters for all variables...................................................................... 95 Table 14-6: Specific Gravity Determinations. ..................................................................................... 96 Table 14-7: Kriging Parameters for Gold. ........................................................................................... 97 Table 14-8: Indicated Resource within VMS Solid. .......................................................................... 100 Table 14-9: Inferred Resource within VMS Solid. ............................................................................ 100 Table 14-10: Indicated Resource within Total Blocks. ........................................................................ 101 Table 14-11: Inferred Resource within Total Blocks. .......................................................................... 101 Table 26-1: Recommended Program and Budget – Phase 1 and 2. .................................................... 110 LIST OF FIGURES Figure 4-1: Location Map - South Tally Pond VMS Project. .............................................................. 10 Figure 4-2: Claim Map - South Tally Pond VMS Project. .................................................................. 11 Figure 4-3: Property Agreement Map - South Tally Pond VMS Project. ............................................. 12 Figure 7-1: Regional Geology and Mineral Occurrences of the Victoria Lake supergroup. ................. 20 Figure 7-2: Geology and Mineral Occurrences of the South Tally Pond Project (after Squires and

Hinchey, 2006). ............................................................................................................... 22 Figure 7-3: Stratigraphic Section - Tally Pond Volcanic Belt (after Squires and Moore, 2003). .......... 23 Figure 7-4: Airborne Magnetic Map - South Tally Pond Project. ........................................................ 24 Figure 7-5: Airborne Conductivity Map - South Tally Pond Project. .................................................. 25 Figure 7-6: Geological Compilation Map - South Tally Pond Block. .................................................. 29 Figure 7-7: Geology Map - Lemarchant Deposit. ............................................................................... 33 Figure 7-8: Airborne Conductivity Map - Lemarchant Deposit. .......................................................... 34 Figure 7-9: Airborne Magnetic Map - Lemarchant Deposit. ............................................................... 35 Figure 8-1: Bimodal Felsic vent complex model with typical alteration and metal zones (after Galley et

al., 2007). ........................................................................................................................ 36 Figure 10-1: Drill hole Location Map - Lemarchant Deposit. ............................................................... 46 Figure 10-2: Section 101+00N - Lemarchant Deposit........................................................................... 52 Figure 10-3: Section 102+00N - Lemarchant Deposit........................................................................... 53 Figure 10-4: Section 102+50N - Lemarchant Deposit........................................................................... 54 Figure 10-5: Section 103+00N - Lemarchant Deposit........................................................................... 55 Figure 10-6: Section 104+00N - Lemarchant Deposit........................................................................... 56 Figure 10-7: Section 105+00N - Lemarchant Deposit........................................................................... 57 Figure 10-8: Section 106+00N - Lemarchant Deposit........................................................................... 58 Figure 10-9: Vertical Long Section 101E (looking east) - Lemarchant Deposit. .................................... 59 Figure 12-1: Performance of Au, Ag, Cu, Pb, and Zn in samples analyzed at both Eastern Analytical and

ALS Minerals for field standard FCM1. ........................................................................... 64 Figure 12-2: Performance of Au, Ag, Cu, Pb, and Zn for standard FCM2. ............................................ 65 Figure 12-3: Performance of Au, Ag, Cu, Pb, and Zn for standard FCM4. ............................................ 66 Figure 12-4: Performance of Au, Ag, Cu, Pb, and Zn for standard FCM6. ............................................ 67 Figure 12-5: Performance of Au, Ag, Cu, Pb, and Zn for standard FCM7. ............................................ 68 Figure 12-6: Performance of Au, Ag, Cu, Pb, and Zn for standard HZ-2. ............................................. 69 Figure 12-7: Performance of Au, Ag, Cu, Pb, and Zn for standard HZ-3. ............................................. 70 Figure 12-8: Performance of Au, Ag, Cu, Pb, and Zn for blanks – Eastern Analytical. ......................... 71



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Figure 12-9: Performance of Au, Ag, Cu, Pb, and Zn for blanks – ALS Minerals. ................................ 72 Figure 12-10: Performance of Au, Ag, Cu, Pb, and Zn for field duplicates analyzed at both Eastern

Analytical and ALS Minerals. .......................................................................................... 74 Figure 12-11: Comparison of Au analyzed with fire assay versus total pulp metallics............................. 75 Figure 12-12: Performance of Paragon’s measured specific gravity duplicates. ...................................... 75 Figure 12-13: Photo of site visit by Dean Fraser (with Christine Devine) at Paragon’s core logging facility

in Buchan’s Junction, NL. ............................................................................................... 76 Figure 12-14: Performance of Au, Ag, Cu, Pb, and Zn for Independent check assays analyzed at Eastern

Analytical. ....................................................................................................................... 78 Figure 12-15: Performance of Independent specific gravity checks. ....................................................... 79 Figure 13-1: Average Cu Deportment. ................................................................................................. 82 Figure 13-2: Overall Cu-Sulphide Liberation. ...................................................................................... 82 Figure 13-3: Mineralogical Cu Grade-Recovery Curve. ....................................................................... 83 Figure 13-4: Overall Sphalerite Liberation. .......................................................................................... 84 Figure 13-5: Mineralogical Zn Grade-Recovery Curve......................................................................... 84 Figure 13-6: Overall Galena Liberation. ............................................................................................... 85 Figure 13-7: Mineralogical Pb Grade-Recovery Curve. ........................................................................ 86 Figure 13-8: Bond Ball Mill Work Index SGS Database. ..................................................................... 87 Figure 13-9: Batch Cleaner Flotation Test Flowsheet. .......................................................................... 88 Figure 14-1: Isometric view looking NNW showing mineralized solid (red), drill holes and topographic

surface with 7.5% ZnEq cut-off Indicated (dark purple) and Inferred (ligher purple) resource blocks. Pink surfaces to the north (right of the diagram) represent semi-massive and massive sulphide intercepts currently outside of the 43-101 resource. ........................ 92

Figure 14-2: Section 5374800 N showing Zn in Kriged blocks and composites. ................................. 102 Figure 14-3: Section 5374700 N showing Zn in Kriged blocks and composites. ................................. 103 Figure 14-4: Section 5374800 N showing Au in Kriged blocks and composites. ................................. 104 Figure 14-5: Section 5374700 N showing Au in Kriged blocks and composites. ................................. 105 Figure 25-1: Schematic Block Diagram (looking northeast), Lemarchant Deposit. ............................. 108 LIST OF APPENDICES Appendix I: Summary of Significant Drill Assays, Lemarchant Deposit. ................................... 124 Appendix II: Listing of Drill Holes used in Mineral Resource Calculation. ................................. 131



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1.0 SUMMARY

This National Instrument 43-101 technical report documents exploration completed by Paragon Minerals Corporation (“Paragon”) on its 100% controlled South Tally Pond VMS Project (the “Property”) located in central Newfoundland. The exploration target is volcanogenic massive sulphide (“VMS”) similar to other VMS deposits in the area including the Buchans deposits and nearby Duck Pond deposit. The report covers exploration work completed by Paragon between September 2007 to September 2011 on the South Tally Pond Block of the South Tally Pond VMS Project. Highlights include an initial 43-101 compliant mineral resource estimate and preliminary metallurgical work completed on the Lemarchant Prospect. This technical report was co-authored by Mr. David Copeland and Ms. Christine Devine of Paragon Minerals Corporation and Independent Qualified Persons Mr. Dean Fraser of RDF Consulting Ltd and Mr. Gary Giroux of Giroux Consultants Ltd. Mr. Fraser has relied on the information provided by Paragon and is responsible for all contents other than the resource estimation. Mr. Gary Giroux is responsible for the resource estimation portion of this report. The South Tally Pond VMS Project is located 110 kilometres southwest of the town of Grand Falls-Windsor, NL and 35 kilometres south of the community of Millertown, NL. The Property consists of five, contiguous 100% controlled properties or blocks including the Harpoon Block, Gills Pond Block, Higher Levels Block, South Tally Pond Block and the South Tally Pond Extension Block. The aggregate land position comprises 8 map-staked mineral licences (856 claims) covering 21,400 hectares immediately southwest of the Duck Pond Mine. The South Tally Pond Block is under option from Altius Resources Inc., whereby Paragon can earn a 100% interest in this property by making one remaining share payment to the vendors. The Harpoon Block is subject to a 2% net smelter return royalty to the property vendors of which 50% is purchasable by Paragon. The South Tally Pond project area has been explored intermittently since the late 1960’s for precious metal-rich polymetallic volcanogenic massive sulphide deposits. The bulk of the historic exploration work in the area was completed by Noranda and its various partners between 1973 and 1998. This exploration work resulted in the discovery of the Duck Pond and Boundary deposits. In addition, Noranda discovered numerous other prospects including the Lemarchant, Rogerson Lake, Bindon’s Pond, Higher Levels, Spencer’s Pond and Beaver Lake Prospects through geochemical and geophysical surveys. Each of these areas has seen limited to no drilling. The South Tally Pond Project is underlain by rocks of the Victoria Lake supergroup which consists of a structurally complex, composite collage of bimodal Neoproterozoic to Ordovician arc-related magmatic and sedimentary rocks. The Victoria Lake supergroup hosts numerous base metal-bearing VMS deposits, showings and extensive alteration zones, and several gold deposits and showings. This mineralization is distributed throughout all of the lithotectonic assemblages, including the Tally Pond Volcanic Belt, that comprise the supergroup. The Tally Pond Volcanic Belt consists of Cambrian-aged volcanic, volcaniclastic and sedimentary rocks that extend from Victoria Lake northeast to Burnt Pond. The South Tally Pond Project is situated in the same volcanic belt and to the immediate southwest of Teck Resources Limited’s Duck Pond Copper-



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Zinc Mine (5.1 million tonnes averaging 3.6% Cu, 6.3% Zn, 1.0% Pb, 64 g/t Ag and 0.9 g/t Au for both the Duck Pond and Boundary deposits). The Lemarchant Deposit area is underlain by a north-striking sequence of bimodal submarine volcanic rocks (rhyolites and basalts) of the Tally Pond Volcanic Belt. The mineralization is hosted within a 4,000 metre long and 700 metre wide sequence of highly altered felsic volcanic rocks. Polymetallic sulphide mineralization is hosted in moderate to intensely altered rhyolite breccias, massive flows and lesser tuffaceous horizons. The footwall to the semi-massive to massive sulphide mineralization is characterized by a well developed, barium-enriched base metal stringer system, with moderate to intense quartz-sericite-chlorite to quartz-chlorite alteration. On several sections the footwall alteration zone is cut-off by a frequently recognizable, east-verging thrust fault (Lemarchant Fault) that potentially repeats the mineralized horizon at depth in the minimally tested Lower Felsic Block. The Lower Felsic Block represents an area of high exploration potential that warrants aggressive follow-up drilling. Exploration and Diamond Drilling In the Lemarchant area, Paragon has completed soil and till sampling (1,554 samples), an airborne EM-magnetic geophysical survey (175 line kilometres), a ground EM geophysical survey (20.725 line kilometres), a ground Titan 24 geophysical survey (14.4 line kilometres), a total of 21,259.1 metres of diamond drilling in 60 drill holes, and borehole pulse EM geophysics (19 holes; 8,855 metres). The exploration was focused on the known base metal mineralization hosted within the Lemarchant Deposit. In 2007, Paragon made a significant precious metal-rich base metal discovery at the Lemarchant Prospect. Drilling to-date has intersected semi-massive to massive sulphide mineralization over a 500-metre strike length between sections 101N and 106N. The Lemarchant Main Zone is defined between 101N and 104N, with two significant drill intersections on sections 105N and 106N. Select highlight drill assays include:

Hole ID Section Length (m)

Cu (%)

Zn (%)

Pb (%)

Ag (g/t)

Au (g/t)

Vertical Depth (m)

LM07-13 101+00N 5 0.77 7.49 0.07 40.29 1.21 158LM11-65 101+00N 7.5 1.43 17.54 2.34 124.29 0.72 155LM07-14 102+00N 5.4 1.06 5.26 1.52 92.56 0.85 196LM10-43 102+50N 30.1 0.91 9.3 2.28 60.37 1.41 191LM11-52 102+50N 8.7 0.75 8.09 2.09 90.06 2.59 188LM11-63 102+50N 18.6 0.82 6.47 1.25 71.55 3.88 193including 7 1.65 12.74 3.27 185.75 10.13 193LM07-15 103+00N 14.6 0.81 9.46 2.13 73.44 1.85 206LM11-61 103+00N 27.4 1.18 11.65 3.82 54.7 1.07 188LM08-33 103+00N 26.8 0.48 4.98 0.93 37.7 0.83 186



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including 8.1 0.68 5.92 2.19 102.7 2.14 186LM11-62 103+00N 10.3 1.61 11.83 3.27 528.31 3.13 180LM11-59 103+25N 30.4 1.07 9.48 1.23 27.68 0.7 199LM07-17 104+00N 14.6 0.45 12.38 2.61 50.32 0.74 221LM08-24 105+00N 6 0.61 6.6 0.68 28.4 0.45 411LM08-37 106+00N 3 0.97 9.32 0.45 16.1 0.26 284

Quality Control and Data Verification Paragon employed a systematic quality control sampling program throughout all of its Lemarchant drill programs. This consisted of the insertion of a natural blank and reference standards for Au, Ag, Cu, Pb and Zn for every 20 core samples collected. To verify the repeatability of assay results, Paragon completed check assaying on all samples analyzed for Ag, Cu, Pb and Zn and select samples for Au by submitting the samples to two analytical labs (Eastern Analytical and ALS Minerals). Through a review of the data collected by Paragon it was determined that the data is of industry standard quality and suitable for use in the estimation of mineral resources. The Independent Qualified Person, Mr. Dean Fraser completed a site visit and review of diamond drill core on September 5th, 2011 and has independently verified the results of Paragon’s exploration work. Metallurgical Test Results Preliminary metallurgical test work was undertaken by SGS Mineral Services of Lakefield, Ontario, Canada (“SGS”) on a composite sample of quartered drill core from the Lemarchant Deposit that included representative samples from massive sulphides, semi-massive sulphides, felsic volcanic breccia and massive barite. The program included head characterization, mineralogical analysis (QEMSCAN), grind establishment and metallurgical testing including gravity and flotation tests. Highlights of the test work include: Mineralogical analyses (QEMSCAN) indicate:

- Zinc concentrates of over 57% should be achievable at zinc recoveries above 90%; - Copper concentrates over 30% should be achievable at copper recoveries above 90%; and - Lead concentrates over 80% should be achievable at lead recoveries above 90%

Preliminary flotation tests on the composite sample indicate:

- a copper-lead concentrate grade of 48.4% (11.6% Cu, 36.8% Pb) containing 6.96 g/t Au and 1,695 g/t Ag can be produced with 83.4% Cu, 92.9% Pb, 75.6% Au and 86.9% Ag metal recoveries; and

- a zinc concentrate grade of 60.8% Zn can be produced with a 68.4% Zn metal recovery. Based on conclusions reported by SGS it is anticipated that the concentrate grades and metal recoveries will improve once the flowsheet is optimized for regrinding and reagents. Additional metallurgical test work is warranted and will be undertaken at a later date. The initial mineral resource estimate for the Lemarchant Deposit utilizes these preliminary metallurgical test studies.



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Mineral Resource Estimate The independent mineral resource estimate prepared by Gary Giroux is reported in accordance with Canadian Securities Administrators' NI 43-101 and conforms to the generally accepted Canadian Institute of Mining "Estimation of Mineral Resources and Mineral Reserves Best Practices" Guidelines. The mineral resource estimate is on the Lemarchant Main Zone and is based on drill holes completed up to September, 2011. Seventy-four diamond drill holes were used in generating the geological model for the Main Zone, with 31 of the drill holes (10,000 metres) included in the resource estimate. Outlier assays were capped and all assays within the mineralized zones composited to 2.5 metres lengths. All gaps in the assay record were assigned 5 ppm for Cu, Pb, Zn, 0.001 g/t for Au and 0.01 g/t for Ag grades. Metal grades were estimated using ordinary kriging into a 3D block model with block dimensions of 10 x 10 x 5 metres. Three dimensional geologic solids were constructed by QP Dean Fraser, an independent consultant to Paragon. The geological solids were provided to Giroux for review and utilized for the mineral resource estimate. In general, the solids were limited to material grading > 2% Zn that could be demonstrated to be correlative with definable stratabound zones. As a general rule, solids were extended no more than 50 metres up-dip, down-dip and along strike from a drill hole. One mineralized solid was constructed for the mineral resource estimate and extends to a vertical depth of 210 metres. Blocks were classified as Indicated or Inferred based on the blocks proximity to data. Highlights include: • Indicated Mineral Resource of 1.24 million tonnes grading 5.38% Zn, 0.58% Cu, 1.19%

Pb, 1.01 g/t Au and 59.17 g/t Ag (15.40% ZnEQ) using a 7.5% Zn equivalent grade cut-off.

• Inferred Mineral Resource of 1.34 million tonnes grading 3.70% Zn, 0.41% Cu, 0.86% Pb, 1.00 g/t Au and 50.41 g/t Ag (11.97% ZnEQ) using a 7.5% Zn equivalent grade cut-off.

• The deposit is defined to a vertical depth of 210 metres and remains open to depth and along strike.

The indicated and inferred mineral resource estimates for the Lemarchant Deposit are tabulated below for a range of zinc equivalent (ZnEQ) cut-off values. The effective date of the resource estimate is January 16, 2012.

Indicated Category

Cut-off (ZnEQ%)

Tonnes > Cut-Off

(tonnes) ZnEQ

(%) Zn (%)

Cu (%)

Pb (%)

Au (g/t)

Ag (g/t)

5.50 1,520,000 13.74 4.87 0.52 1.07 0.92 51.01 7.50 1,240,000 15.40 5.38 0.58 1.19 1.01 59.17 9.50 1,020,000 16.91 5.84 0.64 1.30 1.10 66.73



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Inferred Category

Cut-off (ZnEQ%)

Tonnes > Cut-Off

(tonnes) ZnEQ

(%) Zn (%)

Cu (%)

Pb (%)

Au (g/t)

Ag (g/t)

5.50 2,270,000 9.72 3.18 0.36 0.74 0.77 36.53 7.50 1,340,000 11.97 3.70 0.41 0.86 1.00 50.41 9.50 820,000 14.23 4.34 0.47 1.03 1.13 64.23

(i) Mineral resources are estimated at a ZnEQ cut-off where ZnEQ% = ((Zn% * 22.05 * Zn Recovery * Zn Price) + (Cu% *22.05 * Cu Recovery * Cu Price) + (Pb%*22.05*Pb Recovery*Pb Price) + (Au * Au Recovery * Au Price / 31.1035) + (Ag *Ag Recovery * Ag Price/31.1035)) / (22.05*Zn Recovery*Zn Price).

(ii) Metal price assumptions are US$0.88/lb Zn, US$3.15/lb Cu, US$0.91/lb Pb, US$1350/oz Au and US$26.57/oz Ag.

(iii) Metal recovery assumptions are based on preliminary metallurgical results of 68.4% Zn, 83.4% Cu, 92.9% Pb, 75.6% Au and 86.9% Ag.

(iv) Zinc, Copper, Lead, Gold and Silver assays were capped at 46.0% Zn, 5.5% Cu, 12.5% Pb, 14.0 g/t Au and 800 g/t Ag.

(v) Specific gravity (SG) measurements were taken on most of the samples, where actual measurements were not available either stoichiometric values were calculated or average SG values were used.

(vi) No economic evaluation has been undertaken. A ZnEQ cut-off grade of 7.5% was selected as a reasonable cut-off grade for underground development.

Conclusions The South Tally Pond Project is underlain by rocks that are known hosts to massive sulphide mineralization. The lack of a sustained exploration effort in the past coupled with the discovery of significant massive sulphide mineralization by Paragon at the Lemarchant prospect underscores the exploration potential of the project area. Numerous targets within the South Tally Pond Project, such as the Bindon’s Pond, Rogerson Lake, Lemarchant SW, Spencers Pond prospects remain to be sufficiently tested with diamond drilling. Exploration work at the Lemarchant Deposit has outlined a significant massive sulphide deposit that is open for expansion at depth and along strike. The stratigraphy hosting the Lemarchant Main Zone is interpreted to be displaced “upward and to the east” along the Lemarchant Thrust Fault. The truncation of the Main Zone massive sulphide mineralization by the Lemarchant Fault suggests the zone of sulphide mineralization exists, down-dip beneath the fault zone within the Lower Felsic Block. Drilling to the north of the Lemarchant Main Zone (sections 105N and 106N) has outlined a large area of intense hydrothermal alteration and associated semi-massive to massive sulphide mineralization within the Lower Felsic Block. The Lemarchant Main Zone is open along strike to the south where strong hydrothermal alteration, stringer sulphides and borehole EM conductors have been outlined south of section 101N. Recommendations Based on the encouraging results of the exploration work completed to date at the Lemarchant Deposit, addition exploration is well warranted. A major focus of the recommended work program would consist of a combination of infill and step-out drilling to further define the nature



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and extent of the Lemarchant Deposit and to test other geological/geochemical targets that have been defined elsewhere on the property. A two-phase work program and budget is recommended with Phase 2 being contingent on the success of Phase 1. The Phase 1 Program, with a budget of $1,900,000, includes 10,000 metres of diamond drilling in 26 drill holes to further define the nature and extend the Lemarchant Deposit; and to begin investigating other priority target areas. More specifically,

1) The drilling program at Lemarchant should focus on: a) The Lower Felsic Block Target to the west and down-dip of massive sulphide

mineralization cut off by the Lemarchant fault on Section 102 to Section 104; and on Section 105N (LM08-24) and Section 106N (LM08-37) where massive sulphides, proximal felsic volcanic rocks and extensive hydrothermal alteration have already been intersected.

b) The North Target Area down dip of drill holes LM07-16 (Section 104N) and LM93-11 (Section 106) where wide-spaced drilling has intersected massive sulphide mineralization hosted by intensely altered, vent proximal felsic volcanic rocks.

c) Infill drilling on the Lemarchant Main Zone. d) Drill testing the Lemarchant Main Zone massive sulphide to the south of Section 101N

2) Borehole EM geophysics should be completed on 20 drill holes not yet surveyed; 3) Deep-penetrating ground DPEM survey with new parameters should be reviewed and re-

attempted at the Lemarchant Deposit; 4) Deep-penetrating ground DPEM survey should be carried out at the Lemarchant SW and

Bindon’s Pond Prospects; and 5) Environmental baseline studies should be initiated.

The Phase 2 program, with a budget of $3,000,000, would consist mainly of continued definition drilling of the Lemarchant Deposit plus initial drilling at the nearby Lemarchant SW and/or Bindon’s Pond Prospects.



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2.0 INTRODUCTION

This National Instrument (NI) 43-101 Technical Report (the “Report”) documents the exploration completed by Paragon Minerals Corporation (“Paragon”) at the 100% controlled South Tally Pond VMS Project (the “Property”) located in central Newfoundland, Canada. The Report covers exploration work completed since September 2007 on the South Tally Pond Block portion of the South Tally Pond VMS Project and highlights an initial NI43-101 compliant mineral resource estimate and preliminary metallurgical work completed on the Lemarchant Deposit. The report, mineral resource model and estimate and metallurgical test work was prepared following the guidelines of the Canadian Securities Administrators National Instrument 43-101 and Form 43-101F1, and is in conformity with generally accepted CIM “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines”. The report was prepared at the request of Paragon, a TSX Venture Exchange listed issuer trading under the symbol PGR-V. The report also provides Paragon with an independent assessment of the technical merits of the South Tally Pond VMS Project and makes recommendations regarding continued exploration. The report may be used by Paragon for any lawful purpose for which it is suited. This technical report was co-authored by Mr. David Copeland and Ms. Christine Devine of Paragon and Independent Qualified Persons Mr. Dean Fraser of RDF Consulting Ltd and Mr. Gary Giroux of Giroux Consultants Ltd. Mr. Fraser has relied on the information provided by Paragon port and is responsible for all contents other than the resource estimation. Mr. Gary Giroux is responsible for the resource estimation portion of this report. Based on their education, relevant work experience and professional status and applying the tests outlined in section 1.5 of the Instrument, Mr. Fraser and Mr. Giroux are Independent Qualified Persons as this term is defined by National Instrument 43-101. Information contained in this report is based on data collected by Paragon from September 2007 to September 2011 on the South Tally Pond Block, unpublished company reports, public domain data including assessment reports filed with the Newfoundland and Labrador Department of Mines and Energy, and a variety of publications and press releases. On September 5, 2011, Mr. Dean Fraser, accompanied by David Copeland and Christine Devine of Paragon, completed a site visit to the Lemarchant Deposit. Collar locations for twenty-three drill holes used in the Lemarchant resource calculation were located and GPS coordinates recorded. Mr. Fraser also examined 11 drill holes completed by Paragon from the Lemarchant Deposit in order to verify lithology and mineralization as described by Paragon geologists in drill logs and reports. The purpose of the site visit was to inspect the property, and to review drill core and exploration procedures on the project. Ten drill core intervals previously sampled and assayed by Paragon were quarter split for check analysis and seven core samples (half core) were collected by the Q.P. for verification of specific gravity measurements. Gold (Au) and silver (Ag) values for work performed by Paragon are reported as grams per metric tonne (“g/t”) or parts per billion (ppb). Historic Au and Ag values are presented as originally reported and converted to g/t if required. Base metal (copper (Cu), lead (Pb) and zinc (Zn)) values are presented in parts per million (ppm) or weight percent (%). Currency is reported as Canadian dollars unless otherwise noted. All map coordinates are given as Universal Transverse Mercator (UTM) Projection, North American Datum 1927 (NAD27), Zone 21



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coordinates, unless otherwise stated. Distances and dimensions are expressed in metres (m) or kilometres (km), unless otherwise stated.

3.0 RELIANCE ON OTHER EXPERTS

The authors have relied on information provided by Paragon concerning the legal status of claims that form the South Tally Pond Project. Effort was made by Mr. Fraser to review the information provided for obvious errors and omissions; however, Mr. Fraser shall not be held liable for any errors or omissions relating to the legal status of claims described in this report. Mr. Fraser has assumed, and relied on the fact, that all the information and existing technical documents listed in Section 27.0 (“References”) of this report are accurate and complete in all material aspects. While Mr. Fraser carefully reviewed all the available information presented to him, the principal author cannot guarantee its accuracy and completeness. Mr. Fraser reserves the right, but will not be obligated to revise this report and conclusions if additional information becomes known subsequent to the date of this report. Copies of the tenure documents were reviewed by Mr. Fraser and an independent verification of claim title was performed using the Mineral Rights Inquiry form found on the Newfoundland and Labrador Department of Natural Resources’ webpage. Operating licenses, permits, and work contracts were not reviewed. Mr. Fraser has not verified the legality of any underlying agreement(s) that may exist concerning the licenses or other agreement(s) between third parties but has relied on, and believes it has a reasonable basis to rely upon, Mr. David Copeland, P.Geo., Exploration Manager for Paragon to have conducted the proper legal due diligence. Select technical data, as noted in the report, were provided by Paragon, and Mr. Fraser has relied on the integrity of such data. A draft copy of the report was reviewed for factual errors by the clients and Mr. Fraser has relied on Paragon’s knowledge of the Property in this regard. All statements and opinions expressed in this document are given in good faith and in the belief that such statements and opinions are not false and misleading at the date of this report.

4.0 PROPERTY DESCRIPTION AND LOCATION

The South Tally Pond Project is located in central Newfoundland, approximately 110 road kilometres southwest of the town of Grand Falls-Windsor. The property is located within NTS map sheets 12A/10 (Lake Ambrose) and 12A/07 (Snowshoe Pond) centred at approximately 521000E/5375000N (Figures 4-1 and 4-2). The South Tally Pond Project consists of 8 contiguous map-staked mineral licences (856 claims) covering 21,400 hectares (Figure 4-2, Table 4-1). The project area is made up of five, contiguous 100%-owned or controlled properties or blocks including the Harpoon Block, Gills Pond Block, Higher Levels Block, South Tally Pond Block and the South Tally Pond Extension Block. Two of the blocks, the Harpoon Block and South Tally Pond Block, are subject to underlying property agreements as further described below (Table 4-3). The remaining three blocks were staked by Paragon and are not subject to underlying agreements except as described below.



