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ANNUAL INFORMATION FORM







#490, 688 West Hastings Street Vancouver, BC, V6B 1P1
Tel: (604) 688-9427



March 28, 2008

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TABLE OF CONTENTS

Page No.ITEM 1:
      PRELIMINARY NOTES
      11.1
      Incorporation of Financial Statements and Proxy Circular
      11.2
      Date of Information
      11.3
      Glossary of Abbreviations and Terms
      11.4
      Conversion Table
      41.5
      Currency
      41.6
      Share Capital
      4ITEM 2:
      CORPORATE STRUCTURE
      52.1
      Name, Address and Incorporation
      52.2
      Intercorporate Relationships
      5ITEM 3:
      GENERAL DEVELOPMENT OF THE BUSINESS
      63.1
      Three-Year History
      63.2
      Significant Acquisitions
      9ITEM 4:
      DESCRIPTION OF THE BUSINESS
      94.1
      General
      94.2
      Risk Factors
      124.3
      Companies with Asset-backed Securities Outstanding
      154.4
      Companies with Mineral Projects
      15(a)
      Jerritt Canyon Mine, Nevada
      15(b)
      Ketza River Project, Yukon Territory
      51(c)
      Other Properties
      94ITEM 5:
      DIVIDENDS
      945.1
      Dividends
      94ITEM 6:
      DESCRIPTION OF CAPITAL STRUCTURE
      946.1
      General Description of Capital Structure
      946.2
      Constraints
      956.3
      Ratings
      95ITEM 7:
      MARKET FOR SECURITIES
      957.1
      Trading Price and Volume
      957.2
      Prior Sales
      96ITEM 8:
      ESCROWED SECURITIES
      968.1
      Escrowed Securities
      96ITEM 9:
      DIRECTORS AND OFFICERS
      969.1
      Name, Occupation and Security Holding
      969.2
      Cease Trade Orders, Bankruptcies, Penalties or Sanctions
      98


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ii

9.3
      Conflicts of Interest
      99ITEM 10:
      PROMOTERS
      9910.1
      Promoters
      99ITEM 11:
      LEGAL PROCEEDINGS
      9911.1
      Legal Proceedings
      99ITEM 12:
      INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
      10012.1
      Interest of Management and Others in Material Transactions
      100ITEM 13:
      TRANSFER AGENTS AND REGISTRARS
      101Item13.1
      Transfer Agents and Registrars
      101ITEM 14:
      MATERIAL CONTRACTS
      101Item 14.1
      Material Contracts
      101ITEM 15:
      INTERESTS OF EXPERTS
      10115.1
      Names of Experts
      10115.2
      Interests of Experts
      101ITEM 16:
      ADDITIONAL INFORMATION
      102


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ITEM
1: **PRELIMINARY
NOTES

1.1**Incorporation of Financial Statements and Proxy Circular

Specifically incorporated by reference and forming a part of
this annual information form (the AIF) are the audited consolidated financial
statements, including the accompanying notes and the auditors report, for the
Issuer for the period ended December 31, 2007, together with the auditors
report thereon, and the Management Proxy Circular, dated April 17, 2007,
previously filed with the British Columbia, Alberta and Ontario Securities
Commissions.

All financial information in this AIF is prepared in accordance
with accounting principles generally accepted in Canada (Canadian GAAP).

1.2 **Date of Information

All information in this AIF is as of March 28, 2008 unless
otherwise indicated.

1.3 **Glossary of Abbreviations and Terms

Certain abbreviations and terms used throughout this Annual
Information Form are defined below:

|Abbreviation | Unit or Term                       
|------------ | -----------------------------------
|A            | ampere                             
|AA           | atomic absorption                  
|A/m2         | amperes per
      square meter     
|ANFO         | ammonium nitrate fuel oil          
|Ag           | silver                             
|Au           | gold                               
|AuEq         | gold equivalent
      grade        
|°C           | degrees Centigrade                 
|CCD          | counter-current
      decantation  
|CIL          | carbon-in-leach                    
|CoG          | Cut-off-Grade                      
|cm           | centimeter                         
|cm2          | square centimeter                  
|cm3          | cubic centimeter                   
|cfm          | cubic feet per
      minute        
|ConfC        | confidence code                    
|CRec         | core recovery                      
|CSS          | closed-side setting                
|CTW          | estimated true
      width         
|°            | degree (degrees)                   
|dia.         | diameter                           
|EIS          | Environmental Impact Statement     
|EMP          | Environmental
      Management Plan
|FA           | fire assay                         
|ft           | foot (feet)                        
|ft2          | square foot (feet)                 
|ft3          | cubic foot (feet)                  
|g            | gram                               
|gal          | gallon                             
|g-mol        | gram-mole                          
|gpm          | gallons per
      minute           
|g/t          | grams per tonne                    

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|Abbreviation | Unit or Term                                           
|------------ | -------------------------------------------------------
|ha           | hectares                                               
|HDPE         | Height Density Polyethylene                            
|hp           | horsepower                                             
|HTW          | horizontal true width                                  
|ICP          | induced couple
      plasma                            
|ID2          | inverse-distance squared                               
|ID3          | inverse-distance
      cubed                           
|IFC          | International Finance Corporation                      
|ILS          | Intermediate
      Leach Solution                      
|kA           | kiloamperes                                            
|kg           | kilograms                                              
|km           | kilometer                                              
|km2          | square kilometer                                       
|koz          | thousand troy ounce                                    
|kt           | thousand tonnes                                        
|ktpd         | thousand tonnes per day                                
|ktpy         | thousand tonnes
      per year                         
|kV           | kilovolt                                               
|kW           | kilowatt                                               
|kWh          | kilowatt-hour                                          
|kWh/t        | kilowatt-hour per
      metric tonne                   
|l            | liter                                                  
|lps          | liters per second                                      
|lb           | pound                                                  
|LHD          | Load-Haul Dump
      truck                             
|LLDDP        | Linear Low Density Polyethylene
      Plastic          
|LOI          | Loss On Ignition                                       
|LoM          | Life-of-Mine                                           
|lps          | liters per second                                      
|m            | meter                                                  
|m2           | square meter                                           
|m3           | cubic meter                                            
|masl         | meters above sea
      level                           
|MARN         | Ministry of the Environment and
      Natural Resources
|MDA          | Mine Development
      Associates                      
|mg/l         | milligrams/liter                                       
|mm           | millimeter                                             
|mm2          | square millimeter                                      
|mm3          | cubic millimeter                                       
|MME          | Mine & Mill Engineering                                
|Moz          | million troy
      ounces                              
|Mt           | million tonnes                                         
|MTW          | measured true
      width                              
|MW           | million watts                                          
|m.y.         | million years                                          
|NGO          | non-governmental organization                          
|NI 43-101    | Canadian National
      Instrument 43-101              
|OSC          | Ontario Securities Commission                          
|oz           | troy ounce                                             
|%            | percent                                                
|PLC          | Programmable
      Logic Controller                    
|PLS          | Pregnant Leach Solution                                
|PMF          | probable maximum
      flood                           
|ppb          | parts per billion                                      
|ppm          | parts per million                                      
|QA/QC        | Quality Assurance/Quality Control                      
|RC           | rotary
      circulation drilling                      
|RoM          | Run-of-Mine                                            
|RQD          | Rock Quality Description                               

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|Abbreviation | Unit or Term                               
|------------ | -------------------------------------------
|SEC          | U.S. Securities
      & Exchange Commission
|s            | second                                     
|SG           | specific gravity                           
|SPT          | standard penetration testing               
|st           | short ton (2,000
      pounds)             
|t            | tonne (metric ton) (2,204.6
      pounds)  
|tph          | tonnes per hour                            
|tpd          | tonnes per day                             
|tpy          | tonnes per year                            
|TSF          | tailings storage facility                  
|TSP          | total suspended
      particulates         
|μ            | micron or microns                          
|V            | volts                                      
|VFD          | variable frequency drive                   
|W            | watt                                       
|XRD          | x-ray diffraction                          
|yr           | year                                       

Term
      MeaningAssay:
    The chemical analysis of mineral samples to determine the
      metal contentCapital
      Expenditure:
    All other expenditures not classified as operating costs.Composite:
    Combining more than one sample result to give an average
      result over a larger distance.Concentrate:
    A metal-rich product resulting from a mineral enrichment
      process such as gravity concentration or flotation, in which most of the
      desired mineral has been separated from the waste material in the ore.Crushing:
    Initial process of reducing ore particle size to render
      it more amenable for further processing.Cutoff Grade (CoG):
    The grade of mineralized rock, which determines as to
      whether or not it is economic to recover its gold content by further
      concentration.Dilution:
    Waste, which is unavoidably mined with ore.Dip:
    Angle of inclination of a geological feature/rock from
      the horizontal.Fault:
    The surface of a fracture along which movement has
      occurred.Footwall:
    The underlying side of an orebody or stope.Gangue:
    Non-valuable components of the ore.Grade:
    The measure of concentration of gold within mineralized
      rock.Hangingwall:
    The overlying side of an orebody or slope.Haulage:
    A horizontal underground excavation which is used to
      transport mined ore.Igneous:
    Primary crystalline rock formed by the solidification of
      magma.Kriging:
    An interpolation method of assigning values from samples
      to blocks that minimizes the estimation error.Level:
    Horizontal tunnel the primary purpose of which is the
      transportation of personnel and materials.Lithological:
    Geological description pertaining to different rock
      types.LoM Plans:
    Life-of-Mine plans.Material
      Properties:
    Mine properties.Milling:
    A general term used to describe the process in which the
      ore is crushed and ground and subjected to physical or chemical treatment
      to extract the valuable metals to a concentrate or finished product.Mineral/Mining
      Lease:
    A lease area for which mineral rights are held.Mining
      Assets:
    The Material Properties and Significant Exploration
      Properties.


