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NORTHERN DYNASTY MINERALS LTD.





CORPORATE GOVERNANCE POLICIES ANDPROCEDURES MANUALNOVEMBER 12, 2009





NORTHERN DYNASTY MINERALS LTD. (the Company)

Corporate Governance Policies and Procedures Manual (the
Manual)

Amended effective November 12, 2009

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TABLE OF CONTENTS

**CORPORATE GOVERNANCE OVERVIEW AND GUIDELINES**
      31.
      INTRODUCTION
      32.
      DIRECTOR RESPONSIBILITIES
      33.
      DIRECTOR QUALIFICATION STANDARDS
      44.
      BOARD MEETINGS
      65.
      BOARD COMMITTEES
      66.
      DIRECTORS ACCESS TO MANAGEMENT AND INDEPENDENT ADVISORS
      77.
      DIRECTOR COMPENSATION
      88.
      DIRECTOR ORIENTATION AND CONTINUING EDUCATION
      99.
      MANAGEMENT EVALUATION AND SUCCESSION AND EXECUTIVE COMPENSATION
      910.
      CODE OF ETHICS
      1011.
      ANNUAL PERFORMANCE EVALUATION OF THE BOARD
      1012.
      BOARD INTERACTION WITH SHAREHOLDERS, INSTITUTIONAL INVESTORS,
        THE PRESS, CUSTOMERS, ETC
      1013.
      PERIODIC REVIEW OF THE CORPORATE GOVERNANCE GUIDELINES
      10**APPENDIX 1** **MATTERS REQUIRING BOARD
        APPROVAL (NON-DELEGATION POLICY)**
      1**APPENDIX 2** **DIRECTOR INDEPENDENCE
        STANDARDS**
      1**APPENDIX 3** **OUR COMMITMENTS**
      **1****APPENDIX 4** **CODE OF ETHICS AND TRADING
        RESTRICTIONS**
      91.
      AVOIDING QUESTIONABLE OR ILLEGAL PRACTICES
      12.
      HONESTY AND FAIR DEALING
      23.
      POLICY TO PREVENT THE CORRUPTION OF FOREIGN PUBLIC OFFICIALS
      24.
      CORPORATE OPPORTUNITIES AND DUTY OF LOYALTY
      55.
      AVOIDING CONFLICTS OF INTEREST
      66.
      GIVING OR ACCEPTING GIFTS
      77.
      OUTSIDE ACTIVITIES
      78.
      ACCOUNTING AND RECORDKEEPING, INTERNAL ACCOUNTING CONTROLS
        AND AUDITING MATTERS.
      89.
      USE OF COMPANY PROPERTY
      1010.
      PROPRIETARY INFORMATION
      1111.
      OUTSIDE IDEAS
      1112.
      DISCLOSURE POLICY
      1213.
      SECURITIES TRANSACTIONS
      1514.
      ADMINISTRATION AND DISTRIBUTION
      1615.
      REPORTING OF POSSIBLE VIOLATIONS OR OTHER QUESTIONABLE PRACTICES
      17**APPENDIX 5** **DISCLOSURE CONTROLS
        AND PROCEDURES POLICY**
      11.
      INTRODUCTION
      12.
      APPLICATION
      13.
      SUPPLEMENT TO INTERNAL CONTROLS AND PROCEDURES
      24.
      STATEMENT OF RESPONSIBILITY
      25.
      DISCLOSURE COMMITTEE
      26.
      PROCEDURES
      37.
      NEWS RELEASES
      7EXHIBIT 1FORM OF LETTER AND FORM OF CERTIFICATION AIF AND FORM 20-F/40-F
        ANNUAL REPORT
      8EXHIBIT 2SAMPLE FORM OF DISCLOSURE COMMITTEE CERTIFICATION
      10EXHIBIT 3NEWS RELEASE CHECKLIST
      11**APPENDIX 6** **AUDIT COMMITTEE CHARTER**
      11.
      PURPOSE: RESPONSIBILITIES AND AUTHORITY
      12.
      STRUCTURE AND MEMBERSHIP
      6


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|                                                           | 3. | PROCEDURES AND ADMINISTRATION                                                 | 6
|---------------------------------------------------------- | -- | ----------------------------------------------------------------------------- | -
|                                                           | 4. | ADDITIONAL POWERS                                                             | 7
|                                                           | 5. | LIMITATION OF AUDIT COMMITTEES ROLE                                          | 7
|                                                           | 6. | AUDIT COMMITTEE MEMBER INDEPENDENCE AND FINANCIAL LITERACY
      REQUIREMENTS | 7
|                                                           |    |                                                                               |  
|**APPENDIX 7 COMPENSATION COMMITTEE CHARTER**              | 1 
|                                                           |    |                                                                               |  
|                                                           | 1. | PURPOSE: RESPONSIBILITIES AND AUTHORITY.                                      | 1
|                                                           | 2. | STRUCTURE AND MEMBERSHIP                                                      | 2
|                                                           | 3. | PROCEDURES AND ADMINISTRATION                                                 | 2
|                                                           | 4. | ADDITIONAL POWERS                                                             | 3
|                                                           |    |                                                                               |  
|**APPENDIX 8 NOMINATING AND GOVERNANCE COMMITTEE CHARTER** | 1 
|                                                           |    |                                                                               |  
|                                                           | 1. | PURPOSE: RESPONSIBILITY AND AUTHORITY                                         | 1
|                                                           | 2. | STRUCTURE AND MEMBERSHIP                                                      | 2
|                                                           | 3. | PROCEDURES AND ADMINISTRATION                                                 | 2
|                                                           | 4. | ADDITIONAL POWERS                                                             | 3

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CORPORATE GOVERNANCE OVERVIEW AND GUIDELINES

1.Introduction

The Board of Directors of the Company has adopted these
Corporate Governance Guidelines to assist the Board in the exercise of its
responsibilities. The Board may modify or make exceptions to the Guidelines from
time to time in its discretion and consistent with the duties and
responsibilities owed to the Company and its shareholders.

2.Director Responsibilities

(a) **Oversee Management of the Company**. The principal responsibility of the
directors is to oversee the management of the Company in the best interests of
the Company and its shareholders. This responsibility require that the directors
attend to the following:

| | • | review and approve on a regular
        basis, and as the need arises, fundamental operating, financial, and other
        strategic corporate plans which take into account, among other things,
        the opportunities and risks of the business;           
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                  
| | • | evaluate the performance of
        the Company, including the appropriate use of corporate resources;                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                  
| | • | evaluate the performance of,
        and oversee the progress and development of, senior management and take
        appropriate action, such as promotion, change in responsibility and termination;                                                            
| |   |                                                                                                                                                                                                                                                                  
| | • | implement senior management
        succession plans;                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                  
| | • | evaluate the Companys
        compensation programs;                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                  
| | • | establish a corporate environment
        that promotes timely and effective disclosure (including appropriate controls),
        fiscal accountability, high ethical standards and compliance with applicable
        laws and industry and community standards;
| |   |                                                                                                                                                                                                                                                                  
| | • | evaluate the Companys
        systems to identify and manage the risks faced by the Company;                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                  
| | • | review and decide upon material
        transactions and commitments;                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                  
| | • | develop a corporate governance
        structure that allows and encourages the Board to fulfill its responsibilities;                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                  
| | • | provide assistance to the Companys
        senior management, including guidance on those matters that require Board
        involvement; and                                                                                                                   
| |   |                                                                                                                                                                                                                                                                  
| | • | evaluate the overall effectiveness
        of the Board and its committees.                                                                                                                                                                                      

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(b)****
Exercise Business Judgment. In discharging their fiduciary duties of
care, loyalty and candour, directors are expected to exercise their business
judgment to act in what they reasonably and honestly believe to be the best
interests of the Company and its shareholders free from personal interests. In
discharging their duties, the directors normally are entitled to rely on the
Companys senior executives, other employees believed to be responsible, and its
outside advisors, auditors and legal counsel, but also should consider second
opinions where circumstances warrant.

(c)****
Understand the Company and its Business. With the assistance of the
Company, directors are expected to become and remain informed about the Company
and its business, properties, risks and prospects.

(d) **Establish Effective Systems**. Directors are responsible for determining
that effective systems are in place for the periodic and timely reporting to the
Board on important matters concerning the Company. Directors should also provide
for periodic reviews of the integrity of the Companys internal controls and
management information systems.

(e) **Protect Confidentiality and Proprietary Information**. Directors are
responsible for establishing policies that are intended to protect the Companys
confidential and proprietary information from unauthorized or inappropriate
disclosure. Likewise, all discussions and proceedings of the Board of Directors
must be treated as strictly confidential and privileged to preserve open
discussions between directors and to protect the confidentiality of Board
discussions.

(f) **Board, Committee and Shareholder Meetings**. Directors are responsible
for adequately preparing for and attending Board meetings and meetings of
committees on which they serve. They must devote the time needed, and meet as
frequently as necessary, to properly discharge their responsibilities. Directors
who reside in or near the city where the Company holds a shareholders meeting
are expected to make a reasonable effort to attend such meeting.

(g) **Indemnification**. The directors are entitled to Company-provided
indemnification through corporate articles and by-laws, corporate statutes,
indemnity agreements and, when available on reasonable terms, directors and
officers liability insurance.

3.Director Qualification Standards

(a) **Independence**. The Board will ensure that it has at all times at least
the minimum number of directors who meet applicable standards of director
independence. For members of the Audit Committee, director independence is to be
determined in accordance with those legal and stock exchange independence
standards applicable to the Companys Audit Committee. For other purposes, the
Board will, from time to time, establish independence standards that (i) comply
with applicable legal and stock exchange requirements and (ii) are designed to
ensure that the director does not have, directly or indirectly, a financial,
legal or other relationship with the Company that, in the Boards judgment,
would reasonably interfere with the exercise of independent judgment

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in carrying out the responsibilities of
the director. The standards currently in effect are contained in Appendix 2.

(b) **Size and Skills of Board**. The Board believes that a Board comprised of
7 to 12 members is an appropriate size given the Companys present
circumstances. The Board also will consider the competencies and skills that the
Board, as a whole, should possess and the competencies and skills of each
director.

(c) **Other Directorships**. The Board does not believe that its members should
be prohibited or discouraged from serving on boards of other organizations, and
the Board does not propose any specific policies limiting such activities,
providing they do not reduce a directors effectiveness or result in a
continuing conflict of interest. However, the Nominating and Governance
Committee should take into account the nature of and time involved in a
directors service on other boards in evaluating the suitability of individual
directors and in making its recommendations.

(d)****
Tenure. The Board does not believe it should establish director term
limits. Term limits could result in the loss of directors who have been able to
develop, over a period of time, significant insight into the Company and its
operations and an institutional memory that benefits the Board as well as
management. As an alternative to term limits, the Nominating and Governance
Committee will review each directors continuation on the Board annually. This
will allow each director the opportunity to confirm his or her desire to
continue as a member of the Board and allow the Company to replace directors
where, upon recommendation of the Nominating and Governance Committee, the Board
makes a determination in that regard. [A 2008 survey of Canadian companies
(OCallaghan Report) showed around 23% with mandatory retirement ages. The most
recent Spencer Stuart survey of S&P 500 companies found that a substantial
number are setting mandatory retirement ages ranging from 70 to 75, with 72+
being the most frequent, and with the mandatory retirement age rising during the
past several years. Bernie Zinkhofer has advised that mandatory retirement age
policies may be inconsistent with Canadian anti-age discrimination principles,
and has suggested as an alternative a policy of mandatory retirement after
serving a specified number of years service. Anooraq Resources Corporation and
Great Basin Gold have elected not to adopt mandatory retirement policies based
on either age or number of years served.]

(e) **Separation of the Offices of Chairman and CEO**. The Board will select a
Chairman of the Board in a manner and upon the criteria that the Board deems
appropriate at the time of selection. The Board believes the offices of Chairman
of the Board and CEO should not be held by the same persons.

(f) **Selection of New Director Candidates**. Except where the Company is
legally required by contract, law or otherwise to provide third parties with the
right to nominate directors, the Nominating and Governance Committee will be
responsible for (i) identifying individuals qualified to become Board members,
consistent with criteria approved by the Board, (ii) recommending to the Board
the persons to be nominated for election as directors at any meeting of
shareholders and (iii) recommending to the Board persons to be elected by the
Board to fill any vacancies on the Board. The Nominating

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and Governance Committees
recommendations will be considered by the plenary board but the recommendations
are not binding upon it.

(g)****
Extending the Invitation to a New Director Candidate to Join the Board.
An invitation to join the Board will be extended by the Chairman of the Board
when authorized by the Board.

(h) **Majority Vote Policy**. If the votes "for" the election of a director
nominee at a meeting of shareholders are fewer than the number voted "withhold",
the nominee is expected to submit his or her resignation promptly after the
meeting for the consideration of the Nominating and Governance Committee. The
Nominating and Governance Committee will make a recommendation to the Board of
Directors after reviewing the matter, and the Board of Directors will then
decide whether to accept or reject the resignation. The Board's decision to
accept or reject the resignation will be disclosed to shareholders. The nominee
will not participate in any Nominating and Governance Committee deliberations
whether to accept or reject the resignation. This policy does not apply in
circumstances involving contested director elections.

4.Board Meetings

(a) **Selection of Agenda Items**. The Chairman of the Board shall propose an
agenda for each Board meeting. Each Board member is free to request the
inclusion of other agenda items and is generally free to request at any Board
meeting the consideration of subjects that are not on the agenda for that
meeting, although voting on matters so raised may be deferred to another meeting
to permit proper preparation for a vote on an unscheduled matter (emergencies
excepted).

(b)****
Frequency and Length of Meetings. The Chairman of the Board, in
consultation with the members of the Board, will normally determine the
frequency and length of Board meetings; however, the ultimate power in this
regard rests with the plenary Board. Special meetings may be called from time to
time as required to address the needs of the Companys business.

(c) **Advance Distribution of Materials**. Information and data that are
important to the Boards understanding of the business to be conducted at a
Board or committee meeting will normally be distributed in writing to the
directors reasonably before the meeting (with a goal of 7 calendar days) and
directors should review these materials in advance of the meeting. The Board
acknowledges that certain items to be discussed at a Board or committee meeting
may be of a very time-sensitive nature and that the distribution of materials on
these matters before the meeting may not be practicable.

(d)****
Executive Session of Independent Directors. At least one executive
session of independent directors will be held on an annual basis.

5.Board Committees

(a) **Key Committees**. The Board will at all times have an Audit Committee, a
Compensation Committee and a Nominating and Governance Committee. The Board may,
from time to time, establish or maintain additional committees or subcommittees
as

6

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it deems necessary. The Board may
delegate any of its powers to committees of the Board, except that it may not
delegate the powers to fill Board vacancies, remove a director, change the
membership or fill vacancies in a Board Committee, or remove or appoint officers
who are appointed by the Board.

(b) **Committee Charters**. Each committee will have a charter that has been
approved by the Board. The committee charters will set forth the purposes, goals
and responsibilities of the committees. The Board will, from time to time as it
deems appropriate, but at least annually, review and reassess the adequacy of
each charter and make appropriate changes. Each charter must address those
matters required by applicable laws and stock exchange rules.

(c) **Assignment of Committee Members**. The Nominating and Governance
Committee will be responsible for recommending to the Board the persons to be
appointed to each committee of the Board. All members of the Audit Committee
must meet the independence standards applicable to the Audit Committee as
required by applicable laws and regulations and stock exchange rules. A majority
of the members of the Compensation Committee and the Nominating and Governance
Committee must be independent directors in accordance with the director
independence standards established by the Board of Directors from time to time.
The Board of Directors has adopted the uniform independence standards set out in
Appendix 2. The Audit, Compensation and Nominating and Governance Committees
will have a minimum of three directors. Other committees shall have at least one
member or the minimum number of members required by applicable law and the
Companys charter documents.

(d) **Selection of Agenda Items**. Each committee chairman, in consultation
with the other committee members, will develop the committees agenda.

(e) **Frequency of Committee Meetings**. The chairman of each committee, in
consultation with the other committee members, will determine the frequency of
the committee meetings consistent with any requirements set forth in the
committees charter. Special meetings may be called by any member from time to
time as required to address the needs of the Companys business and fulfill the
responsibilities of the committees.