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Table 4-1: List of Mineral Licences. Licence Block Registered

Holder NTS Claims Area

(Ha) Anniversary

Date

019459M Harpoon and Gill’s Pond

Paragon Minerals Corporation 012A/10 42 1050 18-Sep-16

019627M Harpoon and Gill’s Pond

Paragon Minerals Corporation 012A/10 52 1300 13-Dec-12

019631M South Tally Pond and Harpoon

Paragon Minerals Corporation 012A/10 256 6400 29-Jan-12

019092M South Tally Pond Paragon Minerals Corporation

012A/07,10 151 3775 29-Jan-19

018887M Higher Levels Paragon Minerals Corporation 012A/10 11 275 29-Jan-19

013583M Gill’s Pond Paragon Minerals Corporation 012A/10 160 4000 11-Jun-12

019630M South Tally Pond Paragon Minerals Corporation 012A/10 34 850 29-Jan-17

014158M South Tally Pond Extension


012A/07,10 150 3750 19-Nov-11

Total 8 licences 856 21400

4.1 Harpoon Property Agreement

The Harpoon Property Agreement covers 225 claims for a total area of 5,625 hectares (Figure 4-3). The Harpoon Block was optioned from local prospectors. Paragon has completed all option payments and holds a 100% interest in the property. The property is subject to a 2.0% NSR payable to the vendors of which Paragon can purchase 1.0% for $1.0 million. Paragon has the right of first refusal on the remaining 1.0%.

4.3 South Tally Pond Property Agreement

Paragon has an option to earn a 100% interest in the mining and mineral rights of the South Tally Pond Block from Altius Resources Inc. (“Altius”) by issuing a total of 1,000,000 [500,000 issued] Paragon shares over an 8 year period with the final share payment to be made in 2014 (Figure 4-3). Xstrata retains a 2% NSR on the ground and the right to purchase the concentrate from any operating mines on the property via an underlying agreement with Altius Resources Inc. Xstrata is entitled to a cash payment of $2,000,000 upon commencement of commercial production. Title to the mineral licences is held by Paragon.

4.3 Paragon Staked Claims

Paragon has acquired, through map staking, ground that forms a part of the South Tally Pond Project, comprising the Gill’s Pond, Higher Levels and South Tally Pond Extension blocks. This ground is not subject to any of the Property Agreements with the exception of a portion of the South Tally Pond Extension Block that falls within the Barren Lake AOI and is subject to a 2.5% NSR payable to the vendors of which Paragon can purchase 1.5% for $1.5 million (Figure 4-3). Paragon has the right of first refusal on the remaining 1.0%. A portion of the South Tally Pond



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Extension Block also falls under the Lake Douglas West AOI and is subject to a 2.0% NSR payable to the vendors of which Paragon can purchase 1.0% for $1.0 million. Paragon has the right of first refusal on the remaining 1.0%.

Figure 4-1: Location Map - South Tally Pond VMS Project.



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Figure 4-2: Claim Map - South Tally Pond VMS Project.



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Figure 4-3: Property Agreement Map - South Tally Pond VMS Project.



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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The South Tally Pond project area is accessible by well-maintained logging/mining roads originating from a paved highway at Millertown, a community of 100 people (2006 census), located 35 kilometres to the north of the project. Secondary logging roads and logging trails provide good access to various parts of the property, including truck access to the Lemarchant Deposit. The climate is characterized by relatively cold winters and warmer summers compared to coastal regions of Newfoundland. Average historic Environment Canada (1971 to 2000) daytime high temperatures for the community of Buchans (the nearest recording station) range from an average winter low of -9.1oC in February to an average summer high of 16.2oC in July. Mean annual precipitation for the area totals 1,204 mm. On average, 27% of the precipitation falls as snow, mostly from December to March. Average maximum snow depth for the month of February is 61 cm with a historic extreme snow depth of 210 cm for March. Topography is moderate to gentle, with a maximum elevation of 427 metres above sea level, and a total relief of 147 metres. East of Rogerson Lake the terrain consists of two northeast trending ridges separated by a flat, partially bog-covered valley. West of Rogerson Lake the terrain is flat, with extensive bog cover. Bogs collectively cover 20-25% of the property, and small ponds and streams are abundant throughout. The remainder of the property is forested with fir and spruce, which is interspersed with minor larch, alder, birch and aspen. Approximately half of the forest is a mature re-growth after pre-1960s logging; the other half is young re-growth (post-1980s-1990s). Bedrock exposure is moderate along the hills and ridges east of Rogerson Lake, with very minimal exposure in the lower lying areas, and adjacent to Lake Ambrose along the eastern property margin. Rogerson Lake marks a physiographic change from an area of relatively thin overburden in the east to a flat, glacial boulder strewn area with thick overburden to the west. There is moderate outcrop at the north and northeast end of the lake; outcrop is essentially non-existent west of Rogerson Lake. The nearest major centre to the property is Grand Falls-Windsor (population 13,725 – 2011 census) from which most major supplies and services can be obtained. The nearest airports are the Gander International Airport, located 175 road kilometres to the east of the project area and the Deer Lake Regional Airport, located 230 road kilometres to the west of the project area. The property is located immediately southwest of Teck Resources Limited’s producing Duck Pond copper-zinc mine. The mine is serviced by a well maintained all season gravel road from the community of Millertown and is powered by an overhead transmission line originating from the Starr Lake generating station (Belleau and Pelz, 2005). The Lemarchant Deposit is located 33 road kilometres southwest of the Duck Pond Mine and 10 kilometres west of an all-season gravel road that services the Granite Lake hydroelectric dam located 50 km to the south.



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6.0 HISTORY

The South Tally Pond project area has been intermittently explored for base metals since the late 1960’s with the majority of the work focussing on the Duck Pond and Boundary deposits. Relatively limited exploration has been undertaken outside of these two areas. To date, only 169 drill holes for 43,488 metres have been drilled within the South Tally Pond Project, including recent drilling by Paragon. The majority of these drill holes have targeted four main prospects including the Lemarchant, Rogerson Lake, Spencer’s Pond and Gill’s Pond prospects. Drilling in each of these areas (other than at the Lemarchant Deposit) is broad spaced (>100 metres). Outside of these four areas sporadic drilling has occurred largely as initial testing of short strike length airborne electromagnetic (“EM”) conductors. Most of our understanding of the South Tally Pond project area is based on reports by Arseneau et al. (1994), Collins (1990, 1991, 1992, 1993 and 1994), Collins and Squires (1991), Coulson (1992), Gower (1987), MacKenzie (1985), MacKenzie and Robertson (1986), Rogers and Collins (1989), Rogers and Squires (1988) and Reid (1979, 1980a, 1980b, 1981, 1982, 1983 and 1984) and Noranda (1998). Also included is a summary of the exploration and development history of the Duck Pond Mine and the Boundary Deposit that are currently owned by Teck Resources Limited and do not form a part of the South Tally Pond Project.

6.1 Regional Exploration

The Tally Pond area has been explored since the late 1960’s for base metal mineralization following initial exploration work (prospecting and geochemistry) by Asarco during the 1960’s and 1970’s including completion of a regional airborne EM survey in 1966. Asarco drilled 3 holes testing relatively long strike length EM conductors, intersecting thick sequences of black, graphitic shale, in the Beaver Lake and Rogerson Lake areas. The bulk of the exploration work in the Tally Pond area was undertaken by Noranda and its various partners from 1973 to 1998. Exploration, including three systematic airborne surveys in 1974, 1979 and 1988, resulted in the discovery of several base metal VMS deposits and occurrences (e.g. Burnt Pond, Duck Pond, Boundary, Moose Pond, and Lemarchant). In addition, geological, geochemical and geophysical surveys (mainly during 1981 to 1983 and 1989 to 1992) conducted by Noranda throughout the Tally Pond area resulted in the discovery of several prospects (Duck West, Gill’s Pond (Rio Algom), Beaver Lake, Rogerson Lake, Bindon’s Pond, Higher Levels and Spencer’s Pond Prospects). In 1973, reconnaissance geological mapping plus stream and soil geochemical surveys led to the discovery of the Burnt Pond Prospect (Noranda, 1998). In 1975, Labrador Mining and Exploration Co. Ltd. completed diamond drilling (6 holes) testing regional airborne conductors in the Harpoon Brook area (Tuffy, 1975). These drill holes intersected relatively thick sequences of graphitic shale and weakly altered felsic volcanic rocks (Tuffy, 1975; Copeland, 2008).



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In 1980, the Boundary Deposit (initially called the Tally Pond deposit) was discovered by drill testing coincident EM, gravity and till geochemistry anomalies. Between 1980 and 1985, 21 short drill holes intersected massive sulphides of variable thickness (1-20 metres) within three separate, near-surface massive sulphide zones; the North, South and Southeast zones (MacKenzie, 1988; Belleau and Pelz, 2005 and references therein). From 1985 to 1987, follow-up exploration to the southwest of the Boundary Deposit (in an area of coincident massive sulphide float, till anomalies and airborne EM conductors) resulted in the discovery of the Duck Pond Deposit (Noranda, 1998; Belleau and Pelz, 2005). Early drill results from the Duck Pond Deposit include: 2.7% Cu, 6.1% Zn, 0.4% Pb, 28.4 g/t Ag and 0.7 g/t Au over 10.64 metres (DP-86-85) and 2.1% Cu, 10.2% Zn, 1.2% Pb, 46.8 g/t Ag and 0.6 g/t Au over 20.25 metres (DP-87-95; Noranda, 1998; Belleau and Pelz, 2005). Drilling between 1987 and 1991 led to the definition of the Upper Duck Deposit, the discovery of the stratigraphically lower Sleeper Zone (450 metres depth) and the Lower Duck Deposit (750 metres depth). In 1986, Esso Minerals Canada Ltd. (“Esso”) completed linecutting, mapping and prospecting and ground EM surveying in the Gill’s Pond area (O'Sullivan, 1987). From the work, Esso concluded that the strike extension of the host Duck Pond-equivalent felsic volcanics were present to the immediate SE at Gill’s Pond. From 1988 and 1989, Rio Algom completed linecutting, ground geophysics surveys (Mag, VLF, EM) and drilling 29 drill holes for 5,482 m in the Gill’s Pond Area following up on work completed by Esso (Thicke, 1988, 1989, 1990). Most holes were shallow (<150m) and successfully intersected altered felsic volcanic rocks (sericite, chlorite, carbonate, silica, pyritization, etc.). In 1998, Noranda completed a pre-feasibility study on the Duck Pond and Boundary Deposits including non-43-101 compliant “diluted mineable ore reserves” of 4.2 million tonnes grading 3.2% Cu, 5.5% Zn, 57g/t Ag and 0.9g/t Au, including approximately 500,000 tonnes at the Boundary Deposit (Noranda, 1998; Belleau and Pelz, 2005). In 1999, Thundermin Resources Inc. (“Thundermin”) and Queenston Mining Inc. (“Queenston”) acquired a 100% interest in the Duck Pond Property from Noranda and carried out infill and definition drilling comprising 9,300 metres in 26 holes at the Duck Pond Deposit and 3,000 metres in 82 holes at the Boundary Deposit. Based on the new drill results, Thundermin and Queenston completed a revised reserve estimate and bankable feasibility study for the Duck Pond and Boundary deposits, including 43-101-compliant measured and indicated mineral resources of 5.1 million tonnes averaging 3.6% Cu, 6.3% Zn, 1.0% Pb, 64 g/t Ag and 0.9 g/t Au for both the Duck Pond and Boundary deposits (MRDI, 2001). MRDI also reported an additional inferred resource of 1.1 million tonnes grading 2.6% Cu, 5.6% Zn, 1.2% Pb, 58 g/t Ag, and 0.6 g/t Au. In 2002, Aur Resources Limited (“Aur”) acquired all Thundermin’s and Queenston’s interests in the Duck Pond Property. Aur completed a revised feasibility study in 2003 (AMEC, 2003) and based on the results made a positive production decision in December 2004 (Belleau and Pelz, 2005). The Duck Pond Deposit achieved commercial production in April 2007. Teck Resources Limited purchased Aur in late 2007 and took over ownership and operatorship of the Duck Pond Mine.



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In 2005, Rubicon Minerals Corporation completed prospecting, till sampling and trenching on the Harpoon Block after optioning the property (Sparkes, 2005). From 2007 to 2011 Paragon completed airborne magnetic and EM geophysical surveying (2,016.6 line kms in 2007 and 1,231.4 line kms in 2011), prospecting and reconnaissance till sampling (167 samples) over the Harpoon, Gill’s Pond and South Tally Pond Extension blocks (Copeland, 2007; Copeland, 2008; Copeland and Devine, 2011). In 2011, Paragon completed diamond drill testing of three regional targets on the Harpoon Block including the Cookstown (1 drill hole; 209.4 metres), Duck West (1 drill hole; 443.9 metres) and Beaver Lake prospects (3 drill holes; 871.0 metres) (Devine, 2011 and Copeland et al., 2011).

6.2 South Tally Pond Block Exploration

The following is a summary of work completed on the South Tally Pond Block, the focus of the current report and host to the Lemarchant Deposit, Rogerson Lake, Bindon’s Pond and Spencer’s Pond prospects. 6.2.1 Lemarchant Deposit

Between 1981 and 1982 Noranda completed linecutting on the Lemarchant grid (372-1) following up on airborne conductors. Subsequent soil sampling and ground geophysics (VLF-EM, HLEM, EM-37 (partial coverage) and magnetics) were completed by Noranda from the period from 1982 to 1994. Initial drill testing and trenching of the area was completed in 1983 with holes 372-1, 2, 3, 4 and 5 (Reid, 1984). Each of the drill holes was successful in explaining the airborne conductors with intersections of graphitic argillite, exhalative pyritic mudstone and stringer base-metal mineralized, footwall felsic volcanic rocks. Following the discovery of the Duck Pond Deposit in 1987, Noranda recognized that earlier work at Lemarchant had outlined a similar VMS environment to Duck Pond. From 1990 to 1993 Noranda completed 2,846 metres of drilling in 12 holes at Lemarchant (LM91-01 to 06 and LM92-07 to 08, and LM93-09 to 12). Significant historical results from the Lemarchant Deposit include:

• 7.4% Zn, 0.6% Cu, 6.3% Pb, 1515.0 g/t Ag and 11.4 g/t Au, over 0.6 metres (LM91-01); • 5.70% Zn, 4.5% Cu, 0.33% Pb, 272.5 g/t Ag and 1.06 g/t Au over 0.3 metres (LM92-07);

and • 1.53% Zn, 59.8 g/t Ag and 6.1 g/t Au over 3.8 metres (LM92-08).

Altius optioned the South Tally Pond Block from Noranda in 2000. In 2001, Altius completed a geological mapping, drill core re-logging, and lithogeochemical sampling on the Lemarchant Deposit (Barbour and Churchill, 2002 and 2003). In 2004, Altius completed re-logging and re-sampling of 14 diamond drill holes from the Lemarchant Deposit (Barbour and Churchill, 2005). A comprehensive geological mapping and lithogeochemical sampling program resulted in better definition of the extents of the Lemarchant



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Deposit and Spencer’s Pond Prospect (Barbour and Churchill, 2004). Altius also conducted an 844.9 line kilometre airborne HTEM survey covering the Rogerson Lake, Spencer’s Pond and Lemarchant prospects that confirmed known conductors and outlined new conductors in all three alteration zones outside areas of previous geophysical surveying. Paragon optioned the South Tally Pond Block from Altius in December 2006. Since late 2007 Paragon has completed 21,259.1 metres of diamond drilling in 60 holes at the Lemarchant Deposit and has outlined a massive sulphide lens over a 500 metre strike length (Section 101N to Section 106N). In addition to diamond drilling, Paragon has completed systematic soil sampling (1,554 samples), linecutting (19.9 line kilometres of new cutting and 53.6 kilometres of grid refurbishment), airborne (175 line kilometres) and ground EM geophysical surveying (20.725 line kilometres) and ground Titan 24 survey (14.4 line kilometres) and borehole pulse EM geophysics (19 holes; 8,855 metres) at the Lemarchant Deposit (Copeland et al., 2008a, b, Copeland et al., 2009; Copeland, 2010; Copeland and Devine, 2011; and Devine et al., 2011). A summary of this work at the Lemarchant Deposit is presented in sections 9.0 and 10.0. 6.2.2 Spencer’s Pond Prospect Between 1981 and 1982 Noranda completed linecutting on the 372-2 grid (Spencer’s Pond) following up on airborne conductors. From 1990 to 1993 Noranda completed 446.6 metres of diamond drilling in 3 holes at Spencer’s Pond (SP90-01 to 02 and SP91-03). Other work in the Spencer’s Pond area included linecutting (Spencer's Pond 96 Extension Grid), soil sampling and a VLF-EM survey (Noranda, 1998). During winter 2001, Altius completed 787 metres of diamond drilling in 5 holes at Spencer’s Pond (SP01-01 to SP01-05). All drill holes were surveyed using borehole Pulse-EM (“PEM”) geophysics (Smith et. al., 2001; Barbour and Churchill, 2001; and Dalton, 2000). Altius also completed a geological mapping, drill core re-logging, and lithogeochemical sampling on the Spencer’s Pond prospects, deepening of drill hole SP01-04 and surveying the hole with Time-Domain EM (Barbour and Churchill, 2002 and 2003). In 2005, Altius compiled existing geological and geophysical data and created 1:5,000 scale geological base maps and completed 25.35 kilometres of linecutting on the Spencer’s Pond grid and a southern extension of the Lemarchant grid. In late 2006, Altius completed one drill hole (SP06-01; 425 metres) that was designed to test a borehole PEM anomaly along the Spencer’s Pond alteration zone (Winter et al., 2006). Associated with the drilling, 9 kilometres of road into the Spencer’s Pond prospect was rehabilitated. Drilling intersected zones of disseminated pyrite and base metal sulphides with concentrations from 1-5%. No samples were collected from the drill hole. 6.2.3 Rogerson Lake Prospect In 1981, Noranda completed linecutting on the Prescott and Monkstown grids following up on priority airborne conductors from the 1974 Aerodat survey. In addition, soil sampling and ground geophysical surveys (CEM, VLF-EM, HLEM, magnetics and gravity (partial coverage)) were completed from 1981 to 1982. Till sampling was successful in outlining several areas with



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anomalous Cu, Pb, Zn and Ag, including two sites which returned greater than 5,000 ppm Pb (Noranda, 1998; Reid, 1981). Subsequent trenching and prospecting of the till anomalies located numerous boulders of massive and banded pyrite. A heavy mineral separate of tills at one of these sites assayed 17.2% Pb. From 1983 to 1994, Noranda completed 28 broadly spaced drill holes (3,514 metres) throughout the Rogerson Lake Prospect targeting a combination of priority airborne conductors and semi-massive to massive pyrite exposed in trenches. Several drill holes intersected stringer sulphide mineralization within strongly altered, coarse felsic pyroclastic rocks. One drill hole (MT90-01) intersected semi-massive pyrite (up to 50%) over widths up to 0.5 metres, whereas another drill hole (PG90-01) intersected several banded pyrite/argillite horizons within felsic volcanic rocks that returned assays of 7.54 g/t Ag and 7.88 g/t Ag over 0.8 and 0.4 metres, respectively (Noranda, 1998). Hole 372-11 intersected 0.77% Zn from 30.7 to 33.2 metres within felsic volcanic rocks immediately beneath exhalative pyritic mudstone at a mafic-felsic contact. In December 2000, Altius Resources Inc. (“Altius”) optioned the South Tally Pond Block from Noranda. During the winter of 2001, Altius completed 160.62 metres of diamond drilling in one hole (RL01-01) at the western end of the Rogerson Lake Prospect (Barbour and Churchill, 2001; Smith et al., 2001). No significant results were obtained.

7.0 GEOLOGICAL SETTING AND MINERALIZATION

7.1 Regional Geology

The South Tally Pond Project is located within the Dunnage tectonostratigraphic zone of the Canadian Appalachians (Williams, 1979; Figure 7-1). Rocks within the Dunnage zone include volcanic and sedimentary rocks of back-arc and island-arc (e.g. Tally Pond Volcanic Belt) affinity, associated intrusions and ophiolitic rocks. Volcanism was active as early as the late Precambrian and continued sporadically until the Devonian. The Dunnage Zone has been subdivided into the Notre Dame and Exploits subzones, representing volcanic belts that formed on the Laurentian and Gondwanan sides of the ancient Iapetus Ocean, respectively (van Staal et al., 1998). These subzones are separated by an extensive fault system termed the Red Indian Line. Both the base metal-bearing Buchans Group (Swanson and Brown, 1962) and Victoria Lake supergroup (Evans and Kean, 2002; Rogers and van Staal, 2002) are situated in the Notre Dame and Exploits subzones, respectively. The Buchans Group is comprised of mafic and felsic volcanics and associated volcaniclastic and epiclastic rocks (Thurlow and Swanson, 1981). The Buchans Group is best known for hosting the world-class, high grade, polymetallic Buchans Mine which produced 16.2 million tonnes of ore containing 14.51% Zn, 1.33% Cu, 7.56% Pb, 126 g/t Ag, and 1.37 g/t Au between 1928 and 1984 (Kirkham, 1987). The South Tally Pond Project is underlain by rocks of the Victoria Lake supergroup (Evans and Kean, 2002; Rogers and van Staal, 2002). The Victoria Lake supergroup consists of a structurally complex, composite collage of bimodal Neoproterozoic to Ordovician arc-related magmatic and sedimentary rocks (Figure 7-1). These comprise at least six distinct lithologic assemblages, bounded by the Red Indian Line to the northwest and the Victoria Lake Shear Zone to the southeast, with the volcanic packages defining an overall northwest younging arrangement



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(Rogers and van Staal, 2002; Valverde-Vaquero and van Staal, 2002; Zagorevski et al., 2003). From west to east the assemblages include: the Pats Pond assemblage (488 Ma?), the Tulks Hill assemblage (498 +6/-4 Ma; 495 ± 2 Ma), the Long Lake assemblage (~505 Ma), Harpoon Brook assemblage (pre-Caradocian clastic sedimentary rocks), the Tally Pond assemblage (513 ± 2 Ma, 509 ± 1 Ma, 512 ± 2 Ma, 514 ± 7 Ma), and the Burnt Pond/Spencer’s Pond assemblage (~563 Ma, 572 ± 4 Ma). The contacts between the different assemblages are high-strain zones and are generally interpreted to be thrust faults. The Tally Pond assemblage is referred to as the Tally Pond Volcanic Belt for the remainder of the report. The Victoria Lake supergroup hosts numerous base metal-bearing VMS deposits, showings and extensive alteration zones, and several gold deposits and showings (Kean and Evans, 1998a, b; Kean et al., 1981; Moore, 2003; Figure 7-1). This mineralization is distributed throughout all of the lithotectonic assemblages that comprise the supergroup. The Tulks Hill assemblage contains at least eight known massive sulphide deposits, some of which are currently undergoing evaluation, including the Boomerang Deposit of Messina Minerals with an indicated mineral resource totalling 1,364,600 tonnes grading 7.09% Zn, 3.00% Pb, 0.51% Cu, 110.43 g/t Ag, and 1.66 g/t Au, and an inferred mineral resource of 278,100 tonnes grading 6.72% Zn, 2.88% Pb, 0.44% Cu, 96.53 g/t Ag, and 1.29 g/t Au (at a 1% Zn cut-off grade). Domino, adjacent to Boomerang and thought to be the same mineralized horizon, hosts another 411,200 tonnes inferred mineral resource grading 6.3% Zn, 2.8% Pb, 0.4% Cu, 94 g/t Ag and 0.6 g/t Au (Messina Minerals press release, June 21, 2007). The Long Lake assemblage hosts four known massive sulphide lenses that occur over 5 kilometres of strike length. The massive sulphide is associated with barite and is underlain by intensely altered felsic volcanic rocks containing stringer and disseminated base metal-bearing sulphides (messinaminerals.com). The Tally Pond Volcanic Belt contains five massive sulphide lenses at the Duck Pond and Boundary deposits, with an aggregate size of approximately 20 million tonnes, with calculated measured and indicated mineral resources of 5.1 million tonnes averaging 3.6% Cu, 6.3% Zn, 1.0% Pb, 64 g/t Ag and 0.9 g/t Au for both the Duck Pond and Boundary deposits (MRDI, 2001). MRDI also reported an additional inferred resource of 1.1 million tonnes grading 2.6% Cu, 5.6% Zn, 1.2% Pb, 58 g/t Ag, and 0.6 g/t Au (Figure 7-2). The Burnt Pond/Spencer’s Pond assemblage hosts a high-grade massive sulphide occurrence at Burnt Pond, and extensive VMS-style alteration zones.



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Figure 7-1: Regional Geology and Mineral Occurrences of the Victoria Lake supergroup.



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7.2 Property Geology

7.2.1 Stratigraphy

The South Tally Pond Project is underlain by rocks of the Tally Pond Volcanic Belt (Kean and Strong, 1975; Kean and Jayasinghe, 1980 and 1982; Evans and Kean, 2002; and Pollock et al., 2002; Figures 7-2 and 7-3). The Tally Pond Volcanic Belt consists of Cambrian-aged volcanic, volcaniclastic and sedimentary rocks that extend from Victoria Lake northeast to Burnt Pond. The rocks are sub-divided into two main volcanic sequences: the Lake Ambrose and Boundary Brook formations. Grouped in with the Tally Pond Volcanic Belt are a series of older Neoproterozoic-aged sedimentary and volcanic rocks of the Burnt Pond formation and the Spencer’s Pond formation. The Lake Ambrose formation consists of variably amygdaloidal, locally porphyritic, pillowed to massive mafic flows, with lesser breccias, autoclastic, hyaline and reworked tuffs, and dikes (Kean and Jayasinghe, 1980; Evans et al., 1990; Pollock et al., 2002a, b). These rocks are compositionally sub-alkalic basalts or basaltic andesites with a depleted island-arc tholeiitic signature (Figure 7-2; Pollock et al., 2002a, b). The mafic volcanic rocks are variably magnetic producing local magnetic highs (e.g. Lemarchant Deposit; Figure 7-4). The mafic volcanic rocks of the Lake Ambrose formation overlie felsic volcanic rocks of the Boundary Brook formation and are intricately intermingled and interlayered at their contacts; indicating synchronous deposition. The Boundary Brook formation consists of felsic flows that are variably massive to pseudo-brecciated and locally flow banded, breccias, tuffs and quartz porphyry with rhyolitic to dacitic composition and arc geochemical signatures. The contact between the Boundary Brook and generally overlying Lake Ambrose formation are commonly marked by a relatively thin (<1 to 20 metre) sequence of argillite, siltstone or pyritic mudstone that marks a hiatus in volcanic activity atop the rhyolite flows and domes of the Boundary Brook formation. It is this stratigraphic break that marks the top of volcanogenic massive sulphide deposits and occurrences within the Tally Pond Volcanic Belt (e.g. Duck Pond, Boundary, and Lemarchant). These argillite and mudstone sequences form relatively short strike length (<1 to 4 kms) conductors within the belt that are targets for base metal exploration (Figure 7-5). The Lemarchant microgranite is a large (6 km by 1 km) bimodal felsic/mafic intrusive body centred on the Lemarchant Deposit and the Rogerson Lake Prospect. The Lemarchant microgranite is described as fine- to medium-grained quartz and feldspar porphyritic felsic intrusive rocks. This Lemarchant microgranite has a similar geochemical signature to the felsic volcanic rocks of the Boundary Brook formation suggesting that the intrusion is syn-volcanic and related to VMS alteration and mineralization at Lemarchant and Rogerson Lake (Squires and Moore, 2004).



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Figure 7-2: Geology and Mineral Occurrences of the South Tally Pond Project (after Squires and Hinchey, 2006).



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Figure 7-3: Stratigraphic Section - Tally Pond Volcanic Belt (after Squires and Moore, 2003).



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Figure 7-4: Airborne Magnetic Map - South Tally Pond Project.



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Figure 7-5: Airborne Conductivity Map - South Tally Pond Project.