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Term
      MeaningOngoing
      Capital:
    Capital estimates of a routine nature, which is necessary
      for sustaining operations.Ore Reserve:
    That part of a mineral resource that is considered
      economic in terms of tonnage and grade following an appropriately detailed
      study at given commodities prices.Pillar:
    Rock left behind to help support the excavations in an
      underground mine.Sedimentary:
    Pertaining to rocks formed by the accumulation of
      sediments, formed by the erosion of other rocks.Sill:
    A thin, tabular, horizontal to sub-horizontal body of
      igneous rock formed by the injection of magma into planar zones of
      weakness.Stope:
    Underground void created by mining.Stratigraphy:
    The study of stratified rocks in terms of time and space.Strike:
    Direction of line formed by the intersection of strata
      surfaces with the horizontal plane, always perpendicular to the dip
      direction.Sulfide:
    A sulfur bearing mineral.Tailings:
    Finely ground waste rock from which valuable minerals or
      metals have been extracted.Thickening:
    The process of concentrating solid particles in
      suspension.Total
      Expenditure:
    All expenditures including those of an operating and
      capital nature.Variogram:
    A statistical representation of the characteristics
      (usually grade).


1.4**Conversion Table

In this AIF a combination of Imperial and metric measures are
used with respect to mineral properties located in North America. Conversion
rates from Imperial measure to metric and from metric to Imperial are provided
below:

Imperial
      Measure**
      =
    Metric Unit
    Metric
      Measure**
      =
    Imperial Unit2.47 acres 3.28 feet 0.62 miles 0.032 ounces
      (troy) 1.102 tons (short) 0.029 ounces (troy)/ton
    1 hectare 1 metre 1 kilometre 1
      gram 1 tonne 1 gram/tonne
    0.4047 hectares 0.3048 metres 1.609
      kilometres 31.1 grams 0.907 tonnes 34.28 grams/tonne
    1 acre 1 foot 1 mile 1 ounce (troy)
      1 ton 1 ounce (troy/ton)


1.5Currency

Unless otherwise indicated, all dollar amounts are in Canadian
dollars.

1.6Share Capital

On January 5, 2004 the Issuer consolidated its Common Share
capital on the basis of one post-consolidated share for five pre-consolidated
shares. Unless otherwise expressed, all references in this Annual Information
Form are to post-consolidated Common Shares.

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ANNUAL INFORMATION FORM

YUKON-NEVADA GOLD CORP.#490, 688 West Hastings
Street Vancouver, BC, V6B 1P1 Tel: (604) 688-9427 website is:
www.yukon-nevadagold.com

ITEM
2: **CORPORATE
STRUCTURE

2.1**Name, Address and Incorporation

The full corporate name of the issuer is Yukon-Nevada Gold
Corp. (the Issuer).

The address of the head office is:

#490, 688 West Hastings Street
Vancouver, BC, V6B 1P1

and the address of the registered office is:

#1040, 999 West Hastings Street
Vancouver, B.C. V6C 2W2

The Issuer was incorporated under the laws of the Province of
British Columbia under the name YGC Resources Ltd. (YGC) on May 30, 1988. On
January 25, 2002, the Issuer was struck from the Register of Companies for
British Columbia and dissolved. The Issuer was restored to the Register on
August 1, 2003. On January 5, 2004 the Issuer consolidated its share capital on
a five (5) old for one (1) new basis and increased its authorized share capital
from 4,000,000 shares without par value to 100,000,000 shares without par value.
On June 23, 2005, the Issuer increased its authorized share capital from
100,000,000 Common Shares without par value to an unlimited number of Common
Shares without par value.

By Combination Agreement dated March 16, 2007 with Queenstake
Resources Ltd. (Queenstake), the Issuer entered into an Arrangement with
Queenstake, providing for, among other things, the acquisition by the Issuer of
all of the issued and outstanding shares of Queenstake. The Arrangement closed
on June 20, 2007, at which time the Issuer changed its name to its current name.

2.2 **Intercorporate Relationships

Set forth below are the names of the Issuers subsidiaries:

Name
    Jurisdiction of incorporation
    Percentage ownedYGC Resources
      Arizona, Inc.
    Arizona
    100%Ketza River
      Holdings Ltd.
    Yukon
    100%Castle Exploration
      Incorporated
    Colorado
    100%Queenstake
      Resources U.S.A., Inc.
    Delaware
    100%Queenstake
      Resources Ltd.
    British Columbia
    100%


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ITEM
3: **GENERAL
DEVELOPMENT OF THE BUSINESS

The Common Shares of the Issuer were called for trading on the
TSX on April 13, 2005. The Issuer is active in the evaluation, development and
commercial production of mineral properties. The Issuers principal assets are
the Ketza River Property, Yukon Territory and the Jerritt Canyon gold mine,
Nevada. The favourable price for gold has enabled the Issuer to raise equity
financing, the proceeds of which are used to fund improvements to the Jerritt
Canyon concentrator facilities and exploration of the Ketza River Property.

3.1**Three-Year History

The principal business of the Issuer is the production of gold
in Nevada and the acquisition, exploration and development of mineral properties
of merit with a particular focus on gold, silver, zinc and copper properties in
the Yukon Territory and British Columbia in Canada and in Arizona and Nevada in
the United States.

The Issuer was inactive from 1999 to 2002, at which time Graham
Dickson, the president of the Issuer, took the initiative in restoring the
Issuer to the Register of Companies and raising capital to return the Issuer to
good standing as a reporting issuer in the provinces of British Columbia and
Alberta.

The Issuer has owned the Ketza River Gold Property, Yukon,
since 1994. This former producing mine was shut down in November, 1990, due to
the depletion of known reserves of oxide ore. The Ketza River Gold Property
includes 308 mineral claims and leases, a gold mill and all associated chattels,
tools, equipment and licences. Mr. Dickson, a chemist and a professional mining
consultant, identified areas which were under-explored and which could be mined
and processed by different methods than those employed in the past. In
particular, Mr. Dickson identified the possibility of discovering significant
quantities of sulphide ore. The Issuer has completed diamond drilling that
resulted in the discovery of the Chimney and Fork zones and geologic mapping,
prospecting, sampling and diamond drilling on the Shamrock zone. The Issuer is
carrying out an aggressive diamond drill program in an effort to increase
mineral resources, to prepare a feasibility study and, if the results of the
feasibility study are positive, to return the Property to commercial production
as a mine.

The Issuer acquired the Jerritt Canyon gold mine upon
completion of its plan of arrangement with Queenstake on June 20, 2007. On May
30, 2003, Queenstake entered into a definitive asset purchase and sale agreement
with subsidiaries of AngloGold Limited and Meridian Gold Inc. (collectively, the
Sellers) pursuant to which Queenstake agreed to acquire the Sellers
respective 70% and 30% interests in the assets comprising the operating Jerritt
Canyon gold mine. The acquisition closed on June 30, 2003. The Jerritt Canyon
mine is a large-scale underground gold mining operation with significant
exploration potential

The Issuer also holds 55 unpatented mining claims referred to
as the Silver Bar, Pinal County, Arizona. The Silver Bar will be explored by the
Issuer as a gold-copper property. The Issuer also owns other property interests
in the Yukon and in the Greenwood area of south-central British Columbia.

The Issuer intends to seek and acquire additional properties
worthy of exploration.

Year ending December 31, 2005

In January 2005, the Issuer closed a private placement of
20,000 units (the Units) at $1.20 per Unit for gross proceeds of $24,000. Each
Unit consisted of one common share and one common share purchase warrant (a
Warrant). Each Warrant entitled the holder to purchase one additional common
share at a price of $1.80 per share during the first year and $2.40 per share
during the second year.

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On March 18, 2005 John R.W. Fox consented to become a director
of the Issuer and Robert Stroshein resigned as a director of the Issuer. On
March 23, 2005, Graham H. Scott and Neil J.F. Steenberg consented to act as
directors of the Issuer and Timothy Wright resigned as a director of the Issuer.

In April 2005, the Issuer closed a brokered private placement
of 11,989,167 units (the Units) comprised of 7,885,667 Non-Flow-Through Units
at $0.60 per Unit and 4,012,500 Flow-Through Units at $0.80 per Unit, for gross
proceeds of $7,941,400. Each Unit consisted of one common share and one-half (1⁄2)
of one share purchase warrant. Each full warrant entitled the holder to purchase
one additional common share at a price of $1.00 per share for 24 months from
April 13, 2005.

In April 2005, the Issuer closed two private placements for a
total of 2,916,450 units (the Units) at $0.60 per Unit, for gross proceeds of
$1,749,870. Each Unit consisted of one common share and one-half (1⁄2) of one
share purchase warrant. Each full warrant entitled the holder to purchase one
additional common share at a price of $1.00 per share for 24 months from April
13, 2005.

On April 13, 2005, the Issuers Common Shares commenced trading
on the TSX.