6.Directors Access to Management and Independent Advisors

(a) **Access to Officers and Employees**. All directors have at all reasonable
times, and on reasonable notice, full and free access to officers and employees
of the Company. Any meetings or contacts that a director wishes to initiate
should normally be arranged through the CEO or the CFO. The directors will use
their judgment to ensure that any such contact is not disruptive to the business
operations of the Company. The directors are normally expected to provide a copy
or otherwise inform the CEO or CFO of any communication between a director and
an officer or employee of the Company.

(b) **Access to Independent Advisors**. The Board and each committee shall have
the power to hire and consult with independent legal, financial or other
advisors for the benefit of the Board or such committee, as they may deem
necessary, without consulting

7

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or obtaining the approval of any
officer of the Company. Such independent advisors may be the regular advisors to
the Company. The Board or any such committee is empowered, without further
action by the Company, to cause the Company to pay the appropriate compensation
of such advisors as established by the Board or any such committee.

7.Director Compensation, Stock Ownership and Stock Trading

(a) **Role of Board and Compensation Committee**. The form and amount of
director compensation will be recommended by the Compensation Committee and
approved by the Board in accordance with the general principles set forth herein
and in the Compensation Committee Charter. The Compensation Committee will also
conduct an annual review of the compensation of the Companys directors and make
recommendations to the Board.

(b)****
Form of Compensation. The Board believes that directors should be
provided with incentives to focus on long-term shareholder value. The Board
believes that including equity options as part of director compensation helps
align the interests of directors with those of the Companys shareholders.

(c) **Amount of Compensation**. The Company seeks to attract exceptional talent
to its Board. Therefore, the Companys policy is to compensate directors
competitively relative to comparable companies. The Companys management will,
from time to time, present a report to the Compensation Committee comparing the
Companys director compensation with that of comparable companies. The Board
believes that it is appropriate for the Chairman of the Board and the chairmen
of the committees, if not members of management, to receive additional
compensation for their additional duties in these positions. Directors who are
also employees of the Company may receive additional compensation for Board or
committee service if they are not already compensated at full industry rates in
their capacities as employees.

(d) **Compensation for Director Service by Company Employee While Serving on Other
Boards of Directors**. When any employee of the Company serves as a
director of another company at the request of the Company or as the
representative of the Company, that employee may not accept compensation from
that other company for such service. If any such compensation is nonetheless
received, it shall be received on behalf of and paid over to the Company.

(e)****
Director Stock Ownership.The Board believes that each director should
acquire and hold shares of Company stock in an amount that is meaningful to
shareholders and appropriate to each such director. Therefore, the Board, in
consultation with each director, will establish a target for stock ownership by
each director and a time period during which this target is to be met. In
general, stock having a value equal to three times annual base cash compensation
is an appropriate level of ownership, to be acquired over a period of not more
than five years. The Board will periodically review the targets to take into
account market circumstances.

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(f)****
Stock Trading. Prior to purchasing or selling shares of Company stock,
directors must advise the CEO, CFO or counsel for the Company so as to avoid
trading at a time when there may be undisclosed material information and so that
Company Spokespersons will be aware of such transactions and be able to respond
to questions regarding changes in share ownership from shareholders and others.

8.Director Orientation and Continuing Education

(a)****
Director Orientation. The Board and the Companys senior management will
conduct orientation programs for new directors as soon as possible after their
appointment as directors. The orientation programs will include presentations by
management to familiarize new directors with the Companys projects and
strategic plans, its significant financial, accounting and risk management
issues, its compliance programs, its code of business conduct and ethics, its
principal officers, its internal and independent auditors and its outside legal
advisors. In addition, the orientation programs will include a review of the
Companys expectations of its directors in terms of time and effort, a review of
the directors fiduciary duties, and visits to Company headquarters and, to the
extent practical, the Companys significant facilities.

(b) **Continuing Education**. To enable each director to better perform his or
her duties and to recognize and deal appropriately with issues that arise, the
Company will provide the directors with suggestions to undertake continuing
director education, the cost of which will be borne by the Company.

9.Management Evaluation and Succession and Executive Compensation

(a)****
Selection of CEO. The Board selects the Companys CEO in the manner that
it determines to be in the best interests of the Company. The Board, together
with the CEO, will develop a clear position description for the CEO. The board
will also develop the corporate goals and objectives that the CEO is responsible
for meeting.

(b)****
Evaluation of Senior Management. The Compensation Committee will be
responsible for overseeing the evaluation of the performance of the CEO and
other members of senior management. The Compensation Committee will determine
the nature and frequency of the evaluation supervise the conduct of the
evaluation and prepare an assessment of the performance of the CEO, to be
discussed with the Board. The Board will review the assessment to ensure that
the CEO is providing the best leadership for the Company over the long- and
short-term. The Compensation Committee will also discuss with the Board the
recommendations of the CEO with regards to the compensation of the other members
of senior management.

(c) **Succession of Senior Management**. The Compensation Committee will be
responsible for overseeing an annual evaluation of senior management succession
planning.

(d) **Expectations of Senior Management**. The Board will establish, and review
on an annual basis, its expectations for senior management generally.

9

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(e) **Executive Compensation**. Compensation of the CEO must be determined, or
recommended to the Board for determination, by the Compensation Committee. The
CEO must not be present during voting or deliberations. Compensation for all
other members of senior management must be determined, or recommended to the
Board for determination, by the Compensation Committee.

10.Code of Ethics

The Board of Directors, on the recommendation of the Nominating
and Governance Committee, will adopt and maintain a Code of Ethics that will
apply to the employees, officers and directors of the Company. The Code of
Ethics will meet the definition and coverage of a code of ethics under Item
406 of SEC Regulation S-K and other applicable laws and regulations.

11.Annual Performance Evaluation of the Board

The Nominating and Governance Committee will oversee an annual
self-evaluation of the Board to determine whether it and its committees are
functioning effectively. The Nominating and Governance Committee will determine
the nature of the evaluation, supervise the conduct of the evaluation and
prepare an assessment of the Boards performance. This evaluation will be
discussed by the Board.

12.Board Interaction with Shareholders, Institutional Investors, the Press,
Customers, etc.

The Board believes that the CEO and his or her designees should
normally speak for the Company. Individual Board members may, from time to time,
meet or otherwise communicate with various constituencies that are involved with
the Company. It is, however, expected that Board members would do so with the
knowledge of and, absent unusual circumstances, only at the request of the CEO.

The Board will give appropriate attention to written
communications that are submitted by shareholders and other interested parties,
and will respond if and as appropriate. Absent unusual circumstances, the
Chairman of the Board monitors communications from shareholders and other
interested parties, and will provide copies or summaries of such communications
to the other directors as he or she considers appropriate.

13.Periodic Review of the Corporate Governance Guidelines

The Board will, from time to time, with or without
recommendations of the Nominating and Governance Committee, review and reassess
the adequacy of these Guidelines and consider any proposed changes.

The Company will ensure that a current version of the
Governance Manual, inclusive of the Index, is posted on the Companys Internet
site.

10

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APPENDIX 1

MATTERS REQUIRING BOARD APPROVAL (Non-delegation
Policy)

This Policy identifies items which must be approved by the
Board or a committee of the Board and are not delegated to management without
Board approval. A general overriding consideration is that the directors are
required under law to manage, or supervise the management of, the business and
affairs of the Company. Accordingly, even if an action might fall outside these
guidelines, management should consider whether the matter, nevertheless, should
be referred to the Board for consideration.

The following is a list of items which officers must refer to
the Board, or an appropriate committee thereof, for consideration. Under these
guidelines, the Threshold Amount is equal to C$1,500,000 and an Out of Budget
Transaction is a transaction that exceeds the Threshold Amount and that is not
otherwise already part of the Companys approved operating budget.

|1. | The approval of annual corporate budgets.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | The approval of all financial information and other
      disclosure documents that are required by law to be approved by the Board
      before they are released to the public.                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Allotment of any securities. This includes shares,
      options, warrants or other convertible or debt securities, and the payment
      of a commission to any person as consideration for purchasing securities
      of the Company or providing purchasers for any such securities. Securities
      may be issued by executive officers where previously allotted by the Board
      (e.g. exercise of previously allotted options and warrants upon
      exercise).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4. | Entering into transactions of a fundamental nature such
      as amalgamations, mergers and material acquisitions or
  dispositions.                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Agreeing to redeem, purchase or otherwise acquire any of
      the Companys shares.                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6. | Entering into any agreement or commitment to acquire or
      dispose of assets that are material to the Company including, but not
      limited to, those that are an Out of Budget Transaction.                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|7. | Entering into, or making a material modification of, any
      agreement or commitment to become liable for any indebtedness, including
      the granting of a guarantee or similar standby obligation, if (a) the
      amount of such indebtedness is an Out of Budget Transaction or (b) any
      assets of the Company are made subject to a security interest in an Out of
      Budget Transaction.                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|8. | Committing to making any capital expenditure which is an
      Out of Budget Transaction.                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|9. | Entering into any contract, agreement or commitment out
      of the ordinary course of business if such agreement involves a commitment
      of financial resources which exceeds the Threshold
  Amount.                                                                                                                                                                                                                                                                

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|10. | Entering into any agreement with an officer, director or
      10% shareholder of the Company or any parent or subsidiary of the Company
      outside of the ordinary course of business.                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                      
|11. | Entering into or amending any agreement with Hunter
      Dickinson Services Inc. (HDSI).                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                      
|12. | Terminating, suspending or significantly modifying any
      material business activity or business strategy of the Company.                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                      
|13. | Undertaking a new business activity that requires an
      allocation of resources that exceed the Threshold Amount.                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                      
|14. | Making any material change to a business or strategic
      plan that has been approved by the Board.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                      
|15. | Initiating or settling any legal proceeding involving a
      payment that may exceed the Threshold Amount.                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                      
|16. | Employing or terminating the Companys independent
      auditor.                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                      
|17. | Hiring or terminating the employment, or determining the
      compensation, of any person who is an executive officer of the
    Company.                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                      
|18. | Offering any material employment or consulting terms to
      any individual or entity which are not customary for the Company. This
      determination is to be made by reference to terms of employment or
      consultancy that have generally been offered to other employees or
      consultants in similar positions or with similar status.
|    |                                                                                                                                                                                                                                                                                                                                                      
|19. | The approval of a request by the CEO or the CFO of the
      Company to serve on the board of another entity, other than not-for-profit
      entities or family businesses that in no material way compete with the
      Company or do any material business with the Company.                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                      
|20. | Any other matter specified by the Board as requiring its
      prior approval.                                                                                                                                                                                                                                                                       

2

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APPENDIX 2

DIRECTOR INDEPENDENCE STANDARDS

The following standards are to be used in determining whether a
director is independent for purposes of determining independence from
Management, including for determination of independence in selecting members of
Board committees. These standards have been prepared by Canadian Securities
Regulators, the NYSE Amex, the Toronto Stock Exchange, and the Securities and
Exchange Commission. To be independent, a director must meet the requirements of
all of the standards. Notwithstanding the foregoing, no director qualifies as an
independent director unless the Board of Directors affirmatively determines that
the director does not have a relationship with the Company that would interfere
with the exercise of independent judgment.

This governance manual also uses the term outside director.
An outside director is a director who is not independent under the applicable
standards but who does not have full-time (or substantially full-time)
employment with the Company or a remunerated consulting services relationship of
a similar nature. For greater certainty, an outside director may be classified
as outside but may not be independent where, for instance, that person owns (or
represents a shareholder who owns) more than 10% of the Companys shares.

NYSE Amex Section 803A

Independent director means a person other than an
executive officer or employee of the company. No director qualifies as
independent unless the issuers board of directors affirmatively determines that
the director does not have a relationship that would interfere with the exercise
of independent judgment. In addition to the requirements contained in this
Section 803A, directors serving on the audit committee must also comply with the
requirements set forth in Section 803B(2) [compliance with SEC Rule 10A-3]. The
following is a non-exclusive list of persons who shall not be considered
independent:

| | (a) | a director who is, or during the past three years was,
      employed by the company, other than prior employment as an interim
      executive officer (provided the interim employment did not last longer,
      then one year);                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                    
| | (b) | a director who accepted or has an immediate family member
      who accepted any compensation from the company in excess of US$120,000
      during any period of twelve consecutive months within the three years
      preceding the determination of independence, other than the
    following:
| |     |                                                                                                                                                                                                                                                                                                    
| |     | (i)                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                    
| |     | (ii)                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                    
| |     | (iii)                                                                                                                                                                                                                                                                                              

-1-

---

| |     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | benefits under a tax-qualified retirement plan, or
      non-discretionary compensation;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                         
| | (c) | a director who is an immediate family member of an
      individual who is, or at any time during the past three years was,
      employed by the company as an executive officer;                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                         
| | (d) | a director who is, or has an immediate family member who
      is, a partner in, or a controlling shareholder or an executive officer of,
      any organization to which the company made, or from which the company
      received, payments (other than those arising solely from investments in
      the companys securities or payments under non-discretionary charitable
      contribution matching programs) that exceed 5% of the organizations
      consolidated gross revenues for that year, or US$200,000, whichever is
      more, in any of the most recent three fiscal years;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                         
| | (e) | a director who is, or has an immediate family member who
      is, employed as an executive officer of another entity where at any time
      during the most recent three fiscal years any of the issuers executive
      officers serve on the compensation committee of such other entity;
    or                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                         
| | (f) | a director who is, or has an immediate family member who
      is, a current partner of the companys outside auditor, or was a partner
      or employee of the companys outside auditor who worked on the companys
      audit at any time during any of the past three
years.                                                                                                                                                                                                                                                                                                                 

2

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Securities Exchange Act Rule 10A-3

In order to be considered independent for the purposes of Rule
10A-3, a director must meet the following independence standards.

|(i)  | Each member of the audit committee must be a member of
      the board of directors of the listed issuer, and must otherwise be
      independent.                                                                                
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                   
|(ii) | In order to be considered to be independent, a member of
      an audit committee may not, other than in his or her capacity as a member
      of the audit committee, the board of directors, or any other board
      committee:
|     |                                                                                                                                                                                                                                   
|     | (A)                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                   
|     | (B)                                                                                                                                                                                                                               

The following definitions apply to the determination of
independence under Rule 10A-3:

|(1) | (i) | The term "affiliate" of, or a person "affiliated" with, a
      specified person, means a person that directly, or indirectly through one
      or more intermediaries, controls, or is controlled by, or is under common
      control with, the person specified.
|--- | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)  | A person will be deemed not to be in control of a
      specified person for purposes of this section if the person:
| | ----- | --------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                     
| |       | (1)                                                                                                                 
| |       |                                                                                                                     
| |       | (2)                                                                                                                 
| |       |                                                                                                                     
| | (iii) | The following will be deemed to be affiliates:                                                                      
| |       |                                                                                                                     
| |       | (1)                                                                                                                 
| |       |                                                                                                                     
| |       | (2)                                                                                                                 
| |       |                                                                                                                     
| |       | (3)                                                                                                                 
| |       |                                                                                                                     
| |       | (4)                                                                                                                 

|(2) | The term "control" (including the terms "controlling",
      "controlled by" and "under common control with") means the possession,
      direct or indirect, of the power to direct or
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

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|    | cause the direction of the management and policies of a
      person, whether through the ownership of voting securities, by contract,
      or otherwise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | The term "executive officer" has the meaning set forth in
      § 240.3b-7, and generally includes the president, any vice-president in
      charge of a principal business unit or function, or person who performs a
      policy-making function for the issuer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(4) | The term "indirect acceptance" by a member of an audit
      committee of any consulting, advisory or other compensatory fee includes
      acceptance of such a fee by a spouse, a minor child or stepchild or a
      child or stepchild sharing a home with the member or by an entity in which
      such member is a partner, member, an officer such as a managing director
      occupying a comparable position or executive officer, or occupies a
      similar position (except limited partners, non-managing members and those
      occupying similar positions who, in each case, have no active role in
      providing services to the entity) and which provides accounting,
      consulting, legal, investment banking or financial advisory services to
      the issuer or any subsidiary of the issuer.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(5) | The terms "listed" and "listing" refer to securities
      listed on a national securities exchange or listed in an automated
      inter-dealer quotation system of a national securities association or to
      issuers of such securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