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The Spencer’s Pond formation comprises an 8 km long belt of bimodal volcanic and associated sedimentary rocks located along the southeast boundary of the property. The Spencer’s Pond formation has been subdivided into four units including: a felsic volcanic unit, a chloritoid-rich unit, a volcaniclastic unit and a mafic volcanic unit. The felsic volcanic rocks consist of strongly foliated, quartz-phyric fragmental and/or pseudo-fragmental rocks, with lesser massive, quartz-phyric to aphyric rhyolite that displays strong sericite, silica, ferroan carbonate and pyrite alteration. The VMS alteration indices are very similar to the strong alteration signatures seen at the Lemarchant Deposit and Duck Pond Mine (Barbour and Churchill, 2005). The Spencer’s Pond formation is interpreted to be Neoproterozoic in age based on a similar Nd isotopic signature as the Burnt Pond formation (ca. 572 ± 4 Ma (U-Pb)). These rocks are similar in age to the Valentine Lake trondhjemite (563 ± 2 Ma) and Crippleback Lake quartz monzonite (565 +4/-3 Ma) that occur along strike to the northeast and southwest at a similar structural and stratigraphic location (Pollock et al., 2002b; Rogers et al., 2006; McNicoll et al., 2008; Dunning et al., 1991). The volcanic sequences of the Tally Pond Volcanic Belt and the Spencer’s Pond formation are capped by a Caradocian-aged black shale unit. The black shale units form long strike length conductors through the belt due to high graphite, pyrite and pyrrhotite contents (Figure 7-5). The entire sequence is then overlain by Ordovician-aged marine turbidite and epiclastic rocks of the Harpoon Brook formation. The volcanic rocks of the Boundary Brook and Lake Ambrose formations are often in fault (thrust) contact with the younger overlying sedimentary sequences (Kean and Jayasinghe, 1982). The entire volcanic and sedimentary stratigraphy is cut by the Ordovician-aged Harpoon Gabbro. The Harpoon Gabbro is well exposed in the northeast portion of the property and associated sills and dykes crosscut all lithologies including mineralized rocks at the Duck Pond Mine. The Harpoon Gabbro forms a large magnetic high within the eastern part of the project area (Figure 7-4). The Silurian-aged Rogerson Lake Conglomerate covers the southeast margin of the property, directly underlying rocks of the Spencer’s Pond formation. The unit is deep red to grey, hematitic, and comprises pebble to cobble conglomerate with occasional beds of sandstone. The conglomerate is generally thick bedded and weakly to moderately sorted, with clast-supported texture. The conglomerate contact is discordant to the trend of units within the Spencer’s Pond formation, suggesting structural juxtapositioning, or that the conglomerate might have been deposited in a graben-like structure. This unit is interpreted as a fault-scarp, molasse-type sequence that is suspected to mask a Silurian or earlier structure (Kean and Evans, 1988). 7.2.2 Structure and Metamorphism

Major lithological contacts within the Tally Pond Volcanic Belt (e.g. black shale/felsic volcanics contacts) are defined by early stage thrust faults that mark early (D1) deformation and tectonic amalgamation of the various volcanic arc and sedimentary sequences within the region (Evans and Kean, 2002; Rogers et. al., 2006; Zagorevski and van Staal, 2002). The fault zones are generally marked by localized shearing and fault breccia development. Local thrust induced folds are observed on the property.



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All lithologies and mapped D1 thrust faults have been deformed about generally upright, open to tight, east-northeast-striking, southeast-vergent folds (F2/D2). This fold system marks progressive deformation and thickening of the volcanic belt and is associated with development of a weak to moderate pervasive easterly striking foliation. The F2 folds are gently shallow to doubly plunging, which causes multiple repetitions of the main lithological contacts within the belt. At the Lemarchant Deposit, the oldest deformation is recorded as a north-south striking, and moderately to steeply east dipping S1 foliation that is present in fine-grained mafic xenoliths/rafts within the plagiogranite sequence. Zones of ductile shearing largely observed in drill core represent an early stage fabric (S1). This shear fabric is often sub-parallel to lithological contacts and is commonly associated with sulphide-rich, carbonaceous shale units, or zones of locally intense Fe-carbonate and sericite alteration. This penetrative fabric is also observed to transgress lithological contacts and to define the Lemarchant Fault, a relatively early stage thrust fault affecting the stratigraphy at the Lemarchant Deposit (Collins, 1994; Squires and Moore, 2004). This similar relationship has been observed at the Duck Pond Mine where the hangingwall to the Duck Pond Deposit is truncated about the Duck Pond Thrust, an early stage, possibly reactivated thrust fault. The S1 fabric is tentatively interpreted to be related to early stage, lithology parallel thrust faulting within the Tally Pond Belt (Barbour and Churchill, 2005). The second deformation event is represented as a regional, east to southeast striking and moderately north dipping S2 foliation that is present in all lithologic units. The foliation is well developed in the fine-grained ductile lithologies, and macroscopically absent in the more competent lithologies such as pillow basalt flows and massive, siliceous rhyolites. The regional pervasive nature of the foliation, and its orientation at a relatively large angle to the trend of lithologic units, suggest that the foliation is an axial planar fabric related to regional folding. The nature of this folding is poorly documented because the volcanic stratigraphy is composed of thick, massive units that were originally far from planar. There is a general lack of bedded or thinly layered units in the stratigraphy, and where present, they are very poorly exposed (Barbour and Churchill, 2005). The Victoria Lake supergroup has a lower-greenschist facies metamorphic signature (Evans and Kean, 2002). Rock units of the Tally Pond Volcanic Belt are relatively well preserved with intact, primary volcanic textures that are easily discernible in surface outcrops and drill core. 7.2.3 Alteration and Mineralization

The South Tally Pond Block is host to multiple zones of typical hydrothermal alteration and mineralization. Alteration is widespread in both the Tally Pond Volcanic Belt and the Spencer’s Pond volcanics. Large alteration zones have been identified at the Lemarchant, Rogerson Lake, Bindon’s Pond and Spencer’s Pond prospects (Figure 7-2 and 7-5). Typical VMS-style mineralization is associated with alteration zones and can consist of semi-massive to massive sulphides or stringer and disseminated sulphides containing various proportions of pyrite, pyrrhotite, chalcopyrite, sphalerite, galena, bornite and massive barite.



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Massive sulphides at the Lemarchant Deposit and the Duck Pond Mine are hosted within and at the top of the Boundary Brook formation near the contact with the overlying Lake Ambrose formation (Figure 7-6). The main VMS zones are described below. Lemarchant Deposit: The Lemarchant Deposit is hosted within a 4000-metre long by 700-metre wide zone of VMS-style hydrothermal alteration (Figure 7-6). Alteration varies between intense silicification, sericitization, chloritization and barium-enrichment, with anomalous disseminated and stringer pyrite, base metal sulphides and lesser pyrrhotite. Lithogeochemical analyses of the altered rocks returned signatures (Ishikawa, ACNK, Ba/Sr; Hg/Na2O vs. Ba/Sr plot (the “Duck Pond Index or Duck Pond Field”; Collins, 1989)) comparative to those of the alteration surrounding the Duck Pond and Boundary deposits. Massive, semi-massive and stringer sulphide mineralization has been discovered at the Lemarchant Deposit as discussed in detail in section 7.3. Rogerson Lake Prospect: The Rogerson Lake Prospect is a zone of alteration within felsic volcanic rocks along the northwest side of Rogerson Lake (Figure 7-6). The alteration has been traced over an area measuring between 200 to 700 metres wide and 2 kilometres long. Intense chlorite alteration exposed in a trench in the centre of the zone compares favourably to alteration associated with the Lemarchant, Duck Pond and Boundary massive sulphide deposits. Pyrite, pyrrhotite, minor chalcopyrite and traces of sphalerite and galena have been encountered over most of the alteration zone. A diamond drill hole, located in the southwest part of the zone, intersected 20-25% stringer and disseminated pyrite over 5 metres, including semi-massive pyrite (up to 50%) over 0.5 metres. Zones of several metres of 10-15% stringer pyrite have been intersected within other drill holes located in the northeast part of the zone. Bindon’s Pond Prospect: The Bindon’s Pond Prospect is a zone of altered felsic volcanic rocks measuring 900 metres long by 200 metres wide that is located to the south of a mafic-felsic volcanic contact (Figure 7-6). Alteration is dominated by varying amounts of quartz, sericite, and chlorite, with abundant stringer pyrite and minor base metal sulphides. The presence of short strike length conductors and anomalous geochemistry provide a favourable target for initial drill testing. These felsic rocks are interpreted to be the folded eastern exposure of the felsic rocks seen at the Lemarchant Deposit. Spencer's Pond Prospect: The Spencer’s Pond Prospect comprises widespread disseminated and stringer sulphide mineralization, hosted by strongly altered rhyolite, volcaniclastic rocks and mafic volcanic rocks (Figure 7-6). The alteration encompasses most of the Spencer’s Pond volcanics within the property and is characterized by locally extensive chloritoid development, in addition to the normal sericite-quartz-chlorite-sulphide alteration. Sulphides within the alteration zone are mainly pyrite and pyrrhotite, with minor base metal sulphides, and lithogeochemical signatures of the rocks indicate a Duck Pond alteration signature, although, given the presumed late Neoproterozoic age of the Spencer’s Pond volcanics, this alteration predates the alteration within the Tally Pond Volcanic Belt.



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Figure 7-6: Geological Compilation Map - South Tally Pond Block.



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7.3 Lemarchant Deposit

The Lemarchant Deposit is centred on the north-south trending 100+00E baseline and extends from east-west section lines 99+00N and 112+00N on the Lemarchant grid at UTM 520880E, 5374800N (Figure 7-7). Outcrop exposure in the area is about 5%. Geological contacts projected from drill holes and surface mapping trend approximately north-south with a gentle to moderate dip (25 to 60 degrees) to the east in the main and southern parts of the deposit as seen on the surface geology plan map (Figure 7-7). To the northwest, the stratigraphy turns sub-horizontal to gently westerly dipping; outlining a broad up-right anticline. Decametre-scale fold patterns to the north of the prospect are evident from outcrop mapping and these mimic the regional fold patterns observed through the belt. In the east part of the deposit massive, pillowed or brecciated mafic volcanics conformably overly, altered to unaltered, felsic volcanic units to the west (Figures 7-3 and 7-7). The Lemarchant microgranite outcrops to the northwest corner of the map area and is interpreted to be the syn-volcanic intrusion related to the VMS alteration and mineralizing event (Pollock et al., 2002a and b; Moore, 2003; Squires and Moore, 2004). From youngest to oldest, the main stratigraphy consists of an upright sequence (generally 150-200 metres thick) of gently east dipping, aphyric, magnetite-bearing, pillowed, massive or brecciated mafic flows and flow breccias, and associated synvolcanic mafic dykes and sills. At the lower contact of this mafic package is a fine-grained, generally thin (<1 to 20 metres), conductive, pyrite mineralized mudstone horizon (Figure 7-8) that conformably overlies, or is intercalated with, massive sulphide and massive barite mineralization. The mineralized zone varies in thickness from less than 1.7 metre up to 30 metres. Below the mineralized zone is a package of moderate to strongly altered, and weakly to strongly mineralized felsic volcanic and volcaniclastic rocks. This felsic package varies in thickness, directly below the massive sulphide, from 30-50 metres before grading into less altered felsic volcanics that have been observed to be up to 250 metres thick. Faults are a prominent feature of the deformation history of the Tally Pond Volcanic Belt and are observed to truncate and offset mineralization at Duck Pond (Moore, 2003; Squires and Moore, 2004). At the Lemarchant Deposit, several east-west brittle fault structures have been identified by offsets of the stratigraphy. Outcrop patterns outline a northwest-striking fault, with minor dextral surface displacement, cutting through the Lemarchant Deposit. The faults have a strong magnetic expression, suggesting that its early history may have been as a growth fault, possibly controlling placement of the Lemarchant alteration system (Figure 7-9). Magnetic patterns, and offsets of the conductive response of the carbonaceous horizon along the northwest side of the property, indicate the presence of several west-northwest to east-west oriented faults. Evidence from drilling indicates that there are several of these E-W trending faults that affect the Lemarchant Deposit. Multiple drill pierce points on one structure define a steep, northerly dip and an offset of massive sulphides suggest extensional displacement along the fault resulting in approximately 30 metres of dip-slip movement. These structures are generally parallel to the orientation of sections, have a steep (~70o to 90o) dip and are recognized by broken, blocky and brecciated sections in the drill core. Although these structures may offset some of the stratigraphy, the extent of movement along these faults appears to be minimal.



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A gently, west-dipping, east-verging thrust fault (Lemarchant Fault) appears to cut the mineralization and underlying footwall sequence (Figure 7-7). The Lemarchant Fault has been observed in multiple drill holes as a strongly deformed, ductile structure with well developed fabric up to several metres wide. The fault is usually recognized by this deformation and a succession of felsic volcanics structurally overlying mafic volcanics which resemble the hanging wall mafic volcanics above the massive sulphide horizon. Several holes have been drilled through the mafic volcanics and have successfully intersected a second package of altered and stringer mineralized felsic volcanic rocks. This package of felsic volcanics is termed the Lower Felsic Block (LFB). The Lemarchant Deposit is comprised of semi-massive to massive sulphide between section 101N to 104N (the Lemarchant Main Zone – see Figure 7-7 for vertical surface projection) and two smaller mineralized intersections on sections 105N and 106N hosted within the LFB. Mineralization at the Lemarchant Deposit is characterized by high-grade, polymetallic massive sulphides and barite with significant precious metal (gold, silver) contents. Typically the mineralization is comprised of: disseminated to massive fine-grained, brownish pyrite; honey-brown, grey, white or rarely purple-red, fine to medium-grained sphalerite; fine-grained stringers of yellowish chalcopyrite; fine-grained, wispy grey-silver galena; and lesser medium-grained, peacock blue/purple bornite. Visible gold has also been observed in several holes and is easier to detect on split samples of core. Massive sulphide and metal zoning is evident within the Lemarchant Deposit. Namely, the deposit has a barite-rich cap, a lead-zinc sulphide-rich zone, which gives way to zinc-copper rich sulphides, and ultimately zinc-copper-rich stringers with depth. The paragenesis of the sequence is classic for VMS mineralization with early fluids likely dominated by barium, forming barite upon mixing with oxygenated seawater. This barite is cross-cut by bornite, likely the product of copper transport in highly oxidized fluids. The restriction of the bornite to barite zones suggests that bornite formed prior to lead-zinc mineralization. The sphalerite-galena ores, and galena in particular, cross-cut the barite and bornite, although galena is found with bornite suggesting partial overlap between the bornite stage of mineralization and the sphalerite-galena phase of mineralization. The sphalerite-galena stage is cross cut by chalcopyrite, suggesting that this is a later phase of mineralization (Piercey, S.J. pers. comm.; Copeland et al., 2009a and b). This classic shift from barite to lead-zinc sulphides (black ore or proto-ore), to more copper-rich sulphides (yellow ore) is similar to most VMS systems representing initial lower temperature venting (barite), through moderate temperature venting (black ore), to higher temperature (~300oC) venting (yellow ore) (e.g. Ohmoto, 1996). The massive sulphides of the Lemarchant Main Zone vary in thickness from 1.7 to 30.4 metres and are underlain by a sequence of intensely altered and barium-enriched felsic volcanic rocks. VMS-style alteration is typical at the immediate Lemarchant Deposit. Alteration varies between intense silicification, sericitization and chloritization, barite-enrichment with anomalous disseminated and stringer pyrite, base metal sulphides and lesser pyrrhotite. Ishikawa (Ishikawa, 1976) and ACNK (Al2O3/Total Alkali) are useful alteration indices in assessing the intensity of chlorite and sericite alteration. Ba/Sr is a useful ratio in determining the presence of Ba-enrichment in footwall rocks, suggesting proximity to hydrothermal seafloor venting. Typically, rocks at the Lemarchant Deposit with Ishikawa >50, ACNK >1.4, and Ba/Sr >25 are considered



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altered. Elevated alteration of felsic volcanic rocks is predominant below the massive sulphide mineralization but has also been observed north (on sections 104N to 108N) of the Lemarchant Main Zone in the LFB. This LFB is an important exploration target as it has similar felsic volcanic lithology and intense alteration and may represent the structural repetition of the host stratigraphy to the Lemarchant Main Zone massive sulphide mineralization. Airborne geophysical surveying has produced several shallow (< 200 metres), short strike length conductive trends of significance. Two short strike length airborne EM anomalies parallel and follow the mafic-felsic contact at the Lemarchant Deposit that marks the horizon hosting massive base metal sulphides at depth (Figure 7-8). The airborne EM anomalies are likely representative of pyrite and pyrrhotite-bearing mudstone and argillaceous sediment at the mafic-felsic contact that caps the massive sulphides and associated VMS-style alteration zone in the underlying felsic volcanic strata. The airborne magnetic data outlines two isolated magnetic highs just to the east of each of the linear conductive features at Lemarchant. Preliminary magnetic susceptibility readings on the Lemarchant drill core indicate that the magnetic highs are due at least in part to magnetite-bearing hangingwall mafic volcanics. The southern isolated magnetic high corresponds spatially with the extent of massive sulphide mineralization at depth (Figure 7-9).



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Figure 7-7: Geology Map - Lemarchant Deposit.



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Figure 7-8: Airborne Conductivity Map - Lemarchant Deposit.



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Figure 7-9: Airborne Magnetic Map - Lemarchant Deposit.



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8.0 DEPOSIT TYPES

The South Tally Pond VMS Project is being actively explored by Paragon for volcanogenic massive sulphide (VMS) deposits enriched in zinc, copper, lead, gold and silver. This type of mineralization and deposits are well known in the Buchans-Victoria Lake region within a geological setting that is highly prospective for such mineral deposits. Volcanogenic Massive Sulphide deposits are formed in a submarine volcanic environment by discharge of metal-bearing fluids onto or just beneath the sea floor following and during active deposition of volcanic lavas (Franklin et al., 1981; Franklin, 1993; Franklin et al., 2005; Gibson, et al., 1999; and Barrie & Hannington, 1999). These deposits are currently classified into five different types, largely based on the nature of the rocks hosting the massive sulphides deposit (Galley et al., 2007; Franklin et al., 2005). The Lemarchant and Duck Pond deposits are Bimodal-Felsic VMS deposits as they are predominantly hosted within stratigraphy containing >50% felsic volcanic rocks, less than 15% siliciclastic sediments and mafic volcanic rocks forming the remainder (Figure 8-1).

Figure 8-1: Bimodal Felsic vent complex model with typical alteration and metal zones (after

Galley et al., 2007).



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Key characteristics of these deposit types are that they commonly form concordant lenticular to tabular shaped bodies that overlie a footwall stockwork sulphide and hydrothermal alteration zone (chlorite, silica, sericite) that is generally discordant to the contacts of the host rocks (Date et al., 1983; Saeki and Date, 1980; Spitz and Darling, 1978). The massive sulphides and underlying stringer systems are often closely associated with felsic lava domes, volcaniclastic breccias, subvolcanic intrusions and synvolcanic fault zones. Discharge of hydrothermal fluids is largely controlled by a combination of synvolcanic fracture/fault zones and host rock permeability/porosity. VMS deposits commonly form at a favourable stratigraphic horizon within volcanic belts and are found in clusters throughout productive volcanic belts globally. For example, this favourable horizon may be a transition from felsic volcanism to mafic volcanism; or another transition that marks a fundamental shift in the nature of volcanic activity within the arc sequence. This transition generally records a significant hiatus in volcanism that is marked by a relatively thin sequence of either chemical or clastic sedimentary rocks that, depending upon proximity to the hydrothermal vent system, may be intimately associated with base metal sulphide deposition (hydrothermal exhalite; e.g. modern black and white smokers). Figure 8-1 presents an idealized section through a typical bimodal-felsic VMS vent system (Galley et al., 2007). Bimodal felsic VMS deposits are commonly found within more compositionally mature volcanic arcs and are usually more silver, zinc and barium-rich than the other VMS deposit types. Examples of these deposit types include: Kuroko, Japan; Skelleftea, Sweden; Tasmanian VMS deposits (Hellyer, Que River) and Buchans, Newfoundland.

9.0 EXPLORATION

Exploration completed on the South Tally Pond Block by Paragon since 2007 comprises soil sampling (1,554 samples), airborne electromagnetic and magnetic geophysical surveying (175 line kilometres), a ground EM geophysical survey (20.725 line kilometres), a ground Titan 24 geophysical survey (14.4 line kilometres), borehole pulse EM geophysics (19 holes; 8,855 metres), and diamond drilling (60 drill holes, 21,259 metres). All work is documented in company reports filed with the Department of Mines and Energy, Newfoundland and Labrador (Copeland et al, 2008a, b; Copeland et al., 2009; Copeland, 2010; Copeland and Devine, 2011; and Devine et al., 2011).

9.1 Soil Sampling

From February 19 to May 1, 2008 a program of B-horizon soil sampling was completed over the Lemarchant Deposit and the Bindon’s Pond prospect (Copeland et al., 2008b; Copeland et al., 2009). 851 samples covered the Lemarchant Deposit surrounding the historical samples collected by Noranda in the late 1980’s and early 1990’s and 602 soil samples covered the Bindon’s Pond prospect. At Lemarchant, samples were collected along the existing cut and chained grid lines with a dutch soil auger at 25-metre sample spacing and 100 metre line spacing. Soil samples were collected along GPS controlled flag lines in the Bindon’s Pond area with a dutch soil auger at 25-metre sample spacing and 100 metre line spacing along lines oriented 340 degrees (true). Samples were analysed for Au, Ag, Cu, Pb, Zn at Eastern Analytical Limited



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(“Eastern Analytical”) in Springdale, NL and by 33-element ICP-ES (method ME-ICP61) at ALS Minerals in North Vancouver, BC (“ALS Minerals” or “ALS”). At the Lemarchant Deposit, soil sampling to the south and north (along strike) from previous soil sampling programs has extended the areas of anomalous geochemistry by 1500 metres to the south and 300 metres to the north of previous sampling with anomalous Zn (up to 880 ppm), Pb (up to 2300 ppm), Cu (up to 240 ppm), Ag (up to 5.3 g/t) and Au (up to 50 ppb). The outcropping stringer mineralized felsic volcanic rocks to the west of the baseline produce a strong multi-element B-horizon anomaly that corresponds well with the mafic/felsic contact. The strongest soils observed are immediately up-dip of the drilled massive sulphides and to the north of the current area of drilling. This soil anomaly corresponds to the area of strongest electromagnetic response from the airborne EM surveys flown in 2004 and 2011 and previous surveys upon which Noranda based its early stage reconnaissance drilling (holes 372-1 and 372-2). The northern half of this coincident stratigraphic, geochemical (soils and lithogeochemistry) and geophysical (EM and magnetic highs) trend has not yet been systematically drill tested. At Bindon’s Pond, an area located approximately 2 kilometres east of the Lemarchant Deposit, the soil sampling program identified zones of anomalous zinc (up to 1800 ppm), lead (up to 91 ppm), silver (up to 7.53 g/t) and gold (up to 138 ppb). The soil samples were collected over an area of mapped altered felsic volcanic rocks with alteration and mineralization similar to that mapped at the Lemarchant Deposit. From June 10 to 12, 2008, Stea Surficial Geological Services of Halifax, Nova Scotia along with Paragon personnel collected 101 B-horizon soil samples over 3 lines covering the mafic-felsic contact on the Lemarchant Deposit (Copeland et al., 2009; Stea, 2008). Two lines were designed to sample soil immediately above massive sulphide. Sampling was completed as an orientation enzyme leach soil survey with the objective of comparing this soil analytical technique with that of historic B-horizon soil sampling with conventional ICP-analyses for the area and also hoping to provide “apical” anomalies that might directly indicate the presence of buried (overburden or bedrock) massive sulphides within the grid area. The soil sampling provided a strong apical anomaly (Pb, Ag) that corresponds with the historic B-horizon soil anomalies. This anomaly corresponds with the surface projection of the mineralized felsic volcanics but does not directly overly the massive sulphide lens at depth. It is concluded that the enzyme leach digestion/analytical approach is no more effective in this environment/case than traditional B-horizon soil ICP analysis.

9.2 Airborne Geophysical Survey

In 2011, the Lemarchant deposit and surrounding area was covered by 75 metre line-spaced helicopter-borne magnetics and time-domain electromagnetics (AeroTEM IV) at a more optimal flight line orientation (090o-270o) than a previous survey (Aeroquest, 2011; Copeland and Devine, 2011). A total of 147 line kilometres of surveying was completed. Two short strike length airborne EM anomalies parallel and follow the mafic-felsic contact at the Lemarchant Deposit that marks the horizon hosting massive base metal sulphides at depth. The



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airborne EM anomalies are likely representative of pyrite and pyrrhotite-bearing mudstone and argillaceous sediment at the mafic-felsic contact that caps the massive sulphides and associated VMS-style alteration zone in the underlying felsic volcanic strata. A break between the two airborne conductive trends corresponds with the location of massive sulphide and barite at depth and these massive sulphides have limited associated conductivity response, indicating that the airborne conductors represent mudstone/argillite horizons that flank the massive base metal sulphide mineralization (Figure 7-8). The current survey has increased the strike extent of the conductor at the Lemarchant Deposit from 450 to 800 metres on the northern anomaly and 350 to 600 metres on the southern anomaly (Figure 7-8). The increase in strike extent may be due to the revised line orientation and spacing in the current survey. Several other short strike length (200-400 metres) anomalies (4 in total) of similar conductance to the southeast of the Lemarchant Deposit are apparent in the airborne data (Figure 7-9). Limited drilling has tested these anomalies. For example, one drill hole (SP01-01) to the SE was collared 300 metres to the west of the centre of one of the anomalies. The drill hole intersected stringer base metal sulphides with anomalous gold at a depth of 100 and 125 metres. Although the drill hole did not encounter altered felsic volcanic rocks, remaining in mafic to the end of the drill hole at 149.35 metres, it is possible that the altered felsic volcanic stratigraphy is present along strike or at depth. The airborne conductors are representative of sulphide and graphite bearing mudstone or argillite horizons at the mafic-felsic contact or massive base-metal sulphide mineralization. These conductors form attractive targets for follow-up drilling. As discussed in section 7.3 the airborne magnetic data outlines two isolated magnetic highs. The southern isolated magnetic high corresponds spatially with the extent of massive sulphide mineralization at depth while the northern magnetic high remains untested by diamond drilling (Figure 7-9).

9.3 Ground Geophysical Surveys

9.3.1 Titan-24

From July 5th to 23rd, 2008, Quantec Geoscience Ltd. of Toronto, Ontario (“Quantec”) completed 14.4 line kilometres of Titan-24 DCIP and MT surveying (Copeland et al., 2009b). The survey was carried out over 6 exploration grid lines 98N, 100N, 102N, 104N, 106N and 108N on the Lemarchant grid with surveying covering 2.4 kilometres per line (minimum line length). The Titan 24 Deep Earth Imaging system measures parameters of DC (resistivity), IP (chargeability) and MT (magnetotelluric resistivity). With the current survey it is interpreted that the Titan-24 survey is providing sufficient resolution to a depth of 300-350 metres for the DC/IP component and to a depth of approximately 800 metres for the MT component. The survey was designed to cover the main mafic-felsic stratigraphic transition that hosts polymetallic massive sulphide mineralization. The survey was also designed to cover the western extent of the felsic stratigraphy extending to its contact with the Lemarchant microgranite. The objective of the survey was to provide a deep geophysical (resistivity, chargeability and magnetotelluric) imaging



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and detection of massive sulphide mineralization at depths from <300 metres to 1,400 metres within the survey area. The Titan geophysical survey outlined several high priority, multi-line anomalies in the west, central and east portions of the surveyed grid area.