At the Issuers 2005 Annual and Special General Meeting held
May 19, 2005, Graham Dickson was re-elected to the Issuers Board of Directors
and Graham H. Scott, John R.W. Fox, Neil J.F. Steenberg, E. Lynn Patterson and
Robert Chafee were elected to the Issuers Board of Directors. At the Meeting,
shareholders also approved the adoption of a new Stock Option Plan whereby the
maximum number of shares reserved for grant under option is 10% of the number of
shares outstanding at the time of grant.

Following the 2005 Annual General Meeting, Mr. Patterson was
appointed the Issuers Chairman, Graham Dickson was re-appointed President and
Chief Executive Officer, Robert Stroshein was appointed Vice President of
Exploration and Graham Scott was appointed Secretary.

In July 2005, the Issuer closed a brokered private placement of
5,597,856 units (the Units) comprised of 4,800,000 Flow-Through Units at $0.80
per Unit and 797,856 non-Flow-Through Units at $0.70 per Unit, for gross
proceeds of $4,398,500. Each Unit consisted of one common share and one-half (1⁄2)
of one share purchase warrant. Each full warrant entitled the holder to purchase
one additional common share at a price of $1.00 per share for 24 months from
July 28, 2005.

On July 7, 2005 Christopher Oxner was appointed the Issuers
Chief Financial Officer.

On July 7, 2005 Graham H. Scott resigned as a director of the
Issuer and R.J. (Don) MacDonald was appointed to the Issuers Board of
Directors.

On August 8, 2005 Christopher Oxner was appointed the Issuers
Assistant Secretary.

In August 2005, the Issuer closed a private placement of
932,000 units (the Units) at $0.70 per Unit, for gross proceeds of $652,400.
Each Unit consisted of one common share and one-half (1⁄2) of one share purchase
warrant. Each full warrant entitled the holder to purchase one additional common
share at a price of $1.00 per share for 24 months from August 25, 2005.

On September 7, 2005 Robert Stroshein resigned as the Issuers
Vice President of Exploration.

On October 6, 2005 Peter Holbek was appointed to the Issuers
Board of Directors.

During 2005, a total of 79 diamond drill holes were completed
on the Manto Zone of the Ketza River Property and an additional 21 holes were
drilled on the Shamrock Zone.

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8

Year ending December 31, 2006

In March 2006 the Issuer entered into a Shareholder Rights Plan
to ensure that shareholders of the Issuer are treated fairly in the event of any
unsolicited take-over bid for the Issuer. The Agreement was approved by the
Issuers shareholders at its Annual General Meeting held May 2, 2006 and has a
term of ten (10) years.

In May 2006 the Issuer closed a brokered private placement of
5,500,000 Flow-Through Shares (the FT Shares) at a price of $1.50 per FT
Share, for gross proceeds of $8,250,000.

At the Issuers 2006 Annual General Meeting held May 2, 2006,
Graham Dickson, Peter Holbek, John R.W. Fox, Neil J.F. Steenberg, E. Lynn
Patterson, R.J. (Don) MacDonald and Robert Chafee were re-elected to the
Issuers Board of Directors.

In June 2006 the Issuer closed a non-brokered private placement
of 19,231 non-flow-through shares (the NFT Shares) at a price of $1.30 per NFT
Share and 1,430,067 Flow-Through Shares (the FT Shares) at a price of $1.50
per FT Share, for gross proceeds of $2,170,100.

By Agreement dated September 30, 2006 between the Issuer and
George Fairclough, the Issuer was granted an option to purchase 100% interest in
claims owned by Mr. Fairclough located in the Yukon Territory, known as the
Silver Valley Property.

In December 2006 the Issuer closed a non-brokered private
placement of 900,000 Flow-Through Shares (the FT Shares) at a price of $2.50
per FT Share, for gross proceeds of $2,250,000.

Year Ending December 31, 2007

On January 5, 2007 Iain Harris was appointed to the Issuers
Board of Directors, and appointed to the Issuers Audit Committee and Corporate
Governance Committee.

On February 1, 2007 Wasserman Ramsay resigned as the Issuers
auditor and KPMG LLP was appointed as the Issuers successor auditor.

By Combination Agreement dated March 16, 2007 between the
Issuer and Queenstake, the Issuer acquired all of the issued and outstanding
shares of Queenstake. The Arrangement closed on June 20, 2007. Full details of
this acquisition and related financing transactions are disclosed under General
Development of the Business  Significant Acquisitions.

On March 20, 2007 the Issuer entered into an
Agreement-in-Principle with Northwest Mining and Geological Exploration Bureau
for Nonferrous Metals (NWM), of China. Under the terms of the agreement, the
Issuer and NWM will establish a new corporation Yukon-Shaanxi Mining Company
Inc. (Yukon-Shaanxi), and will work together to acquire and explore mineral
properties in the Yukon. The Issuer and NWM have also agreed to acquire and
explore joint venture mineral properties in China and to exchange information,
technology and personnel.

At an Annual and Special Meeting of the Issuer held on May 18,
2007, the shareholders approved the plan of arrangement between the Issuer and
Queenstake and the private placement of up to 94,500,000 shares of the Issuer.

In May and June of 2007, in connection with the Queenstake
acquisition, the Issuer completed a private placement transaction of 42,351,864
Subscription Receipts at a price of $1.80 per Subscription Receipt, for total
gross proceeds of approximately $76.2 million. Each Subscription Receipt
entitled the holder to acquire, at no additional cost, one common share and one
half of one transferable share purchase warrant. Each whole warrant entitles the
holder to purchase one additional Common Share at a price of $3.00 on or before
June 20, 2012.

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9

In October 2007, the Issuer completed a private placement of
5,000,000 flow-through shares at $2.00 per share for gross proceeds of
$10,000,000.

During the year ended December 2007, the Issuer incurred
exploration expenditures of approximately US $7.2 million on the Jerritt Canyon
property. Approximately 20,000 meters were drilled and the focus was in the
greater Mahala area.

The Issuer incurred exploration expenditures of approximately
US $15 million on the Ketza River project and approximately US $1.2 million on
the Silver Valley property. Both of these properties are located in the Yukon.

Events Subsequent to December 31, 2007

On February 1, 2008 the Issuers Board of Directors approved
the appointment of David Drips, B.Sc. Mining Engineering, as its new Vice
President Mining. The Issuer also promoted Sam Ash, B.Sc. Mining Engineering, to
Manager of New Operations.

The Issuer granted 500,000 stock options to employees on March
28, 2008.

3.2**Significant Acquisitions

The Issuer completed one significant acquisition in 2007: the
acquisition of Queenstake Resources Ltd. and all of its assets including the
Jerritt Canyon gold mine in Nevada.

Plan of Arrangement with Queenstake Resources Ltd.

By Combination Agreement dated March 16, 2007 the Issuer agreed
to acquire all of the issued and outstanding shares of Queenstake. Shareholders
of YGC received one common share of the Issuer for each one common share held in
YGC held. Shareholders of Queenstake received one common share of the Issuer for
each ten common shares of Queenstake held.

One of the conditions precedent for the Plan of Arrangement was
that the Issuer complete a private placement to raise approximately $80 million.
During May and June of 2007, the Issuer raised $76.2 million by the private
placement of 42,351,864 subscription receipts (the Subscription Receipts) at a
price of $1.80 per Subscription Receipt. Each Subscription Receipt entitled the
holder to acquire, at no additional cost, one common share and one half of one
transferable share purchase warrant. Each whole warrant entitled the holder to
purchase one additional Common Share at a price of $3.00 on or before June 20,
2012. The Subscription Receipts were exchanged for shares and warrants of the
Issuer on the closing of the Plan of Arrangement, which occurred on June 20,
2007.

ITEM
4: **DESCRIPTION OF
THE BUSINESS

4.1 **General

The principal businesses of the Issuer are the continued mining
of the Jerritt Canyon gold mine in Nevada, as well as the acquisition,
exploration and, if warranted, development of natural resource properties of
merit with a particular focus on the Ketza River Property, Yukon Territory.

Jerritt Canyon is an operating gold complex with two producing
underground mines, ore stockpiles and a 1.5 million ton per year capacity
processing plant. In addition, the approximately 119 square miles that comprise
the Jerritt Canyon property offer a significant number of advanced, early stage
and district-scale exploration targets and

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10

potential to expand the currently defined mineral reserves and
resources proximal to the producing mines. The Issuer intends to seek and
acquire additional properties worthy of exploration/development.

Principal Markets

Product fabrication and bullion investment are the two
principal uses of gold. Within the fabrication category there are a wide variety
of end uses, the largest of which is the manufacture of jewellery. Other
fabrication purposes include official coins, electronics, miscellaneous
industrial and decorative uses, dentistry, medals and medallions.

Distribution Methods

Gold can be readily sold on numerous markets throughout the
world and it is not difficult to ascertain its market price at any particular
time. Since there are a large number of available gold purchasers, the Issuer is
not dependent upon the sale of gold to any one customer.

Revenues

100% of the Issuers gold sales are to customers outside of the
consolidated entity.

The Issuer has commenced pre-feasibility work on the Ketza
River project which is scheduled for completion in mid-2008.

Production and Services

The results of the pre-feasibility work on the Ketza River
project will help determine the mining and processing methodology to be
employed.

Specialized Skill and Knowledge

The acquisition of Queenstake in 2008 brought a lot of
technical expertise to the Issuer. This expertise has been utilized extensively
since the date of acquisition..