4

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Sections 1.4 and 1.5 of Multilateral Instrument
52-110

1.4****
Meaning of Independence

|(1) | An audit committee member is independent if he or she has
      no direct or indirect material relationship with the issuer.                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                         
|(2) | For the purposes of subsection (1), a material
      relationship is a relationship which could, in the view of the issuers
      board of directors, be reasonably expected to interfere with the exercise
      of a members independent judgment.
|    |                                                                                                                                                                                                                                                         
|(3) | Despite subsection (2), the following individuals are
      considered to have a material relationship with an issuer:                                                                                                                                  
|    |                                                                                                                                                                                                                                                         
|    | (a)                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                         
|    | (b)                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                         
|    | (c)                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         
|    | (d)                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                         

| | (ii)  | is an employee of that firm and participates in its
      audit, assurance or tax compliance (but not tax planning) practice,
    or      
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                           
| | (iii) | was within the last three years a partner or employee of
      that firm and personally worked on the issuers audit within that
    time;

| | (e) | an individual who, or whose immediate family member, is
      or has been within the last three years, an executive officer of an entity
      if any of the issuers current executive officers serves or served at that
      same time on the entitys compensation
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

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|    |                                                                                                                                                                                                                                                                                                                                                                                                         | committee; and                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (f)                                                                                                                                                                                                                                                                                                                                                                                                     | an individual who received, or whose immediate family
      member who is employed as an executive officer of the issuer received,
      more than $75,000 in direct compensation from the issuer during any 12
      month period within the last three years.
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|(4) | Despite subsection (3), an individual will not be
      considered to have a material relationship with the issuer solely
      because:                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                     | he or she had a relationship identified in subsection (3)
      if that relationship ended before March 30, 2004; or                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                     | he or she had a relationship identified in subsection (3)
      by virtue of subsection (8) if that relationship ended before June 30,
      2005.                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|(5) | For the purposes of clauses (3)(c) and (3)(d), a partner
      does not include a fixed income partner whose interest in the firm that is
      the internal or external auditor is limited to the receipt of fixed
      amounts of compensation (including deferred compensation) for prior
      service with that firm if the compensation is not contingent in any way on
      continued service.
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|(6) | For the purposes of clause (3)(f), direct compensation
      does not include:                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                     | remuneration for acting as a member of the board of
      directors or of any board committee of the issuer, and                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                     | the receipt of fixed amounts of compensation under a
      retirement plan (including deferred compensation) for prior service with
      the issuer if the compensation is not contingent in any way on continued
      service.                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|(7) | Despite subsection (3), an individual will not be
      considered to have a material relationship with the issuer solely because
      the individual or his or her immediate family member                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                     | has previously acted as an interim chief executive
      officer of the issuer, or                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                     | acts, or has previously acted, as a chair or vice-chair
      of the board of directors or of any board committee of the issuer on a
      part-time basis.                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                
|(8) | For the purpose of section 1.4, an issuer includes a
      subsidiary entity of the issuer and a parent of the
  issuer.                                                                                                                                                                                                                                                                               

6

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1.5 ****Additional Independence Requirements

|(1) | Despite any determination made under section 1.4, an
      individual who                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                             
|    | (a)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|    | (b)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|(2) | For the purposes of subsection (1), the indirect
      acceptance by an individual of any consulting, advisory or other
      compensatory fee includes acceptance of a fee by:                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                             
|    | (a)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|    | (b)                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                             
|(3) | For the purposes of subsection (1), compensatory fees do
      not include the receipt of fixed amounts of compensation under a
      retirement plan (including deferred compensation) for prior service with
      the issuer if the compensation is not contingent in any way on continued
      service.

7

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Toronto Stock Exchange Company Manual Section 316



An independent director is defined as a person who:

|a) | is not a member of management and is free from any
      interest and any business and other relationship which in the opinion of
      the Exchange could reasonably be perceived to materially interfere with
      the director's ability to act in the best interests of the company;
    and
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                  
|b) | is a beneficial holder, directly or indirectly, or is a
      nominee or associate of a beneficial holder, collectively of 10% or less
      of the votes attaching to all issued and outstanding securities of the
      company.                                                               

The Exchange will consider all relevant factors in assessing
the independence of the director. As a general rule, the following persons would
not be considered an independent director:

| | i)  | a person who is currently, or has been within the past
      three years, an officer, employee of or service provider to the company or
      any of its subsidiaries or affiliates; or
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                        
| | ii) | a person who is an officer, employee or controlling
      shareholder of a company that has a material business relationship with
      the company.                                   

8

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APPENDIX 3

OUR COMMITMENTS

Human Resources

We are committed to having an employment environment that is
supportive and that demonstrates the value that we place on teamwork and
individual contributions. We expect all of our employees to treat their fellow
employees with the courtesy, dignity and respect that they would like to
receive. An integral part of that policy is that the Company does not practice
or permit discrimination against any person because of race, colour, religion,
national origin, sex, sexual orientation, age or disability. We are also
committed to having a friendly workplace that is free of harassment,
intimidation and hostility. Not only is it the law; it is good practice.

We are committed to treating all of our employees fairly. To
that end, we encourage our employees to confer with the appropriate person if
they have employment related issues that they believe should be addressed.

We want to known as the employer of choice in every community
in which we operate.

Health and Safety

We are committed to having work sites that are healthy and
safe. We expect all of our employees to comply with all applicable health and
safety requirements and policies. The health and safety of all of our employees,
and all who come in contact with our company locations, is paramount. In
addition to following all applicable laws and company safety policies, we expect
all of our employees to use common sense in matters involving health and safety.
We are committed to the policy that it is always better to be safe than sorry!

Environment

We are committed to standards of excellence in our
environmental practices. We will meet all legal requirements applicable to our
activity. Where feasible, we will exceed the legal requirements. Where there are
no applicable legal standards, we will apply responsible practices. To this end,
we expect our employees to (1) comply with applicable environmental
requirements, (2) seek guidance when they are unsure of the standards, (3)
consider what extra steps we may follow to enhance our environmental
performance, and (4) report violations or suspected violations to the
appropriate persons.

Community and other Stakeholders

We are committed to maintaining the best possible relationships
with the communities in which we operate. We cannot function as a company unless
we are accepted in the communities in which we operate, and we cannot be
accepted in our communities unless we act responsibly

9

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toward our neighbours and those who are impacted by our activity. We must remember that in many instances we are guests in the community and that if we eventually leave, the community and its members will remain in place. If we are to be welcomed in
other communities in the future, it is imperative that we leave a legacy of good will in those places where we have conducted business in the past. The Company's policy is to make positive contributions to the communities in which we operate,
including encouragement of local employment in our operations and financial contributions to an appropriate extent, so that the community is enriched by our presence. We also encourage all of our employees to participate in community activity.

Our suppliers and customers are critical to our success in many ways. We are committed to maintaining honest and mutually beneficial relationships with our suppliers and customers. We expect to be treated fairly by our suppliers and customers, and
our suppliers and customers are entitled to the same treatment from us. Our reputation for fair dealing will serve to benefit us whenever and wherever we engage in business.

Our relationships with governmental entities can be especially important in our success as a company. We are committed to dealing in an honest and forthright manner with all governmental entities with which we have relationships. While we will
exercise and protect our legal rights, we will also cooperate with all governmental entities in recognition of our civic duties.

Our employees make our Company successful in many ways. We recognize their participation and importance through our commitments to human resources and health and safety.

Our shareholders are our most important stakeholders. As the owners of the Company, they have entrusted us with the care of their assets, and they rely on us to manage those assets responsibly, with a view to providing them with a suitable return on
their investment. We are committed to managing their assets responsibly and to providing them with timely and complete disclosure.

Ethical Conduct and Compliance with Law

We are committed to conduct our business in an ethical way and in compliance with applicable laws and regulations. As a part of our commitment, we have established our Code of Ethics and Trading Restrictions. The Code of Ethics contains some
specific provisions dealing with such matters as corporate opportunity, conflicts of interest, and securities trading. It also deals with more general matters, such as compliance with law and honesty and fair dealing. The Company strives to operate
in an ethical and legal way in all of its activities, and we expect our employees to do the same. The Code of Ethics cannot cover everything that may come up. For that reason, when one of our employees is confronted with a matter that is not covered
by the Ethics Policy, we expect that employee to ask himself or herself two questions before proceeding: (1) does it feel right, and (2) how would I feel if my actions were the subject of a front-page news report?

10

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What to Do

Our Code of Ethics and Trading Restrictions contains a set of
suggested procedures that our employees can use to raise issues that they
believe may violate the Company's Code of Ethics and Trading Restrictions. But
those procedures are equally available for any employee to report any instances
where he or she believes that we or any of our employees are falling down on our
commitments. We want to know if we can do better, and we encourage all of our
employees to tell us anytime they believe we are not fulfilling our commitments.

11

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APPENDIX 4

CODE OF ETHICS AND TRADING RESTRICTIONS

Introduction

The Companys policy is to conduct its business in accordance
with the highest ethical and legal standards. To assist the Company in achieving
this policy, the Board of Directors has adopted this Code of Ethics and Trading
Restrictions. The Code is designed to deter wrongdoing and to promote:

| | (1) | Honest and ethical conduct, including the ethical
      handling of actual or apparent conflicts of interest;                                                                     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                   
| | (2) | Full, fair, accurate, timely and understandable
      disclosure in reports and documents that the Company submits to regulatory
      authorities and communicates to the public;
| |     |                                                                                                                                                                                   
| | (3) | Compliance with applicable governmental laws and
      regulations;                                                                                                               
| |     |                                                                                                                                                                                   
| | (4) | Prompt internal reporting of violations of the Code to
      appropriate persons identified in the Code; and                                                                      
| |     |                                                                                                                                                                                   
| | (5) | Accountability for adherence to the
  Code.                                                                                                                                       

The Code applies to all employees, officers, and directors of
the Company and its subsidiaries. Because Hunter Dickinson Services Inc.
(HDSI) employees and officers may provide services to the Company the Code
also applies to all employees, officers and directors of HDSI with respect to
their activities relating to the Company. Depending on the circumstances, it may
also apply to agents and other representatives of the Company. ("You" as used in
this Code refers to all such persons, as appropriate.) In addition to your
complying with the Code, it is your responsibility to prevent others from
violating these standards if you are in a position to do so. If you are not in a
position to do so, it is your responsibility to bring the matter to the
attention of a member of senior management who is in a position to take
appropriate action, or to the attention of an independent member of the Board of
Directors.

1.Avoiding Questionable or Illegal Practices

The Companys policy is to comply with all laws and regulations
that apply to its business, and to avoid any activity that may be regarded as
questionable or unethical. Fraudulent, illegal or unethical acts will not be
tolerated. No action that would otherwise be questionable is permissible simply
because it is customary in a particular location or business.

If you are confronted with a situation that raises an issue
under this policy, ask yourself these questions:

- Is the life, health or safety of anyone, or the environment, endangered by
  the action?

-1-

---

- Is it legal?
- Does it feel honest, fair and ethical?
- Does it compromise anyones trust or integrity?
- Would the public disclosure of the activity in any way be embarrassing to
  you, the Company or any other affected employees?

You should be sufficiently familiar with any laws and
regulations and Company policies and procedures that apply to your area of work
and responsibility. That will permit you to recognize possible breaches and to
know when to seek advice. If in doubt, you should discuss the matter with a
member of senior management.

2.Honesty and Fair Dealing.

When representing the Company, it is important that you deal
honestly and fairly with the Companys joint venture partners, suppliers,
customers, professional advisors, competitors, other employees, and anyone else
with whom you have contact in the course of performing your job. You should not
take any advantage of anyone through actions such as manipulation, concealment,
misappropriation or abuse of confidential information, falsification,
misrepresentation of material facts, undue influence or any other unfair dealing
practice. You also should not give any advantage to anyone for reason of
personal relationship, personal benefit or other reasons not involving the best
interest of the Company.

3.Policy to Prevent the Corruption of Foreign Public Officials

Both Canada and the United States have laws making it illegal
to corrupt officials of foreign governments or to engage in certain related
acts. In Canada, the law is entitled Corruption of Foreign Public Officials
Act and in the United States the law is entitled Foreign Corrupt
Practices Act. In the discussion that follows, we have always adopted the
more stringent requirement of the two laws.

(a)****
Persons to Whom the Laws Apply. Both laws apply to the Company and its
subsidiaries; their employees, officers and directors; and their agents and
representatives. For these purposes, action by a foreign agent or representative
is the equivalent of action by the Company.

The laws may apply in whole or in part
to foreign companies and joint ventures if a U.S. or Canadian company controls
the foreign company or joint venture or otherwise authorizes, directs or
participates in activity by the foreign company or joint venture. Deciding
whether activities of a foreign company or joint venture are authorized,
directed or participated in by the Company in any particular instance will be an
uncertain exercise with uncertain results. In addition, allegations of illegal
conduct by any company or joint venture in which the Company has a significant
interest can only cause damage to the reputation of the Company. For this
reason, you should assume that any action of any foreign companies and joint
ventures in which the Company has a significant interest,

2

---

including the actions of the employees
and agents of such foreign companies and joint ventures, will be attributable to
the Company.

(b)****
Prohibition.The laws make it illegal to offer or provide money or
anything of value for the personal benefit of (i) any foreign government
official or any official of a public international organization (such as the
International Monetary Fund, regional development banks or other multilateral
organizations) or (ii) any foreign political party or its officials or any
political candidate for the purpose of: influencing that official in the
exercise of his or her duties (or non-exercise of those duties); having any such
person influence foreign government activity; or otherwise securing an improper
advantage for the purpose of aiding the Company in obtaining, retaining or
directing business. The laws may be violated if the Company knows, or if it
should have been obvious to the Company, that the payments were made for an
illegal purpose.

The laws also apply to indirect
payments, i.e., where the Company offers or provides money or anything of
value to any person with the knowledge that the person will make a payment to a
foreign government official, official of a public international organization,
foreign political party or its officials, or any political candidate for such a
prohibited purpose.

The laws also make it illegal to
possess property or proceeds from property known to have been obtained as a
result of the bribery of a public official or to launder (i.e., deal
with intent to conceal) property or proceeds from property obtained as a result
of the bribery of a public official.

Foreign government-owned corporations
and other instrumentalities are generally treated as if they are governments,
and their employees, officers and directors are treated as government officials.

(c)****
Exception to Prohibition. There is an exception in the laws for
facilitating payments. Facilitating payments are payments made to expedite
routine governmental action that does not involve obtaining, retaining or
directing business. Example include payments to (i) secure processing of papers
such as visas, work orders and permits, (ii) induce customs officials to process
legally transmitted goods, (iii) obtain police protection, (iv) obtain
installation and maintenance of utility connections, and (v) induce minor
government functionaries (government employees without discretionary authority
over a project or transaction) to complete their jobs in the manner required and
where the situation does not involve the securing of business.

There are three additional exceptions:

- It is an affirmative defence if it can be shown that the payment was legal
  under the written laws and regulations of the foreign country. As an example,
  in some foreign countries, the Company may be required by law to hire as an
  agent a national of that country who also is connected to the government of
  that country in some way or other.

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- It also is an affirmative defence if it can be shown that the payment was a
  reimbursement of travel, lodging and other reasonable and bona fide expenses
  directly related to the business promotion, demonstration or explanation of
  the Companys business, or the execution or performance of a contract with the
  foreign government. As an example, payment of the travel expenses of a foreign
  government official to visit one of our mines, as a part of an effort to
  promote the Company in that country, would fit into this category.
- Unconditional gifts having nominal value, when made openly and as a social
  amenity, or as a token of esteem, regard or gratitude in accordance with local
  custom, generally will not be regarded as a bribe.

(d) ****Company Policy. The Companys policy is firm and unconditional.
Under no circumstances will the Company ever pay a bribe prohibited by the laws.
If you are ever solicited for such a bribe, or if you become aware of any
instance where any Company employee, officer, director, agent or representative
of the Company or its subsidiaries or its joint ventures proposes to offer such
a bribe or is otherwise involved in such illegal activity, you are to report the
matter to your immediate superior, or directly to the CEO or CFO of the Company.
Any employee, officer, director, agent or representative who participates in any
scheme to pay such an illegal bribe will be terminated immediately.