Western Titan Trend In the west part of the grid, a strong IP chargeability response occurs over an 800 metre strike length. On sections 98+00N to 102+00N a chargeability anomaly with occasional weak resistivity lows occurs in the western part of the grid. This anomaly is broadly (100-200m) coincident with the contact between altered felsic volcanic rocks and the Lemarchant microgranite to the west. This western anomaly “merges” at depth with the anomaly in the central part of the grid and may represent the Lower Felsic Block (evidenced on section 106+00N in drill holes 06, 25, 27, 28 and 29). This western anomaly represents a new, untested area of the property. Central Titan Trend In the central part of the grid, a moderate to strong, near surface (<100 to 300 metres) combined IP chargeability high and resistivity low anomaly extends over all six surveyed lines. The multi-line IP response corresponds with the strongly mineralized felsic volcanic rocks and base metal massive sulphides drilled on sections 101 to 104N. The IP chargeability high on section 106N coincides with pyrite-pyrrhotite-magnetite mudstone with underlying higher Zn and Cu grades relative to other drill holes and coincident more intense (proximal) alteration. Drilling of this target (drill hole LM08-37) west of drill hole LM08-29 resulted in the discovery of massive sulphides at the top of the chargeability high. Eastern Titan Trend In the east part of the grid, a moderate to strong conductor is evident over a 600 metre strike length. The geophysical anomaly may represent the fold repeated favourable felsic volcanic stratigraphy to the east of the previous drilling. The anomaly coincides with anomalous copper-lead-zinc-silver surface soil geochemistry and ground/airborne EM conductors. 9.3.2 Deep Penetrating Electromagnetics (DPEM)

From June 2nd to June 15th, 2011, 20.725 line kilometres of deep penetrating electromagnetic (DPEM) geophysical survey was completed by Eastern Geophysics Ltd. of Corner Brook, Newfoundland, over the Lemarchant Deposit to test for conductive bodies below the depth limit of existing airborne surveys (Devine et al., 2011). The equipment used was the Crone Pulse EM system. The surface survey consisted of a 20 channel digital receiver, a 4.8 kW transmitter, an 11 HP Motor Generator, and a surface coil. The synchronization for this surface survey was carried out with crystal clocks. The survey utilized a very large 2 by 2 kilometre In-Loop layout as the size of the loop is critical to see below the limit of the airborne EM survey. In this set-up, a large loop was laid out with all lines read inside the loop. A total of 9 lines were surveyed from L96+00N to L112+00N and the 200 metre spaced lines were read at 50 metre station intervals. This entire survey measured 3 components (X, Y& Z) of the secondary field. The In-Loop mode is utilized more frequently when working with horizontal structures of less than 45o dips. If



41

vertical steeply dipping bodies (dips greater than 45°) are expected, an out of loop mode is most common. The first review of this survey did not provide any discernible deep, conductive targets over the Lemarchant Deposit. Upon completion of the survey and analysis of the data it was revealed that the size of loop was effective but was well underpowered for the deep detection of conductive bodies. Additional surveys may be conducted in the future with several modifications to the survey design, including doubling the loop wire laid out and possibly doubling the transmitter set up, to improve the collection of data. The survey generated conductors very similar to that outlined by the airborne EM surveys. Interpretation of the Pulse EM surface dataset indicates that the numerous conductors detected and modeled from the borehole Pulse EM surveys and the conductive trends recognized in the 2008 Titan 24 geophysical survey were not reproduced by the surface Pulse EM geophysical survey. Survey parameters, such as insufficient current in the large loop, are thought to have been an influencing factor in the results.

9.4 Borehole Geophysical Surveys

Borehole Pulse EM geophysical surveys have been completed during three programs by Paragon on a total of 19 drill holes (8,855 metres) as outlined in Table 9-1 (Copeland et al., 2008a; Copeland , 2010 and Devine et al., 2011). The surveys were carried out by Eastern Geophysics Limited of Corner Brook, NL and the resultant data has been interpreted and modelled by Kevin Ralph, P.Geoph. of Crone Geophysics and Exploration Ltd. and Bob Lo, P. Eng. Table 9-1: Pulse EM Programs at the Lemarchant Deposit 2007 to 2011.

Program Dates Drill holes Completed

Drill hole Extensions Metres Completed

Fall 2007 Dec. 10 to 20, 2007 3 LM07-16, 17 and 18 1,110Winter 2010 Feb. to March,

2010 11 LM93-11; LM08-19, 29, 24, 37,

38, 39; LM10-41, 42, 43, 45 4,915

Winter 2011 March 30 to April 4, 2011

5 LM08-43, LM10-49, 51, 52, 53 2,830

Total 19 8,855 The borehole EM survey data has provided abundant targets for follow-up drill testing. In the North Target area, two 250-metre long untested and parallel conductive trends extend north of sections 105N and 106N. Each of these conductors corresponds with known zones of massive sulphide mineralization or intensely altered and stringer mineralized felsic volcanic rocks. Also in the North Target area an extensive non-conductive pyritic mudstone horizon intersected in drill holes LM08-24, LM10-45 and LM93-11 requires follow-up drill testing. This horizon is underlain by altered felsic volcanic rocks with stringer base metal mineralization that, to the west in drill hole LM08-37, hosts massive base metal sulphides. Follow-up drill testing to the south and up-dip of massive sulphide mineralization intersected in drill hole LM08-24 (lower north



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target) and the semi-massive sulphide and barite intersected in drill hole LM08-19 (upper north target) are priority target areas. 9.4.1 Lemarchant Main Zone

In the central part of the Lemarchant Deposit, the borehole EM data shows encouraging off-hole responses that point directly to massive base metal sulphides encountered in adjacent drill holes. Deeper conductors potentially explained by exhalative sulphide horizons encountered at depth (~400 metres) in drill holes LM07-15 and LM07-16, and weak to moderate hydrothermal alteration in these vectors, potentially indicate a southerly analogue to massive sulphides encountered at depth in drill hole LM08-24. 9.4.2 North Target area

The North Target area of the Lemarchant Deposit comprises several broadly spaced drill holes north of section 10450N, where an interpreted east-west fault zone is currently interpreted to disrupt the relatively continuous stratigraphy to the south that hosts the Lemarchant Main Zone massive sulphide lens. Drilling in 2008 in this area was successful at intersecting massive base metal sulphides in hole LM08-37 and associated massive pyrite and pyrrhotite exhalite and iron formation in hole LM08-28 and 29 and a narrow section of semi-massive sulphide and barite in hole LM08-19. These zones of massive sulphide (holes LM08-29 and 37 and in part hole LM08-38) are underlain by thick zones of VMS stringer mineralization and intense hydrothermal alteration. 9.4.3 South Target Area

The South Target area of the Lemarchant Deposit comprises several broadly spaced, mainly shallow historic, drill holes south of section 101N. Borehole EM surveying of LM08-39 in 2008 produced and off-hole response up dip of the drill hole which led to the interpretation that the southerly continuation of massive sulphides from drill hole LM07-13 likely passed through up-dip of the stratigraphy intersected in drill hole LM08-39 (Copeland et. al., 2009; Devine et al., 2011). In the South Target area, limited borehole EM surveying and follow-up drilling indicates that the graphitic argillite or pyritic mudstone unit that usually caps the massive sulphide mineralization continues south of section 100N (and discovery hole LM07-13) and is associated with strong footwall hydrothermal alteration. Strong footwall alteration from drilling on section 99N supports the continuation of the mineralizing to the south. Additional surveying and drilling is required in this area to locate the southern continuation of Lemarchant massive sulphide lens. Numerous borehole PEM conductors associated with these areas remain untested as follows:

• South of section 101N along strike from massive sulphides intersected in drill hole LM07-13;

• North of section 108N coincident with the exhalative sediments intersected in drill holes LM11-49 and 50;



43

• North of section 106N coincident with exhalative sediments and stringer to semi-massive sulphide mineralization intersected in the Lower Felsic Block in drill holes LM08-29, 28 and 37; and

• At depth between section 101N and 106N where stringer to massive sulphides and associated exhalative sediments have been intersected in drill holes LM08-16 and 24.

10.0 DRILLING

A total of 74 drill holes for 24,276.44 metres have been drilled at the Lemarchant Deposit including 14 historic drill holes (372-1 to 371-2; LM91-01 to LM91-06; LM92-07 to LM92-08; LM93-09 to LM93-12). Sixty of those drill holes (21,259.1 metres) were completed by Paragon between 2007 and 2011. Drilling has outlined three separate massive sulphide lenses (the Lemarchant Main Zone, 105N and 106N lenses) over a 500-metre strike length (Figures 10-1 to 10-9; Copeland et al., 2008a, b, Copeland et al., 2009 and Copeland, 2010, Devine et al., 2011). Diamond drilling was completed under four separate programs as outlined in Table 10-1 and Table 10-2. Table 10-1: Diamond Drill Programs at the Lemarchant Deposit 2007 to 2011. Program Drill holes

Completed Drill holeExtensions

Metres Completed

Contractor

Fall 2007 (Aug. 22 to Dec. 19, 2007)

6 (LM07-13 to 18) 2,851.1 Cabo Drilling Atlantic Ltd.

Winter 2008 (Feb. 7 to April 10, 2008)


Fall 2008 (Sept. 9 to Nov. 11, 2008)


Winter 2010 (Feb. 12 to April 1, 2010)

8 (LM10-41 to 48) 2 (LM93-11, LM08-24)

3,488.8 New Valley Drilling Company Ltd.

Winter - Summer 2011 (Feb. 11 to Sept. 10, 2011)

24 (LM11-49 to 72) 2 (LM07-17, LM08-28)

7,746.2 New Valley Drilling Company Ltd.

Total 60 21,259.1

10.1 Methodology

Cabo Drilling Atlantic Ltd. (2007 and 2008 programs) and New Valley Drilling Company Ltd. (2010 and 2011 programs) of Springdale, NL carried out the diamond drilling using unitized Boyles 37 (or equivalent) drill rigs equipped to drill NQ-sized core. Drill sites and moves were made using a wide-pad bulldozer or nodwell as wet, boggy conditions typify the Lemarchant area. Core was placed in wooden trays supplied by Osmond’s Saw Mill in Millertown, NL. Drill collars were accurately measured with differential GPS by a contractor from Eastern Geophysical Ltd., marked with 2" X 2" wooden posts, and labelled with aluminum tags. A Reflex single-shot downhole survey instrument was used to monitor drill hole deviation, with a test taken approximately every 60 metres down the hole. Drilling utilized an 18 inch reaming shell and a hexagonal core barrel to keep the drill holes from deviating.



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Drill core was logged by Sean McClenaghan (2007), Barry Sparkes (2008), Ralph Stea (2008), Baxter Kean (2008), Ryan Toole (2008), Dan Downton (2008), Floyd House (2010), David Copeland (2007-2011), Bryan Sparrow (2011) and Christine Devine (2011), in a secure, well lighted core logging facility in Buchans Junction, Newfoundland. The diamond drill programs were supervised by David Copeland, P.Geo. and Christine Devine, P.Geo. Drill core from the 2007 to 2011 drill programs is stored in steel racks at Paragon’s core logging facility in Buchan’s Junction, NL. All sampled drill core intervals were cut in half using a diamond-bladed rock saw. Half of the core was sent to Eastern Analytical in Springdale, NL, where samples were analysed for Au, Ag, Cu, Pb and Zn. The remaining half of the core is stored in wooden core trays with the sampled intervals marked for each sample. All sample pulps resulting from initial preparation for assay at Eastern Analytical were forwarded to ALS Minerals for 33 trace-element ICP analysis by the method ME-ICP61 and selected samples were sent for whole rock geochemical analysis by ME-XRF06 and ME-MS81. A total of 6,931 drill core samples were submitted for analysis, along with 711 blanks and standards. All drill core samples were delivered to Eastern by Paragon personnel or courier immediately following logging and sampling of the drill hole. Specific gravity readings were recorded on 950 drill core samples via the mass in air/mass in water method. 769 of the specific gravity readings fall within the geological solid used for the resource calculation. Drill data is stored digitally in an MS Access database with hardcopy logs stored at Paragon’s field office in St. John’s, NL.

10.2 Drilling Results

The first of 6 holes drilled in 2007 intersected a massive sulphide zone containing 7.49% Zn, 0.77% Cu, 0.07% Pb, 40.29 g/t Ag and 1.21 Au over 5.05 metres in hole LM07-13. Three of the five subsequent holes were successful in intersecting massive sulphides with significant assay results of:

• 5.26% Zn, 1.06% Cu, 1.52% Pb, 92.56 g/t Ag and 0.85 g/t Au (5.4 m) (LM07-14); • 9.46% Zn, 0.81% Cu, 2.13% Pb, 73.44 g/t Ag and 1.85 g/t Au (14.6 m) (LM07-15); • 12.38% Zn, 2.61% Pb, 0.45% Cu, 50.32 g/t Ag and 0.74 g/t Au (14.6 m) (LM07-17)

The 2008 drilling program followed up the success of the 2007 discovery. The intention of the 2008 program was to step out largely from significant economic intercepts to expand on the existing mineralization. A newly discovered massive sulphide horizon was intersected in hole LM08-37 on section 106N with 9.32% Zn, 0.45% Pb, 0.97% Cu, 0.26 g/t Au and 16.10 g/t Ag over 3.0 metres. One drill hole intersected the Lemarchant Main Zone with significant assay results:

• 5.92% Zn, 2.19% Pb, 0.68% Cu, 2.14 g/t Au and 102.7 g/t Ag (8.1 m) (LM08-33).

The 2010 winter drilling program focused on the Lemarchant massive sulphide discovery and consisted of 10 diamond drill holes (3,489 metres; LM10-41 to 48 and extensions to LM93-11 and LM08-24). One drill hole drilled in 2010 intersected the best mineralization to-date containing 9.30% Zn, 2.28% Pb, 0.91% Cu, 60.37 g/t Ag and 1.41 g/t Au over 30.1 metres in



45

LM10-43. An extension to drill hole LM08-24 led to a newly discovered lens on section 105N. Highlight assay results include:

• 4.30% Zn, 0.16% Pb, 0.30% Cu, 36.3 g/t Ag, and 0.38 g/t Au (8.4 m) (LM10-46); • 6.60% Zn, 0.68% Pb, 0.61% Cu, 28.38 g/t Ag and 0.46 g/t Au (6.0 m) (LM08-24ext).

In 2011, drilling (24 drill holes + 2 drill hole extensions) designed to expand the current mineralization and to infill between known mineralization to provide sufficient information for a resource calculation. This program was successful in delineating the Lemarchant Main Zone and multiple drill holes intersected thick intervals of base metal massive sulphides with significant high-grade precious metal contents. Highlight assay results include:

• 11.83% Zn, 1.61% Cu, 3.27% Pb, 528.31 g/t Ag and 3.13 g/t Au (10.3 m) (LM11-62); • 12.74% Zn, 1.65% Cu, 3.27% Pb, 185.75 g/t Ag and 10.13 g/t Au (7.0 m) (LM11-63).

The Lemarchant Main Zone extends over 300 metres, remains open up-dip and to the south, and is interpreted to continue down-dip in the fault displaced lower felsic block. The massive sulphide mineralization has been intersected at vertical depths of 150 to 220 metres below surface. All highlight assay results are presented in Table 10-3. These include intercepts of greater than 3% Zn, 50 g/t Ag, 1 g/t Au or any combination of these values. A complete list of composited assay results for each drill hole is presented in Appendix I at the end of this report.



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Figure 10-1: Drill hole Location Map - Lemarchant Deposit.



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Table 10-2: Drill Hole Locations and Descriptions – Lemarchant Deposit.

Drill hole UTM North

UTM East

Grid North

Grid East Elevation Length Azimuth Inclination Date Started Date Finished

372-1 5375230 521025 10700 10125 342 91.4 270 -50.0 March 4, 1983 March 6, 1983 372-2 5374415 520849 9900 9987.5 335 80.5 270 -51.0 March 8, 1983 March 9, 1983 LM91-01 5374519.43 520776.16 10000 9915 336.22 128.4 270 -50.0 June 3, 1991 June 4, 1991 LM91-02 5374512.23 520876.31 10000 9997 336.08 209.4 270 -50.0 August 13, 1991 August 17, 1991 LM91-03 5374413.93 520792.04 9900 9928 336.39 164.6 270 -50.0 August 18, 1991 August 20, 1991 LM91-04 5374613.91 520823.05 10100 9950 336.02 135.7 270 -45.0 August 20, 1991 August 22, 1991 LM91-05 5374219.00 520859.00 9717 10000 338.00 152.4 270 -45.0 August 22, 1991 August 27, 1991 LM91-06 5375118.90 520990.04 10600 10090 341.53 152.4 270 -45.0 August 27, 1991 August 28, 1991 LM92-07 5374597.36 521009.65 10095 10135 334.66 249.9 270 -50.0 May 26, 1992 June 15, 1992 LM92-08 5374808.89 521002.05 10300 10120 342.83 262.1 270 -45.0 May 29, 1992 June 1, 1992 LM93-09 5374587.95 521321.37 10100 10448 333.78 443.8 270 -90.0 July 26, 1993 July 30, 1993 LM93-10 5374599.34 521114.80 10100 10242 335.16 309.8 270 -90.0 July 31, 1993 August 3, 1993 LM93-11* 5375116.37 521209.00 10600 10320 339.07 597.0 270 -54.0. August 7, 1993 August 11, 1993 LM93-12 5374401.58 521026.33 9900 10155 337.56 260.7 270 -68.0 August 12, 1993 August 15, 1993 LM07-13 5374599.93 521111.73 10100 10241 330.23 599.0 270 -65.0 August 22, 2007 September 10, 2007 LM07-14 5374697.64 521111.75 10200 10240 332.45 601.1 270 -65.0 September 11, 2007 October 2, 2007 LM07-15 5374804.66 521069.48 10300 10190 335.76 510.0 270 -65.0 October 2, 2007 November 3, 2007 LM07-16 5374901.08 521077.26 10400 10192 337.53 480.0 270 -65.0 October 9, 2007 December 12, 2007 LM07-17^ 5374908.83 520987.09 10400 10100 340.03 576.4 270 -65.0 October 25, 2007 October 30, 2007 LM07-18 5374909.08 520985.93 10400 10100 340.22 344.0 270 -45.0 December 13, 2007 December 19, 2007 LM08-19 5374967.70 520991.03 10451 10100 344.41 431.0 270 -65.0 February 7, 2008 February 13, 2008 LM08-20 5374957.83 521098.48 10450 10205 340.67 236.0 270 -50.0 February 18, 2008 February 22, 2008 LM08-21 5374976.27 520887.21 10447 10000 340.14 152.0 90 -47.0 February 23, 2007 February 24, 2008 LM08-22 5375022.60 520990.55 10500 10100 338.57 221.0 270 -45.0 February 26, 2008 February 29, 2008 LM08-23 5375020.13 521063.95 10500 10175 339.85 245.0 270 -45.0 March 4, 2008 March 7, 2008 LM08-24^^ 5375020.89 521064.98 10500 10175 338.35 489.8 270 -70.0 March 7, 2008 March 10, 2008 LM08-25 5375131.82 520799.14 10600 9900 342.39 281.0 90 -45.0 March 11, 2008 March 15, 2008 LM08-26 5374807.82 521184.08 10300 10300 332.10 578.0 270 -65.0 March 13, 2008 April 2, 2008 LM08-27 5375131.86 520798.28 10600 9900 342.85 263.0 90 -65.0 March 15, 2008 March 19, 2008 LM08-28^^^ 5375133.64 520695.96 10600 9800 348.09 515.1 90 -65.0 March 19, 2008 March 23, 2008 LM08-29 5375133.62 520695.82 10600 9800 347.93 629.0 90 -73.0 March 23, 2008 April 3, 2008



48


UTM East

Grid North


LM08-30 5374831.71 520763.85 10300 9880 338.14 329.0 270 -75.0 April 3, 2008 April 10, 2008 LM08-31 5374927.84 520833.98 10400 9950 337.21 329.0 270 -45.0 April 5, 2008 April 10, 2008 LM08-32 5374709.38 521061.77 10200 10185 334.14 518.0 270 -56.5 September 9, 2008 September 19, 2008 LM08-33 5374813.53 521069.68 10300 10190 336.11 341.0 270 -50.0 September 19, 2008 September 25, 2008 LM08-34 5374734.41 520916.53 10212.5 10039 332.62 322.0 270 -47.0 September 25, 2008 September 30, 2008 LM08-35 5375138.82 520397.15 10600 9500 359.08 158.0 90 -50.0 September 31, 2008 October 4, 2008 LM08-36^^^^ 5375138.82 520397.15 10600 9500 359.08 14.0 80 -50.0 October 5, 2008 October 6, 2008 LM08-37 5375134.44 520597.20 10600 9700 352.99 434.0 80 -80.0 October 7, 2008 October 20, 2008 LM08-38 5375242.53 520599.45 10700 9700 355.70 422.0 79 -70.0 October 21, 2008 October 29, 2008 LM08-39 5374490.19 521148.10 10000 10290 331.90 358.0 270 -45.0 October 31, 2008 November 5, 2008 LM08-40 5375136.73 520548.34 10600 9650 356.25 389.0 80 -75.0 November 4, 2008 November 11, 2008 LM10-41 5374869.80 520989.56 10350 10100 338.22 322.5 270 -65.0 February 12, 2010 February 15, 2010 LM10-42 5374861.73 521076.19 10350 10190 335.78 402.6 270 -65.0 February 15, 2010 February 20, 2010 LM10-43 5374762.58 521095.95 10250 10215 334.48 318.8 270 -65.0 February 20, 2010 February 24, 2010 LM10-44 5374869.80 520989.56 10350 10100 338.22 281.9 270 -50.0 February 24, 2010 February 27, 2010 LM10-45 5375078.21 521208.62 10550 10320 335.33 587.7 270 -55.0 March 5, 2010 March 13, 2010 LM10-46 5374599.93 521111.73 10100 10241 330.23 265.8 270 -55.0 March 18, 2010 March 21, 2010 LM10-47 5374495.00 521034.00 10000 10170 330.00 282.2 270 -50.0 March 21, 2010 March 24, 2010 LM10-48 5375020.89 521064.98 10500 10175 338.35 541.3 270 -76.0 March 25, 2010 April 1, 2010 LM11-49 5375324.96 521090.82 10800 10185 343.85 521.3 270 -55.0 February 11, 2011 February 21, 2011 LM11-50 5375324.96 521090.82 10800 10185 343.85 230.7 270 -75.0 February 21, 2011 February 24, 2011 LM11-51 5374968.89 520989.08 10451 10100 341.72 505.1 270 -45.0 February 24, 2011 March 7, 2011 LM11-52 5374760.35 521060.42 10270 10175 335.03 318.8 270 -62.0 March 14, 2011 March 19, 2011 LM11-53 5374657.91 521112.84 10150 10235 333.84 297.8 270 -65.0 March 20, 2011 March 25, 2011 LM11-54 5374682.21 521113.55 10175 10240 333.13 279.5 270 -65.0 March 29, 2011 April 1, 2011 LM11-55 5374732.00 521143.00 10240 10265 335.00 303.9 270 -62.0 April 2, 2011 April 6, 2011 LM11-56 5374908.83 520987.09 10400 10100 340.00 358.4 270 -77.0 July 3, 2011 July 7, 2011 LM11-57 5374908.83 520987.09 10400 10100 340.00 575.2 270 -58.5 July 7, 2011 July 14, 2011 LM11-58 5374901.08 521077.26 10400 10192 337.53 428.9 270 -78.0 July 15, 2011 July 20, 2011 LM11-59 5374838.00 521073.00 10325 10190 330.00 288.6 270 -59.5 July 21, 2011 July 24, 2011 LM11-60 5374838.00 521073.00 10325 10190 330.00 285.0 270 -51.0 July 24, 2011 July 27, 2011 LM11-61 5374813.53 521069.68 10300 10190 336.11 310.0 270 -60.0 July 27, 2011 July 30, 2011 LM11-62 5374813.53 521069.68 10300 10190 336.11 291.7 270 -46.0 July 30, 2011 August 3, 2011



49


UTM East

Grid North


LM11-63 5374760.35 521060.42 10250 10175 336.11 267.9 270 -67.0 August 4, 2011 August 6, 2011 LM11-64 5374760.35 521060.42 10250 10175 336.11 276.2 270 -52.0 August 10, 2011 August 13, 2011 LM11-65 5374599.93 521111.73 10100 10240 330.00 203.3 270 -77.0 August 13, 2011 August 15, 2011 LM11-66 5374624.00 521111.00 10125 10240 330.00 242.9 270 -77.0 August 16, 2011 August 18, 2011 LM11-67 5374709.38 521061.77 10200 10185 334.14 236.8 270 -88.0 August 18, 2011 August 21, 2011 LM11-68 5374709.38 521061.77 10200 10185 334.14 252.1 270 -70.0 August 21, 2011 August 24, 2011 LM11-69 5374869.80 520989.56 10350 10100 338.22 279.2 270 -74.0 August 24, 2011 August 30, 2011 LM11-70 5374976.27 520887.21 10450 10000 340.14 138.7 90 -65.0 August 30, 2011 September 1, 2011 LM11-71 5374976.27 520887.21 10450 10000 340.14 151.1 90 -80.0 September 1, 2011 September 8, 2011 LM11-72 5374624.00 521111.00 10125 10240 330.00 227.6 270 -64.0 September 8, 2011 September 10, 2011 Total 74 drill holes

* Drill hole LM93-11 deepened from 376.8 metres to current EOH between March 14 and March 17, 2010 ^ Drill hole LM07-17 deepened from 317 metres to current EOH between June 28 and July 3, 2011 ^^ Drill hole LM08-24 deepened from 224 metres to current EOH between February 28 and March 4, 2011 ^^^ Drill hole LM08-28 deepened from 299 metres to current EOH between March 9 to March 12, 2011^^^^Drill hole LM08-36 abandoned due to excessive deviation.



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Table 10-3: Highlight assays from 2007 to 2011 drill programs at Lemarchant Deposit. Drill hole From

(m) To (m)

Interval (m)

Zinc Lead Copper Silver Gold (%) (%) (%) (g/t) (g/t)

LM91-01 94.20 102.00 7.80 1.00 0.75 0.08 147.90 1.94

including 99.40 100.00 0.60 7.40 6.30 0.57 1301.00 11.40

LM92-07 122.10 122.40 0.30 5.70 0.33 4.50 272.50 1.06

LM92-08 206.60 210.30 3.70 1.33 0.75 0.07 60.69 3.37

LM93-12 173.40 174.90 1.50 3.08 0.23 0.63 6.82 0.14

LM07-13 164.50 169.55 5.05 7.49 0.07 0.77 40.29 1.21

including 164.50 167.30 2.80 10.86 0.11 0.92 63.43 2.02

including 165.20 169.55 4.35 8.69 0.08 0.89 42.48 0.40

and 175.00 176.50 1.50 4.96 0.11 0.04 4.87 0.05

and 184.70 186.00 1.30 4.04 0.03 2.39 11.73 0.01

LM07-14 203.10 220.60 17.50 3.41 1.12 0.51 41.45 0.50

including 204.30 216.30 12.00 4.28 1.45 0.68 54.95 0.52

including 203.50 208.90 5.40 5.34 1.66 1.05 85.10 0.79

LM07-15 219.00 233.60 14.60 9.46 2.17 0.81 87.46 1.90

including 221.60 224.80 3.20 1.43 0.78 0.74 279.72 6.89

including 224.80 227.80 3.00 18.52 3.87 0.36 32.41 0.61

including 224.80 233.60 8.80 14.78 3.16 1.04 37.03 0.58

including 230.50 233.60 3.10 23.02 4.90 2.30 54.64 0.65

LM07-16 369.50 370.20 0.70 8.40 0.01 0.36 18.20 0.23

LM07-17 236.00 259.50 23.50 8.55 1.63 0.35 34.97 0.49

including 236.00 250.60 14.60 12.38 2.61 0.45 52.75 0.73

including 242.50 250.60 8.10 21.04 4.26 0.72 76.05 0.65

LM08-19 94.50 99.00 4.50 0.57 0.52 0.23 92.50 1.92

LM08-22 65.60 71.00 5.40 0.53 0.12 0.06 59.70 0.46

LM08-23 65.60 71.00 5.40 0.52 0.12 0.06 60.94 0.46

LM08-24 432.00 438.00 6.00 6.60 0.68 0.61 28.28 0.46

including 433.00 434.10 1.10 30.54 2.94 1.50 88.90 0.72

LM08-28 238.00 244.00 6.00 0.25 0.01 0.05 24.84 2.23

LM08-33 219.15 246.00 26.85 4.98 0.94 0.48 39.02 0.84

including 229.70 246.00 16.30 5.57 1.40 0.59 59.54 1.21

including 229.70 237.80 8.10 5.92 2.21 0.68 106.91 2.15



51

Drill hole From (m)

To (m)

Interval (m)

Zinc Lead Copper Silver Gold

including 229.70 231.20 1.50 7.34 6.77 0.61 218.83 4.73

including 233.20 236.20 3.00 9.67 1.35 1.04 108.22 2.00

including 243.00 246.00 3.00 10.52 0.46 0.93 11.03 0.24

LM08-37 296.25 299.25 3.00 9.32 0.45 0.97 16.10 0.26

and 377.70 383.10 5.40 3.96 0.01 0.62 2.90 0.08

LM10-43 202.00 249.10 47.10 6.36 1.49 0.63 39.39 0.93

including 202.00 232.10 30.10 9.30 2.28 0.91 60.37 1.41

including 210.30 227.35 17.05 14.80 3.56 1.40 80.90 1.35

LM10-46 174.80 183.20 8.40 4.30 0.16 0.31 36.29 0.38

including 177.95 178.45 0.50 12.50 0.07 1.00 122.70 0.16

LM11-51 123.60 125.50 1.90 3.06 0.03 0.28 7.09 0.09

LM11-52 209.30 228.90 19.60 4.36 0.93 0.40 43.45 1.14

including 210.10 218.80 8.70 8.09 2.09 0.75 96.25 2.43

LM11-54 201.30 203.50 2.20 4.66 2.21 0.18 65.63 0.28

including 201.30 201.80 0.50 16.40 8.70 0.60 245.40 0.48

LM11-57 156.90 157.40 0.50 3.40 1.48 0.82 31.40 0.08

LM11-59 215.80 246.20 30.40 9.48 1.23 1.07 27.68 0.70

including 221.60 240.00 18.40 13.12 1.96 1.52 40.14 1.01

including 221.60 226.00 4.40 23.13 1.81 2.16 33.52 0.42

LM11-60 240.90 248.80 7.90 4.42 0.66 0.19 7.50 0.79

including 240.90 242.60 1.70 17.92 2.76 0.61 20.80 0.25

LM11-61 216.50 243.90 27.40 11.65 3.82 1.18 54.70 1.07

including 218.80 228.50 9.70 20.93 7.48 2.22 105.61 0.73

LM11-62 256.30 266.60 10.30 11.83 3.27 1.61 528.31 3.13 LM11-63 207.30 225.90 18.60 6.47 1.25 0.82 71.55 3.88

including 207.30 214.30 7.00 12.74 3.27 1.65 185.75 10.13 LM11-64 217.90 227.50 9.60 5.35 0.25 0.61 14.76 0.30

including 217.90 221.20 3.30 12.61 0.71 1.49 38.45 0.71

LM11-65 157.20 164.70 7.50 17.54 2.34 1.43 124.29 0.72 LM11-68 195.40 205.95 10.55 6.59 4.34 0.63 130.68 2.20

including 197.05 205.10 8.05 8.28 5.57 0.78 168.15 2.21 LM11-69 178.20 188.00 9.80 3.00 0.10 0.20 4.20 0.10

including 183.60 188.00 4.40 5.81 0.11 0.31 6.12 0.08

LM11-70 91.80 95.80 4.00 3.10 0.15 0.36 9.58 0.12 LM11-72 173.30 177.00 3.70 5.02 0.48 0.47 12.82 0.09



52

Figure 10-2: Section 101+00N - Lemarchant Deposit.



