Mining

Significant activity in the mining sector has taken place over the past few years. Three major efforts are underway, resulting in hundreds of claims being staked, escalating exploration activity, and increasing speculation about the region's mineral resources.

All of the activity is focused on an ancient caldera formation in the hills and lowlands northwest of Lake Iliamna. Northern Dynasty Minerals, Ltd. (NDM) is leading the way with its expanded exploration and accelerated development plans for the Pebble deposit.

Extensive drilling programs in 2002 and 2003 and independent resource assessments established the Pebble deposit as the largest deposit of contained gold resources and the second largest deposit of contained copper resources in North America. With new exploratory discoveries in 2005 in the eastern region of Pebble, inferred total resource estimates are currently 82 million ounces of gold, 67 billion pounds of copper, and more than two billion pounds of molybdenum. These estimates would rank Pebble as the second-largest mineral deposit in the world, valued at more than $200 billion.* The Vancouver-based NDM is part of the Hunter Dickinson Group, which owns or holds interests in a portfolio of mining companies in Canada, Alaska, Mexico, South Africa, Chile, and elsewhere.

NDM and the State of Alaska have executed a Memorandum of Understanding that establishes an inter-agency review team for the project and outlines tasks to be undertaken by the team. Such tasks include reviews of baseline and ongoing data collection, coordination of the NEPA process, and coordinated and timely review of permit applications.

Capital costs to develop the Pebble deposit are estimated at $750 million to $1 billion. Operations were originally slated to begin in late 2008 or early 2009, but new discoveries have pushed the timeline back to 2010. During the construction phase of the project, NDM estimates a workforce of 1,200 to 2,000 will be needed. Based on current resource estimates, a workforce of 600 to 1,000 will be needed once operations commence and continue throughout the siteís 25 - 30 year life.

NDM may operate the mine directly, seek partners for joint venture operations, or look for other ways to generate a return on its investment in the Pebble deposit. As of February 2007, London-based Rio Tinto was a 20% shareholder in the Pebble Mine project.

*Anchorage Daily News, 2/21/07

Around Pebble

Another Canadian firm, Full Metal Minerals (FMM) has entered into a letter of intent to earn 100% of the Pebble South property, located to the southwest and northwest of NDMís Pebble deposit, as well as newly discovered deposits. These deposits occur within a 73 square mile northeast trending mineralized system, and are estimated at 26.5 million ounces of gold and 16.5 billion pounds of copper. FMMís land package is comprised of 466 State claims for approximately 298 sq. km, in contiguous blocks.

Also adjacent to the Pebble exploration area, Arizona firm Liberty Star Gold Corp. holds 1718 mining claims known as the Big Chunk claims, covering approximately 421 square miles. The Big Chunk property is in various stages of exploration, with drilling and geophysics to continue throughout 2006.