With respect to payments that fall
within the exceptions noted above:

- No facilitating payments may be made without the prior written approval
  of the CEO.
- No payment that would otherwise be an illegal bribe may be made on the
  basis that it is legal under the written laws and regulations of the foreign
  country without the prior written approval of the CEO.
- No payment that would otherwise be an illegal bribe may be made on the
  basis that it is a reimbursement of travel, lodging or other reasonable and
  bona fide expenses directly related to the business promotion, demonstration
  or explanation of the Companys business or the execution or performance of a
  contract with the foreign government without the prior written approval of the
  CEO.
- With respect to unconditional gifts of nominal value made openly and as a
  social amenity, or as a token of esteem, regard or gratitude in accordance
  with local custom, the CEO will establish a monetary limit on the value of any
  such gift. Any gifts with a value in excess of that limit must be approved in
  advance by the CEO.

(e)****
Accounting Requirements. The Company and its affiliated foreign companies
and joint ventures must:

- Keep financial records which, in reasonable detail, accurately and fairly
  reflect transactions; and

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- Maintain a system of internal accounting controls sufficient to provide
  reasonable assurances that (i) transactions are executed in accordance with
  management authorization, (ii) transactions are properly recorded as needed to
  permit preparation of financial statements and to maintain accountability for
  assets, (iii) all assets are recorded on the books of the Company and access
  to assets is only permitted in accordance with management authorization, and
  (iv) periodic auditing is done at reasonable intervals and action is taken to
  resolve discrepancies.

As an example, the accounting
provisions require that the Company properly record facilitating payments as
such and prohibit their characterization in some other form. The accounting
provisions also prohibit the Company from maintaining off-record cash slush
funds or cash that may be accessed without senior management authorization.

(f)****
Things to Look For. The following is a list of red flags that may
indicate the possible existence of corrupt practices:

- Foreign agent with a poor reputation or with links to the government.
- Unusually large commission payments or commission payments where the agent
  does not appear to have provided significant services.
- Cash payments, or payments without paper trail or compliance with normal
  internal controls.
- Unusual bonuses to foreign personnel for which there is little support.
- Payments to third country accounts.

4.Corporate Opportunities and Duty of Loyalty

You have a duty of loyalty to the Company, which includes a
duty to advance the Companys legitimate interests when the opportunity to do so
arises. Accordingly, you may not use your position or the Companys name,
property, information or good will for personal gain or for the gain of others.
You are further prohibited from taking advantage of an opportunity that is
discovered through the use of any corporate property, information, contacts or
your position with the Company. All such opportunities, actual or perceived,
should be reported to your immediate supervisor.

From time to time, business opportunities come to the
employees, officers and directors of HDSI. Because HDSI is equally owned by and
provides services to a number of public companies ("HDSI Owner Companies"), the
Company does not have the right to require HDSI to bring to the Company all
corporate opportunities that come to its attention. Rather, the Company and the
other HDSI Owner Companies have agreed with HDSI as to standards that govern the
allocation of business opportunities that come to the attention of HDSI
personnel. The Audit Committee of the Board of Directors is charged with the
responsibility of reviewing relationships with HDSI, and it will consider such
matters as a part of its periodic review of the relationship.

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Outside directors of the Company may have a variety of other
business relationships involving duties of loyalty. In addition, outside
directors do not, as a general matter, have the same obligation as officers and
employees to bring corporate opportunities to the Company. For these reasons,
the Code does not apply to outside directors of the Company with respect to
issues involving duties of loyalty or corporate opportunities and such issues,
to the extent they arise, are to be resolved directly with the Board of
Directors.

5.Avoiding Conflicts of Interest

A conflict of interest occurs when your private interests, or
the private interests of your family, interfere, or appear to interfere, in any
way with the best interests of the Company. For these purposes, family would
generally include your parents and grandparents, spouse, children and
grandchildren, siblings, in-laws and other persons who share a residence with
you or another member of your family. You must take care to avoid any direct or
indirect involvement or understanding that might result in such a conflict or
create the appearance of such a conflict. Whether a situation involves a
conflict of interest depends on all of the circumstances. Generally, the Company
would not consider it a conflict of interest if an employees brother or sister
were an officer of a competitor. However, the Company would consider it a
conflict of interest if a Company employee in charge of procurement were to
purchase products or services from a company owned by the employees brother or
sister or from a company owned by a close personal friend of the employee. The
following are examples of conflict of interest situations which generally must
be avoided or which may raise a question:

- Acting as an employee, officer or director of, or a consultant to, a
  competitor or potential competitor of the Company;
- Having a financial interest in or loan from a business which is a joint
  venture partner, optionor or optionee, competitor, customer or supplier of the
  Company or which otherwise does business with the Company (an investment in
  the securities of a publicly traded company normally would not be considered
  to present a conflict of interest unless it represented a material part of
  your savings);
- Placing of Company business with any other company that is directly or
  beneficially owned or controlled by you or by members of your family.

Some conflicts are clear-cut; others are less obvious. In
addition, there may be circumstances where it is necessary or in the best
interests of the Company to have a business relationship with a business or
company in which an employee or officer, or his or her family, may have an
interest. For example, where Company operations are in a remote location, it may
be necessary from time to time to enter into a business relationship with a
business controlled by an employees family members. For these reasons, you must
fully disclose to your supervisor, the CEO or the CFO all circumstances that
could be perceived as involving a conflict of interest between the Company and
you or members of your family. Full disclosure enables the Company to resolve
unclear situations and to ethically handle conflicts of interest before any
difficulty can arise. To the extent a conflict of interest cannot be avoided in
a reasonable fashion, then appropriate procedures will be put in place to ensure
that there is full disclosure and to minimize the involvement of the conflicted
individuals in the relationship giving rise to the conflict.

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The Company recognizes that there is a potential for a conflict
of interest inherent in the Companys relationship with HDSI. The Board of
Directors believe that the Company derives substantial benefits on a
cost-effective basis from its continuing relationship with HDSI. The Audit
Committee of the Board of Directors will periodically (not less than annually)
review the service agreements with HDSI and transactions under such agreements
to confirm the fairness to the Company.

Outside directors of the Company are not expected to devote
their time and effort solely on behalf of the Company, and they may have a
variety of other business relationships that could give rise to a conflict of
interest. Any such potential conflicts of interest are not subject to the Code
and are to be resolved directly with the Board of Directors.

6.Giving or Accepting Gifts

The giving or accepting of gifts can adversely affect the
Companys reputation for fair dealing and also create conflicts of interest. You
should avoid:

- Giving or offering to give any gift, favour, entertainment, reward, or any
  other thing of value that might influence or appear to influence the judgment
  or conduct of the recipient in the performance of his or her job. This
  includes transactions with government personnel, customers and suppliers. Such
  action may damage the Companys reputation for fair dealing and may be
  illegal.
- Accepting or soliciting a gift, favour, or other thing of value that is
  intended to, or might appear to, influence your decision-making or
  professional conduct. In addition to damaging the Companys reputation for
  fair dealing, receipt of such gifts could interfere with your ability to make
  judgments solely in the best interest of the Company, and thus create the
  appearance of a conflict of interest.

You may give or receive unsolicited gifts or entertainment only
in cases where the gifts or entertainment are of nominal value, are customary to
the industry, will not violate any laws, and will not influence nor appear to
influence the recipients judgment or conduct.

7.Outside Activities

Outside activities must not conflict with the proper
performance of your duties.

(a)Other Business Activity. Full-time employees and officers are
expected to devote substantial effort and attention to the furtherance of the
Companys business. In the usual case, this would make it difficult for you to
properly perform your duties while also being engaged in other business
ventures. For this reason, you may not serve as the proprietor, general partner,
officer or director of any other business without first obtaining the written
consent of the CEO or CFO. In the case of family owned businesses, the CEO or
CFO will normally grant such consent if he or she is satisfied that the
involvement in the family business will not conflict with your duties and will
not involve any conflict with the interests of the Company. In addition, the CEO
may grant consent to an officer or employee serving as a member of the board of
directors of another company in special circumstances. (The Board of Directors
will consider any proposal for the CEO or the

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CFO of the Company to serve on the
board of another entity, other than not-for-profit entities or family businesses
that in no material way compete with the Company or do any material business
with the Company.)

This policy does not apply to employees
or officers who are also employees or employees of HDSI with respect to services
performed by them for other HDSI-related companies.

(b)****
Professional Associations and Charitable Organizations. The Company
encourages employees and officers to participate in geological, engineering and
other professional associations and activities that do not conflict with their
duties for the Company and do not involve conflicts of interest. The Company
also encourages officers and employees to participate in charitable
organizations and activities. However, you should consult with the CEO or CFO
before you undertake any such outside activities requiring a substantial amount
of time. In addition, you should not accept a position as an officer or director
of a professional or charitable organization without prior consultation with the
CEO or CFO, so that they can be satisfied that your activity on behalf of such
organizations cannot be attributed to the Company.

(c)****
Political and Government Affairs. No Company contributions may be made,
directly or indirectly, to any election or issue campaign in any jurisdiction or
circumstance that would be unlawful. Corporate contributions may be made in
appropriate cases where and when permitted by applicable law, but only with the
approval of the CEO. Use of Company equipment, supplies or facilities to support
any political party, candidate or campaign, as well as employee activity during
normal business hours, may constitute a political contribution. You may not
engage in any such activity where it involves Company equipment, supplies or
facilities or activity during normal business hours without the prior approval
of the CEO. In addition, no action which presents, or may appear to present, the
position of the Company with respect to any political or governmental matter may
be taken without the prior approval of the CEO.

The Company encourages employees and
officers, as individuals, to take part in political and governmental affairs to
the extent that such activity does not interfere with the proper performance of
their duties or involve the use of Company assets or a conflict of interest.
However, if you wish to run for public office or hold an appointed public
position, you must confer with the CEO and counsel for the Company to ensure
that the proposed activity is consistent with your duties to the Company and
does not involve a conflict of interest.

The outside directors of the Company are not expected to devote
their full time and effort solely on behalf of the Company and accordingly this
policy does not apply to them.

8.Accounting and Recordkeeping, Internal Accounting Controls and Auditing
Matters.

Many employees of the Company, not just accountants and
controllers, participate in the financial control and reporting processes of the
Company. If you have ANY responsibility for any aspect of the Companys
financial activities (for example: processing or approval of

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payments; creation, processing or approval of invoices and
credit memos; payroll and benefits decisions; approval of expense reports and
other transactions; the estimation of financial reserves or other claims or the
amount of any accrual of deferral; or the recording of any of the foregoing in
the Companys records) and/or the preparation of the Companys financial
statements or other financial reports, you must ensure your involvement complies
with complete and accurate procedures as per established Company practice.

(a)****
Accounting and Recordkeeping. You may not maintain funds or assets for
any improper purposes or make false or misleading statements in any Company
documents, reports or records. No undisclosed or unrecorded accounts may be
established using the Companys funds or other assets. All accounting records
and the financial reports produced from those records must be kept and presented
in accordance with applicable law, must accurately and fairly reflect in
reasonable detail the Companys assets, liabilities, revenue and expenses and,
where applicable, must be in accordance with applicable accounting
principles.

Transactions must be supported by
accurate and reasonably detailed documentation and recorded in the proper
account. Best efforts are to be made to record transactions in the proper
accounting time period. To the extent that estimates are necessary, they must be
based on your good faith judgment and be supported by appropriate documentation.
No payment or the related accounting entry may be approved or made with the
intention or understanding that any part of the payment will be used for any
purpose other than that described by the document supporting the entry or
payment.

(b)****
Internal Accounting Controls. Internal accounting controls have been
established to provide reasonable assurances that (i) transactions are executed
in accordance with management authorization, (ii) transactions are properly
recorded as needed to permit preparation of financial statements and to maintain
accountability for assets, (iii) all assets are recorded on the books of the
Company and access to assets is only permitted in accordance with management
authorization, and (iv) periodic auditing is done at reasonable intervals and
action is taken to resolve discrepancies. You must comply with all internal
control requirements and ensure that no action is taken to avoid the internal
controls requirements.

(c) ****Auditing. The Company employs a firm of independent chartered
accountants to audit the Companys annual financial statements. The annual audit
has a number of purposes, including (i) compliance with regulatory requirements,
(ii) providing an independent assessment of whether the Companys financial
statements fairly present the financial condition, results of operations and
cash flow of the Company, (iii) assessment of the accounting principles used and
significant estimates made by the Company in preparing its financial statements,
and (iv) assessment of the Companys system of internal controls over financial
reporting as required by applicable law and regulatory policies. Each employee
is responsible for providing whatever assistance may be required by the
auditors. If you receive inquiries from the Companys independent accountants,
you must respond promptly, fully and accurately.

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If you have any concerns as to weaknesses in the Companys
accounting system or in the Companys internal controls; or if you believe that
any instances of fraud,* or incorrect or questionable accounting practices may
have occurred; or if you believe that any instances of fraudulent, incorrect or
questionable practices may have occurred in connection with the annual audit of
the Companys financial statements, you should consult with your immediate
supervisor or with the Companys CEO or CFO. Alternatively, you may contact the
Audit Committee of the Board of Directors using the procedures outlined below
under the heading Reporting of Possible Violations or Other Questionable
Practices - Procedures to Submit a Report. Those procedures include a procedure
for confidential, anonymous submission of concerns.

9.Use of Company Property

You are entrusted with the care, management and cost-effective
use of the Companys property and you are not to make use of these resources for
your own personal benefit or for the personal benefit of anyone else. Passwords
are to be kept confidential and use of the computer systems is limited to
authorized business purposes, although occasional personal use of the internet,
e-mail and voice mail will normally be permitted unless your supervisor believes
that this privilege is being abused.

However, in order to protect the Companys interests -
including for example, to ensure that the Companys computers and voice mail are
not being used for improper purposes, such as sexual harassment - the Company
reserves the right to review the contents of the Companys computers, its e-mail
system, and its voice mail system. No employee has a right of personal privacy
with respect to information that is placed in the Companys computers, the
e-mail system, or the voice mail system.

You are responsible to ensure that all Company property
assigned to you is maintained in good condition, and you should be able to
account for such equipment. Any disposition of Company property should be for
the benefit of the Company and not for personal benefit.

Company letterhead stationery is to be used only for
correspondence related to the Companys business. Do not use it for personal
correspondence or charitable solicitation.

You are to return all documents and property in your possession
upon termination of your employment for any reason.

__________

*For purposes of the Code, fraud includes any deliberate
misstatements or omissions in connection with preparation or reporting (internal
or external) of financial and/or operating information about the Company,
whether or not material and without regard to whether the employee receives any
personal benefit.

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10.Proprietary Information

We want our employees to be well informed about our business,
our plans for the future, and the successes and challenges we have along the
way. In return for this openness, the Company places trust in its employees to
maintain, without need for court orders or other legal requirement.

You are to take all reasonable measures to protect the
confidentiality of proprietary information obtained or created by you, or
otherwise made known to you, in connection with your activities on behalf of the
Company. In addition, you must use proprietary information only for the
Companys legitimate business purposes, and not for your personal benefit or the
benefit of anyone else.

To provide the Company with reasonable protection against
unauthorized disclosure or unauthorized use of its proprietary information, all
employees are required to sign an employment agreement prior to their start with
the Company that includes provisions addressing confidentiality. These
agreements state in part that the Company retains exclusive ownership of all
project information and opportunities arising out of employment or consulting
relationships and any information pertaining to the exploration plans of the
Company.

For these purposes, proprietary information means information
developed or secured for use of the Company in its business, where that
information is not generally known to or otherwise readily available to the
public and members of our industry. Proprietary information includes, without
limitation:

- The Companys ideas, discoveries, projects, data, contact information and
  production processes.
- Information concerning actual or projected expenditures, corporate
  transactions, earnings or operating results or business transactions that has
  not been disclosed by the Company.
- Investor lists, relationships with consultants, contracts, business plans
  and strategies.
- Personnel information.