53




54




55




56




57




58




59

Figure 10-9: Vertical Long Section 101E (looking east) - Lemarchant Deposit.



60

11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1 Sample Collection, Control Samples and Shipping

Paragon completed systematic sampling and assaying of drill core from the Lemarchant Deposit by cutting NQ and BQ core in half with a diamond bladed rock saw. Drill core samples were marked by the geologist using coloured wax lumber crayon and sample tags with unique sample numbers. Drill core samples were taken so as to not cross lithological boundaries and were collected to be between 0.3 and 1.0 metres in length. Through zones of semi-massive to massive sulphides sample length was kept generally to lengths of 0.5 metres. The marked sample intervals were split and bagged by the core technician. Half of the sample tag was placed in a plastic bag along with the sample with the other half of the numbered sample tag stapled into the wooden box at the beginning of the core interval. Each bag was tied with vinyl flagging tape and labelled with permanent marker. Control samples (1 natural blank and 1 control standard) were inserted for every 20 core samples collected for assay quality control purposes. As per standard industry practice, Paragon preserved half of the core after cutting. Core preserved by Paragon over the intervals chosen for check analysis by the Independent Qualified Person was sawn in half at the core storage facility. One half of the sawn sample, representing one quarter of the original core, was placed in plastic bags and sealed. The remainder was placed back into the core box for future reference. Soil samples were collected in the field utilizing a standard Dutch auger. The samples, which typically weighed about 0.2 kg, were placed in kraft paper bags together with a waterproof paper ticket depicting a unique sample number and marked with a permanent marker. Control samples were not employed in the soil sampling program. Soil sample pulps were discarded 90 days following assay. All drill core and soils samples were transported in sealed and numbered poly-woven rice bags to Eastern Analytical by Paragon staff or local courier companies. Eastern Analytical confirmed the number of bags on arrival and did not report any irregularities or opened bags for any of the sample shipments. Sample pulps were shipped from Eastern Analytical to ALS Minerals in sealed cardboard boxes using a national courier company. Sample coarse rejects and pulps have been returned by courier to Paragon and are currently stored at the Company’s core storage facility in Buchan’s Junction, NL.

11.2 Sample Preparation

Rock and core sample preparation at Eastern Analytical is carried out according to the following specifications. The samples are dried, crushed in two stages to -10 mesh. The coarse crushed sample is then split using a rifle splitter into two sub-samples; one approximately 300 grams and a remaining generally larger sample (coarse reject). The 300 gram sub-sample is then ring milled such that 98% of the material is less than 150 mesh, producing the sample pulp to be used for analysis. Ring mills are quartz cleaned between samples. Sample coarse rejects and what remains from the 300 gram sample pulp following analysis are retained for future reference.



61

Soil samples are dried in an oven at 90oF (32.2oC) to remove the majority of moisture content. The samples are then pounded with a rubber mallet in the soil bag to loosen the hardened material and screened through an 80 mesh screen. The -80 mesh fraction is then rolled and kept as the sample for analysis. The +80 mesh fraction is discarded.

11.3 Analytical Methods and Procedures

11.3.1 Analytical Methods

Drill core samples collected during each of the drilling programs were analysed at Eastern Analytical for Au by fire assay and Cu, Pb, Zn and Ag by AAS (atomic absorption spectrometry). Sample pulps, prepared by Eastern Analytical were forwarded to ALS Minerals for analysis for major and trace elements by a combination of methods ME-ICP61 (33-element trace analysis by Inductively Coupled Plasma Atomic Emission Spectroscopy), ME-MS81 (expanded trace and rare earth elements) and ME-XRF06 (major element oxides). Verification core samples collected by the Independent Qualified Person (see section 12.2 below), during the September 2011 site visit, were analysed at Eastern Analytical following the same analytical methods as above. Soil samples collected during the 2007 and 2008 exploration program were assayed at Eastern Analytical for Au by fire assay and for Cu, Pb, Zn and Ag by AAS. Soils sample pulps prepared at Eastern Analytical were shipped to ALS Minerals for 33 elements by ICP (method ME-ICP61) following a four acid digestion. 11.3.2 Analytical Procedures

Eastern Analytical Au Fire Assay - A 30 g sample is weighed into an earthen crucible and mixed with PbO fluxes. Silver nitrate is then added and the sample is fused in a fire assay oven to obtain a liquid which is poured into a mould and let cool. The lead button is then separated from the slag and cupelled in a fire assay oven. The resulting silver bead also contains any gold that may be present. The silver is removed with 1 ml nitric acid and then 3 ml hydrochloric acid is added to bring the Ag and Au into solution. After cooling, de-ionized water is added to bring the sample up to a desired volume. The sample is then analyzed by AAS. Eastern Analytical Cu, Pb and Zn Analysis - A 0.200 g sample of the pulp is digested in a beaker with 10ml of nitric acid and 5ml of hydrochloric acid for 45 minutes. The sample is then transferred to a 100ml volumetric flask following which it is analyzed on the AAS. Eastern states that the lower detection limit for this method is 0.01% and there is no upper detection limit. Eastern Analytical Ag Analysis - A 1000 mg sample of the pulp is digested in a 500ml beaker with 10ml of hydrochloric acid and 10ml of nitric acid with the cover left on for 1 hour. The cover is removed and the sample allowed to evaporate to a moist paste. Following this, 25ml of hydrochloric acid and 25ml of de-ionized water are added and the resulting mixture is heated gently and swirled to dissolve solids. The sample is cooled and transferred to a 100ml



62

volumetric flask following which it is analyzed on the AAS. Eastern Analytical states that the lower detection limit for this method is 0.01 oz/ton and there is no upper detection limit. Eastern Analytical Methodology and Reporting - Samples are analyzed one at a time by AAS (in batches of 24) with a value obtained by taking the average of three readings per sample. The AAS unit is checked with a calibration solution after every 12 samples. Sample results are recorded manually and transferred to the manual data entry person where assay data is remerged with RMX sample number and tabulated into reports for certificates. Reports and standards are checked by the Chief Assayer before the certificates are released to the client. ALS Minerals ICP Analysis (method ME-ICP61) - A prepared sample (0.250 gram) is digested with perchloric, nitric, and hydrofluoric acids to near dryness. The sample is then further digested in a small amount of hydrochloric acid. The solution is made up to a final volume of 12.5 ml with 11% hydrochloric acid, homogenized, and analyzed by inductively coupled plasma-atomic emission spectrometry (ICP-AES). Results are corrected for spectral inter-element interferences. ALS Minerals XRF Analysis (method ME-XRF06) - Samples for whole rock analysis by XRF are fused using a lithium borate fusion. A calcined or ignited sample (0.9 g) is added to 9.0 g of Lithium Borate Flux (50% - 50% Li2B4O7 – LiBO2), mixed well and fused in an auto fluxer between 1050 and 1100oC. The melt is then poured into a mould and cooled to yield a solid glass disk. The disks can then be analysed and the elements determined by comparison with standard reference materials. A lithium borate fusion is the preferred fusion for Whole Rock Analysis (WRA) in which rock characterisation can be made through an analysis of major and minor elements. The disks can be dissolved in acid for subsequent ICP-MS analysis. ALS Minerals MS Analysis (method ME-MS81) – A prepared sample (0.200 g) is added to lithium metaborate flux (0.90 g), mixed well and fused in a furnace at 1000oC. The resulting melt is then cooled and dissolved in 100 mL of 4% HNO3 / 2% HCl solution. This solution is then analyzed by inductively coupled plasma – mass spectrometry (ICP-MS).

12.0 DATA VERIFICATION

12.1 Paragon Quality Control Data

Paragon employed a systematic quality control sampling program throughout all of its drill programs that consisted of the insertion of a natural blank (Skull Hill Granite) and powdered reference standards for Au, Ag, Cu, Pb and Zn for every 20 core samples collected. In addition to the insertion of these control samples, Paragon completed check assaying on all samples submitted for Ag, Cu, Pb and Zn by submitting the samples to two independent analytical labs. Only select check assaying was completed for gold. 12.1.1 Analytical Standards

Reference material control samples provide a means to monitor the precision and accuracy of the laboratory assay results. Seven separate professionally prepared standards were used during the 2007-2011 drill programs. All standards were obtained by Paragon from CDN Resources



63

Laboratories Ltd., of Langley, British Columbia and are certified by licensed assayer Duncan Sanderson. The standards used were selected based on similar Au, Ag, Cu, Pb, and Zn contents within the range of Lemarchant mineralization and they include: FCM1, FCM2, FCM4, FCM6, FCM7, HZ-2, and HZ-3. Standards were analyzed at Eastern Analytical with Au by fire assay and Cu, Pb, Zn, Ag analyzed by aqua-regia digestion, with atomic absorption finish. Pulps were then forwarded to ALS Minerals where they were analyzed by ME-ICP61. Time series (chronological order of samples represented by a series of numbers) plots showing assayed values for Au, Ag, Cu, Pb, and Zn for each of the seven separate standards are presented below (Figures 12-1 to 12-7). For standards FCM1, FCM2, FCM4, FCM6, HZ-2, and HZ-3, analyses from Eastern Analytical and ALS Minerals are plotted to compare results from the two labs. Lines defining the second standard deviation of the round robin analyses for each standard are plotted for reference. Analyses that greatly exceed the second standard deviation are considered potentially suspect, resulting in review and investigation of all analyses within the sample batch. In general, performance of the 2007-2011 control samples is quite good, with most assay results falling within two standard deviations from the mean. Standard CDN-FCM1 - Only 4 samples were selected for FCM1, one of the first standards used for the project. Cu, Zn, Pb, Ag analyses (Figure 12-1) fell within the 2-standard deviation when analyzed at ALS. Cu values were slightly below the lower 2-standard deviation when analyzed at Eastern. Au values were only analyzed at Eastern Analytical and are slightly within or below the two-standard deviation. Standard CDN-FCM2 - For each element most samples fall within or very near the range of 2-standard deviation for both Eastern Analytical and ALS labs (Figure 12-2). Zn and Pb values are well within the range whereas Au, Cu, and Ag from Eastern have some samples that fall slightly below the lower 2-standard deviation. Standard CDN-FCM4 - Generally most samples plot well within the range of the 2-standard deviation (Figure 12-3). Au analyzed at Eastern Analytical plots within or slightly below the 2-standard deviation. Cu analyzed at ALS tends to occur within or slightly higher than the upper 2-standard deviation while some samples of Cu analyzed at Eastern Analytical fall below the lower 2-standard deviation. Some samples analyzed for Zn from Eastern Analytical tend to run slightly below the lower 2-standard deviation. Standard CDN-FCM6 - Cu, Zn, and Pb generally plot within the 2-standard deviation range for both labs (Figure 12-4). Several Au samples plot slightly below the lower 2-standard deviation. Ag values at Eastern Analytical consistently run higher than the upper 2-standard deviation. This issue with the high grade silver standard has been addressed with Eastern Analytical and it has been verified that the actual core samples reproduced quite well with similar Ag values when compared to ALS. Ag analyses for standard FCM6 from ALS, consistently fall within the 2-standard deviation. Standard CDN-FCM7 - This standard produces values consistently within the 2-standard deviation for each of the 5 elements from Eastern Analytical (Figure 12-5). Pb values from ALS tend to be slightly lower than the 2-standard deviation.



64

Figure 12-1: Performance of Au, Ag, Cu, Pb, and Zn in samples analyzed at both Eastern

Analytical and ALS Minerals for field standard FCM1.

‐ 2SD 1570ppb

1710 ppb

+ 2SD 1850ppb

800

1000

1200

1400

1600

1800

2000

0 2 4 6

Au Standard (pp

b)

Sample Sequence

Au ‐ FCM1 Standard

Au_Eastern

‐ 2SD 79.7g/t

86.3g/t

+ 2SD 92.9g/t

70

75

80

85

90

95

0 1 2 3 4 5 6 7

Ag Standard (g/t)

Sample Sequence

Ag ‐ FCM1 Standard

Ag_Eastern

Ag_ALS

‐ 2SD 8700ppm

9400ppm

+ 2SD 10100ppm

7300

7800

8300

8800

9300

9800

10300

0 2 4 6

Cu Stand

ard (ppm

)

Sample Sequence

Cu ‐ FCM1 Standard

Cu_Eastern

Cu_ALS

‐ 2SD 4500ppm

5100ppm

+ 2SD 5700ppm

3800

4000

4200

4400

4600

4800

5000

5200

5400

5600

5800

0 2 4 6

Pb Stand

ard (ppb

)

Sample Sequence

Pb ‐ FCM1 Standard

Pb_Eastern

Pb_ALS

‐ 2SD 17700ppm

19300ppm

+ 2SD 20900ppm

15800

16800

17800

18800

19800

20800

0 2 4 6

Zn Stand

ard (ppm

)

Sample Sequence

Zn ‐ FCM1 Standard

Zn_EasternZn_ALS



65

Figure 12-2: Performance of Au, Ag, Cu, Pb, and Zn for standard FCM2.

‐ 2SD 1250ppb

1370 ppb

+ 2SD 1490ppb

800

900

1000

1100

1200

1300

1400

1500

1600

0 10 20 30

Au Standard (pp

b)

Sample Sequence


Au_Eastern

‐ 2SD 66.6 g/t

73.9 g/t

+ 2SD 81.2 g/t

50

55

60

65

70

75

80

85

0 10 20 30

Ag Stand

ard (g/t)

Sample Sequence


Ag_Eastern

Ag_ALS

‐ 2SD 7100ppm

7560ppm

+ 2SD 8020ppm

5500

6000

6500

7000

7500

8000

8500

9000

0 10 20 30

Cu Stand

ard (ppm

)

Sample Sequence


Cu_Eastern

Cu_ ALS

‐ 2SD 4410ppm

4790ppm

+ 2SD 5170ppm

3000

3500

4000

4500

5000

5500

0 10 20 30

Pb Stand

ard (ppm

)

Sample Sequence


Pb_Eastern

Pb_ALS

‐ 2SD 16350ppm

17390ppm

+ 2SD 18430ppm

15000

15500

16000

16500

17000

17500

18000

18500

19000

0 10 20 30

Zn Stand

ard (ppm

)

Sample Sequence


Zn_Eastern

Zn_ALS



66


‐ 2SD 890ppb

970ppb

+ 2SD 1050ppb

750

800

850

900

950

1000

1050

1100

0 10 20 30 40 50 60

Au Standard (pp

b)

Sample Sequence


Au_Eastern

‐ 2SD 48.5g/t

54.9g/t

+ 2SD 61.3g/t

40

45

50

55

60

65

0 10 20 30 40 50 60

Ag Standard (g/t)

Sample Sequence


Ag_Eastern

Ag_ALS

‐ 2SD 6600ppm

7020ppm

+ 2SD 7440ppm

4800

5300

5800

6300

6800

7300

7800

8300

0 10 20 30 40 50 60

Cu Stand

ard (ppm

)

Sample Sequence


Cu_Eastern

Cu_ALS

‐ 2SD 3120ppm

3400ppm

+ 2SD 3680ppm

2500

2700

2900

3100

3300

3500

3700

3900

0 10 20 30 40 50 60

Pb Stand

ard (ppm

)

Sample Sequence


Pb_Eastern

Pb_ALS

‐ 2SD 12000ppm

12800ppm

+ 2SD 13600ppm

10000

10500

11000

11500

12000

12500

13000

13500

14000

0 10 20 30 40 50 60

Zn Stand

ard (ppm

)

Sample Sequence


Zn_Eastern

Zn_ALS



67


‐ 2SD 1990ppb

2150ppb

+ 2SD 2310ppb

750

950

1150

1350

1550

1750

1950

2150

2350

2550

0 5 10 15 20 25

Au Standard (pp

b)

Sample Sequence


Au_Eastern

Au_ALS

‐ 2SD 148.9g/t

156.8g/t

+ 2SD 164.7g/t

130

140

150

160

170

180

190

200

0 5 10 15 20 25

Ag Standard (g/t)

Sample Sequence


Ag_Eastern

Ag_ALS

‐ 2SD 11870ppm

12510ppm

+ 2SD 13150ppm

10000

10500

11000

11500

12000

12500

13000

13500

14000

0 5 10 15 20 25

Cu Stand

ard (ppm

)

Sample Sequence


Cu_Eastern

Cu_ALS

‐ 2SD 14600ppm

15200ppm

+ 2SD 15800ppm

13000

13500

14000

14500

15000

15500

16000

16500

0 5 10 15 20 25

Pb Stand

ard (ppm

)

Sample Sequence


Pb_Eastern

Pb_ALS

‐ 2SD 88300ppm

92700ppm

+ 2SD 97100ppm

80000

85000

90000

95000

100000

0 5 10 15 20 25

Zn Stand

ard (ppm

)

Sample Sequence


Zn_Eastern

Zn_ALS



68


‐ 2SD 812ppb

896ppb

+ 2SD 980ppb

650

700

750

800

850

900

950

1000

1050

0 10 20 30 40

Au Standard (pp

b)

Sample Sequence


Au_Eastern

Au_ALS

‐ 2SD 60.6g/t

64.7g/t

+ 2SD 68.8g/t

55

57

59

61

63

65

67

69

71

73

75

0 10 20 30 40

Ag Stand

ard (g/t)

Sample Sequence


Ag_Eastern

Ag_ALS

‐ 2SD 5000ppm

5260ppm

+ 2SD 5260ppm

4300

4500

4700

4900

5100

5300

5500

5700

5900

6100

0 10 20 30 40

Cu Stand

ard (ppm

)

Sample Sequence


Cu_Eastern

Cu_ALS

‐ 2SD 5870ppm

6290ppm

+ 2SD 6710ppm

5000

5500

6000

6500

7000

0 10 20 30 40

Pb Stand

ard (ppm

)

Sample Sequence


Pb_Eastern

Pb_ALS

‐ 2SD 36600ppm

38500ppm

+ 2SD 40400ppm

33000

35000

37000

39000

41000

43000

45000

0 10 20 30 40

Zn Stand

ard (ppm

)

Sample Sequence


Zn_Eastern

Zn_ALS



69

Standard CDN-HZ-2 - Each element consistently returns values well within the 2-standard deviation for both labs (Figure 12-6) except for Ag which has several samples at ALS that are slightly higher than the 2-standard deviation.

Figure 12-6: Performance of Au, Ag, Cu, Pb, and Zn for standard HZ-2. Standard CDN-HZ-3 - There is a slight amount of scatter in the samples for Standard CDN-HZ-3 (Figure 12-7). Cu values from ALS are elevated above the 2-standard deviation and Pb values are lower than the lower 2-standard deviation. Cu, Pb, Zn, and Ag analyzed at Eastern Analytical generally fall within the 2-standard deviation. Some samples of Au analyzed at Eastern Analytical plot slightly higher than the 2-standard deviation.

‐ 2SD 100ppb

124ppb

+ 2SD 148ppb

60

80

100

120

140

160

180

200

0 50 100

Au Standar d (ppb

)

Sample Sequence

Au ‐ HZ‐2 Standard

Au_Eastern

‐ 2SD 57 g/t

61.1 g/t

+ 2SD 65.2 g/t

45

50

55

60

65

70

75

80

0 20 40 60 80 100 120 140

Ag Standard (g/t)

Sample Sequence

Ag ‐ HZ‐2 Standard

Ag_EasternAg_ALS

‐ 2SD 13000ppm

13600ppm

+ 2SD 14200ppm

11000

11500

12000

12500

13000

13500

14000

14500

15000

15500

0 50 100

Cu Stand

ard (ppm

)

Sample Sequence

Cu ‐ HZ‐2 Standard

Cu_Eastern

Cu_ALS

‐ 2SD 15100ppm

16200ppm

+ 2SD 17300ppm

12000

13000

14000

15000

16000

17000

18000

0 50 100

Pb Stand

ard (ppm

)

Sample Sequence

Pb ‐ HZ‐2 Standard

Pb_Eastern

Pb_ALS

‐ 2SD 68500ppm

72000ppm

+ 2SD 75500ppm

42000

47000

52000

57000

62000

67000

72000

77000

82000

0 50 100

Zn Stand

ard (ppm

)

Sample Sequence

Zn ‐ HZ‐2 Standard

Zn_Eastern

Zn_ALS



70

Figure 12-7: Performance of Au, Ag, Cu, Pb, and Zn for standard HZ-3. 12.1.2 Analytical Blanks

A field blank is important for monitoring potential contamination introduced at labs during sample preparation and analysis. Blanks also monitor accuracy of the lab and help detect sample sequencing errors. True blanks should not have any of the elements of interest much higher than the detection levels of the instrument being used; however in base metal exploration (unlike precious metal exploration) contamination generally has to be in the 100’s of ppm, an order of magnitude higher than detection limit, before it has any meaningful impact on the integrity of

‐ 2SD 45ppb 55ppb+ 2SD 65ppb

0

20

40

60

80

100

120

0 10 20 30 40 50

Au Standard (pp

b)

Sample Sequence

Au ‐ HZ‐3 Standard

Au_Eastern

‐ 2SD 24.1g/t

27.3g/t

+ 2SD 30.5g/t

20

22

24

26

28

30

32

34

0 10 20 30 40 50

Ag Standard (g/t)

Sample Sequence

Ag ‐ HZ‐3 Standard

Ag_Eastern

Ag_ALS

‐ 2SD 5800ppm

6100ppm

+ 2SD 6400ppm

5000

5500

6000

6500

7000

7500

0 10 20 30 40 50

Cu Stand

ard (ppm

)

Sample Sequence

Cu ‐ HZ‐3 Standard

Cu_Eastern

Cu_ALS

‐ 2SD 6710ppm

7070ppm

+ 2SD 7430ppm

5000

5500

6000

6500

7000

7500

8000

8500

0 10 20 30 40 50

Pb Stand

ard (ppm

)

Sample Sequence

Pb ‐ HZ‐3 Standard

Pb_EasternPb_ALS

‐ 2SD 30000ppm

31600ppm

+ 2SD 33200ppm

28000

29000

30000

31000

32000

33000

34000

35000

36000

0 10 20 30 40 50

Zn Stand

ard (ppm

)

Sample Sequence

Zn ‐ HZ‐3 Standard

Zn_Eastern

Zn_ALS



71

database or mineral resource estimate. From 2007 to 2011 Paragon used a field blank that consisted of a homogeneous granite. This blank material consistently returned measurable copper, zinc, and lead higher than 5 times the detection limit, a generally accepted failure threshold for blank samples (Figures 12-8 and 12-9).

Figure 12-8: Performance of Au, Ag, Cu, Pb, and Zn for blanks – Eastern Analytical.

DL ‐ 5.0ppb 5.3ppb

+ 2SD 11.3ppb

4

5

6

7

8

9

10

11

12

0 100 200 300

Au Blank pp

b

Sample Sequence

Au ‐ Blank ‐ Eastern

Au_Eastern

‐ 2SD 0.11g/t

0.2g/t

+ 2SD 0.29g/t

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 100 200 300

Ag Blank g/t

Sample Sequence

Ag ‐ Blank ‐ Eastern

Ag_Eastern

DL‐ 1.0ppm

10.1ppm

+ 2SD 50ppm

0

10

20

30

40

50

60

70

80

90

100

0 100 200 300

Cu Blank

ppm

Sample Sequence

Cu ‐ Blank ‐Eastern

Cu_Eastern

DL‐ 1.0ppm

10.2ppm

+ 2SD 48.6ppm

0

20

40

60

80

100

120

0 100 200 300

Pb Blank

ppm

Sample Sequence

Pb ‐ Blank ‐ Eastern

Pb_Eastern

DL‐ 1.0ppm

39.9ppm

+ 2SD 95.7ppm

0

50

100

150

200

250

300

350

400

450

0 100 200 300

Zn Blank

ppm

Sample Sequence

Zn ‐ Blank ‐ Eastern

Zn_Eastern



72

Figure 12-9: Performance of Au, Ag, Cu, Pb, and Zn for blanks – ALS Minerals. The average of the samples was calculated from both analyses from Eastern Analytical and ALS Minerals and the standard deviation was calculated based on this average. A warning level of 2x the standard deviation was established for the 5 elements. When the lower 2x standard deviation was a negative value, the lower detection limit of the analytical procedure was used to display the range of data. For analyses from both labs the blank consistently returned Zn values between 10-80 ppm indicating the material used for the blank has a natural concentration of zinc and has not been contaminated by zinc. Very limited contamination issues were detected for gold or

DL ‐ 5.0ppb 5.1ppb

+ 2SD 6.2ppb

4.50

5.00

5.50

6.00

6.50

7.00

0 100 200 300

Au Blank pp

b

Sample Sequence

Au Blank ‐ALS

Au_ALS

DL g/t0.26g/t

+ 2SD 0.39g/t

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0 100 200 300

Ag Blank pp

m

Sample Sequence

Ag‐ Blank ‐ALS

Ag_ALS

DL ‐ 1ppm10.94ppm

+ 2SD 82.9ppm

0.00

100.00

200.00

300.00

400.00

500.00

600.00

0 100 200 300

Cu Blank

ppm

Sample Sequence

Cu ‐ Blank ‐ALS

Cu_ALS

DL ‐ 2ppm16.02ppm

+ 2SD 34.33ppm

0.00

50.00

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Pb Blank

ppm

Sample Sequence

Pb ‐ Blank ‐ALS

Pb_ALS

DL ‐ 2ppm64.56ppm

+ 2SD 263.6ppm

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Zn ‐ Blank ‐ALS

Zn_ALS



73

silver within the field blanks. A small number of field blanks indicate the possibility of minor copper, lead, and zinc contamination; however, the levels of potential contamination are low, and do not impact the overall integrity of the resource estimate. 12.1.3 Check Assays and Duplicates

Almost every sample submitted for assay at Eastern Analytical was also sent to ALS Minerals to be analyzed by ME-ICP61 which included checks of Cu, Pb, Zn and Ag. Au check assays were not performed in the past but a set of 319 samples were recently (late 2011) submitted to ALS Minerals for fire assay fusion and atomic absorption finish (Au-AA23). A smaller set of 36 samples (based on the presence of visible gold or assaying greater than 1 g/t Au) were submitted to Eastern Analytical for Au metallic screen fire-assay to determine the presence and amount of coarse gold. Sample checks for ALS versus Eastern Analytical checks are presented for the 5 elements below: Au – 289 samples were compared between ALS and Eastern Analytical. Samples that were below the detection limit from either lab were omitted from the comparison. Even though there is minor scatter (Figure 12-10) the Au samples reproduced quite well considering the amount of coarse gold in some of the higher concentration samples. Ag – 5522 samples were compared (Figure 12-10) at ALS and Eastern Analytical. Overall there is a good correlation between labs except for 12 samples which had very different values from both labs. Values from Eastern returned much lower concentrations of Ag than what was returned from ALS while other metals (from those samples) were consistent between the two labs. These pulps and coarse rejects were located and were resubmitted to Eastern for a duplicate analysis and produced more correlative samples from the rerun as can be seen in Figure 12-10. The revised Ag assays have been employed in the resource estimate. Cu – 5522 samples were compared (Figure 12-10) at ALS and Eastern Analytical. Cu values produced a near 1:1 correlation and generally produced very well at higher concentrations. There is a minor amount of scatter at the lower concentrations of Cu. Pb – 5522 samples were compared (Figure 12-10) at ALS and Eastern Analytical. A small number of samples plot a significant distance from the main slope of the data. The data from both labs for these samples have been verified. The grade of the Eastern Analytical assays closely matches the visual estimate of galena concentrations within the drill core and will be taken as the most representative assay result for these samples. Zn – 5501 samples were compared (Figure 12-10) at ALS and Eastern Analytical. Concentrations in samples with >30% Zn were not reported from ALS and these samples were omitted from the comparison. Generally Zn has excellent reproducibility between ALS and Eastern Analytical labs with minor scatter at higher concentrations.