Competitive Conditions

The Issuer currently has 100% of its operations in North
America and this political stability is seen as an advantage to the Issuer in
the gold mining and exploration marketplace as the Issuer is able to avoid
political risk associated with operating in less stable regimes.

Economic Dependence

N/A

Changes to Contracts

N/A

Environmental Protection

The Issuer will likely incur expenditures in the upcoming year
(s) on mercury emission controls that will be in excess of US $1,000,000. The
level of expenditure will be determined by working collaboratively with
government agencies to determine the scope of work.

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11

Employees

As of December 31, 2007, the Issuer had seven (7) full-time
employees at its head office in Vancouver, as well as three (3) full-time
employees at its office in Colorado and approximately 300 employees at its
Jerritt Canyon gold mine. The Issuer uses a number of consultants and
contractors for a variety of tasks.

Foreign Operations

N/A.

Lending

The Issuer does not lend.

Bankruptcy and Similar Procedures

As at the date hereof, neither the Issuer, nor its
subsidiaries, has been subjected to any bankruptcy, receivership or similar
proceedings.

Reorganization

Commencing in December 2003, Graham Dickson, the president of
the Issuer, took the initiative in reorganizing the Issuer by restoring it with
the Register of Companies and returning the Issuer to good standing as a
reporting issuer in the provinces of British Columbia and Alberta. On January 5,
2004, the Issuers share capital was consolidated on a five (5) old for one (1)
new basis and its authorized share capital was increased from 4,000,000 shares
without par value to 100,000,000 shares without par value; subsequently the
Issuers share capital was increased to an unlimited number if common shares
without par value. On April 13, 2005, the Issuers shares commenced trading on
the TSX.

Social or Environmental Policies

The Issuer believes in hiring as many people from communities
near its operations in both Canada and the USA as possible. The Issuer has a
policy of working with environmental agencies as closely as possible to ensure
the Issuer is in compliance with the ever-changing environmental regulations..

Jerritt Canyon Property

All three major operating permits for the Jerritt Canyon mine
were renewed or reissued in 2004. The Nevada mining permit which regulates water
pollution control was renewed on September 17, 2004 for five years and a site
wide Title V Air Quality Permit was issued on March 10, 2004, also for five
years. On June 4, 2004 a site wide Reclamation Permit was reissued to include
all current activities ongoing at Jerritt Canyon. In addition to obtaining the
three major operating permits, the Issuer has also obtained permits for the
Steer mine portal and surface facilities area in January 2004 and initiated the
U.S. Forest Service permitting process for the next five year exploration plan.
The Issuer was honoured by the State of Nevada when it received the 2003 Nevada
Reclamation Award for closure and reclamation work at the Burns Basin Surface
mine area. Work started in 2005, work progressed on an environmental assessment
for the next five year exploration plan with the U.S. Forest Service. Approval
of the Environmental Assessment was received in mid-2006. The Issuer maintained
active participation in the Nevada Voluntary Mercury Emission Reduction Program
and actively participated with the Nevada Division of Environmental Protection
and others in the development of new regulations regarding Mercury air emission
controls.

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12

A large portion of the Jerritt Canyon mine is located on public
land administered by the U.S. Forest Service. The Jerritt Canyon staff maintains
a proactive relationship with the U.S. Forest Service Administrators, which
includes weekly site inspections and up-dates. A majority of the Jerritt Canyon
mining district has undergone formal National Environmental Policy Act (NEPA)
review as part of the 25 year mining and exploration history of the District.
Environmental issues are well defined in this documentation and appropriate
mitigation strategies are in place to support and expand operations.

Reclamation projects are scheduled annually and are completed
concurrently with the completion of mining activities. To date over 1,500 acres
of mined lands have been reclaimed. Reclamation and closure activities are
defined and associated costs are bonded with the Federal Government and the
State of Nevada. These bonded activities are also insured by a reclamation and
closure policy independently administered by American Insurance Group
Environmental (AIG). As reclamation is completed, payment for completing the
insured activity is paid to the Issuer from a pre-funded Commutation Account
administered by AIG.

As the Issuer is committed to conducting its operations with
close consideration to environmental values and ethics as well as to social
issues. The Issuer will therefore:

- Comply with applicable laws, regulations, and permit conditions and, where
  appropriate, exceed their minimum requirements;
- Establish and maintain management systems to monitor all environmental
  aspects of its activities;
- Review these management systems regularly to evaluate their effectiveness
  and modify them as appropriate to optimize their effectiveness;
- Proactively pursue and evaluate engineering alternatives to best address
  closure and reclamation issues;
- Assure that financial resources are available to meet environmental and
  reclamation obligations;
- Ensure that the Issuers employees and contractors are aware of the
  Issuers environmental policies and understand their relevant
  responsibilities; and
- Participate in the ongoing public and private sector debate on
  environmental and social matters that relate to the mining industry.

The Issuer is continually striving to improve its environmental
performance.

Ketza River Property

The Issuer has an environmental manager in the Yukon that works
closely with the Yukon Territorial Government and a contracted environmental
engineering firm to ensure the Issuer is in compliance with environmental
regulations.

4.2 **Risk Factors

The Issuers ability to generate revenue and profit from its
natural resource properties, or any other resource property it may acquire, is
dependent upon a number of factors, several of which are discussed in item 6.6,
and including, without limitation, the following:

Precious Metal Price Fluctuations

The profitability of the Issuer's proposed operations will be
dependent in part upon the market price of precious metals. The price of such
metals or interests related thereto has fluctuated widely and is affected by
numerous factors beyond the control of the Issuer. These factors include
international economic and political conditions,

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13

expectations of inflation, international currency exchange
rates, interest rates, global or regional consumptive patterns, speculative
activities, levels of supply and demand, increased production due to new mine
developments and improved mining and production methods, availability and costs
of metal substitutes, metal stock levels maintained by producers and others and
inventory carrying costs. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in the Issuer not
receiving an adequate return on invested capital or an investment retaining its
value.

Operating Hazards and Risks

Mining operations generally involve a high degree of risk,
which even a combination of experience, knowledge and careful evaluation may not
be able to overcome. Hazards such as unusual or unexpected formations and other
conditions are involved. Operations in which the Issuer has a direct or indirect
interest will be subject to all the hazards and risks normally incidental to
exploration, development and production of precious metals, any of which could
result in work stoppages, damage to or destruction of mines and other producing
facilities, damage to life and property, environmental damage and possible legal
liability for any or all damage. The Issuer presently carries a limited amount
of liability insurance, and may become subject to liability for pollution,
cave-ins or other hazards, and the payment of such liabilities may have a
material adverse effect on the Issuer's financial position.

Exploration and Development

Mineral exploration and development involve a high degree of
risk and few properties which are explored are ultimately developed into
producing mines. There is no assurance that the Issuer's continuing mineral
exploration and development activities will result in any discoveries of bodies
of commercial ore. The long-term profitability of the Issuer's operations will
be in part directly related to the cost and success of its exploration and
development programs, which may be adversely affected by a number of factors.

Substantial expenditures are required to establish reserves
through drilling, to evaluate metallurgical processes to extract metal from ore
and to develop the mining and processing facilities and infrastructure at any
site chosen for mining. Although substantial benefits may be derived from the
discovery of a major mineralized deposit, no assurance can be given that
minerals will be discovered in sufficient quantities to justify commercial
operations or that the funds required for development can be obtained on a
timely basis.

The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond the Issuer's control and which
cannot be accurately predicted, such as market fluctuations, the proximity and
capacity of milling facilities, mineral markets and processing equipment, and
such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting minerals and
environmental protection.

Calculation of Reserves, Resources and Metal Recoveries

There is a degree of uncertainty attributable to the
calculation of reserves and resources and corresponding grades being mined or
dedicated to future production. Until reserves or resources are actually mined
and processed, the quantity of mineralization and grades must be considered as
estimates only. In addition, the quantity of reserves and resources may vary
depending on metal prices. Any material change in quantity of reserves,
resources, grade, stripping ratio, or metallurgical recoveries may effect the
economic viability of the Issuer's properties. In addition, there can be no
assurance that metallurgical recoveries in small scale laboratory tests will be
duplicated in larger scale tests under on-site conditions or during production.

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Title to Assets

Although the Issuer has taken steps to verify title to mineral
properties in which it has an interest, in a manner consistent with industry
practice for the current stage of its evaluation of such properties, there is no
guarantee that title to such properties will not be challenged or impugned. The
Issuer has not conducted surveys of some of the claims in which it holds direct
or indirect interests and therefore, the precise area and location of such
claims may be in doubt. The Issuer's claims may be subject to prior unregistered
agreements or transfers or native land claims and title may be affected by
undetected defects.

Issuance of Debt

From time to time the Issuer may enter into transactions to
acquire assets or the shares of other corporations. These transactions may be
financed partially or wholly with debt, which may increase the Issuers debt
levels above industry standards. The Issuers articles do not limit the amount
of indebtedness that the Issuer may incur. The level of the Issuers
indebtedness from time to time could impair the Issuers ability to obtain
additional financing in the future on a timely basis to take advantage of
business opportunities that may arise.

Dilution

In order to finance its working capital needs, as well as to
raise equity for the development of its projects, the Issuer may enter into
commitments in the future which would require the issuance of additional shares,
options, warrants and convertible debt. These commitments must comply with
applicable securities laws and may require the approval of the securities
regulatory bodies, and in some cases, the shareholders of the Issuer.