It is your responsibility to know what information is
proprietary and ensure that you use and disclose it only in the performance of
your duties with the Company. If you are unsure, consider the information to be
confidential until you obtain clarification.

If your employment terminates, you will continue to be bound to
your obligations of confidentiality to the maximum extent permitted by law.

11.Outside Ideas

The purpose of this policy is to avoid the risk of allegation
of unauthorized use or disclosure of another persons proprietary rights, ideas
or information.

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When an idea, prospect, opportunity, or other confidential or
proprietary information is submitted to the Company by an outsider, care must be
taken to ensure that the outsider signs an agreement defining the Companys
rights and obligations before the idea or prospect or information is disclosed
to employees qualified to evaluate it or use it. Outsiders who propose to submit
information should be told to submit the information in writing. Outsiders
should also be told that any submission constitutes their agreement that the
Companys brief review to determine possible interest will not create any
non-use, confidentiality or area of interest agreement or obligation of the
Company. If they do not so agree, they should be told not to submit their
information.

On its receipt, any such information should be sent to the CEO
or CFO or persons authorized by them to evaluate outside submissions. No one
other than the CEO or CFO and persons authorized by them are to evaluate any
outside submission.

Each written submission will first be reviewed to see if it
purports to impose non-use, confidentiality or area of interest obligations. If
it does, no further review should be made and, unless the CEO upon being
notified otherwise directs, the material should be returned without further
review. If the material does not purport to impose such an obligation, it should
be reviewed briefly to see if it might be of interest. If it is not of interest,
it is to be returned with a letter stating that the information was briefly
reviewed to determine possible interest, that the information is not of
interest, and that the Company has no non-use, confidentiality or area of
interest agreement or obligation to the sender. If the sender was previously so
informed, the letter should also refer to that prior advice. If the material
appears to be of interest, then the Company will need to enter into an
appropriate confidentiality agreement setting out the parties rights and
obligations before any further review or use of the information.

Third party data subject to confidentiality obligations should
be so marked, all confidentiality obligations should be noted on the relevant
document or file, and all such obligations must be strictly adhered to.

12.Disclosure Policy

The Company has both legal and ethical obligations to provide
appropriate disclosure of material information, and to ensure that employees and
others do not benefit from having and using undisclosed material information.
Material information is any information that reasonably could be expected to
affect the market for the Companys stock or to influence an investors decision
to buy, sell or hold the stock. The wrongful use of undisclosed material
information may make both the Company and the individual involved liable for
criminal and/or civil penalties and damage awards.

(a) ****Control of Confidential Information. All employees have the
responsibility to inform senior management on a timely basis of events or
developments that might have a material effect on the Company. Such information
should be communicated to your superior or to members of senior management.

Strict confidentiality must be
maintained with regard to disclosure of confidential information to persons
within the Company who have no need to know, and to anyone

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outside of the Company. Care must be
taken when handling confidential correspondence, assay results, reports,
documents, memos and facsimiles. Documents containing confidential information
should be shredded or otherwise destroyed, and not placed in rubbish bins.
Visitors to the offices or work sites of the Company are not to be left
unattended at any time, except in designated safe locations, e.g.
reception area and conference rooms. Discussions by Company personnel concerning
Company business should be confined to Company personnel only and on a need to
know basis, and should never occur in public places such as elevators.

(b) ****Public Disclosure Responsibilities. The Company has a variety of
disclosure obligations under laws and stock exchange rules. The Company fulfills
those obligations through regulatory filings, periodic reports to shareholders,
press releases, and web site disclosure. The Company also provides information
to shareholders and others through communications with the media, analysts and
others in the financial community, by way of industry presentations, and in
response to inquiries. In carrying out the Companys disclosure
responsibilities:

| | • | The CEO, the CFO, and other
        members of senior management, as appropriate, have the sole responsibility
        to determine (i) whether a particular matter is sufficiently material
        to the Company to require disclosure, and (ii) the content, time and manner
        of disclosure.                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | • | Company Spokespersons have the
        exclusive authority to speak for the Company with respect to matters of
        public disclosure. The Company Spokespersons consist of the CEO and any
        other persons who are authorized by the CEO, generally or in a specific
        instance, to speak for the Company. NO OTHER PERSONS ARE AUTHORIZED
        TO COMMUNICATE AS TO MATTERS OF PUBLIC DISCLOSURE ON BEHALF OF
        THE COMPANY.                                                                                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | • | It is the responsibility of
        the Company to ensure that that undisclosed material information is disseminated
        in such a way that all members of the public have equal access to the
        information. Substantial security holders and analysts in particular MUST
        NOT receive preferential treatment in the matter of information disclosure.
        Persons given early access to undisclosed material information may not
        use that information to trade in the Companys securities, and they,
        the Company and the individual who causes the early disclosure may be
        liable for civil and criminal penalties and damage awards if there is
        trading on undisclosed material information.

(c) ****External Communications and Inquiries from Analysts, Media and
Other Outsiders. Communications intended for dissemination outside of
the Company and concerning the Companys business must be referred to the CEO or
to one of the designated Company Spokespersonsprior to dissemination.
This includes presentations to analysts and papers or presentations to
professional groups and others.

All inquiries from the press,
securities analysts, investors and other outsiders concerning the Companys
business and affairs must be referred to one of the designated Company

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Spokespersons. This will ensure that
information is disclosed consistently and equitably. Unless specifically
authorized, no one is authorized to respond to such inquiries.

(d)****
Comments on and Dissemination of Analysts Reports and Other Media
Stories. From time to time, the Company may be asked to review or comment on
analysts reports or other media stories about the Company. No employee, officer
or director is to review or comment on analysts reports or media stories except
an authorized Company Spokesperson, and any such inquiry should be forwarded to
such an authorized person without any comments. If a Company Spokesperson does
review such a report or story, the Company Spokesperson should review the report
or story ONLY for factual information and limit his/her comments to discussion
or correction of facts. Furthermore, no undisclosed material information is to
be communicated in the course of such a review and comment. If factual
correction would result in the disclosure of undisclosed material information,
the Company Spokesperson must take the necessary steps to ensure that such
information is communicated to the public generally before it is communicated to
the particular analyst or other person making the inquiry.

Employees, officers or directors of the
Company may be asked to forward or recommend analysts reports or may consider
forwarding analysts reports or media stories about the Company. The forwarding
or recommending of such reports or stories may be regarded as verifying or
validating the information contained in the reports or stories. If any of the
information in the report or story is not accurate, the act of forwarding or
recommending the report or story may constitute the dissemination of false or
misleading information in violation of securities laws. In addition, if any of
the information in the report or story is accurate but has not been generally
disseminated by the Company, the forwarding or recommending of the report or
story may constitute selective disclosure in violation of securities laws.
Finally, copying and dissemination of analysts reports and media stories may
violate copyright laws or the proprietary rights of the authors of the reports
or stories. For these reasons, no employee, officer or director should reproduce
and distribute or otherwise disseminate such reports and stories unless
specifically approved by the CEO. Persons requesting such materials should be
referred to the author or organization that published the material. In addition,
employees, officers and directors should not recommend particular analysts
reports on the Company to any person.

(e)****
Comments on Rumours and Correction of Selective Disclosure. Employees,
officers and directors must not comment, whether positively or negatively, on
rumours about the Companys business. Information about such rumours should be
reported to the Company Spokespersons. In general, the Companys policy is not
to comment on rumours. If a stock exchange or securities regulatory authority
requests the Company to make a definitive statement in response to rumours, a
Company Spokesperson will consider the matter in consultation with legal
counsel.

If any employee, officer or director
makes an unauthorized or premature disclosure of undisclosed material
information (inadvertently or otherwise), the person responsible for the
disclosure, and any other employee, officer or director learning of it, must
contact the CEO or other Company Spokesperson as soon as possible, and the CEO
and other

14

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Company Spokespersons will consider the
Companys responsibilities under applicable law.

13.Securities Transactions

(a) ****Restrictions on Trading. In general, employees, officers and
directors, and their family members, may trade in Company securities unless:

| | • | A Blackout Period (see below) is
      in place, or                
| | - | -------------------------------------------------------------------
| |   |                                                                    
| | • | The person has knowledge of
      undisclosed material information.

If a Blackout Period exists, or if you
have knowledge of undisclosed material information, neither you nor your family
members may trade in Company securities. For purposes of this policy, family
member means your spouse, your minor children, any person substantially
dependent on you for support, and other persons who share a residence with you.
There are two exceptions to this policy: (i) you may exercise any fixed price
option or warrant issued by the Company, BUT you may not sell the security
acquired on exercise of the option or warrant so long as either condition
exists; and (ii) you may sell securities pursuant to a previously existing
Trading Plan entered into with a qualifying broker under Section 161 of the
rules to the Securities Act of British Columbia and pursuant to SEC Rule 10b5-1,
provided that you were not in possession of undisclosed material information
(unless it has since been disclosed) at the time you established the Trading
Plan.

In addition, while you are in
possession of undisclosed material information, you and your family members must
not trade in the securities of companies that have a significant legal or
financial business relationship, direct or indirect, with the Company (generally
joint venture partners) if the undisclosed material information relates to the
subject matter of that business relationship.

(b)****
Blackout Period. From time to time, the CEO or other Company Spokesperson
may institute a Blackout Period because of the existence of undisclosed material
information. If a Blackout Period is instituted, you will be notified, generally
by e-mail. Once notified of the existence of a Blackout Period, except as noted
above, you and your family members may not trade in the Companys securities
until you have been notified that the Blackout Period has been terminated. The
existence of a Blackout Period is itself an item of confidential information
that is not to be disclosed to persons outside of the Company.

(c)****
Special Considerations in Investing in Company Securities. You and your
family members are urged not to purchase securities of the Company using
borrowed funds in an amount or on terms and conditions which are not prudent in
light of your financial condition. In addition, careful consideration should be
given before pledging Company securities for a loan because of the potential
insider trading liability that could arise if the lender should seek to sell the
securities at a time when there is undisclosed material information about the
Company.

15

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(d) ****Certain Additional Policies. These additional policies apply to
officers and directors and in regards to short sales, employees, of the
Company.

| | • | No employee, officer or director shall engage in short
      sales of securities of the Company or sales of borrowed securities of the
      Company. For purposes hereof, the short sale of Company shares as a method
      of facilitating the exercise of a valid option granted by the Company
      shall be deemed not to be a short sale for purposes of the aforementioned
      restriction notwithstanding any such sale-against-an-option must be
      treated as a short sale under Canadian securities legislation. Before
      selling short against an option, the holder of the option should bring the
      proposed transaction to the attention of the Companys CEO or CFO so as to
      ensure the transaction is treated properly.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | No officer or director shall place automatic buy or sell
      orders with brokers except for a Trading Plan entered into with a
      qualifying broker under Section 161 of the rules to the Securities Act of
      British Columbia and pursuant to SEC Rule 10b5-1, provided that you were
      not in possession of undisclosed material information (unless it has since
      been disclosed) at the time you established the Trading Plan.                                                                                                                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | • | No officer or director of the Company shall buy or sell
      equity securities of the Company during the period that begins five
      trading days before and ends one trading day after the public release of
      quarterly and annual results of operation of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

14.Administration and Distribution

The Companys Board of Directors, the Audit Committee, and the
Nominating and Governance Committee have established the standards of business
ethics and conduct contained in the Code, and it is their responsibility to
oversee compliance with the Code. Any change in or waiver of any provision of
the Code shall require approval of the Audit Committee or the Nominating and
Governance Committee, as applicable, and shall be publicly disclosed in the time
period and manner as required by law or regulation.

The Code is to be distributed to each employee, officer and
director of the Company and to the employees, officers and directors of HDSI. It
will also be made available via the Companys Internet site.

Strict adherence to the Code is vital. Directors will confirm
on an annual basis in connection with the preparation of the Management
Information Circular that they have read and understand the Code of Ethics.
Management will adopt appropriate policies to ensure that officers and employees
are provided with and have read the Code of Ethics. All managers are responsible
for ensuring that employees under their supervision are aware of and understand
the provisions of the Code For clarification or guidance on any point in the
Code, please consult the CEO or CFO.

16

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15.Reporting of Possible Violations or Other Questionable Practices

The following procedures govern the reporting and treatment of
reports of possible violations of the Code. The Company's Audit Committee
Charter provides that the Audit Committee is to establish procedures for the
receipt, retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters. The Audit Committee has adopted
these procedures as to complaints and submissions regarding accounting, internal
accounting controls or auditing matters, and the Nominating and Governance
Committee has adopted these procedures as to all other complaints and
submissions regarding the Code.

(a) ****When to Make a Report. You should make a report if you believe
that any employee, officer or director of the Company or HDSI, or any agent or
representative of the Company, may have or is about to engage in any conduct
which you believe may be:

| | • | A violation of the Code or any
      internal policy or code of practice,                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                     
| | • | A violation or otherwise involve questionable practices
      in connection with accounting, internal accounting controls or auditing
      matters,
| |   |                                                                                                                                                     
| | • | A violation of any law or
      regulation,                                                                                                         
| |   |                                                                                                                                                     
| | • | Corruption, mismanagement or
      fraud, or                                                                                                        
| |   |                                                                                                                                                     
| | • | A danger to the public or danger
      to worker health and safety or the environment.                                                              

If you are unsure about the matter but
concerned about the possibility of a violation or questionable practice, you
should nonetheless report the matter. Delays in bringing the information to the
attention of senior management, the Audit Committee, or the Nominating and
Governance Committee may cause damage, complications, and irreversible
consequences for the Company. Following the steps outlined below will allow the
Company to address the issues and ensure that timely remedial action is
taken.

(b) ****Procedures to Submit a Report. You may make a report under this
procedure in one of the following ways:

| | • | Bring the matter to the attention of your immediate
      supervisor. Any supervisor receiving such a report is to immediately bring
      the matter to the attention of the CEO, the CFO, or other member of senior
      management.                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                             
| | • | Bring the matter to the attention of the CEO, the CFO, or
      any other member of senior management.                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                             
| | • | Bring the matter to the attention of an independent
      director of the Company. Matters relating to accounting, internal
      accounting controls or auditing matters should be reported to the Chairman
      of the Audit Committee. All other matters should be reported to the
      Chairman of the Nominating and Governance Committee. If you are

17

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uncertain as to whether the matter
should go to the Audit Committee or the Nominating and Governance Committee, you
may choose either one. You may make the report orally, in writing, or by e-mail.
All reports will be treated as confidential to the extent possible, and only
revealed on a need-to-know basis or as required by law or court order. Contact
information for the Chairman of the Audit Committee and the Chairman of the
Nominating and Governance Committee is as follows:

Chairman of the Audit Committee
    
    Chairman of the Nominating andGovernance CommitteeName: David Elliott
    
    Name: Wayne KirkAddress 3111 West 42 Ave
    
    Address: PO Box 558Vancouver, BC V6N 3H1
    
    Orcas, WA 98280Telephone No. (604) 267-9694
    
    Telephone No. (360) 376-1013Fax No. (604) 267-9693
    
    Fax No. (360) 376-2545e-mail address davidelliott@hdgold.com
    
    e-mail address: waynekirk01@comcast.net


| | • | If you prefer to report on an anonymous basis, call on
      the Northern Dynasty hotline at 1-877-874-8416. Any calls to this number
      will be forwarded to the Chairman of the Audit Committee for further
      handling.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

With respect to matters involving the
possible violation of laws or regulations, you also may choose to bring such
concerns to an outside regulatory authority. However, the Company is committed
to taking internal action in response to employee concerns, and would appreciate
the opportunity to do so, if appropriate.

(c) ****Follow-up and Outcome.

(i)****
On receipt of a complaint, the complaint will be reported promptly to the
Chairman of the Audit Committee if it relates to accounting, internal accounting
controls or auditing matters, and to the Chairman of the Nominating and
Governance Committee if it relates to other matters under the Code. In the case
of an oral complaint, the party receiving the complaint is to report it orally
and also to prepare a written summary for the Chairman of the Audit Committee or
Nominating and Governance Committee, as applicable.