74

Figure 12-10: Performance of Au, Ag, Cu, Pb, and Zn for field duplicates analyzed at both

Eastern Analytical and ALS Minerals. As expected, the comparison between Au analyzed with fire assay versus total pulp metallics produced a plot with moderate scatter between the two analyses, likely due to the presence of coarse Au in the samples (Figure 12-11).

y = 0.8948xR² = 0.9354

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Zn_Eastern vs ALS



75

Figure 12-11: Comparison of Au analyzed with fire assay versus total pulp metallics.

12.2 Density Data

A total of 1,117 samples were measured for specific gravity (“SG”). Approximately 1 in every 12 samples was re-measured to compare reproducibility of Paragon’s SG measurements. A total of 87 samples were compared as duplicates and show a sufficient reproducibility (Figure 12-12). SG data generated by Paragon personnel is considered acceptable for use in the resource calculation presented below.

Figure 12-12: Performance of Paragon’s measured specific gravity duplicates.

y = 0.724xR² = 0.4878

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)

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Au Fire Assay vs Total Pulp Metallics

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76

12.3 Independent Data Verification and Site Visit

On September 5, 2011, Mr. Dean Fraser, the co-author and Independent Qualified Person, completed a site visit to Paragon’s core logging facility in Buchan’s Junction, NL and a site visit to the Lemarchant Deposit (Figure 12-13). During the site visit Mr. Fraser reviewed 11 drill holes that showed representative sections through the Lemarchant Deposit stratigraphy and mineralization. A review of geological maps, drill sections and project data was completed during the visit. During the site visit Mr. Fraser verified the location of 23 drill casings and collars with a hand held GPS, which correlate very well with location data in the Paragon Lemarchant drill database. During the site visit, ten replicate samples were taken of Lemarchant drill core by Dean Fraser to verify the reproducibility of Cu, Pb, Zn, Au, and Ag values. The half drill core was quartered using a diamond bladed saw on Paragon premises, and bagged and labelled by Paragon personnel while being monitored by the Independent Qualified Person. These samples were delivered directly to Eastern Analytical by the Independent Qualified Person. When compared to the original assays the Cu, Pb, Zn, and Ag values compared very well while the Au had a moderate amount of scatter due to the presence of coarse or visible gold (Table 12-1; Figure 12-14). The check assays were comparable enough to prove the precision and accuracy of the analytical results were sufficient to use for the resource estimation.

Figure 12-13: Photo of site visit by Dean Fraser (with Christine Devine) at Paragon’s core

logging facility in Buchan’s Junction, NL.



77

Table 12-1: Comparison of original Paragon assays to replicate samples collected by the Independent Qualified Person.

Drill hole From To Sample # Eastern Original Assays Sample # Independent Eastern Assays

(Paragon) Au

(ppb) Cu

(ppm) Pb

(ppm) Zn

(ppm) Ag

(ppm) (Dean Fraser) Au

(ppb) Cu

(ppm) Pb

(ppm) Zn

(ppm) Ag

(ppm) LM07-13 165.8 166.3 CNF21034 763 6300 191 310000 147.3 CNF32501 1168 6235 191 314000 149.0 LM07-14 204.6 205 CNF21346 3733 15000 20300 45000 181.5 CNF32503 4058 16500 23100 49000 188.0 LM07-15 217.3 218.1 CNF21524 41 450 380 9600 1.8 CNF32507 21 595 529 10700 3.2 LM07-15 231.6 232.1 CNF21554 777 26000 7400 250000 30.5 CNF32508 747 23300 5600 282000 27.3 LM08-33 229.7 230.2 CNF36209 3678 3200 83000 79000 52.4 CNF32509 2028 3113 72000 79000 53.5 LM10-43 226.35 226.85 CNF36793 102 16400 400 119000 17.6 CNF32504 84 12000 268 86000 11.3 LM10-43 244.1 245.1 CNF36818 187 4700 1600 34000 4.8 CNF32505 116 2634 439 14500 4.3 LM11-52 215.5 216 CNF37926 3826 7100 21500 48000 287.6 CNF32506 3281 7559 20800 49000 339.0 LM11-54 201.3 201.8 CNF38250 483 6000 87000 164000 245.4 CNF32502 712 7837 87000 178000 275.0 LM11-59 231.9 232.83 CNF39423 10763 24200 73000 226000 75.2 CNF32510 906 23600 73000 203000 88.1



78

Figure 12-14: Performance of Au, Ag, Cu, Pb, and Zn for Independent check assays analyzed at

Eastern Analytical. Six samples were taken by the Independent Qualified Person to verify specific gravity measurements. As shown in Figure 12-15, the measured samples correlate almost one to one indicating the specific gravity measurements completed by Paragon personnel are reliable for use in the resource estimation.

y = 1.3508xR² = 0.0385

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79

Figure 12-15: Performance of Independent specific gravity checks. Based on the review of Paragon procedures and practices and the results of the data verification, the Independent Qualified Person has very reason to believe that the data collected by Paragon is of industry standard quality and suitable for use in the estimation of mineral resources. Assays results from Eastern Analytical were used for calculating the Mineral Resource Estimate in section 14.0.

13.0 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 Sample Description, Preparation and Scope of Work

The metallurgical test work was completed on previously drilled quartered NQ-diameter drill core from drill holes LM11-61 and 62. A total of 43 individual samples (total mass 51.25 kilograms) of drill core from the two drill holes were sent to SGS Mineral Services (“SGS”) of Lakefield, Ontario on September 28, 2011. The samples submitted comprised 6 separate “ore types” that define a vertical lithological zonation through the Lemarchant Deposit and include, from hangingwall to footwall: Pyritic Mudstone, Massive Sulphide, Massive Barite, Semi-Massive Sulphide, Chlorite Schist and Felsic Volcanic Breccia. Each of the “ore types” were analysed separately using SGS’s Quantitative Evaluation of Minerals by SCANning Electron Microscopy (“QEMSCAN”) to enable a better understanding of the mineralogy, the nature of mineral locking and liberation, mineral deportment and association and the estimation of theoretical recoveries and concentrate grades. Concurrent with the QEMSCAN mineralogical work, Paragon chose to complete further studies on a composited sample of all of the “ore types” to get a preliminary understanding of the milling and recovery characteristics of the Lemarchant sulphides. These studies include:

• the Bond Ball Mill Grindability test, to test for hardness and associated work index relative to a global database of other similar ore deposits.

• Gravity testwork on a Master Composite sample to test for gravity separation of gold and silver, based on the presence of visible gold within the Lemarchant sulphides.

y = 0.9855xR² = 0.9698

2.5

3.0

3.5

4.0

4.5

2.5 3.0 3.5 4.0 4.5

Parago

n SG

Independent SG

Specific Gravity Check



80

• Flotation testwork on the Master Composite to determine bench-scale recoveries and concentrate grades for a combined Cu/Pb concentrate and a Zn concentrate.

Information for this section of the report has been extracted from the SGS report by Lascelles and Imeson (2012). The samples were composited according to ore type, stage-crushed to 100% passing 6mesh and a 250g sub-sample removed for mineralogy from each sample except for the chlorite schist sample. The remainders for each ore type as well as the entire chlorite schist sample were combined into a Master composite, from which 12kg was removed for grindability testwork and two 10kg charges were prepared for gravity and flotation testing. The remaining sample was further roll-crushed to 100% passing 10mesh and rotary split into 2kg test charges with 150g riffle out for a head assay, 250g riffled out for mineralogy and 1kg riffled out for pulp and metallics assay.

13.2 Master Composite Head Analysis

The Master composite sample was analysed via to determine the bulk chemistry of the sample including the establishment of the head grade for base and precious metals (Table 13-1). A head grade of 1.44% Cu, 4.01% Pb, 11.90% Zn, 0.83 g/t Au and 214 g/t Ag was determined for the sample. Metallic screen assays for gold and silver indicate the presence of coarse gold and silver; 30% of which may be recoverable via gravity separation. Table 13-1: Master Composite Head Characterization.

Element Unit Master Composite

XRF - Pyrosulphate FusionCu % 1.44Pb % 4.01Zn % 11.9Fe % 3.12LECOS % 14.8S2- % 13.3Fire AssayAu g/t 0.83Ag g/t 214ICP-OESAg g/t 235Al g/t 17000As g/t 419Ba g/t 174000Be g/t 0.11Bi g/t < 20Ca g/t 29300Cd g/t 552Co g/t < 4Cr g/t 8K g/t 2180Li g/t < 5Mg g/t 21600Mn g/t 855Mo g/t 208Na g/t 3750Ni g/t 195P g/t 447Sb g/t 107Se g/t < 40Sn g/t < 20Sr g/t 2250Ti g/t 291Tl g/t < 30U g/t < 20V g/t 41Y g/t 5.8



81

Table 13-2: Master Composite Gold and Silver Screened Metallics Analyses.

13.3 QEMSCAN Mineralogical Study

A 250g sub-sample of each ore type sample (except for the chlorite schist sample) was submitted for mineralogical analysis. Each sample was stage pulverized to ~80% passing 53µm and split into three fractions (+53µm, -53 / + 20 µm, and -20µm). The three size fractions of each of the samples were used to prepare polished sections, which were subjected to detailed mineralogical characterisation by QEMSCAN, using the Particle Mineral Analysis (“PMA”) method. The purpose of the investigation was to determine the modal abundance, liberation, and association of the valuable mineral species within each ore sample. 13.3.1 Sulphide Mineralogy

Copper sulphide (“CuS”), sphalerite (“Sp”) and galena (“Ga”) abundances within each of the composites are in order of decreasing modal abundance as follows:

• Massive Sulphide (5.9% CuS, 32.3% Sp and 6.8% Ga) • Master Composite (3.4% CuS, 17.3% Sp and 3.8% Ga), • Felsic Volcanic Breccia (2.4% CuS and 11.3% Sp and 0.6% Ga) • Semi-Massive Sulphide (1.9% CuS, 8.5% Sp and 2.6% Ga) • Massive Barite (1.8% CuS, 3.9% Sp and 1.1% Ga).

The main non-sulphide mineral is barite in the Master, Massive Sulphide, Semi-Massive Sulphide, and Massive Barite composites; ranging from 87.1% for the Massive Barite to 29.5% for the Massive Sulphide composite. The Felsic Volcanic Breccia composite contains very little barite and its major non-sulphide mineral is quartz. 13.3.2 Copper Sulphide Association, Liberation and Theoretical Grade-Recovery

Copper occurs mainly as chalcopyrite with lesser amounts of bornite, enargite, tennantite, chalcocite and covellite. Within the Master Composite, Massive Sulphide, Semi-Massive Sulphide and Massive Barite samples, 67.2% to 76.8% of the copper is present as chalcopyrite while the remaining 15.2% to 24.9% is bornite, with lesser enargite/tennantite, secondary Cu sulphides (e.g. chalcocite, covellite) and Ag minerals (Figure 13-1). Liberation of Cu-sulphide minerals from each sample was good, with 79.1 to 84.2% of the Cu-sulphide free or liberated for most of the composites except for the Pyritic Mudstone which had poor liberation at 69.4% and the Felsic Volcanic Breccia composite which had very good liberation at 91.1% (Figure 13-2). Figure 13-3 illustrates the Cu grade-recovery curves for the composites. Except for the Pyritic Mudstone composite, which showed poor liberation, a Cu concentrate grading above 30% Cu should be achievable at Cu recoveries above 90%.

Calculated +150mesh -150mesh % DistributionHead (g/t) Wt. % g/t Wt. % g/t A g/t B +150mesh -150mesh

Au 0.83 2.95 8.10 97.1 0.59 0.63 28.8 71.2Ag 214 2.95 2399 97.1 149 147 33.1 66.9

Element



82

Figure 13-1: Average Cu Deportment.

Figure 13-2: Overall Cu-Sulphide Liberation.

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Mas

s (%

Cu)

Other Carbonates 0.0 0.0 0.0 0.0

Other Sulphides 0.0 0.0 0.0 0.0 1.6 0.1

Ag-Minerals 0.3 0.3 1.4 0.5

Other Secondary Cu Sulphides 0.9 0.5 4.4 0.6 0.0 0.5

Enargite/Tennantite 6.2 3.8 7.1 6.4 0.3 5.8

Bornite 15.2 22.6 19.1 24.9 1.4 0.6

Chalcopyrite 76.8 72.3 67.3 67.2 96.6 93.0

Sphalerite 0.5 0.6 0.7 0.4 0.0 0.1

Master CompMassive Sulphide

Semi-Massive Sulphide

Massive Barite

Pyritic Mudstone

Felsic Volcanic Breccia

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s (%

Cu

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Barren 0.0 0.0 0.0 0.0 0.0 0.0

Locked CuSul 3.6 3.9 5.6 5.1 15.8 1.8

CuSul Sub-Midds 5.1 5.2 7.8 6.3 7.1 2.0

CuSul Midds 7.2 7.1 7.5 9.0 7.7 5.1

Lib CuSul 17.1 11.6 9.3 10.0 11.9 4.5

Free CuSul 67.1 72.1 69.8 69.7 57.5 86.6

Master Comp Massive Sulphide Semi-Massive Sulphide

Massive Barite Pyritic Mudstone Felsic Volcanic Breccia



83

Figure 13-3: Mineralogical Cu Grade-Recovery Curve. 13.3.3 Sphalerite Association, Liberation and Theoretical Grade-Recovery

Sphalerite liberation within the samples is very good ranging from 83.0% to 93.8% of the sphalerite being free and liberated. Sphalerite association is varied, the middlings and locked sphalerite particles being associated with barite, chalcopyrite, galena, pyrite, carbonates, and silicates (Figure 13-4). For all of the composites observed, a Zn concentrate grading above 57% Zn should be achievable at Zn recoveries above 90% (Figure 13-5).

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ecov

ery

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Felsic Volcanic BrecciaMassive BariteMassive SulphideMaster CompPyritic MudstoneSemi-Massive Sulphide



84

Figure 13-4: Overall Sphalerite Liberation.

Figure 13-5: Mineralogical Zn Grade-Recovery Curve.

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ite)

Barren 0.0 0.0 0.0 0.0 0.0 0.0

Locked Sph 1.3 1.0 1.9 2.7 4.0 1.2

Sub Midds Sph 2.4 1.7 4.4 5.9 3.3 2.0

Midds Sph 4.3 4.3 5.5 8.4 6.1 3.0

Lib Sph 7.5 7.0 8.8 7.9 4.9 3.8

Free Sph 84.5 86.0 79.4 75.1 81.8 90.0



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85

13.3.4 Galena Association, Liberation and Theoretical Grade-Recovery

Galena liberation is generally lower, on average, than for sphalerite and the Cu-sulphides, with a maximum of 83.2% of the galena free or liberated in the Massive Sulphide composite and a minimum of 64.3% of the galena free or liberated in the Pyritic Mudstone composite (Figure 13-6). The majority of the galena middlings or locked particles are associated with sphalerite, as well as barite, hard silicates, chalcopyrite, and pyrite. Except for the Pyritic Mudstone composite, which showed poor liberation, a Pb concentrate grading ~80% Pb should be achievable at Pb recoveries above 90% (Figure 13-7).

Figure 13-6: Overall Galena Liberation.

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Barren 0.0 0.0 0.0 0.0 0.0 0.0

Locked Gal 7.3 5.2 8.0 10.9 6.0 6.7

Gal Sub-Midds 6.1 6.5 5.1 7.7 29.8 11.2

Gal Midds 5.8 5.2 10.3 10.6 0.0 10.4

Lib Gal 5.2 10.0 5.0 6.1 43.2 5.9

Free Gal 75.6 73.2 71.5 64.6 21.1 65.8





86

Figure 13-7: Mineralogical Pb Grade-Recovery Curve.

13.4 Bond Ball Mill Grindability Test

The Bond Ball mill grindability test was performed at 150 mesh of grind (106 microns) on the Master composite. The test results are summarized in Table 13-3 and compared to the SGS database in Figure 13-8. With a Bond Ball Mill Work Index (BWI) of 7.3kWh/t, the Master composite sample can be categorized as very soft. Table 13-3: Bond Ball Mill Grindability Test Results.

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Sample Name Mesh of Grind

F80

(μm)P80

(μm)Gram per Revolution

Work Index (kWh/t)

Hardness Percentile

Feed passing (%)

Bulk Density (kg/m3)

Closing Screen Size (μm)

Mib

(kWh/t)Master Comp 150 2,283 82 3.16 7.3 1 15.4 2,625 106.0 8.4



87

Figure 13-8: Bond Ball Mill Work Index SGS Database.

13.5 Gravity Testwork

A single gravity test was completed on the Master Composite. The gravity concentrate graded 46.6% Pb, 67.3g/t Au and 2,895g/t Ag with recoveries of 5.3% Pb, 35.4% Au, and 6.8% Ag (Table 13-4). The addition of a gravity separation stage ahead of flotation could possibly increase overall Au recovery to the final Pb concentrate as this high-Pb gravity concentrate would likely not impact on the final Pb concentrate grade. Table 13-4: Gravity Test Results.

13.6 Flotation Testwork

13.6.1 Duck Pond Flowsheet Evaluation

A total of ten batch cleaner tests were completed; eight following the full Duck Pond standard flowsheet (Figure 13-9) and two including the CuPb circuit only. The test conditions are summarized in Table 13-5 and the results are presented in Table 13-6. All tests, except for F3, were conducted on whole ore, with F1 having a coarser primary grind and CuPb rougher pH. Test F3 replicated test F2 conditions on the combined gravity tailings.

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Bond Ball Mill Work Index - Metric

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Product Weight Assays g/t, % % Distributiong % Au Ag Cu Pb Zn S Au Ag Cu Pb Zn S

Mozley Conc 43.4 0.4 67.3 2895 1.32 46.6 3.55 17.2 35.4 6.8 0.4 5.3 0.1 0.5Knelson + Mozley Tail 9861.2 99.6 0.54 175 1.36 3.67 12.0 14.9 64.6 93.2 99.6 94.7 99.9 99.5

Head (calc.) 9904.6 100.0 0.83 187 1.36 3.86 12.0 14.9 100.0 100.0 100.0 100.0 100.0 100.0 (direct) 0.83 214 1.44 4.01 11.9 14.8



88

Figure 13-9: Batch Cleaner Flotation Test Flowsheet. Table 13-5: Batch Cleaner Test Conditions.

Grind K80 (µm) CuPb Circuit Reagents (g/t) Zn Circuit Reagents (g/t)

PrimaryCuPb

RegrindZn

Regrind Ca(OH)2 ZnSO4 NaCN MBS Dextrin 3418A MIBC Ca(OH)2 CuSO4 SIBX 5100 MIBC U250CF1 50 28 20 795 300 - - 300 17.5 32.5 1155 1200 30 - 7.5 7.5F2 39 21 15 315 300 - - - 17.5 32.5 1235 1200 30 - 7.5 7.5F3 45 21 14 360 300 - - - 17.5 32.5 670 1200 30 - 7.5 7.5F4 ~40 ~20 ~15 290 600 - - - 17.5 32.5 1240 1200 40 - 7.5 7.5F5 ~40 21 20 315 225 75 - - 20 32.5 1595 1200 70 - 15 15F6 ~40 20 16 335 150 50 100 - 17.5 32.5 1535 1200 - 37.5 15 -F7 ~40 ~25 - 505 150 - - - 20 7.5 - - - - - -F8 ~40 ~25 - 355 250 - - - 20 7.5 - - - - - -F9 39 25 17 950 330 110 - - 42.5 15 1365 1200 70 - 15 15

F10 39 ~25 ~20 950* 270 90 - - 27.5 12.5 1500 1200 70 - 15 15* Na2CO3

Test #



89

Table 13-6: Batch Cleaner Test Results.

Test K80 Product Weight Assays %, g/t % Distribution# (µm) % Cu Pb Cu+Pb Zn Au Ag S Cu Pb Zn Au Ag S

Rougher CuPb Ro Cl Conc 3.9 18.1 2.94 21.0 13.5 12.0 4056 27.9 47.6 2.8 4.4 52.0 70.1 7.1F1 50 CuPb 3rd Cl Conc 2.8 12.9 5.50 18.4 28.9 5.56 708 30.6 25.0 3.9 6.9 17.8 9.0 5.7

CuPb CuPb 2nd Cl Conc 3.7 11.0 6.26 17.2 28.0 4.73 616 29.2 27.7 5.7 8.7 19.7 10.2 7.1Regrind CuPb 1st Cl Conc 5.5 8.21 6.69 14.9 26.1 3.58 469 26.8 30.8 9.1 12.1 22.2 11.6 9.7

28 Final CuPb Conc 6.7 15.9 4.03 19.9 20.0 9.27 2634 29.0 72.7 6.7 11.3 69.8 79.2 12.8Zn Ro Feed 89.9 0.33 3.90 10.9 0.25 44.3 13.9 20.1 86.8 82.1 25.0 17.8 82.1

Zn Zn Ro Cl Conc 4.8 0.59 9.58 55.0 0.31 42.0 29.9 1.9 11.4 22.3 1.7 0.9 9.5Regrind Zn 3rd Cl Conc 5.6 0.52 5.47 58.1 0.37 46.0 30.7 2.0 7.5 27.1 2.3 1.1 11.2

20 Zn 2nd Cl Conc 6.2 0.62 6.70 56.0 0.38 47.8 30.0 2.6 10.3 29.3 2.7 1.3 12.3Zn 1st Cl Conc 7.8 0.79 8.34 52.5 0.40 49.9 28.8 4.2 16.2 34.6 3.6 1.8 14.9Zn Ro 1-2 Conc 22.1 1.06 12.35 43.1 0.39 45.8 25.9 15.9 67.7 80.2 9.7 4.5 37.7Final Zn Conc 10.4 0.55 7.38 56.7 0.34 44.1 30.3 3.9 18.9 49.4 4.0 2.0 20.7Head (calc.) 100.0 1.47 4.04 11.9 0.89 223 15.2 100.0 100.0 100.0 100.0 100.0 100.0







CuPb CuPb 2nd Cl Conc 4.9 11.85 26.5 38.4 19.9 3.47 1376 25.5 40.7 34.4 8.1 27.8 39.6 8.8Gravity Regrind CuPb 1st Cl Conc 6.3 10.03 24.6 34.7 22.4 2.97 1137 25.2 44.3 41.1 11.8 30.7 42.2 11.2Tails 21 Final CuPb Conc 7.1 12.5 33.4 46.0 14.8 4.20 1757 23.4 62.6 63.1 8.8 49.0 73.6 11.7

Zn Ro Feed 89.7 0.43 0.86 11.1 0.30 36.8 13.1 27.2 20.3 83.1 43.9 19.4 82.6Zn Zn Ro Cl Conc 10.5 0.45 1.91 59.9 0.30 56.1 29.3 3.3 5.3 52.2 5.1 3.5 21.6

Regrind Zn 3rd Cl Conc 2.9 0.55 1.68 58.5 0.43 84.4 30.8 1.1 1.3 13.9 2.0 1.4 6.214 Zn 2nd Cl Conc 3.8 0.75 2.27 52.9 0.50 101 29.0 2.0 2.3 16.7 3.1 2.3 7.8

Zn 1st Cl Conc 5.5 0.98 2.70 44.6 0.57 110 26.2 3.8 3.9 20.5 5.1 3.6 10.2Zn Ro 1-2 Conc 23.1 0.93 2.23 42.4 0.44 78.7 24.8 15.1 13.6 81.5 16.6 10.7 40.3Final Zn Conc 13.3 0.47 1.86 59.6 0.33 62.2 29.6 4.4 6.6 66.1 7.2 4.9 27.8Head (calc.) 100.0 1.43 3.78 12.0 0.61 170 14.2 100.0 100.0 100.0 100.0 100.0 100.0

Rougher Cu Rougher 1 9.3 12.7 26.9 39.6 18.0 6.87 1391 26.9 83.7 61.7 14.2 53.6 70.1 17.1F4 ~40 Cu Rougher 1-2 10.3 12.1 27.6 39.6 18.0 7.07 1401 26.7 87.9 69.9 15.7 61.0 78.0 18.8

CuPb Cu Rougher 1-3 10.5 11.88 27.7 39.5 18.0 7.64 1417 26.8 88.4 71.6 16.0 67.4 80.6 19.2Regrind Cu Rougher Tail 0.4 2.29 11.5 13.8 8.9 34.7 2214 31.3 0.7 1.2 0.3 12.3 5.1 0.9

~20 Final CuPb Conc 11.0 11.5 27.0 38.5 17.7 8.69 1448 26.9 89.1 72.8 16.3 79.7 85.7 20.1Zn Ro Feed 86.1 0.14 0.54 10.5 0.24 24.9 12.7 8.4 11.5 76.3 17.2 11.6 74.7


~15 Zn 2nd Cl Conc 4.4 0.30 1.66 60.1 0.34 35.5 30.4 0.9 1.8 22.1 1.2 0.8 9.0Zn 1st Cl Conc 5.7 0.37 1.84 55.1 0.36 39.4 28.8 1.5 2.6 26.3 1.7 1.2 11.1Zn Ro 1-2 Conc 14.5 0.40 1.99 43.1 0.38 39.2 24.7 4.1 7.1 52.7 4.6 3.1 24.4Final Zn Conc 7.0 0.26 2.16 60.7 0.30 30.1 30.8 1.3 3.7 35.9 1.8 1.1 14.7Head (calc.) 100.0 1.42 4.07 11.9 1.19 185 14.7 100.0 100.0 100.0 100.0 100.0 100.0

Rougher CuPb Ro Cl Conc 3.7 6.5 61.6 68.1 6.6 12.5 3253 17.7 16.3 54.3 2.1 41.6 69.9 4.4F5 ~40 CuPb 3rd Cl Conc 7.7 11.2 19.6 30.8 31.3 3.44 232 28.2 58.0 35.5 20.0 23.5 10.2 14.4








Zn Zn Ro Cl Conc 14.7 1.76 1.89 58.8 0.36 63.5 31.6 17.6 6.7 69.9 3.8 4.1 31.3Regrind Zn 3rd Cl Conc 3.7 2.76 2.06 55.8 0.76 153 30.8 7.0 1.8 16.9 2.0 2.5 7.8

16 Zn 2nd Cl Conc 4.2 2.80 2.21 50.7 0.83 158 29.2 8.0 2.2 17.1 2.5 2.9 8.2Zn 1st Cl Conc 4.9 2.69 2.26 43.2 1.08 140 26.6 9.1 2.7 17.3 3.8 3.0 8.9Zn Ro 1-2 Conc 24.8 1.79 1.84 43.7 0.55 79.5 26.3 30.2 11.0 87.8 9.7 8.7 44.1Final Zn Conc 18.4 1.96 1.92 58.2 0.44 81.6 31.4 24.6 8.5 86.8 5.8 6.6 39.1Head (calc.) 100.0 1.47 4.15 12.3 1.40 227 14.8 100.0 100.0 100.0 100.0 100.0 100.0



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13.6.2 CuPb Circuit Optimization

In order to optimize Zn rejection in the CuPb circuit, tests F7 and F8 focused on improving Cu and Pb recovery to the final CuPb concentrate while rejecting as much Zn as possible to the Zn rougher feed. These tests did not include the Zn flotation circuit. Tests F9 and F10 were full flowsheet optimization tests. The test results are presented in Table 13-7. Table 13-7: CuPb Circuit Optimization Batch Cleaner Test Results

The best results were obtained in test F10 (Table 13-7). The final CuPb concentrate graded 11.6% Cu and 36.8% Pb for a combined grade of 48.4% Cu+Pb at 14.1% Zn at 84.3% Cu and 92.9% Pb recovery. Zinc losses to the final CuPb concentrate were 12.4% while losses to the CuPb cleaner intermediate streams were 15.9% for a total of 71.7% of the Zn reporting to the Zn rougher feed. The final Zn concentrate graded 60.8% Zn, 0.32% Cu, and 0.39% Pb at 68.4% Zn recovery. The preliminary recoveries from test F10 were used for calculating the Mineral Resource Estimate (section 14.0).