Regulatory and environmental matters

The following discussion is necessarily brief and must not be
taken to constitute a complete discussion of the various statutes, rules and
governmental orders to which the Issuers operations may be subject. The
Issuers existing properties are located in Canada and the United States, and
are subject to extensive federal, provincial and local governmental regulations
in these countries. These regulations may be revised or expanded at any time. A
broad number of matters are subject to regulation. Generally, compliance with
these regulations requires the Issuer to obtain permits issued by federal,
provincial and local regulatory agencies. Certain permits require periodic
renewal or review of their conditions. It is impossible to predict whether it
will be possible to obtain or renew such permits or whether material changes in
permit conditions will be imposed. The inability to obtain or renew permits or
the imposition of additional conditions could have a material adverse effect on
the Issuers ability to develop and operate its properties.

Environmental laws and regulations to which the Issuer is
subject as it progresses from the development stage to the production stage give
rise to additional concerns and requirements. Failure to comply with applicable
laws, regulations and permits can result in injunctive actions, suits for
damages, and civil and criminal penalties. The laws and regulations applicable
to the Issuers activities change frequently and it is not possible to predict
the potential impact on the Issuer from any such future changes.

Passive Foreign Investment Company (PFIC)

The Issuer has not determined whether it meets the definition
of PFIC, within the meaning of Sections 1291 through 1298 of the U.S. Internal
Revenue Code of 1986, as amended, for the current tax year and any prior tax
years. The Issuer may or may not qualify as a PFIC in subsequent years due to
changes in its assets and business operations. A U.S. shareholder who holds
stock in a foreign corporation during any year in which such corporation
qualifies as a PFIC is subject to numerous special U.S. federal income taxation
rules and may elect to be taxed under two alternative tax regimes. A U.S.
shareholder should consult their own U.S. tax advisor with respect to an

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15

investment in the Issuers shares and to ascertain which of the
alternative tax regimes, if any, might be beneficial to the U.S. shareholders
own facts and circumstances.

Enforcement of Civil Liabilities

The Issuer is a corporation existing under the laws of British
Columbia, Canada. Some of the Issuers assets are located outside the United
States and many of its directors and officers are residents of countries other
than the United States. As a result, it may be difficult for investors to effect
service of process within the United States upon the Issuer and its directors
and officers, or to realize in the United States upon judgments of courts of the
United States predicated upon civil liability of the Company and its directors
and officers under United States federal securities laws.

4.3**Companies with Asset-backed Securities Outstanding

The Issuer has not, does not and will not invest in
asset-backed securities.

4.4**Companies with Mineral Projects

(a)         
Jerritt Canyon Mine, Nevada

On June 30, 2003, a subsidiary of the Issuer, Queenstake
Resources Ltd. (Queenstake), acquired the Jerritt Canyon mine in Nevada. The
Jerritt Canyon mine is an operating gold property with two producing underground
mines and ore stock piles, currently feeding ore to a 1.5 million ton per year
capacity processing plant.

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Figure 1: General Location Map of the Jerritt Canyon Mine



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Figure 2: General Land Map of the Jerritt Canyon District

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Accessibility, Climate, Local Resources,
Infrastructure and Physiography

The Jerritt Canyon Mine is located in Elko County, Nevada,
approximately 50 miles north of Elko. Access to the property is by State Road
225 to the mine access road. The roads are paved and in excellent condition all
the way to the main gate where the administrative offices, process plant,
warehouse, and tailings impoundment are located. The mines are accessed by haul
roads on Queenstake controlled land.

The climate is temperate with winter temperatures between 0oF
and 40oF and summer temperatures between 35oF and 90oF. Average annual
precipitation at the tailings impoundment is estimated at 14 inches per year
with an estimated annual average evaporation of 43 inches. A significant amount
of the total precipitation falls as snow and increases with elevation to the
mining areas. Mine operations are only rarely halted by weather conditions,
although ore haulage from the mines may be slowed. The mill, warehouse, shop,
and administrative facilities are at a lower elevation and therefore are less
exposed to weather extremes.

The vegetation is typical of the Basin and Range province with
sagebrush vegetation dominant at the lower elevations. Small stands of aspen and
isolated fir trees grow in canyons and drainages.

Jerritt Canyon mine is located in the Independence Mountain
Range in the Basin and Range province of northern Nevada. The topography ranges
from about 6,400 feet at the administrative facilities and mill site to about
8,000 feet at the highest point of the haul road to the mines.

Elko, Nevada with a population of about 36,000 is the closest
city to the mine. The city is on Interstate 80 and is serviced by daily
commercial flights to Salt Lake City, Utah. Elko is a center for the mining
operations in northern Nevada and services necessary for the mine are readily
available there.

History

The Jerritt Canyon mine is wholly owned by Queenstake Resources
Ltd. after the purchase by that company from the joint venture of Anglo Gold and
Meridian Gold in June 2003. The joint venture was formed in 1976 between
Freeport Minerals Company, later Freeport McMoran Inc., and FMC, later Meridian
Gold. In 1990, Freeport sold its interest in Jerritt Canyon to Minorco and their
wholly owned subsidiary, Independence Mining Company, which became the new joint
venture partner and operator of the mine. In 1998, Minorcos North American gold
assets, including a 70% interest in Jerritt Canyon were sold to Anglo Gold.

Prospectors explored for antimony in the 1910s. Thirty to
forty tons of stibnite as antimony ore were reportedly mined and shipped from
the Burns Basin mine in the Jerritt Canyon district between 1918 and 1945. In
the early 1970s there was a renewed interest in antimony exploration when its
price reached historic highs of $40 per pound. Around 1971, FMC began exploring
for antimony in the Independence Mountains. In 1972, FMC, later known as
Meridian, discovered a disseminated gold deposit in the Jerritt Canyon area. In
1976, a joint venture was formed with Freeport Minerals Company to explore and
develop the area, and mining commenced at Jerritt in 1981.

Open pit mining was conducted at the site from startup in 1981
until 1999. The first underground operation at Jerritt Canyon started up in 1993
at West Generator. The mine during 2006 consisted of three underground mining
operations feeding ore to a process plant consisting of a roaster followed by
carbon-in-leach processing. The mines are mechanized operations using backfill
for ground control and to increase ore recovery. In the early years, the ores
mined at the operation were less refractory and were processed through a wet
mill. This wet mill continued to operate until 1997 and is still located on
site. With ores becoming more carbonaceous and refractory, as well as with the
introduction of higher-grade ore from underground operations, a dry mill with an
ore roasting circuit was added in 1989 and is currently in operation.

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Since its inception, the Jerritt Canyon Mine has produced over
seven million ounces of gold. Annual production has historically averaged
between 125,000 and 350,000 ounces of gold. Queenstake reports the 2007 mill
production at 175,645 ounces of gold comprised of 126,140 ounces of gold from
Jerritt Canyon ores and 49,505 ounces of gold from toll milled ores. This
production is from a total of 968,130 tons of ore comprised of 619,933 tons of
Jerritt Canyon ore and 348,197 tons of toll milled ore.

Surface exploration drilling and underground core drilling
which is also used as an exploration tool, decreased from 2001 to 2002, when the
former owner, Anglo Gold shifted focus from exploration to reserve development.
In 2000, about 445,000 feet of exploration and development were completed, of
which 165,000 feet consisted of surface Reverse Circulation (RC) drilling and
the remainder was underground (UG) core and RC drilling. In 2001, a total of
about 500,450 feet were drilled, 65,450 of which were surface RC holes. In 2002,
435,000 feet were drilled, all of which were from underground. After the
acquisition of Jerritt Canyon at mid-2003, Queenstake started more aggressive
exploration and mine development programs and those programs have continued
throughout 2006. These programs were continued after the merger of Queenstake
Resources and YGC Resources in 2007.

The measured and indicated mineral resources, including
reserves, at Jerritt Canyon during Queenstakes ownership, as documented in NI
43-101 filings are given in Table 1.

Table 1: Historic Measured and Indicated Mineral Resources
during Queenstakes Ownership

|Year | Tons      | Grade | Ounces   
|---- | --------- | ----- | ---------
|2003 | 9,497,000 | 0.242 | 2,295,000
|2004 | 9,988,000 | 0.241 | 2,410,000
|2005 | 8,812,000 | 0.236 | 2,079,000
|2006 | 8,203,000 | 0.232 | 1,907,000

The proven and probable reserves at Jerritt Canyon during
Queenstakes ownership, as documented in NI 43-101 filings are given in Table 2.

Table 2: Historic Proven and Probable Mineral Reserves
during Queenstakes Ownership

|Year | Tons      | Grade | Ounces 
|---- | --------- | ----- | -------
|2003 | 3,065,000 | 0.268 | 820,000
|2004 | 3,511,000 | 0.249 | 875,000
|2005 | 3,723,000 | 0.236 | 878,000
|2006 | 1,985,000 | 0.245 | 486,000

Geological Setting

The Jerritt Canyon mining district is located in the
Independence Mountain Range in northern Nevada. The range is part of the Basin
and Range province of Nevada and is a horst block consisting primarily of
Paleozoic sedimentary rocks with lesser Tertiary volcanics and intrusive dikes.
A district geologic map is shown in Figure 3 and a stratigraphic column is shown
in Figure 4.