(ii)****
The appropriate Committee Chairman will promptly commission the conduct of an
investigation. At the election of the Committee Chairman, the investigation may
be conducted by Company personnel, or by outside counsel, accountants or other
persons employed by the appropriate Committee.

(iii) ****The identity of a person filing a complaint will be treated as
confidential to the extent possible, and only revealed on a need-to-know basis
or as required by law or court order.

18

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(iv) ****On completion of the investigation, an oral and/or written
investigative report will be provided to management and the Audit Committee or
Nominating and Governance Committee, as applicable. If any unlawful, violative
or other questionable conduct is discovered, the appropriate Committee will
cause to be taken such remedial action as the Committee deems appropriate under
the circumstances to achieve compliance with the applicable law, regulation or
policy and to otherwise remedy the unlawful, violative or other questionable
conduct. The Chairman of the appropriate Committee will prepare, or cause to be
prepared, a written summary of the remedial action taken.

(v)****
In each case, the written investigative report (or summary of any oral report),
and a written summary of the remedial action taken in response to the
investigative report will be retained along with the original complaint/report
by or under the authority of the appropriate Committee Chairman for a period of
four years after the resolution of the matter.

(d)****
Prohibition Against Retaliation. The Company welcomes the courage and
honesty of an employee who voices concern over a particular matter that he or
she believes to be unlawful or harmful. Any attempts to intimidate, threaten,
harass or retaliate against any employee based upon a good faith report made by
an employee pursuant to the Code is strictly prohibited and will result in
disciplinary action up to and including termination of the person responsible
for any such intimidation, threat, harassment or retaliation.

However, groundless or unwarranted
complaints - including those with vindictive intent are not acceptable.
Appropriate disciplinary measures will be taken if allegations are initiated for
malicious reasons or in bad faith.

(e) ****Governmental or Company Inquiry. If you receive an inquiry from
a governmental authority concerning suspected unlawful conduct, you should
immediately direct the inquiry to your immediate superior, the CEO, the CFO or
other member of senior management. In such circumstances, you should take
measures to preserve documents and other items relevant to the investigation. To
conceal an offence or to alter or destroy evidence is illegal and may result in
criminal prosecution. It also violates the Companys commitment of conducting
its business in a legal and ethical manner and is strictly prohibited.

If you receive an inquiry from the
Company representative or a Board committee in connection with an investigation
under the Code, you are equally obligated to take measures to preserve documents
and other items relevant to the investigation.

(f) ****Failure to Comply or File a Report. The Company is committed to
complying with all applicable laws, regulations and policies. Such compliance is
only possible if all employees, officers and directors ensure that they follow
all applicable laws, and Company policies and guidelines. When in doubt, ask the
CEO, CFO or other members of senior management. Personnel who violate the law or
the Companys compliance policies or knowingly fail to report a violation of law
or compliance policy may be

19

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subject to disciplinary action, up to
and including dismissal. The nature and extent of the action will be determined
on a case-by-case basis. In reviewing the situation, the following is a partial
list of considerations:

| | • | The nature and severity of the
      offence.                                            
| | - | -----------------------------------------------------------------------------------------
| |   |                                                                                          
| | • | Whether the persons involved
      acted reasonably.                                     
| |   |                                                                                          
| | • | The efforts by the persons
      involved to obtain guidance before the offence occurred.
| |   |                                                                                          
| | • | Whether the persons involved
      reported themselves.                                  

Personnel are encouraged to report
their own wrongdoing or possible wrongdoing. This action will be taken into
account when assessing the appropriate discipline, if any. The Company will also
recognize situations where a person has made an honest mistake and will take it
into account in deciding the course of action to pursue.

20

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APPENDIX 5

DISCLOSURE CONTROLS AND PROCEDURES POLICY

1.Introduction

Canadian and United States laws require the Company to maintain
disclosure controls and procedures that are designed to ensure that
information required to be disclosed by the Company in reports it files or
submits to regulatory authorities is recorded, processed, summarized and
reported on a timely basis. Disclosure controls and procedures must be designed
to ensure that information is accumulated and communicated to the Companys
management to allow timely decisions regarding required disclosure. Disclosure
controls and procedures should capture information that is relevant to
assessment of developments and risks that pertain to the Companys business, as
well as other material information about the Company.

The Companys CEO and CFO periodically are required to certify
that they (1) are responsible for establishing and maintaining disclosure
controls and procedures, (2) have designed such controls and procedures to
ensure that material information is made known to them by others within the
Company on a timely basis, and (3) have evaluated the effectiveness of the
disclosure controls and procedures and presented the conclusions of that
evaluation in certain filings.

Also, legislation in at least one Province (Ontario) requires
  such procedures and controls be in place in order for management to have a defence
  against litigation arising out of a misstatement in a public filing or arising
  out of a failure to promptly make a required disclosure.

2.Application

This Disclosure Controls and Procedures Policy covers the
following:

*(a)*         
  *Periodic Disclosures*

- Annual Information Forms and Annual Reports filed with the United States
  Securities and Exchange Commission.
- Annual Reports to Shareholders and other periodic reports and related press
  releases submitted to the SEC under cover of Form 6-K or filed in Canada.
- Management Information Circulars.
- Registration statements/prospectuses filed with the SEC and Canadian
  authorities.

*(b)*         
  *Event-Driven Disclosures*

- Anticipated events such as the results from exploration programs,
  acquisitions, divestitures, and initiation of legal proceedings by the
  Company.

-1-

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- Unanticipated events such as early or unexpected receipt of surprising
  exploration results, correction of misstatements in previously publicly-filed
  information, lawsuits against the Company, severe accidents causing harm to
  personnel or significant loss of property, material regulatory investigations,
  and discovery of fraud or illegal conduct.

3.Supplement to Internal Controls and Procedures

The Companys other internal controls and procedures are not
affected by these disclosure controls and procedures, and they will continue to
operate independent of the disclosure controls and procedures set out in this
Policy.

4.Statement of Responsibility

Design of this Policy is the responsibility of the CEO and CFO,
subject to evaluation by the Board of Directors, and implementation of this
Policy is the responsibility of the CEO and CFO, with the assistance of the
other members of the Disclosure Committee (as defined below).

5.Disclosure Committee

The Company has established a Disclosure Committee in order for
the Company to carry out its responsibilities under this Policy. The Committee
is not a committee of the Board. The Committee shall maintain a record of its
work and deliberations. The Disclosure Committee shall appoint a Secretary for
the Committee, who need not be a member of the Committee, who shall be
responsible for maintaining such records and otherwise documenting compliance
with the requirements of this Policy.

*(a)*         
  *Members*

The Disclosure Committee consists of the President and CEO,
CFO, Vice President, Operations, Director of Finance and Reporting (or the
person performing the duties associated with this position) (the DFR),
Manager, Corporate Communications, and such other persons as the CEO may
designate. The Disclosure Committee may delegate specific functions to
sub-committees of the Disclosure Committee, subject to final report to, and
approval of the actions of any such subcommittee by, the Disclosure Committee. A
quorum of the Disclosure Committee is the CEO and any two other members or the
CFO and a majority of all members other than the CEO and CFO.

*(b)*         
  *Meetings*

The Disclosure Committee will meet as required, and will meet
(or communicate by telephone or electronically) at least once each fiscal
quarter and will meet on the request of any member in the event of the
occurrence of an event or situation involving or affecting the Company which may
warrant public disclosure.

2

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*(c)*         
  *Responsibilities*

The primary responsibility of the Disclosure Committee is to
cause the Company to fulfill its disclosure obligations on a timely basis. To
carry out its functions, the Disclosure Committee will:

- Implement controls and procedures for both periodic and event-driven
  disclosures.
- Establish and implement processes for the timely collection and reporting
  to the Disclosure Committee of potential material information, and the timely
  evaluation and dissemination of material information to securities regulators,
  stock exchanges and shareholders.
- Review, or arrange for the review by an authorized subcommittee, of all
  documents subject to the Policy.
- Evaluate the effectiveness of disclosure and control procedures, including
  this Policy, on a regular basis, not less frequently than annually, and within
  the 90-day period prior to the filing of the AIF and Annual Report to the SEC.
- Report on its evaluation of disclosure controls and procedures at least
  annually to the Audit Committee of the Board of Directors.

In fulfilling its oversight responsibilities, the Disclosure
Committee will give consideration to the following:

- Timeliness and the filing requirements in all jurisdictions.
- Involvement of key personnel as necessary to ensure adequate collection,
  evaluation and disclosure of all material information.
- Adequacy of resources, including quality of staffing within areas of
  responsibility for collection, evaluation and disclosure of all material
  information.
- Adequacy of training of personnel involved with collection, evaluation and
  disclosure of all material information.
- Approval responsibility for each part and the entirety of disclosure
  documents.
- Assistance to the Board of Directors in carrying out its oversight
  responsibilities.

In carrying out its responsibilities, the Disclosure Committee
will have full access to all books and records, facilities and personnel of the
Company, as well as independent auditors, counsel and other experts.

6.Procedures

The following key disclosure controls and procedures are
established to ensure that material information is collected, evaluated and
disclosed by the Company on a timely basis.

3

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*(a)*         
*Standing Disclosure Practice and Procedure*

The Companys Code of Ethics and Trading Restrictions sets out,
in paragraph 12, the Companys Disclosure Policy. That Disclosure Policy
explains the responsibility of each employee to inform senior management on a
timely basis of events or developments that might have a material effect on the
Company. It is the responsibility of all members of senior management to inform
the members of the Disclosure Committee of such information.

If any officer or member of the Disclosure Committee receives a
report of non-public, possibly or potentially material information and concludes
that the Company may have an obligation to promptly disclose that information to
securities regulators, stock exchanges, shareholders or the public, that person
shall promptly advise the members of the Disclosure Committee. The Disclosure
Committee shall promptly convene (or communicate electronically) to consider the
significance and need for disclosure of that information and, in consultation
with the CEO, shall take such steps as its members deem appropriate under the
circumstances.

*(b)*          *Annual Information Form (AIF)/SEC Annual Report Controls and Procedures*

In addition to the Companys normal annual financial reporting
process, the Company will follow the following additional procedures in respect
of preparation of the AIF/Annual Report to the SEC:

- Prior to commencement of drafting the AIF/Annual Report to the SEC, the
  CFO, the DFR, Manager, Corporate Communications and the responsible
  exploration or technical supervisors and others, as appropriate, will meet or
  otherwise communicate to determine the content of the document, including any
  new legal or regulatory requirements.
- The Disclosure Committee will prepare a summary of principal required
  disclosure items, assign drafting responsibility for each, assign
  responsibility for compilation and overall control of the drafting process,
  establish a schedule for drafting and review, and distribute packages for
  review. As part of the process, the Disclosure Committee will identify those
  persons within the Company that can be expected to have particular knowledge
  as to the items covered by the document and ensure that those persons review
  the appropriate portions of the document.
- The Disclosure Committee, other selected employees, and independent
  auditors and outside counsel, as appropriate, will review and comment on the
  first complete draft of the reports/financial statements. Subsequent drafts of
  the reports and financial statements will be circulated by e-mail, facsimile
  or delivery for review and comment; this process need only be face-to-face
  upon the request of any member of the Disclosure Committee. Any officers not
  on the Disclosure Committee will be provided with copies of drafts, as
  appropriate.
- In preparation for the controls evaluation process, the Disclosure
  Committee will inquire of participants in the disclosure process regarding the
  disclosure process and possible instances of fraud and receive their
  certifications in a manner acceptable to the CEO based on the form set out in
  Exhibit 1.

4

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- The CEO, Disclosure Committee, other selected employees, as appropriate,
  independent auditors, outside counsel, if requested by any of the foregoing
  persons or by these professionals themselves, and the Audit Committee will
  review the near final text of the AIF/Annual Report to the SEC.
- Before reviewing the final text of the AIF/Annual Report to the SEC, the
  CEO, Disclosure Committee and other selected employees, as appropriate, will
  evaluate the disclosure controls and procedures, identify any deficiencies or
  weaknesses in the design or operation of internal controls, and consider any
  reports of fraud.
- As a part of the process of evaluating the disclosure controls and
  procedures, the members of the Disclosure Committee, other than the CEO and
  CFO, will certify (in a manner acceptable to the CEO based on the form set out
  in Exhibit 2) to the CEO and CFO that: (1) he or she is not aware of any
  material misstatements or omissions to state material facts in the AIF/Annual
  Reports to the SEC (2) the Disclosure Committee has followed all of its
  procedures and policies in connection with the preparation of the AIF/Annual
  Reports to the SEC; (3) he or she believe that the disclosure controls and
  procedures are documented and are adequate and effective to ensure that
  material information is collected, recorded, accessed and controlled by
  authorized personnel and assembled and made known to the Disclosure Committee
  on a timely basis; (4) he or she is not aware of any material deficiencies in
  the design or operation of the disclosure controls and procedures or the
  internal controls that has not been remedied; and (5) he or she is not aware
  of any employee fraud. The CFO will also provide such a signed certification
  to the CEO.

(c) **Annual Reports to Shareholders and other periodic reports and related press
releases submitted to the SEC under cover of Form 6-K or in Canada as Material
Change Reports.**

In addition to the Companys normal financial closing
processes, the Company will follow the following additional procedures in
respect of Annual Reports to Shareholders and other periodic reports and press
releases submitted to the SEC under cover of Form 6-K and in Canada as Material
Change Reports.

- Prior to the commencement of drafting, the CFO, DFR and others, as
  appropriate, will meet or otherwise communicate to determine the content to be
  included in the document, including any new legal or regulatory requirements.
- The DFR (or persons designed by the DFR) will prepare a summary of
  principal required disclosure items, assign drafting responsibility for each,
  assign responsibility for overall control of the drafting process, establish a
  schedule for drafting and review, and distribute packages for review. As part
  of the process, the DFR (or persons designated by the DFR) will identify
  persons within the Company that can be expected to have particular knowledge
  as to the items covered by the document and ensure that those persons review
  the appropriate portions of the document.
- The Disclosure Committee, other selected employees, independent auditors
  and outside counsel, as appropriate, will review and comment on the document.

5

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- The Disclosure Committee, other selected employees, independent auditors
  and outside counsel, as appropriate, will resolve all disclosure issues and
  finalize text.

*(d)*          *Management Information Circular Controls and Procedures*

- Prior to the commencement of drafting, the CEO, CFO, DFR and Manager,
  Corporate Communications shall meet or otherwise communicate to determine the
  matters to be included in the Management Information Circular and additional
  parties, if any (such as outside compensation consultants), to be involved in
  the preparation of the Management Information Circular.
- Prior to the substantial completion of drafting, the DFR or a subcommittee
  appointed by the DFR will enquire of outside counsel to determine any changes
  required since the prior year in the requirements of the Management
  Information Circular.
- The DFR (or persons appointed by the DFR) will prepare a summary of
  principal required disclosure items and establish a schedule for drafting and
  review. As part of the process, the Disclosure Committee will identify those
  persons within the Company that can be expected to have particular knowledge
  as to the items covered by the document and ensure that those persons review
  the appropriate portions of the document.
- The DFR (or persons appointed by the DFR) will draft the Management
  Information Circular and distribute the Management Information Circular to the
  Disclosure Committee, the Board, outside counsel, and other additional
  parties, as appropriate, for review and comment.
- The DFR, the Disclosure Committee and others, as appropriate will resolve
  all disclosure issues and finalize text.

*(e)*         
  *Registration Statements/Prospectuses*

Registration statements and prospectuses will normally be
prepared in the context of agreements and meetings with underwriters and others
involved in the process. Although the process will involve drafting and review
of information in processes that are similar to those involved in the
preparation of an AIF/Annual Report to the SEC, due to the timing and
participation by others in the process, it is not possible to set out in advance
the specific steps to be followed.

- It shall be the responsibility of the CFO and DFR, in conjunction with
  independent auditors and outside counsel, to implement disclosure and approval
  procedures comparable to those contained in this policy for other reports, to
  keep the Disclosure Committee involved and informed, as appropriate, to ensure
  the accuracy and completeness of such documents, and to keep the Board of
  Directors informed and involved in the process, as appropriate.