Test K80 Product Weight Assays %, g/t % Distribution# (µm) % Cu Pb Cu+Pb Zn Au Ag S Cu Pb Zn Au Ag S



~25 Final CuPb Conc 10.2 11.6 21.5 33.2 21.7 9.74 1578 26.4 88.7 52.8 18.8 79.4 82.5 18.9Zn Ro Feed 83.9 0.10 0.60 9.38 0.24 30.0 12.2 6.0 12.1 66.9 15.9 12.9 71.9Head (calc.) 100.0 1.34 4.16 11.8 1.25 195 14.3 100.0 100.0 100.0 100.0 100.0 100.0



~25 Final CuPb Conc 12.0 10.4 23.7 34.0 22.7 6.85 1422 25.9 88.9 69.1 23.0 76.7 85.5 21.8Zn Ro Feed 82.1 0.10 0.51 8.7 0.23 25.0 11.9 5.8 10.1 60.2 17.3 10.3 68.5Head (calc.) 100.0 1.40 4.12 11.8 1.07 200 14.3 100.0 100.0 100.0 100.0 100.0 100.0








~25 Final CuPb Conc 10.4 11.6 36.8 48.4 14.1 6.96 1695 23.1 83.4 92.9 12.4 75.6 86.9 16.6Zn Ro Feed 85.2 0.15 0.16 10.0 0.22 20.8 12.8 9.0 3.3 71.7 20.0 8.7 75.1


~20 Zn 2nd Cl Conc 7.1 0.38 0.42 53.2 0.29 45.4 29.6 1.8 0.7 31.8 2.1 1.6 14.4Zn 1st Cl Conc 8.3 0.39 0.42 46.1 0.31 44.4 27.2 2.2 0.8 32.2 2.7 1.8 15.5Zn Ro 1-2 Conc 27.8 0.32 0.33 30.2 0.30 33.1 21.2 6.2 2.2 71.1 8.6 4.5 40.8Final Zn Conc 13.3 0.32 0.39 60.8 0.23 39.5 31.5 3.0 1.3 68.4 3.2 2.6 28.9Head (calc.) 100.0 1.45 4.13 11.8 0.96 203 14.5 100.0 100.0 100.0 100.0 100.0 100.0



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14.0 MINERAL RESOURCE ESTIMATES

At the request of Paragon, Giroux Consultants Ltd. was retained to produce a resource estimate on the Lemarchant Deposit, South Tally Pond Project in the Rogerson Lake Area of Newfoundland. The effective date for this Resource is January 16, 2012. G.H. Giroux is the qualified person responsible for the resource estimate. Mr. Giroux is a qualified person by virtue of education, experience and membership in a professional association. He is independent of both the issuer and the vendor applying all of the tests in section 1.5 of National Instrument 43-101. Mr. Giroux has not visited the property.

14.1 Data Analysis

Paragon supplied a data base consisting of 74 drill holes, with 420 down hole survey readings and 6,821 assays for gold, silver, copper, lead and zinc. Gold assays supplied in ppb were converted to g/t. Gold assays missing or reported as zero were assigned a value of 0.001 g/t. Silver assays missing or reported as zero were assigned a value of 0.01 g/t. Copper, lead and zinc assays missing or reported as zero were converted to 5 ppm. Gaps in the from-to record were replaced with 0.001 g/t Au, 0.01 g/t Ag and 5 ppm for Cu, Pb and Zn. All Cu, Pb and Zn assays were then converted to percent. A geologic 3-dimensional solid model was built by QP Dean Fraser, using Surpac software. The mineralized VMS solid was built to encompass massive sulphide and stringer mineralization where possible.



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Figure 14-1: Isometric view looking NNW showing mineralized solid (red), drill holes and topographic surface with 7.5% ZnEq cut-

off Indicated (dark purple) and Inferred (ligher purple) resource blocks. Pink surfaces to the north (right of the diagram) represent semi-massive and massive sulphide intercepts currently outside of the 43-101 resource.



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Drill holes within the data base were compared to the VMS solid and individual assays were back-tagged if within this solid. Of the supplied drill holes, 32 intersected the mineralized solid totalling 10,000 m. The complete list of drill holes is shown as Appendix II with the drill holes that intersected the VMS solid highlighted. The assay statistics for samples within the solid are compared to those outside the solid below. Table 14-1: Sample statistics for assays within and outside the VMS solid.

Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Assays within the VMS Solid Number 1,035 1,035 1,035 1,035 1,035 Mean 0.63 29.43 0.36 0.75 3.68 Standard Deviation 2.15 122.38 0.68 1.91 6.99 Minimum Value 0.001 0.01 0.001 0.001 0.001 Maximum Value 45.91 3106.0 5.00 15.30 55.00 Coefficient of Variation 3.40 4.16 1.90 2.54 1.90 Assays outside of VMS Solid Number 6,886 6,886 6,886 6,886 6,886 Mean 0.05 1.83 0.03 0.02 0.14 Standard Deviation 0.24 19.45 0.11 0.12 0.71 Minimum Value 0.001 0.01 0.001 0.001 0.001 Maximum Value 11.40 1518.0 3.40 6.30 36.00 Coefficient of Variation 4.95 10.61 4.27 6.07 5.21

Scattered high values for both precious and base metals occur outside the interpreted VMS solid but at this time it was not possible to join them up with intervals on adjoining sections. The grade distributions, for each variable, were examined using lognormal cumulative probability plots to determine if capping was required and if so at what level. Outlier values were identified for each variable and are tabulated below. Table 14-2: Cap levels for all variables.

Domain Variable Cap Level Number Capped

VMS Solid Au 14.0 g/t 3 Ag 800 g/t 2 Cu 5.5 % 0 Pb 12.5 % 5 Zn 46.0 % 2

Waste Au 1 g/t 35 Ag 41 g/t 31 Cu 1.1 % 17 Pb .75 % 21 Zn 4.4 % 14

The results from capping are tabulated below.



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Table 14-3: Sample statistics for capped assays within and outside VMS solid.

Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Capped Assays within the VMS Solid Number 1,035 1,035 1,035 1,035 1,035 Mean 0.58 27.06 0.36 0.74 3.67 Standard Deviation 1.48 78.38 0.68 1.85 6.92 Minimum Value 0.001 0.01 0.001 0.001 0.001 Maximum Value 14.00 800.00 5.00 12.50 46.00 Coefficient of Variation 2.55 2.90 1.90 2.50 1.89 Capped Assays outside of VMS Solid Number 6,886 6,886 6,886 6,886 6,886 Mean 0.04 1.44 0.02 0.02 0.12 Standard Deviation 0.10 4.13 0.09 0.07 0.38 Minimum Value 0.001 0.01 0.001 0.001 0.001 Maximum Value 1.00 41.00 1.10 0.75 4.40 Coefficient of Variation 2.54 2.87 3.56 3.83 3.07

14.2 Composites

Within the VMS mineralized solid 99.6 % of assays were less than 2 metres in length. A composite length of 2.5 metres was chosen to produce a uniform support for resource estimation. Uniform 2.5 m composites were produce honouring the boundaries of the VMS solid. Small intervals at the solid boundaries less than 1.25 metres were combined with the adjoining sample to produce a uniform support of 2.5 ± 1.25 metre. All data within the VMS solid was used. The 2.5 metre composite statistics are tabulated below. Table 14-4: Sample statistics for 2.5 m Composites within and outside VMS solid.

Au (g/t) Ag (g/t) Cu (%) Pb (%) Zn (%) Composites within the VMS Solid Number 319 319 319 319 319 Mean 0.51 22.90 0.31 0.64 3.18 Standard Deviation 0.96 58.84 0.51 1.44 5.42 Minimum Value 0.001 0.01 0.001 0.001 0.001 Maximum Value 6.32 635.35 3.17 11.40 32.52 Coefficient of Variation 1.90 2.57 1.63 2.27 1.70 Composites outside of VMS Solid Number 3,675 3,675 3,675 3,675 3,675 Mean 0.01 0.21 0.005 0.002 0.018 Standard Deviation 0.03 0.95 0.026 0.010 0.088 Minimum Value 0.001 0.01 0.001 0.001 0.001 Maximum Value 0.74 22.34 0.76 0.19 1.98 Coefficient of Variation 4.13 4.56 5.58 4.49 4.97



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14.3 Variography

Pairwise relative semivariograms were produced for Au, Ag, Cu, Pb and Zn in both the VMS and Waste Domains. Within the VMS solid all variables showed a geometric anisotropy with nested spherical models fit to all directions. Within waste isotropic nested spherical models were fit to all variables. The semivariogram parameters are tabulated below. Table 14-5: Semivariogram parameters for all variables.

Domain Variable Az / Dip C0 C1 C2 Short Range (m)

Long Range (m)

VMS Au 103o / 0o 0.15 0.45 0.40 50.0 102.0 013o / -50o 0.15 0.45 0.40 15.0 100.0 193o / -40o 0.15 0.45 0.40 15.0 30.0

Ag 103o / 0o 0.30 0.40 0.50 40.0 90.0 013o / -50o 0.30 0.40 0.50 50.0 58.0 193o / -40o 0.30 0.40 0.50 30.0 40.0

Cu 50o / 0o 0.40 0.10 0.55 15.0 80.0 320o / -35o 0.40 0.10 0.55 20.0 64.0 140o / -55o 0.40 0.10 0.55 20.0 48.0

Pb 60o / 0o 0.70 0.20 0.50 40.0 68.0 330o / -45o 0.70 0.20 0.50 15.0 20.0 150o / -45o 0.70 0.20 0.50 20.0 60.0

Zn 50o / 0o 0.30 0.20 0.58 20.0 60.0 320o / -45o 0.30 0.20 0.58 20.0 36.0 140o / -45o 0.30 0.20 0.58 20.0 50.0

Waste Au Omni Directional 0.05 0.07 0.,13 10.0 100.0 Ag Omni Directional 0.10 0.05 0.15 10.0 100.0 Cu Omni Directional 0.05 0.05 0.10 10.0 100.0 Pb Omni Directional 0.05 0.02 0.05 10.0 100.0 Zn Omni Directional 0.10 0.03 0.14 10.0 100.0

14.4 Block Model

A block model with blocks 10 x 10 x 5 m in dimension was superimposed on the VMS solid with the percentage of the block below surface topography and within the VMS solid recorded in each block. The block model origin is shown below. Lower Left Corner of Model 520600 E Block size = 10 m 62 Columns 5374520 N Block size = 10 m 44 Rows Top of Model 350 Elevation Block size = 5 m 57 Levels



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No Rotation

14.5 Bulk Density

A total of 769 specific gravity determinations were made on the Lemarchant VMS zone or 74% of the assayed interval within the VMS solid. An additional 270 measurements were taken from assays outside the solid in areas considered waste. All measurements were done on drill core using the weight in air-weight in water procedure. Specific Gravity = (Weight of Sample in air) (Weight in air – Weight in water) The results are tabulated below. Considering 74% of assays within the interpreted VMS domain had specific gravity measured, 2.5 metre composites were produced for specific gravity. These 2.5 m composites were used to estimate a specific gravity into all blocks with some percentage of VMS present using inverse distance squared interpolation. The waste within blocks was assigned the average specific gravity of 2.76. A weighted average for the total block was then produced. Table 14-6: Specific Gravity Determinations.

Domain Number of Samples

Min. SG

Max. SG

Average SG

VMS (samples) 769 1.75 5.00 3.13 Waste 270 1.47 3.55 2.76 VMS (2.5 m Composites) 233 2.49 4.41 3.07

14.6 Grade Interpolation

Grades for all variables were interpolated into blocks containing some percentage of VMS by Ordinary Kriging. The kriging exercise was completed in a series of passes with the search ellipse for each pass a function of the semivariogram range for each variable. For pass 1 the search ellipse dimensions were equal to ¼ of the semivariogram range. A minimum of 4 composites were required to estimate a block. For blocks not estimated in pass 1 the search ellipse was expanded to ½ the semivariogram range and a second pass was completed. Again a minimum 4 composites were required to estimate a block. A third pass using the full range and a fourth pass using twice the range completed the kriging exercise. In all passes a maximum of 12 composites were allowed with a maximum of 3 from any one drill hole. The kriging parameters for the estimation of gold are tabulated below. For all blocks estimated for VMS mineralization, that contained some percentage of waste, a second kriging run was completed in a similar fashion using composites from outside the VMS solid. Again grades for Au, Ag, Cu, Pb and Zn were kriged by Ordinary Kriging using the same procedure described above.



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Finally the specific gravity for the VMS portion of estimated blocks was determined by inverse distance squared interpolation. The waste portion of blocks was assigned the average of waste samples, a value of 2.76. The weighted average of the total block was then determined. Table 14-7: Kriging Parameters for Gold. Domain Variable Pass Number

Kriged Az/Dip Dist.

(m) Az/Dip Dist.

(m) Az/Dip Dist.

(m) VMS Au 1 401 103o / 0o 25.5 013o / -50o 25.0 193o / -40o 7.5

2 2,314 103o / 0o 51.0 013o / -50o 50.0 193o / -40o 15.0 3 2,625 103o / 0o 102.0 013o / -50o 100.0 193o / -40o 30.0 4 2,525 103o / 0o 204.0 013o / -50o 200.0 193o / -40o 60.0

Waste Au 1 508 Omni Directional 25.0 2 2,062 Omni Directional 50.0 3 2,702 Omni Directional 100.0 4 806 Omni Directional 200.0

14.7 Classification

Based on the study herein reported, delineated mineralization of the Lemarchant VMS Deposit are classified as a resource according to the following definitions from National Instrument 43-101 and from CIM (2005): “In this Instrument, the terms "mineral resource", "inferred mineral resource", "indicated mineral resource" and "measured mineral resource" have the meanings ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum, as the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM Council, as those definitions may be amended.” The terms Measured, Indicated and Inferred are defined by CIM (2005) as follows: “A Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.” “The term Mineral Resource covers mineralization and natural material of intrinsic economic interest which has been identified and estimated through exploration and sampling and within which Mineral Reserves may subsequently be defined by the consideration and application of technical, economic, legal, environmental, socio-economic and governmental factors. The phrase ‘reasonable prospects for economic extraction’ implies a judgment by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of economic extraction. A Mineral Resource is an inventory of mineralization that under realistically assumed and justifiable technical and economic conditions might become economically extractable. These assumptions must be presented explicitly in both public and technical reports.”



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Inferred Mineral Resource “An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, workings and drill holes.” “Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic studies.” Indicated Mineral Resource “An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.” “Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can serve as the basis for major development decisions.” Measured Mineral Resource “A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.” “Mineralization or other natural material of economic interest may be classified as a Measured Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such that the tonnage and grade of the mineralization can be estimated to within close



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limits and that variation from the estimate would not significantly affect potential economic viability. This category requires a high level of confidence in, and understanding of, the geology and controls of the mineral deposit.” Within the Lemarchant VMS Deposit the geological continuity has been established though surface mapping and diamond drill hole interpretation. Grade continuity can be quantified by semivariogram analysis. By tying the classification to the semivariogram ranges through the use of various search ellipses the resource can be classified as follows:

• In general Blocks estimated during pass 1 and 2 using search ellipses with dimensions up to ½ the semivariogram range were classified as Indicated

• All remaining blocks were classified as Inferred

Since this deposit is multi element and all variables contribute to the value of a block, a Zn Equivalent value was determined for the mineralized portion of each block using the following assumptions. Determining prices to use in these exercises is difficult in this volatile metal price climate. Two year or three year trailing averages are useful guides except when these prices exceed the spot price at the moment.

Commodity Spot Price Jan. 13, 2012

2 year Trailing Average

3 year Trailing Average

Gold $1,642/oz $1,350 / oz $1,205 / oz Silver $29.64 / oz $26.57 / oz $22.18 / oz Zinc $0.88 / lb $1.00 / lb $0.89 / lb Copper $3.60 / lb $3.68 / lb $3.15 / lb Lead $0.91 / lb $1.04 / lb $0.93 / lb

For this study the following assumptions were made. Au - Price of $1350.00 / oz Recovery of 75.6 % Ag – Price of $26.57 / oz Recovery of 86.9 % Zn – Price of $0.88 / lb Recovery of 68.4 % Cu – Price of $3.15 / lb Recovery of 83.4 % Pb – Price of $0.91 / lb Recovery of 92.9 % ZnEQ% = (( Zn% x 13.27) + (Cu% x 57.93) + (Pb% x 18.64) + (Au g/t x 32.81) + (Ag g/t x 0.74)) 13.27 The results are presented as two sets of Tables for Indicated and Inferred Resource. The first set of Tables 14-8 and 14-9 show the resource if one could mine to the limits of the VMS solid. This resource assumes zero dilution. A second set of Tables 14-10 and 14-11 show the resource within total blocks (10 x 10 x 5 m). This resource includes edge dilution around the VMS solid and assumes one would mine whole blocks. The resource attainable by actual mining, using proper grade control, would likely be between these two extremes.



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Table 14-8: Indicated Resource within VMS Solid.

Cut-off (ZNEQ)

Tonnes > Cut-Off (tonnes)

Grade > Cut-off Zn (%)

Cu (%)

Pb (%) Au (g/t) Ag (g/t) Zn Eq (%)

5.00 1,620,000 4.70 0.50 1.03 0.88 48.58 13.225.50 1,520,000 4.87 0.52 1.07 0.92 51.01 13.746.00 1,460,000 4.99 0.53 1.09 0.93 52.72 14.106.50 1,390,000 5.11 0.54 1.12 0.96 54.62 14.497.00 1,310,000 5.25 0.56 1.16 0.99 56.97 14.977.50 1,240,000 5.38 0.58 1.19 1.01 59.17 15.408.00 1,180,000 5.50 0.59 1.21 1.03 61.06 15.778.50 1,110,000 5.64 0.61 1.25 1.06 63.15 16.219.00 1,070,000 5.74 0.62 1.28 1.08 64.99 16.559.50 1,020,000 5.84 0.64 1.30 1.10 66.73 16.91

10.00 970,000 5.95 0.65 1.32 1.13 68.52 17.2610.50 920,000 6.08 0.67 1.35 1.15 70.44 17.6711.00 860,000 6.21 0.68 1.39 1.17 72.69 18.1011.50 810,000 6.35 0.70 1.43 1.20 74.57 18.5612.00 760,000 6.52 0.72 1.48 1.22 76.37 19.03

Table 14-9: Inferred Resource within VMS Solid.

Cut-off (ZNEQ)



Cu (%)


5.00 2,560,000 3.05 0.34 0.69 0.72 33.93 9.225.50 2,270,000 3.18 0.36 0.74 0.77 36.53 9.726.00 2,030,000 3.31 0.37 0.77 0.82 38.93 10.206.50 1,810,000 3.40 0.38 0.80 0.87 41.85 10.677.00 1,550,000 3.55 0.40 0.83 0.93 46.26 11.347.50 1,340,000 3.70 0.41 0.86 1.00 50.41 11.978.00 1,180,000 3.87 0.42 0.90 1.04 53.93 12.568.50 1,060,000 4.02 0.44 0.94 1.06 57.08 13.079.00 940,000 4.19 0.46 0.98 1.09 60.34 13.629.50 820,000 4.34 0.47 1.03 1.13 64.23 14.23

10.00 760,000 4.47 0.48 1.06 1.15 66.09 14.5810.50 690,000 4.57 0.49 1.07 1.19 68.86 15.0111.00 610,000 4.72 0.51 1.12 1.23 71.83 15.5611.50 560,000 4.90 0.52 1.16 1.25 73.25 15.9912.00 500,000 5.11 0.54 1.21 1.28 75.07 16.51



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Table 14-10: Indicated Resource within Total Blocks.

Cut-off (ZNEQ)



Cu (%)


5.00 1,600,000 4.49 0.48 0.99 0.85 46.95 12.705.50 1,490,000 4.67 0.50 1.03 0.89 49.46 13.256.00 1,410,000 4.81 0.51 1.07 0.91 51.48 13.696.50 1,350,000 4.92 0.52 1.09 0.94 53.06 14.047.00 1,260,000 5.08 0.54 1.13 0.97 55.27 14.527.50 1,180,000 5.23 0.56 1.17 0.99 57.75 15.028.00 1,110,000 5.37 0.58 1.20 1.02 59.96 15.478.50 1,050,000 5.51 0.60 1.23 1.04 61.86 15.889.00 990,000 5.64 0.61 1.27 1.06 63.81 16.309.50 940,000 5.76 0.63 1.30 1.09 65.39 16.67

10.00 900,000 5.87 0.64 1.32 1.12 67.32 17.0510.50 850,000 5.98 0.66 1.36 1.13 69.19 17.4211.00 790,000 6.11 0.67 1.40 1.16 71.55 17.8811.50 750,000 6.25 0.69 1.43 1.18 73.00 18.2812.00 700,000 6.44 0.71 1.48 1.20 74.75 18.74

Table 14-11: Inferred Resource within Total Blocks.

Cut-off (ZNEQ)



Cu (%)


5.00 2,050,000 2.96 0.33 0.70 0.68 33.68 8.965.50 1,800,000 3.09 0.35 0.74 0.72 36.24 9.466.00 1,580,000 3.24 0.36 0.78 0.77 39.03 9.996.50 1,350,000 3.40 0.38 0.81 0.82 42.83 10.637.00 1,130,000 3.61 0.40 0.85 0.89 47.24 11.387.50 980,000 3.77 0.41 0.87 0.95 51.20 12.008.00 870,000 3.94 0.43 0.91 0.99 54.18 12.578.50 770,000 4.11 0.44 0.95 1.02 57.33 13.099.00 680,000 4.26 0.46 0.98 1.06 61.05 13.699.50 620,000 4.41 0.48 1.02 1.08 63.21 14.13

10.00 570,000 4.56 0.49 1.05 1.11 64.95 14.5410.50 520,000 4.65 0.50 1.06 1.14 67.86 14.9411.00 470,000 4.83 0.52 1.09 1.17 69.30 15.3911.50 430,000 4.98 0.53 1.14 1.19 70.49 15.7612.00 380,000 5.19 0.54 1.17 1.22 71.76 16.23



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14.8 Model Verification

East-west cross sections were produced to compare the estimated grades for zinc and gold with the composite values from drill holes. The blocks show no bias and reasonable correlation with the drill hole composites (Figures 14-2 to 14-5).

Figure 14-2: Section 5374800 N showing Zn in Kriged blocks and composites.



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Figure 14-3: Section 5374700 N showing Zn in Kriged blocks and composites.



104

Figure 14-4: Section 5374800 N showing Au in Kriged blocks and composites.



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Figure 14-5: Section 5374700 N showing Au in Kriged blocks and composites.

15.0 MINERAL RESERVE ESTIMATES

There are no current Mineral Reserves at the South Tally Pond Project.

16.0 MINING METHODS

This section is not applicable.



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17.0 RECOVERY METHODS


18.0 PROJECT INFRASTRUCTURE


19.0 MARKET STUDIES AND CONTRACTS


20.0 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT


21.0 CAPITAL AND OPERATING COSTS


22.0 ECONOMIC ANALYSIS

No economic analysis has been completed on the Property.

23.0 ADJACENT PROPERTIES


24.0 OTHER RELEVANT DATA AND INFORMATION

There is no other relevant data or information to present on the Property.

25.0 INTERPRETATION AND CONCLUSIONS

The South Tally Pond VMS Project is located in a proven mining district in central Newfoundland. Significant deposits in the district include the world-class, past producing Buchan Cu-Zn deposits, historically Canada’s richest zinc mine and the currently producing Duck Pond Cu-Zn deposit owned by Teck Resources. The South Tally Pond Project is located in



107

the same volcanic belt as the Duck Pond Cu-Zn Mine, in which Paragon holds a significant land position immediately southwest of the mine site. The newly discovered Lemarchant Deposit is located 20 kilometres southwest of the Duck Pond mine site. The South Tally Pond Project is underlain by the Tally Pond Volcanic Belt, a sequence of submarine felsic and mafic volcanic rocks and related intrusive rocks that are highly prospective for volcanogenic massive sulphide deposits. Given that these deposits tend to occur in clusters the South Tally Pond Project has excellent opportunity to host multiple VMS deposits. Previous exploration in the project area was focused mainly on the Duck Pond and Boundary deposits located immediately northeast of the property. Intermittent exploration outside of these areas led to the discovery of the Lemarchant, Rogerson Lake, Bindon’s Pond, Lemarchant SW, Spencer’s Pond and Beaver Lake prospects. Other than the more recent Paragon drilling programs at the Lemarchant Deposit, each of these areas had seen limited to no drilling and represents an underexplored, prospective VMS environment that requires additional exploration. Drilling to date by Paragon at the Lemarchant Deposit has outlined a significant semi-massive to massive, precious metal–rich, copper-lead-zinc massive sulphide deposit, the Lemarchant Main Zone between sections 101N to 104N. The polymetallic sulphide deposit is located between vertical depths of 150 to 210 metres and remains open along strike and to depth. The mineralization is characterized by high-grade copper-lead-zinc massive sulphides plus barite with significant gold and silver contents. The semi-massive to massive sulphide mineralization intersected to date range from 1.7 to 30.4 metres in thickness and are typically underlain by a thick sequence of intensely altered, proximal felsic volcanic rocks. All excellent characteristics of a well developed volcanogenic massive sulphide system. Preliminary metallurgical studies completed by SGS Canada Inc. on a representative composite sample from the Lemarchant Deposit show favourable metal recoveries. Mineralogical studies (QEMSCAN) suggest that up to 90% copper and 90% zinc recoveries are possible. Initial flotation tests on the composite sample produced the following results: • a copper-lead concentrate grade of 48.4% (11.6% Cu, 36.8% Pb) containing 6.96 g/t Au and

1,695 g/t Ag can be produced with 83.4% Cu, 92.9% Pb, 75.6% Au and 86.9% Ag metal recoveries; and

• a zinc concentrate grade of 60.8% Zn can be produced with a 68.4% Zn metal recovery.