There are four distinct assemblages in the district,
characterized by their position relative to the Roberts Mountains thrust, a
Devonian to Mississippian structure formed during the Antler orogeny:

- The western facies, or upper plate of the thrust, consists of the Cambrian
  to Ordovician Valmy Group and forms about 70% of the exposed rock in the area.
  In the Jerritt Canyon district, the Valmy Group consists of the Snow Canyon
  formation, a chert, argillite, greenstone, and carbonaceous siltstone
  sequence, and the McAfee Quartzite, a sequence of massive quartzite and shale;

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- The eastern facies, or lower plate of the thrust, consists of a sequence of
  Ordovician to Devonian shallow water sedimentary rocks that are exposed in
  tectonic and erosional windows through the upper plate. The gold
  mineralization in the district is contained with the eastern facies rocks. The
  Pogonip Group rock is exposed in the west-central part of the district and is
  composed of fossiliferous limestone with calcareous shale and dolomite
  interbeds. The Eureka Quartzite is a massive quartzite with minor interbeds of
  siltstone. The Hansen Creek Formation is one of two principal ore hosts in the
  district. It is divided into five units, with the contacts between the units
  being the favorable sites of gold mineralization. The Hansen Creek consists of
  interbedded silty limestone, calcareous siltstone, dolomite, chert, and
  carbonaceous limestone. The Roberts Mountains Formation is the second ore host
  and consists of calcareous, carbonaceous siltstone and thinly bedded, silty
  limestone. The Waterpipe Canyon formation is thought to have been deposited in
  a synkinematic foreland basin that formed during the Antler orogeny; it
  consists of greywacke with interbedded carbonaceous shale, chert pebble
  conglomerate, bedded chert, sandstone, and siltstone;
- The Schoonover sequence occurs north of the district and consists of
  basaltic and andesitic greenstone, chert, tuff, volcaniclastics, and
  siliciclastic and limestone turbidites of Devonian to Permian age; and
- The Antler overlap sequence is restricted to the north end of the range and
  consists of conglomerates, argillite, siltstone and limestone.

There are four sets of dikes: Pennsylvanian basalt dikes,
Eocene basalt and quartz monzonite dikes and a Miocene basalt dike. The
Pennsylvanian and Eocene basaltic dikes are altered and mineralized in most of
the mines.

The regional structural setting of the Jerritt Canyon district
is complex, with several regional deformation events being evident. The Devonian
to Mississippian Antler orogeny, resulting from west to east compression, is
represented in the upper plate Snow Canyon Formation with north-south folds in
both the hanging wall and footwall of the thrust. The Permian to Triassic Sonoma
orogeny emplaced the Golconda allochthon over parts of the Roberts Mountains
allochthon to the north of the district. The northwest to southeast compression
associated with this deformation is rarely seen in the district. The Jurassic to
Cretaceous Nevadan orogeny resulted in east-west folds that are often associated
with mineralization.

Within the Jerritt Canyon area, gold can locally occur within
all sedimentary formations, but is preferentially hosted by the Roberts
Mountains and Hansen Creek Formations of the eastern facies in the lower plate
of the Roberts Mountains thrust . The Roberts Mountains Formation consists of
calcareous to dolomitic siltstones and silty limestones. The Hansen Creek
Formation is divided into five members, numbered I through V from the top of the
formation to the bottom. Hansen Creek I is a thinly bedded sequence of gray,
medium-grained limestones and continuous blocky chert beds; it is typically
brecciated. Hansen Creek II is a dark to light gray, irregularly bedded to
massive, vuggy, dolomitic limestone. Hansen Creek III consists of intercalated
carbonaceous micrites and laminated argillaceous limestones. Hansen Creek IV is
a thickly bedded, medium to coarse-grained, carbonaceous limestone with
discontinuous black chert nodules. Hansen Creek V consists of laminated,
carbonaceous siltstone with chert lenses.

The contact between the Roberts Mountains Formation and the
overlying Snow Canyon Formation is a regional thrust fault which transported the
Snow Canyon eastward over the Roberts Mountains Formation. The contact between
the Roberts Mountain Formation and the underlying Hansen Creek Formation is a
discontinuity locally known as the Saval discontinuity. The discontinuity may be
an angular unconformity of local extent or a thrust fault. The base of the
Hansen Creek is gradational into the Eureka Quartzite. Locally, the
stratigraphic section has been repeated by thrust faulting as seen in the
cross-section through the SSX mine in Figure 5.

Alteration in the Jerritt Canyon district includes
silicification, dolomitization, remobilization, and reconstitution of organic
carbon, decalcification, and argillization. The rocks also exhibit hypogene and
supergene oxidation and

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bleaching. The most importation alteration types relative to
gold deposition are silicification, remobilization and redeposition of organic
carbon and decalcification.

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Figure 3: General Geology Map of the Jerritt Canyon District



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Figure 4: Stratigraphic Column of the Jerritt Canyon
District



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Figure 5: Typical Cross-Section through the Jerritt Canyon
District



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Exploration

The Jerritt Canyon district was explored by prospectors looking
for antimony in the early 1900s. FMC Corporation, exploring for antimony in the
1970s, discovered gold occurrences similar to those in the nearby Carlin trend.
In 1976, FMC, then known as Meridian Mining, formed a joint venture with
Freeport Minerals to explore and develop the deposits. Mining commenced in 1981
with the North Generator open pit.

Since then, the operators of Jerritt Canyon have conducted
exploration programs for the identification and development of new mineralized
areas. Several open pit deposits were discovered, developed, and mined during
the 1980s and 1990s, including North Generator, Alchem, Marlboro Canyon,
Burns, Steer, Saval and Dash. Underground targets were also identified, and the
first to be exploited was the West Generator underground deposit in 1993. The
Murray deposit, originally discovered by condemnation drilling, has produced
over 1 million ounces. The SSX deposit was discovered in the early 1990s by
geologists following the structural trends between Burns Basin and California
Mountain open pits. The SSX mine has also produced over 1 million ounces. The
MCE, Smith, and Steer extension of SSX are more recent discoveries.

The Jerritt Canyon operation has had a history of exploration
and discovery since the 1970s. In the last few years until Queenstakes
acquisition of the property, most of the exploration efforts have been
concentrated at and around the existing underground mines. Exploration efforts
in the southern part of the range were directed to areas such as Water Pipe, Pie
Creek, and Starvation Canyon. Queenstake has increased the exploration effort
near the mine areas and also in the south. As a result, the known mineralization
at Starvation Canyon has increased in size and quality so that a portion of it
was included in the end of 2005 reserves. Additional drilling at Starvation
Canyon in 2006 and 2007 was targeted toward further definition and expansion of
the resource.

Queenstake has carried out an aggressive program of exploration
since its acquisition, with the following footages drilled in the past four
years of its ownership of the property:

- 2003: ******280,151 feet of underground and surface RC and Core Drilling;
- 2004:******
  710,896 feet of underground and surface RC and Core Drilling;
- 2005: ******450,694 feet of underground and surface RC and Core Drilling;
- 2006:******
  396,063 feet of underground and surface RC and Core Drilling, and
- 2007:******
  467,242 feet of underground and surface RC and Core Drilling..

Queenstake continues to evaluate its landholdings with the
objective of focusing future exploration and drilling the most promising areas
both near and away from the existing mines.

Mineralization

SSX Mine

The drift connecting the SSX and Steer mines was completed in
the latter half of 2005 and the mines have been operated as a single unit
referred to as the SSX complex since then. In 2007 a drift out to the Saval III
portal was completed allowing access to the resource extending in the pit wall.

The SSX deposit was discovered in the early 1990s following
the northeast structural trends between the Burns Basin and California Mountain
deposits and the west-northwest trends from the Steer/Saval deposits. Mining
started in 1997, and SSX has been the main ore producer for the last few
years.

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Mineralization at the SSX mine occurs mostly in the micritic
unit III of the Hansen Creek Formation. A smaller portion of the mineralization
occurs in calcareous siltstone at the base of the Roberts Mountains Formation or
in the upper two cherty and dolomitic members of the Hansen Creek Formation.
Mineralized zones are localized in and near west-northwest trending steeply
dipping dikes (e.g. South Boundary Dike); however, dike material is a minor
component of the ore at SSX. Mineralization is also localized along
cross-cutting northeast trending faults (the Purple Fault in Zones 4 and 6, and
the Crestline Fault in Zone 1). Folding of the mineralized horizons is apparent
along axes parallel to the west-northwest dike trend and, more prominently,
parallel to the northeast fault set. Gold occurs in decarbonitized rock,
commonly in association with variable amounts of orpiment and realgar.
Silicification with stibnite can also be associated with gold in portions of the
upper cherty member of the Hansen Creek Formation. The intersection of the
northeast and west-northwest structural trends remain a primary target for
resource expansion. The westward extension of the South Boundary Dike and the
West Mahala resource to the east represent exploration opportunities.

Gold mineralization in the Steer portion of the SSX complex has
been identified in an area stretching approximately 3,000 feet east from the old
Steer pit to halfway along the connection drift to SSX Zone 5. Most gold
mineralization at Steer is associated with gently dipping structures cutting
through the Hansen Creek III unit. These structures strike northeast and dip
southeast, offsetting individual strata. Typical ore zones follow the structures
and tend to be broad and relatively thin. The mineralized zones are usually at
the contact between the Hansen Creek units III and IV and occasionally follow
the structures up through the Hansen III. Both within the Steer portion and the
western side of SSX several low-angle features have been observed. These
features are at least partly responsible for the gold mineralization at the
contact of the Hansen Creek Units III and IV.