*(f)*         
*Event-Driven Disclosures*

Event-driven disclosures are those disclosures which are not
periodic in nature and will arise from time to time as a consequence of both
anticipated and unanticipated events. Examples of anticipated events include the
results of exploration programs, initiation of legal proceedings by

6

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or against the Company, significant acquisitions and
divestitures, and similar matters all of which are likely to be deemed material
information.

To the extent that such events are wholly or partially within
the Companys control, disclosure in respect of these events should be planned
for by the Disclosure Committee. The Disclosure Committee, or a subcommittee
thereof, should be involved in the preparation of event-driven disclosures
including press releases, material change reports and amendments to the existing
continuous disclosure record in Canada and the United States. The full Board of
Directors should be notified in the event there is need to make any material
unanticipated event-driven disclosure.

7.News Releases

The Disclosure Committee shall generally be responsible for
supervising preparation and dissemination of news releases and shall generally
consult the checklist in Exhibit 3. The Disclosure Committee will assign
drafting responsibility for drafting and distribution of each release. As a part
of the process, the Disclosure Committee will identify those persons within the
Company that can be expected to have particular knowledge as to the items
covered by the document and ensure that those persons review the document.

7

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Exhibit 1

Sample Form of Letter andForm of CertificationAIF and Annual Report to the SEC

Letter

You have been assisting the Disclosure Committee of the Company
in preparing the Annual Information Form/ Annual Report to the SEC for the year
_____. As you are aware, we must certify that our Company has disclosure
controls and procedures to ensure that material information about our Company is
made known to the Disclosure Committee on a timely basis so that it may be
properly disclosed to shareholders and others. Before the AIF/Annual Report is
filed, we would appreciate your confirming to us that you believe that you have
provided the Disclosure Committee with all information that was responsive to
the Disclosure Committees requests. Also, please confirm that, for the period
__________through the date of your response, that you are not aware of any
instance of fraud, whether or not material, by any current or former employee
involving the Company or, if you are aware of any such fraud, that you have
reported it as provided by the Code of Ethics and Trading Restrictions.
(Recognizing the sensitivity and desire for anonymity that may be involved with
such disclosures, please note that this confirmation does not require that you
specifically identify any report of fraud that you may have made.).

We would also appreciate your advising us of any suggestions
you have for improving the procedures we established in order to ensure that
material information about the Company is made known to us on a timely basis.

Please complete and return the accompanying certification to
the Disclosure Committee. by no later than __________________, 200_.

[CEO] ___________________________

[CFO]
___________________________

Certification

To: ___________________________.

I have participated in the development of information for and
participated in the preparation of the Annual Information Form/Annual Report to
the SEC for the year 200_. I am familiar with all of the information that I have
received from and provided to the Disclosure Committee in connection with my
participation in the preparation of the AIF/Annual Report for 200_. I believe
that I have been responsive to all of the Disclosure Committees requests, and
that I have provided all of the information requested from me.

8

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For the period _____________ through the date of this
certificate, I am not aware of any instance of fraud, whether or not material,
by any current or former employee involving the Company, or if I am aware of any
such fraud, I have reported it as provided by the Code of Ethics and Trading
Restrictions. For purposes of the Code, fraud includes any misstatements or
omissions in connection with preparation or reporting (internal or external) of
financial and/or operating information about the Company, whether or not
material and without regard to whether the employee receives any personal
benefit.

I believe that the procedures established in order to ensure
that material information about the Company is made known to the senior officers
on a timely basis:

[   ] are adequate and effective, or

[   ] can be improved in the following
ways:     _____________________________________

________________________________________________________________________.



|Dated: ____________________________________ | Signature:  
      ____________________________________
|------------------------------------------- | -------------------------------------------------------
|                                            | Print Name:
    ____________________________________   

9

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Exhibit 2

Sample Form of Disclosure Committee Certification

To ______________________:

I, ____________________, certify that:

1. ****I have reviewed the AIF/Annual Report of the Company for the year
__________ (all or any of the foregoing being for convenience, the Report).

2. ****Based on my knowledge, the Report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by the Report.

3. ****Based on my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as of
and for the periods presented in the Report.

4. ****The Disclosure Committee of which I am a part has followed all of its
procedures and policies in connection with the preparation of the Report.

5. ****Based on our most recent evaluation, I believe that the Companys
disclosure controls and procedures are adequate and effective to ensure that
material information is made known to the Disclosure Committee on a timely
basis.

6. ****Based on our most recent evaluation, I am not aware of any material
deficiencies in the design or operation of the disclosure controls and
procedures or the internal controls that has not been remedied.

7.****
Based on our most recent evaluation, I am not aware of any employee, supplier or
other person involved in fraud against or involving the Company.

|Dated: _________________________________ | Signature:  
      _________________________________
|---------------------------------------- | ----------------------------------------------------
|                                         | Print Name:
  _________________________________     

10

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Exhibit 3

News Release Checklist

Instructions for Use

This News Release Checklist should be consulted by the
appropriate members of the Companys Disclosure Committee when preparing a news
release.

Checklist Questions

|1.  | Has the information to be distributed been determined to
      be definitely or reasonably likely to be material to investors?                                                                                                                                                                                                                                                                 
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|2.  | Has the information been accurately summarized in a draft
      press release with a view to ensuring that it comprehensively discloses
      the event or information in a factually accurate and plain language manner
      with reasonable balance in respect to the positive and negative aspects of
      the information?                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|3.  | If the event or information is conditional, contingent or
      otherwise uncertain, does the news release properly disclose the nature of
      such conditions and contingencies, e.g. subject to regulatory approval,
      subject to definitive agreement, etc.?                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|4.  | If the news release contains information of a geological,
      engineering or other technical nature, has it been prepared or reviewed by
      a qualified person (QP) as defined by applicable regulatory policy
      (43-101)?                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|5.  | If the answer to question 4 is yes, is the information of
      a nature which requires an independentQP under applicable
      policy?                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|6.  | Does the release contain information about financial
      performance, legal proceedings, legal agreements or other matters which
      requires the review of one of the Companys professional advisors (legal,
      accounting, other)?                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|7.  | Does the press release describe a proposed financing of
      the Company which may require that the news release not be disseminated in
      the United States or be otherwise restricted?                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|8.  | Does the forward-looking information disclaimer in the
      news release adequately disclose the principal risks in connection with
      the matter in a specific and comprehensive (not a shopping list)
      format?                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|9.  | Has a quorum of the Disclosure Committee approved this
      news release?                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                
|10. | If the answer to question 9 is yes, are there any other
      persons to whom the news release should be first shown on confidential
      basis, either as a courtesy or as a manner of confirming its accuracy or
      the agreement of any third party with the characterization of the
      information? (e.g. joint venture partners, lawyers, auditors, stock
      exchange officials)

11

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|11. | Has the board of directors and in particular the
      independent board members reviewed the news release?                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                        
|12. | If the information is to be released during trading
      hours, is it of such a significantly material nature as to warrant a
      halting of the Companys shares from trading to permit a period of
      dissemination (only to be done in urgent situations or with the prior
      notice of same to the board)?
|    |                                                                                                                                                                                                                                                                                                                        
|13. | Will the news release be disseminated through ordinary
      paid wire services or is there a need to contact other media (newspapers,
      business writers)?                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                        
|14. | Has the Companys corporate communications and investor
      relations staff been apprised of the news release and been given an
      opportunity to raise any questions or issues which may be predicted to
      arise out of dissemination of a news release?                                                     
|    |                                                                                                                                                                                                                                                                                                                        
|15. | Is there any reason to alert other employees to the news
      release prior to its release?                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                        
|16. | Have all the required regulatory filings for the news
      release been arranged? For example, filing the news release and a Material
      Change Report, if necessary, on SEDAR and filing the news release and
      Material Change Report, if applicable, on Form 6-K on
  EDGAR.                                

12

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APPENDIX 6

AUDIT COMMITTEE CHARTER

1.Purpose: Responsibilities and Authority

The Committee shall carry out its responsibilities under
applicable laws, regulations and stock exchange requirements with respect to the
employment, compensation and oversight of the Companys independent auditor, and
other matters under the authority of the Committee. The Committee also shall
assist the Board of Directors in carrying out its oversight responsibilities
relating to the Companys financial, accounting and reporting processes, the
Companys system of internal accounting and financial controls, the Companys
compliance with related legal and regulatory requirements, and the fairness of
transactions between the Company and related parties. In furtherance of this
purpose, the Committee shall have the following responsibilities and authority:

(a) **Relationship with Independent Auditor.**

(i)****
Subject to the law of British Columbia as to the role of the Shareholders in the
appointment of independent auditors, the Committee shall have the sole authority
to appoint or replace the independent auditor.

(ii) ****The Committee shall be directly responsible for the compensation and
oversight of the work of the independent auditor (including resolution of
disagreements between management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or related
work.

(iii)****
The independent auditor shall report directly to the Committee.

(iv) ****The Committee shall approve in advance all audit and permitted
non-audit services with the independent auditor, including the terms of the
engagements and the fees payable. The Committee may delegate to a subcommittee
the authority to grant pre-approvals of audit and permitted non-audit services,
provided that the decision of any such subcommittee shall be presented to the
full Committee at its next scheduled meeting.

(v) ****At least annually, the Committee shall review and evaluate the
experience and qualifications of the lead partner and senior members of the
independent auditor team.

(vi) ****At least annually, the Committee shall obtain and review a report from
the independent auditor regarding:

(A)****
the independent auditors internal quality-control procedures;

(B) ****any material issues raised by the most recent internal quality-control
review, or peer review, of the auditor, or by any inquiry or

-1-

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investigation by governmental or
professional authorities within the preceding five years respecting one or more
independent audits carried out by the firm;

(C) ****any steps taken to deal with any such issues; and

(D) ****all relationships between the independent auditor and the Company.

(vii) ****At least annually, the Committee shall evaluate the qualifications,
performance and independence of the independent auditor, including considering
whether the auditors quality controls are adequate and the provision of
permitted non-audit services is compatible with maintaining the auditors
independence.

(viii) ****The Committee shall ensure the rotation of the lead (or coordinating)
audit partner having primary responsibility for the audit, the concurring
partner responsible for reviewing the audit, and other audit partners as
required by law.

(ix) ****The Committee shall consider whether, in order to assure continuing
auditor independence, it is appropriate to adopt a policy of rotating the
independent auditing firm on a regular basis.

(x) ****The Committee shall recommend to the Board policies for the Companys
hiring of employees or former employees of the independent auditor who were
engaged on the Companys account or participated in any capacity in the audit of
the Company.

(b) **Financial Statement and Disclosure Review.**

(i)****
The Committee shall review and discuss with management and the independent
auditor the annual audited financial statements, including disclosures made in
managements discussion and analysis, and recommend to the Board whether the
audited financial statements should be filed with applicable securities
regulatory authorities and included in the Companys annual reports.

(ii) ****The Committee shall review and discuss with management (and, to the
extent the Committee deems it necessary or appropriate, the independent auditor)
the Companys quarterly financial statements, including disclosures made in
managements discussion and analysis, and recommend to the Board whether such
financial statements should be filed with applicable securities regulatory
authorities.

(iii) ****The Committee shall review and discuss with management and the
independent auditor significant financial reporting issues and judgments made in
connection with the preparation of the Companys financial statements, including
the independent auditors assessment of the quality of the Companys accounting
principles, any significant changes in the Companys selection or application of
accounting principles, any major issues as to the adequacy of the Companys

2

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internal controls over financial
reporting, and any special steps adopted in light of material control
deficiencies.

(iv)****
At least annually and prior to the publication of annual audited financial
statements, the Committee shall review and discuss with management and the
independent auditor a report from the independent auditor on:

(A) ****all critical accounting policies and practices used by the Company;

(B) ****all alternative accounting treatments of financial information that
have been discussed with management since the prior report, ramifications of the
use of such alternative disclosures and treatments, the treatment preferred by
the independent auditor, and an explanation of why the independent auditors
preferred method was not adopted; and.

(C)****
other material written communications between the independent auditor and
management since the prior report, such as any management letter or schedule of
unadjusted differences, the development, selection and disclosure of critical
accounting estimates, and analyses of the effect of alternative assumptions,
estimates or IFRS methods on the Companys financial statements.

(v) ****Prior to their filing or issuance, the Committee shall review the
Companys Annual Information Form/Annual Report to the SEC, quarterly and annual
earnings press releases, and other financial press releases, including the use
of pro forma or adjusted non-IFRS information.

(vi) ****The Committee shall review and discuss with management the financial
information and earnings guidance provided to analysts and rating agencies. Such
discussion may be specific or it may be in general regarding the types of
information to be disclosed and the types of presentations to be made.

(c) **Conduct of the Annual Audit**. The Committee shall oversee the
annual audit, and in the course of such oversight the Committee shall have the
following responsibilities and authority:

(i) ****The Committee shall meet with the independent auditor prior to the
audit to discuss the planning and conduct of the annual audit, and shall meet
with the independent auditor as may be necessary or appropriate in connection
with the audit.

(ii) ****The Committee shall ascertain that the independent auditor is
registered and in good standing with the Canadian Public Accounting Board and
the Public Company Accounting Oversight Board and that the independent auditor
satisfies all applicable Canadian independence standards, Independence Standards
Board Standard No. 1, and SEC Regulation S-X, Section 2-01. The Committee shall
obtain from the auditor a written statement delineating all relationships
between

3

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the auditor and the Company as per ISB
Standard 1, and review relationships that may impact the objectivity and
independence of the auditor.

(iii)****
The Committee shall discuss with the independent auditor the matters required to
be discussed by Statement on Auditing Standards No. 61 relating to the conduct
of the audit, including

(A)****
the adoption of, or changes to, the Companys significant auditing and
accounting principles and practices as suggested by the independent auditor,
internal auditors or management;

(B)****
the management letter provided by the independent auditor and the Companys
response to that letter; and

(C)****
any difficulties encountered in the course of the audit work, including any
restrictions on the scope of activities or access to requested information, and
any significant disagreements with management.

(iv) ****The Committee shall obtain from the independent auditor assurance that
the audit was conducted in a manner consistent with Section 10A of the
Securities Exchange Act of 1934 and that, in the course of conducting the audit,
the independent auditor has not become aware of information indicating that an
illegal act has or may have occurred or, if such an act may have occurred, that
the independent auditor has taken all action required by Section 10A(b) of the
Securities Exchange Act of 1934.

(v)****
The Committee shall make such inquiries to the management and the independent
auditor as the Committee members deem necessary or appropriate to satisfy
themselves regarding the efficacy of the Companys financial and internal
controls and procedures and the auditing process.

(d) **Compliance and Oversight.**

(i)****
The Committee shall meet periodically with management and the independent
auditor in separate executive sessions. The Committee may also, to the extent it
deems necessary or appropriate, meet with the Companys investment bankers and
financial analysts who follow the Company.

(ii)****
The Committee shall discuss with management and the independent auditor the
effect of regulatory and accounting initiatives as well as off-balance sheet
structures on the Companys financial statements.

(iii) ****The Committee shall discuss with management the Companys major
financial risk exposures and the steps management has taken to monitor and
control such exposures, including the Companys risk assessment and risk
management policies.

4

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(iv) ****At least annually and prior to the filing of the AIF/Annual Report to
the SEC, the Committee shall review with management and the independent auditor
the disclosure controls and procedures and confirm that the Company (with CEO
and CFO participation) has evaluated the effectiveness of the design and
operation of the controls within 90 days prior to the date of filing of the
AIF/Annual Report to the SEC. The Committee also shall review with management
and the independent auditor any deficiencies in the design and operation of
internal controls and significant deficiencies or material weaknesses therein
and any fraud involving management or other employees who have a significant
role in the Companys internal controls. As a part of that review, the Committee
shall review the process followed in preparing and verifying the accuracy of the
CEO and CFO annual certifications required to be included in the Annual Report
to the SEC.

(v) ****At least annually and prior to the filing of the AIF/Annual Report to
the SEC, the Committee shall review with management and the independent auditor
managements internal control report and assessment of the internal controls and
procedures, and the independent auditors report on and assessment of the
internal controls and procedures.

(vi) ****The Committee shall establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential, anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters.