An initial NI43-101-compliant mineral resource estimate was completed in January, 2012 on the Lemarchant Main Zone by Giroux Consultants of Vancouver, BC, Canada. Although no economic assessment has yet been undertaken, a zinc equivalent cut-off of 7.5% ZnEQ was used and is viewed as reasonable cut-off grade for underground mining. The indicated and inferred mineral resource is estimated as follows: • Indicated Resource of 1.24 million tonnes grading 5.38% Zn, 0.58% Cu, 1.19% Pb, 1.01

g/t Au and 59.17 g/t Ag (15.40% ZnEQ) using a 7.5% Zn equivalent grade cut-off. • Inferred Resource of 1.34 million tonnes grading 3.70% Zn, 0.41% Cu, 0.86% Pb, 1.00

g/t Au and 50.41 g/t Ag (11.97% ZnEQ) using a 7.5% Zn equivalent grade cut-off.



108

The Lemarchant Main Zone mineralization is interpreted to be displaced by up to 300 metres eastward by the Lemarchant Fault, a gently west dipping thrust fault (Figure 25-1). The Lower Felsic Block consists of felsic volcanic rocks, widespread footwall stringer mineralization, strong alteration indices, and syn-volcanic mafic sills. Alteration appears to increase towards a number of east-west oriented syn-volcanic structures between sections 104N to 106N. The east-west structures potentially focused the hydrothermal fluids resulting in some of the most intense hydrothermal alteration observed in these areas. Semi-massive to massive sulphide mineralization has been intersected within the Lower Felsic Block at depths of 300 metres (Section 106) and 420 metres (Section 105). These massive sulphides are hosted in thick sequences (>300 metres) of highly altered felsic volcanic rocks. These massive sulphides, along with a thick alteration system in the Lower Felsic Block demonstrate the presence a preserved massive sulphide system at depth beneath the Lemarchant Fault. The Lemarchant Deposit remains open for expansion along strike to the south and north of the current drilling, and at depth in the Lower Felsic Block.

Figure 25-1: Schematic Block Diagram (looking northeast), Lemarchant Deposit.



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26.0 RECOMMENDATIONS

Based on the encouraging results of the exploration work completed to date at the Lemarchant Deposit, addition exploration is well warranted. A major focus of the recommended work program would consist of a combination of infill and step-out drilling to further define the nature and extent of the Lemarchant Deposit and to test other geological/geochemical targets that have been defined elsewhere on the property. A two-phase work program and budget is recommended with Phase 2 being contingent on the success of Phase 1. The work program and budget are summarized in Table 26-1. The Phase 1 Program includes 10,000 metres of diamond drilling in 26 drill holes to further define the nature and extend the Lemarchant Deposit; and to begin investigating other priority target areas. More specifically,

1) The drilling program at Lemarchant should focus on:

a) The Lower Felsic Block Target to the west and down-dip of massive sulphide mineralization cut off by the Lemarchant fault on Section 102 to Section 104; and on Section 105N (LM08-24) and Section 106N (LM08-37) where massive sulphides, proximal felsic volcanic rocks and extensive hydrothermal alteration have already been intersected.

b) The North Target Area down dip of drill holes LM07-16 (Section 104N) and LM93-11 (Section 106) where wide-spaced drilling has intersected massive sulphide mineralization hosted by intensely altered, vent proximal felsic volcanic rocks.

c) Infill drilling on the Lemarchant Main Zone.

d) Drill testing the Lemarchant Main Zone massive sulphide to the south of Section 101N

2) Borehole EM geophysics should be completed on 20 drill holes not yet surveyed;

3) Deep-penetrating ground DPEM survey with new parameters should be reviewed and re-attempted at the Lemarchant Deposit;

4) Deep-penetrating ground DPEM survey should be carried out at the Lemarchant SW and Bindon’s Pond Prospects; and

5) Environmental baseline studies should be initiated.

The Phase 2 program would consist mainly of continued definition drilling of the Lemarchant Deposit plus initial drilling at the nearby Lemarchant SW and/or Bindon’s Pond Prospects.



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Table 26-1: Recommended Program and Budget – Phase 1 and 2.

Phase 1 Program Proposed Expenditures $CDN Project Management/Staff Costs 70,000 Geologists/Geo-technicians (drill logging, compilation, reporting) 130,000 Computer hardware/software 20,000 Communications 20,000 Diamond Drilling (2 drills) plus Materials (10,000 metres):

a) Lemarchant - Lower Felsic Block - 10 drill holes, 5,000 m @ $100 500,000 b) Lemarchant North - 4 drill holes, 2,000 m @ $100 200,000 c) Lemarchant – Infill Main Zone - 8 drill holes, 2,000 m @ $100 200,000 d) Lemarchant South – 4 drill holes, 1,000 m @ $100 100,000

Geochemistry - Assaying (approx. 2500 samples) 100,000 Geochemistry - Whole Rock (approx. 100 samples) 50,000 Field Costs (transportation, accommodation, fuel, etc.) 60,000 Initial Environmental Baseline Studies 50,000 Borehole Pulse EM (existing and new drill holes) 50,000 Ground DPEM Survey – Lemarchant (25 line km @ $2000) 50,000 Ground DPEM Survey - Lemarchant SW, Bindon’s Pond (62.5 line km@$2000) 125,000 Sub-total 1,725,000 Contingency ~ 10% 175,000 Total 1,900,000 Phase 2 Program Proposed Expenditures $CDN Update 43-101 Resource Estimate 30,000 Scoping Study (or Preliminary Economic Assessment) 50,000 Metallurgical Testing/Consulting 75,000 Continued Environmental Baseline Studies 75,000 Continued Diamond Drilling - Lemarchant (15,000 metres) 2,500,000 Sub-total 2,730,000 Contingency ~ 10% 270,000 Total 3,000,000



111

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Licence Number 1334, Harpoon Brook Area, N.T.S. 12A/10. Unpublished Assessment Work Report prepared for Noranda Exploration Company, Limited. 5 pages.

Reid, W. (1980b) Second Year Assessment Report (Geophysical, Geological and Geochemical),

Licence Number 1249, 12064, 12065, Gill’s Pond North Area, N.T.S. 12A/10. Unpublished Assessment Work Report prepared for Noranda Exploration Company, Limited. 5 pages.



117

Reid, W. (1981) Report on 1980 Field Work (Geological, Geophysical, Geochemical and

Diamond Drilling) on portions of Anglo-Newfoundland Development Charter and Associated Reid Lots, NTS. 12A/7, 12A/9 & 12A/10. Written for Noranda Exploration Co. Ltd.






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Rogers, H.D. and Squires, G.C. (1988) Report of Assessment Work on Concession Lands within

the Boundary of the BP Mining – Norex Joint Venture Agreement (Reid Lot 231, 234 and AND Charter), NTS 12A/7, 9, 10. Written for Noranda Exploration Company, Limited.

Rogers, H.D. and Collins, C. (1989) Report of Assessment Work on Concession Lands Within

the Boundary of the Norex – BP Mining Norex Joint Venture Agreement Area (Reid Lot 231, 234, 235, AND Charter & Reid Lot 229), NTS 12A/7, 9, 10. Unpublished Assessment Work Report prepared for Noranda Exploration Company, Limited. 23 pages.

Rogers, N. and van Staal, C.R. (2002) Toward a Victoria Lake Supergroup: A provisional

stratigraphic revision of the Red Indian to Victoria lakes area, central Newfoundland. In Current Research (2002), Newfoundland and Labrador Department of Mines and Energy, Geological Survey, Report 02-1, p. 185.

Rogers, N., van Staal, C. R., McNicoll, V., Pollock, J., Zagorevski, A., and Whalen, J. (2006)

Neoproterozoic and Cambrian arc magmatism along the eastern margin of the Victoria Lake Supergroup: A remnant of Ganderian basement in central Newfoundland?: Precambrian Research, v. 147, p. 320-341.

Saeki, Y. and Date, J. (1980) Computer application to the alteration data of the footwall dacite

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Diamond Drilling & Geophysics, Licenses 6559M & 6560M, South Tally Pond Property, Rogerson Lake Area, Central Newfoundland, NTS 12A/10 & 12A/07. Written for Altius Resources Inc.



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Sparkes, B.A. (2005) Assessment Report of Prospecting, Compilation, Trenching, Basal Till

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and Metallurgical Bulletin, vol. 65 no. 9, 1962, pages 618-626. Geofile Number: 012A/15/0026.

Thicke, M. J., (1988) First and second year assessment report on geophysical exploration for

license 2784 on claim block 2765 and license 3276 on claim blocks 4864-4874 in the Gills Pond area, Newfoundland, 15 p. Rio Algom Exploration Incorporated, Geofile 012A/10/0491.

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August-November, 1988, 40 p. Rio Algom Exploration Inc., Geofile 12A/10 (522). Thicke, M. J., (1990) Report on diamond drilling and pulse EM survey, License 2784, Gills Pond

Project, May-August, 1989, 12 p. Rio Algom Exploration Inc., Geofile 12A/10(554). Thurlow, J.G. and Swanson, E.A. (1981) The Buchans Group: its structural and stratigraphic

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Tuffy (1975) Diamond Drilling Report, Millertown Claim Group, Newfoundland. A report prepared for Labrador Mining and Exploration Co. Ltd.

Valverde-Vaquero, P. and van Staal, C.R. (2002) Geology and magnetic anomalies of the

Exploits- Meelpaeg boundary zone in the Victoria lake area (central Newfoundland): Regional implications. In Current Research (2002), Newfoundland and Labrador Department of Mines and Energy, Geological Survey, Report 02-1, p. 197.

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Assessment Report on Linecutting & Diamond Drilling, Licence 8183M, South Tally Pond Property, Rogerson Lake Area, Central Newfoundland, NTS Sheets 12A10 & 12A07. A report prepared for Altius Resources Inc. and Xtrata Zinc Canada. 32 pages.

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southwestern Newfoundland. In Current Research (2002), Newfoundland and Labrador Department of Mines and Energy, Geological Survey, Report 02-1, p. 211.



124

APPENDIX I. SUMMARY OF SIGNIFICANT DRILL ASSAYS, LEMARCHANT DEPOSIT. Drill hole

Northing Easting Inclination Length From (m) To (m) Interval (m) Zinc Lead Copper Silver Gold (m) (%) (%) (%) (g/t) (g/t)

372-1 107+00 101+25 -50 91.4 no significant assays

372-2 99+00 99+87.5 -51 80.5 no significant assays

LM91-01 100+00 99+15 -50 128.4 94.20 102.00 7.80 1.00 0.75 0.08 147.90 1.94

including 99.40 100.00 0.60 7.40 6.30 0.57 1301.00 11.40

LM91-02 100+00 99+97 -50 209.4 148.50 149.10 0.60 2.12 0.14 trace 6.84 0.22

LM91-03 99+00 99+28 -50 164.6 111.60 112.60 1.00 1.87 0.49 0.04 7.15 0.09

LM91-04 101+00 99+50 -45 135.7 54.60 57.20 2.60 1.61 trace trace trace trace

LM91-05 97+17 100+00 -45 152.4 no significant assays


LM92-07 100+95 101+35 -50 249.9 122.10 122.40 0.30 5.70 0.33 4.50 272.50 1.06

LM92-08 103+00 101+20 -45 262.1 206.60 210.30 3.70 1.33 0.75 0.07 60.69 3.37

LM93-09 101+00 104+48 -90 443.8 did not intersect felsic host rock; no significant assays



LM93-12 99+00 101+55 -68 260.7 173.40 174.90 1.50 3.08 0.23 0.63 6.82 0.14

LM07-13 101+00 102+41 -65 599.0 164.50 200.70 36.20 1.46 0.02 0.33 7.00 0.20

including 164.50 169.55 5.05 7.49 0.07 0.77 40.29 1.21

including 164.50 167.30 2.80 10.86 0.11 0.92 63.43 2.02

including 165.20 169.55 4.35 8.69 0.08 0.89 42.48 0.40

including 175.00 176.50 1.50 4.96 0.11 0.04 4.87 0.05

including 184.70 186.00

1.30 4.04 0.03 2.39 11.73 0.01



125

Drill hole

Northing Easting Inclination Length From (m) To (m) Interval (m) Zinc Lead Copper Silver Gold

(m) (%) (%) (%) (g/t) (g/t)

LM07-14 102+00 102+40 -65 601.1 203.10 220.60 17.50 3.41 1.12 0.51 41.45 0.50

including 204.30 216.30 12.00 4.28 1.45 0.68 54.95 0.52

including 203.50 208.90 5.40 5.34 1.66 1.05 85.10 0.79

LM07-15 103+00 101+90 -65 510.0 219.00 233.60 14.60 9.46 2.17 0.81 87.46 1.90

including 221.60 224.80 3.20 1.43 0.78 0.74 279.72 6.89

including 224.80 227.80 3.00 18.52 3.87 0.36 32.41 0.61

including 224.80 233.60 8.80 14.78 3.16 1.04 37.03 0.58

including 230.50 233.60 3.10 23.02 4.90 2.30 54.64 0.65

LM07-16 104+00 101+90 -65 480.0 369.50 376.00 6.50 1.66 0.13 0.10 7.92 0.04

including 369.50 370.20 0.70 8.40 0.01 0.36 18.20 0.23

LM07-17 104+00 101+00 -65 576.4 236.00 259.50 23.50 8.55 1.63 0.35 34.97 0.49

including 236.00 250.60 14.60 12.38 2.61 0.45 52.75 0.73

including 242.50 250.60 8.10 21.04 4.26 0.72 76.05 0.65

LM07-18 104+00 101+00 -45 344.0 132.10 183.80 51.70 0.58 0.10 0.09 4.25 0.12

including 136.80 146.80 10.00 1.62 0.46 0.15 12.42 0.15

and 234.70 245.50 10.80 0.25 0.07 0.01 2.23 0.05

LM08-19 104+51 101+00 -65 431.0 2.30 9.50 7.20 0.49 0.30 0.06 14.14 0.13

and 94.50 99.00 4.50 0.57 0.52 0.23 92.50 1.92



LM08-22 105+00 101+00 -45 221.0 65.60 71.00 5.40 0.53 0.12 0.06 59.70 0.46

LM08-23 105+00 101+75 -45 245.0 65.60 71.00 5.40 0.52 0.12 0.06 60.94 0.46



126

Drill hole


(m) (%) (%) (%) (g/t) (g/t)

and 94.00 101.00 7.00 1.36 0.23 0.16 15.82 0.22

including 95.00 100.50 5.50 1.61 0.27 0.19 18.47 0.26

and 190.00 195.00 5.00 1.00 0.37 0.14 7.45 0.11

LM08-24 105+00 101+75 -70 489.8 432.00 438.00 6.00 6.60 0.68 0.61 28.28 0.46

including 433.00 434.10 1.10 30.54 2.94 1.50 88.90 0.72

LM08-25 106+00 99+00 -45 281.0 4.20 13.00 8.80 0.35 0.03 0.12 7.36 0.15

and 63.00 69.00 6.00 0.55 0.00 0.02 1.08 0.04

and 151.00 194.00 43.00 0.47 0.07 0.04 3.43 0.08


LM08-27 106+00 99+00 -65 262.4 3.00 20.20 17.20 0.29 0.04 0.10 4.29 0.10

and 152.40 156.70 4.00 0.21 0.12 0.01 6.96 0.39

LM08-28 106+00 98+00 -65 515.1 11.00 15.00 4.00 0.75 0.14 0.04 1.35 0.03

and 238.00 244.00 6.00 0.25 0.01 0.05 24.84 2.23

and 370.90 372.90 2.00 2.29 0.30 0.20 10.30 0.12

and 396.00 401.30 5.30 0.85 0.22 0.04 14.05 0.71

including 399.30 401.30 2.00 1.93 0.30 0.06 11.70 0.62

LM08-29 106+00 98+00 -73 629.0 293.00 317.00 24.00 0.68 0.16 0.08 4.83 0.10

including 299.00 309.00 10.00 1.02 0.13 0.10 6.34 0.13

including 324.00 375.00 51.00 0.58 0.11 0.08 2.87 0.10

including 406.00 430.00 24.00 0.37 0.01 0.17 2.09 0.06

including 419.50 423.00 3.50 1.57 0.01 0.73 6.24 0.10

LM08-30 103+00 98+80 -75 329.0 42.00 58.00 16.00 0.24 0.03 0.04 2.02 0.05



127

Drill hole


(m) (%) (%) (%) (g/t) (g/t)

and 67.00 117.00 50.00 0.24 0.01 0.08 1.85 0.07

LM08-31 104+00 99+50 -45 329.0 172.00 182.00 10.00 0.85 0.18 0.10 5.57 0.09

LM08-32 102+00 101+85 -56.5 518.0 210.50 214.10 3.60 0.79 0.02 0.09 1.15 0.04

and 219.90 220.90 1.00 2.17 0.01 0.32 3.50 0.08

and 232.90 237.60 4.70 1.68 0.00 0.09 1.40 0.07

LM08-33 103+00 101+90 -50 341.0 219.15 246.00 26.85 4.98 0.94 0.48 39.02 0.84

including 229.70 246.00 16.30 5.57 1.40 0.59 59.54 1.21

including 229.70 237.80 8.10 5.92 2.21 0.68 106.91 2.15

including 229.70 231.20 1.50 7.34 6.77 0.61 218.83 4.73

including 233.20 236.20 3.00 9.67 1.35 1.04 108.22 2.00

including 243.00 246.00 3.00 10.52 0.46 0.93 11.03 0.24

LM08-34 102+12 100+39 -47 322.0 174.30 175.30 1.00 1.88 0.29 0.20 7.19 0.09

LM08-35 106+00 95+00 -50 158.0 hole abandoned - no significant assays

LM08-36 106+00 94+90 -50 14.0 hole abandoned

LM08-37 106+00 97+00 -80 434.0 296.25 299.25 3.00 9.32 0.45 0.97 16.10 0.26

and 312.70 377.70 65.00 0.34 0.03 0.04 0.73 0.02

and 377.70 383.10 5.40 3.96 0.01 0.62 2.90 0.08




LM10-41 103+50 101+00 -65 322.5 194.70 199.50 4.80 0.45 0.02 0.07 3.48 0.31

LM10-42 103+50 101+90 -65 402.6 344.20 351.50 7.30 0.98 0.16 0.14 4.61 0.09



128

Drill hole


(m) (%) (%) (%) (g/t) (g/t)

LM10-43 102+50 102+15 -65 318.8 202.00 249.10 47.10 6.36 1.49 0.63 39.39 0.93

including 202.00 232.10 30.10 9.30 2.28 0.91 60.37 1.41

including 210.30 227.35 17.05 14.80 3.56 1.40 80.90 1.35

LM10-44 103+50 101+90 -65 281.9 174.30 175.30 1.00 1.88 0.29 0.20 7.19 0.09

LM10-45 105+50 103+20 -55 587.7 426.30 426.80 0.50 1.70 0.45 0.24 34.10 0.11

LM10-46 101+00 102+40 -55 265.8 174.80 183.20 8.40 4.30 0.16 0.31 36.29 0.38

including 177.95 178.45 0.50 12.50 0.07 1.00 122.70 0.16

LM10-47 100+00 101+70 -50 282.2 189.80 190.30 0.50 2.18 0.49 0.45 9.20 0.11

and 194.10 194.60 0.50 0.05 0.03 1.97 11.90 0.23




LM11-51 104+51 101+00 -45 505.1 123.60 125.50 1.90 3.06 0.03 0.28 7.09 0.09

LM11-52 102+50 101+75 -62 318.8 209.30 228.90 19.60 4.36 0.93 0.40 43.45 1.14

including 210.10 218.80 8.70 8.09 2.09 0.75 96.25 2.43

LM11-53 101+50 102+35 -65 297.8 221.00 228.40 7.40 1.33 0.01 0.28 2.60 0.07

LM11-54 101+75 102+40 -65 279.5 194.80 201.30 6.50 0.06 0.02 0.03 11.79 3.00

including 201.30 203.50 2.20 4.66 2.21 0.18 65.63 0.28

including 201.30 201.80 0.50 16.40 8.70 0.60 245.40 0.48

LM11-55 102+65 102+40 -62 303.9 no significant assays; mafic volcanics

LM11-56 104+00 101+00 -77 358.4 139.10 139.60 0.50 1.64 0.33 0.76 15.7 0.21

and 157.10 158.60 1.50 1.42 0.46 0.10 20.83 0.58



129

Drill hole


(m) (%) (%) (%) (g/t) (g/t)

LM11-57 104+00 101+00 -58.5 575.2 156.90 157.40 0.50 3.40 1.48 0.82 31.40 0.08

and 472.20 472.90 0.70 1.24 0.07 0.20 3.10 0.03

and 480.50 481.60 1.10 2.66 0.08 0.96 12.30 0.07

LM11-58 104+00 101+90 -78 428.9 no significant assays, mafic volcanics

LM11-59 103+25 101+90 -59.5 288.6 215.80 246.20 30.40 9.48 1.23 1.07 27.68 0.70

including 221.60 240.00 18.40 13.12 1.96 1.52 40.14 1.01

including 221.60 226.00 4.40 23.13 1.81 2.16 33.52 0.42

LM11-60 103+25 101+90 -51 285.0 240.90 248.80 7.90 4.42 0.66 0.19 7.50 0.79

including 240.90 242.60 1.70 17.92 2.76 0.61 20.80 0.25

LM11-61 103+00 101+90 -60 310.0 216.50 243.90 27.40 11.65 3.82 1.18 54.70 1.07

including 218.80 228.50 9.70 20.93 7.48 2.22 105.61 0.73

LM11-62 103+00 101+90 -46 291.7 256.30 266.60 10.30 11.83 3.27 1.61 528.31 3.13

LM11-63 102+50 101+75 -67 267.9 207.30 225.90 18.60 6.47 1.25 0.82 71.55 3.88 including 207.30 214.30 7.00 12.74 3.27 1.65 185.75 10.13 LM11-64 102+50 101+75 -52 276.2 217.90 227.50 9.60 5.35 0.25 0.61 14.76 0.30 including 217.90 221.20 3.30 12.61 0.71 1.49 38.45 0.71 LM11-65 101+00 102+40 -77 203.3 157.20 164.70 7.50 17.54 2.34 1.43 124.29 0.72 LM11-66 101+25 102+40 -77 242.9 176.90 181.00 4.10 0.84 0.06 0.05 1.61 0.05 LM11-67 102+00 101+85 -88 236.8 196.00 207.00 11.00 1.72 0.32 0.10 5.89 0.15 LM11-68 102+00 101+85 -70 252.1 195.40 205.95 10.55 6.59 4.34 0.63 130.68 2.20 including 197.05 205.10 8.05 8.28 5.57 0.78 168.15 2.21 LM11-69 103+50 101+00 -74 279.2 178.20 188.00 9.80 3.00 0.10 0.20 4.20 0.10 including 183.60 188.00 4.40 5.81 0.11 0.31 6.12 0.08 LM11-70 104+50 100+00 -65 138.7 91.80 103.50 11.70 1.69 0.24 0.20 10.90 0.17 including 91.80 95.80 4.00 3.10 0.15 0.36 9.58 0.12 LM11-71 104+50 100+00 -80 151.1 93.00 123.00 30.00 0.50 0.08 0.06 5.03 0.14



130

Drill hole


(m) (%) (%) (%) (g/t) (g/t)including 93.00 96.00 3.00 1.20 0.28 0.12 11.43 0.07 LM11-72 103+50 101+25 -64 227.6 173.30 177.00 3.70 5.02 0.48 0.47 12.82 0.09

24,276



131

APPENDIX II. – LISTING OF DRILL HOLES USED IN MINERAL RESOURCE CALCULATION (HOLES THAT INTERSECTED MINERALIZED SOLID ARE

HIGHLIGHTED). DRILL HOLE* EASTING NORTHING ELEVATION LENGTH(m) 372-1 521025.00 5375230.00 342.00 91.40 372-2 520849.00 5374415.00 335.00 80.50 LM91-01 520776.16 5374519.43 336.22 128.40 LM91-02 520876.31 5374512.23 336.08 209.40 LM91-03 520792.04 5374413.93 336.39 164.60 LM91-04 520823.05 5374613.91 336.02 135.70 LM91-05 520859.00 5374219.00 338.00 152.40 LM91-06 520990.04 5375118.90 341.53 152.40 LM92-07 521009.65 5374597.36 334.66 249.94 LM92-08 521002.05 5374808.89 342.83 262.10 LM93-09 521321.37 5374587.95 333.78 443.80 LM93-10 521114.80 5374599.34 335.16 309.80 LM93-11 521209.00 5375116.37 339.07 597.00 LM93-12 521026.33 5374400.58 337.56 260.70 LM07-13 521111.73 5374599.93 330.23 599.00 LM07-14 521114.68 5374697.20 337.53 601.10 LM07-15 521072.26 5374803.86 339.11 510.00 LM07-16 521080.23 5374900.18 342.30 480.00 LM07-17 520989.96 5374908.51 343.97 576.40 LM07-18 520988.76 5374908.27 344.01 344.00 LM08-19 520991.90 5374957.95 346.55 431.00 LM08-20 521100.34 5374948.43 344.23 236.00 LM08-21 520890.39 5374966.61 343.79 152.00 LM08-22 520992.89 5375012.59 342.70 221.00 LM08-23 521066.36 5375010.74 342.73 245.00 LM08-24 521067.71 5375010.66 343.03 489.80 LM08-25 520800.72 5375122.01 346.04 281.00 LM08-26 521186.40 5374797.86 336.87 578.00 LM08-27 520801.60 5375122.05 346.06 262.40 LM08-28 520698.95 5375123.52 351.18 515.10 LM08-29 520698.52 5375123.42 351.43 629.00 LM08-30 520762.74 5374822.48 338.35 329.00 LM08-31 520835.93 5374918.41 340.34 329.00 LM08-32 521063.85 5374699.95 337.25 518.00 LM08-33 521071.61 5374804.03 339.18 341.00 LM08-34 520918.51 5374724.55 336.53 322.00 LM08-35 520399.30 5375127.71 363.65 158.00



132

DRILL HOLE* EASTING NORTHING ELEVATION LENGTH(m) LM08-37 520599.35 5375124.04 356.56 434.00 LM08-38 520601.69 5375232.02 359.18 422.00 LM08-39 521150.72 5374481.04 335.90 358.00 LM08-40 520551.01 5375125.61 359.59 389.00 LM10-41 520991.94 5374859.02 342.04 322.50 LM10-42 521078.43 5374850.41 339.56 402.60 LM10-43 521098.65 5374752.73 337.70 318.80 LM10-44 520992.05 5374859.39 342.01 281.90 LM10-45 521209.80 5375067.25 338.96 587.70 LM10-46 521116.93 5374600.14 335.26 265.80 LM10-47 521040.11 5374493.23 337.59 282.20 LM10-48 521069.51 5375010.02 342.75 541.30 LM11-49 521092.55 5375314.26 347.92 521.30 LM11-50 521093.25 5375314.30 348.02 230.70 LM11-51 520993.41 5374958.07 346.57 505.10 LM11-52 521062.78 5374749.62 339.41 318.80 LM11-53 521115.69 5374648.02 337.95 297.80 LM11-54 521117.29 5374670.48 337.68 279.50 LM11-55 521174.19 5374734.12 337.82 303.90 LM11-56 520990.30 5374908.47 344.02 358.40 LM11-57 520989.64 5374908.55 343.87 575.20 LM11-58 521082.62 5374901.56 342.40 428.90 LM11-59 521077.87 5374828.82 339.23 288.60 LM11-60 521077.68 5374828.78 339.10 285.00 LM11-61 521072.10 5374804.29 339.08 310.00 LM11-62 521071.47 5374804.42 339.17 291.70 LM11-63 521062.35 5374749.78 339.38 267.90 LM11-64 521062.02 5374749.86 339.29 276.20 LM11-65 521114.13 5374599.59 335.15 203.30 LM11-66 521116.03 5374625.24 336.96 242.90 LM11-67 521065.92 5374699.23 337.17 236.80 LM11-68 521065.52 5374699.27 337.16 252.10 LM11-69 520993.34 5374860.13 341.84 279.20 LM11-70 520889.29 5374968.19 343.51 138.70 LM11-71 520888.83 5374968.14 343.21 151.10 LM11-72 521114.59 5374625.36 336.34 227.60 *Drill hole LM08-36 was excluded from the resource calculation as it was terminated well before entering the mineralized zone.

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