In the eastern portion of the Steer area, high-grade
mineralization is associated with the Husky fault, a major northeast trending
normal fault with at least 300 feet of normal dip-slip displacement to the
southeast. Major northwest trending dikes appear to have locally
compartmentalized high-grade mineralization. The intersection of these dikes
with the Hansen III unit and the Husky fault and its related structures offers
excellent exploration potential. One of these dikes is interpreted to be the
western extension of the South Boundary dike, which is an important
ore-controlling structure at the SSX mine to the east.

At Steer and SSX the structural intersections are the primary
targets for resource expansion, as well as the westward extension of the South
Boundary dike. In the eastern part of the SSX complex, the West Mahala mineral
resource remains an excellent exploration opportunity.

Smith Mine

The Smith Mine, accessed from the Dash open pit, was started in
1999 as the pit was being mined out. The Smith Mine complex consists of several
distinct areas that are accessed from the Smith portal, as well as an area to
the east, East Dash, that will be accessed from a separate portal in the Dash
pit. During 2006 the portal was developed to access mineralization in the east
highwall of the Dash pit.

Gold mineralization in the main Smith, Mahala, and West Dash
deposits is associated with the northeast trending Coulee Fault and
west-northwest trending faults and dikes. In Zone 1, high-grade gold
mineralization is hosted in the upper and middle portions of the Hansen Creek
Formation unit III within a northwest trending horst block between the South
Graben fault and the 170 fault. Mineralization in Zones 2 and 3 is directly
associated with west-northwest trending dikes. High-grade mineralization occurs
within the Hansen Creek units II and III along the steeply dipping dikes. Lesser
amounts of mineralization exist at higher levels where the dikes intersect
favorable beds in the Roberts Mountains Formation. An exception to the tight
elevation controls on mineralization is at the intersection of the
west-northwest trending dikes and Coulee fault. Here, high-grade mineralization
blows out into the Hansen Creek unit III along the west plunging intersection of
the dikes and the fault for a down-dip depth of 600 ft.

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27

Gold mineralization in the Mahala area is spatially associated
with the west-northwest trending Mahala fault and associated dikes and favorable
ore-host stratigraphy including units II and III of the Hansen Creek Formation
and lower beds of the Roberts Mountains Formation. Mineralization at East Mahala
occurs primarily in broad, SE-dipping lenses in Roberts Mountains Formation in
the hanging wall of the Coulee Fault

The B-Pit deposit occurs as gently dipping, thin lenses of
mineralized material north of the main Smith deposit. Three of the four lenses
occur are stratigraphically bound within the Roberts Mountains Formation. The
fourth lens occurs at the top of the Hansen unit III in the wall of a
NW-trending horst block just to the south of the other three zones.

The West and East Dash deposits occur at the extreme ends of
the west-northwest trending Dash Fault system which formed the mineralization
mined in the Dash pit. The West Dash deposit occurs at the intersection of the
Coulee fault and the west-northwest trending Dash fault. Most gold
mineralization at West Dash occurs in fault-bounded slices of Hansen Creek unit
III with minor amounts in the overlying Hansen Creek unit II and Roberts
Mountains Formation. West Dash is accessed through the Smith Portal. The East
Dash deposit lies to the east of the Dash pit. A portion of this deposit has
been accessed by a small portal in the pit. At East Dash, most gold occurs in
two lenses parallel to the Dash Fault and dipping to the northeast. The largest
lens is about 1,100 feet and is 15 feet to 25 feet thick. The north edge of the
lens seems to be bounded by a steep east-west trending fault that is locally
mineralized with high-grade material. The second lens is smaller at about 350
feet across, but much thicker, up to 120 feet.

In 2007, surface and underground drilling along the western
extension of the Coulee and Mahala Dike Trends, revealed additional
mineralization which was brought into the resource category during the year.

Murray Mine

The Murray Mine occurs within the Roberts Mountains Formation
and the top three units of the Hansen Creek Formation. A minor amount of
mineralization also occurs within the silicified unit IV of the Hansen Creek
Formation. It was originally discovered by condemnation drilling for a waste
dump for one of the early open pits. Mineralization in the main Murray deposit
occurs along the New Deep Fault which is a wrench fault striking west -northwest
and dipping 50o to 60o to the northeast. Mineralization in Zone 7 located about
750 feet north of the New Deep Fault occurred within calcareous siltstone beds
of the Roberts Mountains Formation. Zone 7 and the main Murray have been largely
mined out, with remnant pockets of mineralization remaining.

Zone 9 mineralization is located immediately west of the main
Murray deposit and is associated with a westward projection of the New Deep
Fault and several northeast trending faults. It was the focus of drilling
campaigns in 2002-2005. Although there was no additional drilling in this
resource it was removed from reserves in 2006 because of economics and possible
water issues. It consists of two separate areas, a relatively flat-lying zone at
the base of the Roberts Mountains Formation and a main zone which is associated
with the New Deep fault. Mineralization is hosted by the Hansen Creek III which
is locally overlain by the Snow Canyon Formation

Starvation Canyon

Mineralization at the Starvation Canyon project occurs at the
Hansen II-III contact and is localized along a west-northwest fault zone at
northeast structural intersections. The majority of the mineralization is within
the interbedded micrite and argillaceous limestone of the Hansen Creek III,
starting at or just beneath the contact. There are instances where
mineralization has formed within the massive limestone of the basal Hansen Creek
II, but these are rare. Drilling in 2007 has further defined the resource at
Starvation, along its outer edges as well as the internal grade distributions
and higher angled structures. In particular, core drilling had an impact as
sample recovery increased.

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28

Additional exploration potential exists to increase the
resource of the presently known mineralized zones. The southern margin and the
western extensions of the western zone have expansion potential along
approximately 600 feet of strike length. The northwest structure that appears to
be the primary control for the Starvation Canyon resource has potential for
additional clusters of mineralization both to the northwest and southeast.

Saval

Gold mineralization in the Saval Basin area to the west of the
SSX mine is primarily hosted in favorable Hansen Creek Formation unit III where
it has been structurally prepared by faulting and has locally been
compartmentalized by northwest-trending dike systems. In this area, a series of
west-northwest trending structures have been cut by northeast-trending faults.
Notable structural features include the west-northwest trending Saval horst and
the northeast-trending Husky fault, which cuts across the older Saval horst and
down-drops it to the southeast. Ore zones were mostly formed in Hansen III host
in the vicinity of structural intersections, often forming relatively steep,
narrow, plunging orebodies. Dikes, such as the Saval 3 pit dike can be traced
for thousands of feet. High-grade gold mineralization has been concentrated
along the Saval 3 pit dike in several locations, most prominently in the Saval 3
pit and in the north part of zone 5 at SSX. Except at the Saval 4 deposit, most
economic zones in the Saval basin area have been mined out leaving relatively
small mineralized zones in difficult-to-access pit walls and bottoms. During
2006 access to a small resource in the highwall of the Saval 2 pit was completed
with a small amount of production. A small reserve is being carried in the
highwall of the Saval 2 pit in 2008.

At Saval 4, a significant gold zone has been identified that
can be mined from underground with hillside access. A small pit was excavated
during 2006 to allow for a portal. This excavation occurred in mineralized
Roberts Mountains formation with 2,050 ounces stockpiled. In this zone,
relatively steep, confined, and vertically extensive high-grade ore-bodies have
formed within the Saval horst beneath a splay fault of the large Sheep Tank
fault. It is interpreted that the intersection of the west-northwest trending
faults that bound the horst interact with northeast trending faults, forming
structurally prepared ore hosts along their intersections. Additional
mineralized zones form on the flanks of the horst where it intersects the
NE-trending structures. Most notable is a high-grade zone directly in the Sheep
Tank fault just to the north of the main pod. Thinner mineralization occurs near
the top of the horst along its south bounding fault. Excellent opportunity
exists for local resource expansion of the main pod and in the flanking
fault-hosted zones with close-in underground drilling after mining has begun.

Other Reserve/Resource Areas

Wright Window Pit

The Wright Window is a small open pit reserve and resource area
located on the west side of the Independence Mountains to the west of the Murray
mine. The deposit is hosted by the lower Roberts Mountains and Upper Hansen
Creek Formations along the Saval Discontinuity. Mineralization occurs on two
zones; the west zone mineralization outcrops at the surface and is about 50 feet
thick. The higher-grade east area is about 200 x 300 feet wide and 45 feet
thick.

Pie Creek Resource

Potentially economic gold mineralization occurs in a series of
near-surface zones in the head of the Pie Creek drainage on the east flank of
Wheeler Mountain. Indicated and Inferred resources have been modeled and are
shallow enough, at a depth of 200 feet, for consideration of open-pit mining.
The main pod is about 800 feet long, dips moderately to the southeast at about
300, and is 20 feet to 45 feet in cross-sectional thickness.
Mineralization is hosted in the top of unit III of the Hansen Creek Formation
and is probably controlled by northeast trending faults. Three other smaller
pods near the main pod are similarly in the top of the Hansen III, but strike
northwest,

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29

dip moderately to the north, and are probably controlled by
local faults of similar orientation. The main pod mineralization occurs between
two of the mineralized northwesterly cross structures.