(vii) ****The Committee shall discuss with management and the independent auditor
any correspondence with regulators or governmental agencies and any employee
complaints or reports which raise material issues regarding the Companys
financial statements or accounting policies.

(viii) ****At least annually, the Committee shall meet with the Companys legal
counsel and discuss any legal matters that may have a material impact on the
financial statements or the Companys compliance policies.

(ix)****
At least annually and prior to the filing of the AIF/Annual Report to the SEC,
the Committee shall prepare all reports required under applicable laws,
regulations and stock exchange requirements.

(x) ****The Committee shall recommend to the Nominating and Governance
Committee the qualifications and criteria for membership on the Committee.

(e) **Related Party Transactions.**

(i)****
The Committee shall review for fairness to the Company proposed transactions,
contracts and other arrangements between the Company and its subsidiaries and
any related party or affiliate, and make recommendations to the Board whether
any such transactions, contracts and other arrangements should be

5

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approved or continued. The foregoing
shall not include any compensation payable pursuant to any plan, program,
contract or arrangement subject to the authority of the Companys Compensation
Committee.

(ii) ****As used herein the term related party means any officer or director
of the Company or any subsidiary, or any shareholder holding a greater than 10%
direct or indirect financial or voting interest in the Company, and the term
affiliate means any person, whether acting alone or in concert with others,
that has the power to exercise a controlling influence over the Company and its
subsidiaries. "Related party" includes Hunter Dickinson Services Inc.

2.Structure and Membership

(a) **Number and qualification**. The Committee shall consist of three persons
unless the Board should from time to time otherwise determine. All members of
the Committee shall meet the experience and financial literacy requirements of
Multilateral Instrument MI 52-110 and the rules of the Toronto Stock Exchange
and the NYSE Amex. At least one member of the Committee shall be a financial
expert as defined in Item 407 of SEC Regulation S-K.

(b) **Selection and Removal**. Members of the Committee shall be appointed by
the Board, upon the recommendation of the Nominating and Governance Committee.
The Board may remove members of the Committee at any time with or without cause.

(c) **Independence**. All of the members of the Committee shall be
independent as required for audit committees by Multilateral Instrument MI
52-110, the rules of the Toronto Stock Exchange and the NYSE Amex, and SEC Rule
10A-3.

(d) **Chair**. Unless the Board elects a Chair of the Committee, the Committee
shall elect a Chair by majority vote.

(e)****
Compensation. The compensation of the Committee shall be as determined by
the Board.

(f)****
Term. Members of the Committee shall be appointed for one-year terms.
Each member shall serve until his or her replacement is appointed, or until he
or she resigns or is removed from the Board or the Committee.

3.Procedures and Administration

(a)****
Meetings. The Committee shall meet as often as it deems necessary in
order to perform its responsibilities, but not less than quarterly. The
Committee shall keep minutes of its meetings and any other records as it deems
appropriate.

(b)****
Subcommittees. The Committee may form and delegate authority to one or
more subcommittees, consisting of at least one member, as it deems appropriate
from time to time under the circumstances.

6

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(c) **Reports to the Board**. The Committee shall regularly report to the Board
with respect to such matters as are relevant to the Committees discharge of its
responsibilities, and shall report in writing on request of the Chairman of the
Board.

(d) **Charter**. The Committee shall, at least annually, review and reassess
the adequacy of this Charter and recommend any proposed changes to the Board for
approval.

(e) **Independent Advisors**. The Committee shall have the authority to engage
such independent legal and other advisors as it deems necessary or appropriate
to carry out its responsibilities. Such independent advisors may be regular
advisors to the Company. The Committee is empowered, without further action by
the Board, to cause the Company to pay appropriate compensation to advisors
engaged by the Committee.

(f)****
Investigations. The Committee shall have the authority to conduct or
authorize investigations into any matters within the scope of its
responsibilities as it deems appropriate, including the authority to request any
Officer or other person to meet with the Committee and to access all Company
records.

(g) **Annual Self-Evaluation**. The Committee shall evaluate its own
performance at least annually.

4.Additional Powers

The Committee shall have such other duties as may be delegated
from time to time by the Board of Directors.

5.Limitation of Audit Committees Role

While the Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Committee to plan or conduct
audits or to determine that the Companys financial statements and disclosures
are complete and accurate and are in accordance with IFRS and applicable rules
and regulations. These are the responsibilities of management and the
independent auditor.

6.Audit Committee Member Independence, Financial Literacy and Financial
Expert Requirements

A.          
Independence

(a) ****See
Appendix 2 of the Companys Corporate Governance Overview and Guidelines.

B.Financial Literacy and Financial Expert Requirements

MI 52-110

Section 3.1(4) states that each audit committee member must be
financially literate.

7

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Section 1.6 defines the meaning of financial literacy as
follows:

For the purposes of this Instrument, an individual is
financially literate if he or she has the ability to read and understand a set
of financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
the issues that can reasonably be expected to be raised by the issuers
financial statements.

NYSE AMEX Section 803(B)(2)(a)(iii)

Each issuer must have an Audit Committee of at least three
members, each of whom:

is able to read and understand fundamental financial
statements, including a companys balance sheet, income statement, and cash flow
statement. Additionally, each issuer must certify that it has, and will continue
to have, at least one member of the audit committee who is financially
sophisticated, in that he or she has past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individuals financial
sophistication, including but not limited to being or having been a chief
executive officer, chief financial officer, other senior officer with financial
oversight responsibilities. A director who qualifies as an audit committee
financial expert under Item 407(d)(5)(ii) of Regulation S-K . . . is presumed to
qualify as financially sophisticated.

ITEM 407(d)(5)(ii) 0F REGULATION S-K, DEFINITION OF FINANCIAL
EXPERT

For purposes of this Item, an audit committee financial expert
means a person who has the following attributes:

|(A) | An understanding of generally accepted accounting
      principles and financial statements;                                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(B) | The ability to assess the general application of such
      principles in connection with the accounting for estimates, accruals and
      reserves;                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(C) | Experience preparing, auditing, analyzing or evaluating
      financial statements that present a breadth and level of complexity of
      accounting issues that are generally comparable to the breadth and
      complexity of issues that can reasonably be expected to be raised by the
      small business issuers financial statements, or experience actively
      supervising one or more persons engaged in such activities;
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(D) | An understanding of internal control over financial
      reporting; and                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(E) | An understanding of audit committee
  functions.                                                                                                                                                                                                                                                                                                                                                                                         

A person shall have acquired such attributes through:

|(A) | Education and experience as a principal financial
      officer, principal accounting officer, controller, public accountant or
      auditor or experience in one or more positions that involve the
      performance of similar functions;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8

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|(B) | Experience actively supervising a principal financial
      officer, principal accounting officer, controller, public accountant,
      auditor or person performing similar functions;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                        
|(C) | Experience overseeing or assessing the performance of
      companies or public accountants with respect to the preparation, auditing
      or evaluation of financial statements; or  
|    |                                                                                                                                                                                        
|(D) | Other relevant experience.                                                                                                                                                             

9

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APPENDIX 7

COMPENSATION COMMITTEE CHARTER

1.Purpose: Responsibilities and Authority.

The Compensation Committee shall assist the Board of Directors
in carrying out its responsibilities relating to executive and director
compensation. In furtherance of this purpose, the Committee shall have the
following responsibilities and authority:

(a) ****The Committee shall recommend to the Board of Directors the form and
amount of compensation to be paid by the Company to directors for service on the
Board and on Board committees. The Committee shall review director compensation
at least annually.

(b)****
The Committee shall annually review the Companys base compensation structure
and the Company's incentive compensation, stock option and other equity-based
compensation programs and recommend changes in or additions to such structure
and plans to the Board of Directors as needed.

(c)****
The Committee shall recommend to the Board of Directors the annual base
compensation of the Company's executive officers and senior managers
(collectively the "Officers").

(d)****
The Committee shall recommend to the Board of Directors the range of increase or
decrease in the annual base compensation for non-Officer personnel providing
services to the Company.

(e) ****The Committee shall recommend to the Board of Directors annual
corporate goals and objectives under any incentive compensation plan adopted by
the Company for Officers and non-Officer personnel providing services to the
Company, and recommend incentive compensation participation levels for Officers
and non-Officer personnel providing services to the Company under any such
incentive compensation plan. In determining the incentive component of
compensation, the Committee will consider the Companys performance and relative
shareholder return, the values of similar incentives at comparable companies and
the awards given in past years.

(f) ****The Committee shall evaluate the performance of Officers generally and
in light of annual corporate goals and objectives under any incentive
compensation plan.

(g) ****The Committee shall periodically review with the Chairman and Chief
Executive Officer their assessments of Officers and succession plans, and make
recommendations to the Board regarding appointment of Officers.

(h)****
The Committee shall provide oversight of the performance evaluation and
incentive compensation of non-Officer personnel providing services to the
Company.

-1-

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(i) ****The Committee shall administer the Company's stock option and other
equity based compensation plans and determine the grants of stock options and
other equity based compensation.

(j) ****The Committee shall recommend to the Nominating and Governance
Committee the qualifications and criteria for membership on the Committee.

The Chief Executive Officer of the Company shall not be present
during any vote or other deliberation of the Committee regarding the
compensation or performance of the Chief Executive Officer.

2.Structure and Membership

(a) **Number**. The Committee shall consist of four persons unless the Board
should from time to time otherwise determine.

(b) **Selection and Removal**. Members of the Committee shall be appointed by
the Board, upon the recommendation of the Nominating and Governance Committee.
The Board may remove members of the Committee at any time with or without cause.

(c)****
Independence.At a minimum a majority of the members of the Committee
shall be independent as determined under the Companys Corporate Governance
Overview and Guidelines.

(d) **Chair**. Unless the Board elects a Chair of the Committee, the Committee
shall elect a Chair by majority vote.

(e) **Compensation**. The compensation of the Committee shall be as determined
by the Board.

(f) **Term**. Members of the Committee shall be appointed for one-year terms.
Each member shall serve until his or her replacement is appointed, or until he
or she resigns or is removed from the Board or the Committee.

3.Procedures and Administration

(a) **Meetings**. The Committee shall meet as often as it deems necessary in
order to perform its responsibilities. The Committee shall keep minutes of its
meetings and any other records as it deems appropriate.

(b)****
Subcommittees. The Committee may form and delegate authority to one or
more subcommittees, which may consist of one or more members, as it deems
necessary or appropriate from time to time under the circumstances.

(c) **Reports to the Board**. The Committee shall regularly report to the Board
with respect to such matters as are relevant to the Committees discharge of its
responsibilities, and shall report in writing on request of the Chairman of the
Board.

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(d) **Charter**. The Committee shall, at least annually, review and reassess
the adequacy of this Charter and recommend any proposed changes to the Board for
approval.

(e)****
Independent Advisors. The Committee shall have the authority to engage
such independent legal and other advisors as it deems necessary or appropriate
to carry out its responsibilities. Such independent advisors may be regular
advisors to the Company. The Committee is empowered, without further action by
the Board, to cause the Company to pay appropriate compensation to advisors
engaged by the Committee.

(f)****
Investigations. The Committee shall have the authority to conduct or
authorize investigations into any matters within the scope of its
responsibilities as it deems appropriate, including the authority to request any
Officer or other person to meet with the Committee.

(g) **Annual Self-Evaluation**. The Committee shall evaluate its own
performance at least annually.

4.Additional Powers

The Committee shall have such other duties as may be delegated
from time to time by the Board of Directors.

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APPENDIX 8

NOMINATING AND GOVERNANCE COMMITTEE CHARTER

1.Purpose: Responsibility and Authority

The Nominating and Governance Committee shall assist the Board
of Directors in carrying out its responsibilities relating to stewardship and
governance. In furtherance of this purpose the Committee shall have the
following responsibilities and authority:

(a) ****The Committee shall recommend to the Board criteria for Board
membership. In making its recommendation, the Committee shall consider the
competencies and skills that the Board, as a whole, should possess and the
competencies and skills of each current director. The Committee shall review
with the Board, on an annual basis, the requisite skills and criteria for Board
members as well as the composition and size of the Board as a whole in order to
ensure that the Board has the requisite expertise, that its membership consists
of persons with sufficiently diverse and independent backgrounds, and that its
membership consists of an appropriate mix of inside, outside and independent
directors.

(b)****
The Committee shall identify and recommend to the Board individuals qualified to
become Board members, consistent with criteria approved by the Board. The
Committee shall be responsible for recommending to the Board the nominees for
election as directors at any meeting of shareholders and the persons to be
appointed by the Board to fill any vacancies on the Board. The Committee may
adopt procedures regarding director candidates proposed by the shareholders.

(c) ****The Committee shall recommend to the Board corporate governance and
ethics principles and policies that should be applicable to the Company. The
Committee shall monitor legislation, regulatory policies and industry best
practices dealing with corporate governance and, from time to time as it deems
appropriate, review and reassess the adequacy of the Companys corporate
governance principles and practices and recommend any proposed changes to the
Board.

(d)****
The Committee shall consider questions of independence and possible conflicts of
interest of members of the Board and of senior managers and make recommendations
regarding such matters to the Board, including the criteria for determining
director independence.

(e)****
The Committee shall, on an annual basis, recommend assignments to committees of
the Board, including recommendations as to chairmen of committees of the Board,
review and make recommendations to the Board concerning the types, duties,
functions, size and operation of committees of the Board, review the adequacy of
charters of all committees of the Board and make recommendations to the Board
for any changes to such charters.

(f)****
The Committee shall, on an annual basis, oversee the evaluation of the Board and
its committees to determine whether the Board, its members and its committees
are functioning effectively. The Committee shall determine the nature of the
evaluation,

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supervise the conduct of the evaluation
and prepare an assessment of performance of the Board and the Committee, to be
discussed with the Board.

(g) ****The Committee shall manage Board and committee succession planning.

(h)****
The Committee shall oversee the investigation of matters arising under the Code
of Ethics that are not within the responsibility of the Audit Committee.

(i) ****The Committee shall consider and make recommendations to the Board in
circumstances where a Director tenders a resignation pursuant to the Majority
Vote Policy.

(j) ****The Committee shall monitor communications with shareholders regarding
matters of corporate governance.

2.Structure and Membership

(a) **Number**. The Committee shall consist of four persons unless the Board
should from time to time otherwise determine.

(b) **Selection and Removal**. Members of the Committee shall be appointed by
the Board, upon the recommendation of the Committee. The Board may remove
members of the Committee at any time with or without cause.

(c)****
Independence.At a minimum a majority of the members of the Committee
shall be independent as determined under the Companys Corporate Governance
Overview and Guidelines.

(d) **Chair**. Unless the Board elects a Chair of the Committee, the Committee
shall elect a Chair by majority vote.

(e)****
Compensation. The compensation of the Committee shall be as determined by
the Board.

(f) **Term**. Members of the Committee shall be appointed for one-year terms.
Each member shall serve until his or her replacement is appointed, or until he
or she resigns or is removed from the Board or the Committee.

3.Procedures and Administration

(a) **Meetings**. The Committee shall meet as often as it deems necessary in
order to perform its responsibilities. The Committee shall keep minutes of its
meetings and any other records as it may deem appropriate.

(b) **Subcommittees**. The Committee may form and delegate authority to one or
more subcommittees, which may consist of one or more members member, as it deems
necessary or appropriate from time to time under the circumstances.

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(c)****
Reports to the Board. The Committee shall regularly report to the Board
with respect to such matters as are relevant to the Committees discharge of its
responsibilities, and shall report in writing on request of the Chairman of the
Board.

(d)****
Independent Advisors. The Committee shall have the authority to engage
such independent legal and other advisors as it deems necessary or appropriate
to carry out its responsibilities. Such independent advisors may be regular
advisors to the Company. The Committee is empowered, without further action by
the Board, to cause the Company to pay appropriate compensation to such advisors
engaged by the Committee.

(e) **Investigations**. The Committee shall have the authority to conduct or
authorize investigations into any matters within the scope of its
responsibilities as it may deem necessary or appropriate, including the
authority to request any officer or other person to meet with the Committee.

(f)****
Annual Self-Evaluation. The Committee shall evaluate its own performance
at least annually.

4.Additional Powers

The Committee shall have such other duties as may be delegated
from time to time by the Board of Directors.

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