Drilling

Numerous drill campaigns have been executed at Jerritt Canyon
since its discovery in the 1970s. Exploration drilling programs typically
consist of RC drilling at about 200 foot centers, the spacing is then reduced to
about 140 feet and finally, to 100 foot centers or less. Surface core drilling
typically makes up about 5% to 10% of the total drilling. At the underground
mines, definition drilling consists of core drilling on 50 foot centers from
underground stations, using NQ sized core which is 1.875 inches in diameter.
Underground RC drilling (Cubex) is used for resource confirmation and is drilled
on 20 to 40- foot centers. RC holes are generally less than 150 feet in length,
but can be as long as 300 feet. Underground production sample drilling consists
of Cubex and rotary percussion drilling (Solo and Secoma). Holes are generally
short, less than 60 feet, and are drilled on center as close as 10 to 20 feet.
The vast majority of drillholes, except the production holes, are measured for
downhole deviation.

Tens of thousands of holes have been drilled on the property
over the years. The Murray mine has over 22,000 holes with more than 2 million
feet drilled; the Smith mine has over 5,500 holes with more than 1.40 million
feet; the SSX mine has nearly 18,500 holes with 2.6 million feet of drilling.

Drilling at Jerritt Canyon for the last seven years is shown in
Table 3. Drilling in 2000 through 2002 was conducted by the former owner, and
drilling from 2003 to present was conducted by Queenstake.

Table 3: Jerritt Canyon Drilling (2000 through 2007)

|Year | Surface
      RC | Surface
      Core | UG
      Core | UG
      RC | Production
|---- | ---------------- | ------------------ | ------------- | ----------- | ----------
|     | No.              | Footage            | No.           | Footage     | No.       
|2000 | 378              | 444,795            | 2             | *           | 292       
|2001 | 59               | 65,450             | 0             | 0           | 268       
|2002 | 27               | 18,905             | 0             | 0           | 186       
|2003 | 108              | 47,277             | 0             | 0           | 119       
|2004 | 377              | 300,226            | 34            | 21,212      | 297       
|2005 | 126              | 101,413            | 4             | 1,403       | 179       
|2006 | 155              | 135,940            | 0             | 0           | 125       
|2007 | 220              | 216,592            | 15            | 12,495      | 44        

*2000 surface core footage is included with surface RC
**2000 underground RC drilling is included with production drilling

Sampling and Analysis

Surface Drilling - Reverse Circulation Drilling

Surface exploration drilling programs at Jerritt Canyon consist
predominantly of reverse circulation (RC) holes, with some surface core
drilling. The drilling is conducted by a contract company and downhole surveys
are taken by a contractor using a gyroscopic instrument. Collar locations are
surveyed by a contracted survey company and/or in-house surveyors.

The surface RC holes are 5.5 inches in diameter and are sampled
on 5 foot intervals, according to a protocol established by Queenstake.

Surface diamond drill core is HQ-sized (2.5 inches), unless it
is necessary to reduce to NQ for completion of the hole. Surface core is logged
for lithologic information and for geotechnical data according to the Jerritt
Canyon logging manual at the logging facility. Surface core is split or cut with
a diamond saw or hydraulic splitter and half of the sample is sent to the lab
for analysis.

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Underground Drilling

Drill hole spacing is targeted at 30 to 50 foot centers
throughout the deposit. The attitude of the drill hole can be at any inclination
to the mineralized unit although it is preferred to be as close to normal to the
ore-controlling structures as possible. Collars of all drill holes are surveyed
and the orientation of the holes is determined. All of the holes are surveyed by
using a down-hole survey instrument (tropari or Flexit) or by a contract survey
crew to measure the hole deviation. All of the collar and downhole surveys must
pass quality assurance scrutiny by the site geologist prior to loading the data
into the database. Only the actual data taken from the drillhole survey is used.
Any projections of the survey beyond the length of the hole when surveyed are
discarded. On rare occasions the collars are lost prior to collar or down hole
surveys being completed; in this case the planned coordinates and hole
orientation are used. However, when geological interpretation is done this
factor is heavily considered in determining the validity of using the data from
these holes.

Production Samples

- Percussive drills (Solo, Airtrack, Secoma and others) are the dominant type
  used for collection of sludge samples over one rod length or six feet for
  final definition of the ore zones. It utilizes a rotary percussion drill with
  3 inch diameter bits. Cuttings exit the hole via the annulus and are collected
  in a tray placed beneath the collar of the hole. These holes are drilled no
  longer than 60 feet in length due to hole deviation and downhole sample
  contamination issues. The hole and tray are cleaned prior to continuing the
  drill hole an additional six feet. Collar locations are surveyed but a
  downhole survey is not generally done. Some twinned data collected in 2001
  suggests that there is a greater potential for these holes to have down-hole
  contamination beyond 36 feet depending largely on the orientation of the hole.
  For this reason the length of these holes has been decreased in the past few
  years. These drills are used for definition drilling at Murray and to a much
  lesser extent at SSX and Smith Mines;
- Jumbo drill holes and jackleg holes are drilled for ore control only. This
  data, when collected, is used to help determine ore waste determinations but
  is not loaded into the database;
- Selective rib and/or face samples are also used to help determine the ore
  boundaries and for grade control. They can be used to support the constrained
  ore boundary and in some cases at SSX are used to help estimate the block
  model grades; and
- Cubex drills are sometime used for production drilling.

Truck Samples

At all the underground mines each haul truck is sampled for
grade control purposes. The samples consist of grab samples taken over the
entire load by the truck driver. Samples are placed in bags with pre-attached
bar code numbered tags and transported to the Jerritt Canyon lab. Truck sample
assays are cut by 8% which is a factor that has been determined through mine to
mill reconciliation. The grades are used to state mine production.

Sample Preparation, Analyses and Security

Jerritt Canyon Laboratory Procedures

The mine utilizes the Jerritt Canyon laboratory for analytical
work on the underground samples with check samples sent to ALS Chemex for
comparisons. The samples for most of the surface drilling in the West Dash
resource area in 2006 were also analyzed at the Jerritt Canyon facility. The
assay lab is located in a separate building close to the ore processing plant.
The laboratory has all the normal sample preparation equipment and facilities.
The

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31

laboratory operates continually with a crew of 16 and performs
about 500 fire assays per day with a 24-hour turn around from receipt of sample
to reporting of assays.

Sample Preparation

All of the underground samples received at the Jerritt Canyon
assay laboratory arrive with bar coded labels. The labels match drill logs
maintained by samplers and drillers in the Jerritt Canyon Underground
Department. Sample bar codes are scanned into the LIMS and assay lots are
auto-created. The surface drillhole samples are labeled on the sample bag which
are then logged into the LIMS system by the lab technicians. All logged samples
dry for four to six hours at 325°F prior to prepping.

A rotary (automatic) 1:4 split (50 rotary cuts minimum) follows
first stage crushing. Core samples first stage crush to 99% -1 inch prior to
split; all other types are typically 1/2 inch prior to first stage split.
Second stage crushing (99% - 3/8 inch) automatically passes through a rotary
splitter (50 cut minimum). The assay split is then pulverized in a plate mill to
95%-150 mesh (Tyler) and blends for five minutes on a rotary blending wheel. The
samples are placed in bar coded sample cups and transferred to fire assay.

Jerritt Canyon Lab Fire Assay Procedures:

A tray of 24 thirty-gram charge crucibles is prepared with a
standard litharge flux. Each sample is weighed at one assay ton. Of 24 samples
on each tray, one is a repeat sample, one is a standard, one is a blank, and one
is a blind standard inserted into the sample stream by the geology department.
The samples are fired by the method of fusion/cupellation, with a gravimetric
finish. The balance used for the final weighing is a Cahn C-30 microbalance that
is serviced and calibrated on a semi-annual basis by Microlab Services.

The laboratory in-house QA/QC procedure for checking the
accuracy of the Jerritt Canyon lab consists of submitting saved duplicate
samples of the mill feed and tail daily samples to outside labs for comparison.
These samples are submitted on a weekly basis to either Rocky Mountain
Geochemical or Chemex Laboratories. The data is compiled from the Jerritt Canyon
daily assay sheet and compared with the results from the two outside labs. The
results of the comparison are entered into a statistical program and a running
check is maintained on the data.

Commercial Laboratories

Surface RC and diamond drilling are sent to ALS Chemex and
American Assay. Samples above 0.100 opt gold are routinely fire assayed with a
gravimetric finish. Blanks, standards, and pulps are routinely inserted into the
sample stream for QA/QC, and check assays

The Geology Department at Jerritt Canyon has established
laboratory quality assurance/quality control procedures as follows:

Jerritt Canyon Laboratory

- One standard sample per 20 samples;
- One blank sample, consisting of silica sand, per drillhole;
- One pulp of a previously assayed interval is inserted into the sample
  stream at the geologists discretion; and
- Check assays consist of coarse rejects and pulps (one sample for every
  twenty over 0.01 opt and one in ten over 0.07 opt) sent to a commercial
  laboratory, generally ALS Chemex.

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Commercial Laboratory

- One standard sample in each batch of samples. A batch contains 40 samples
  in most commercial labs;
- One blank sample of silica sand per hole, inserted at the beginning or end
  of hole, or after a mineralized zone;
- A duplicate sample consisting of a pulp of a previously assayed interval
  may be used as a substitute for the regular standards; and
- 10% of the samples that have a value greater than 0.07 opt gold, and 5% of
  samples between 0.01 opt and 0.07 opt gold are submitted to a second lab for
  check analysis.

The standards have been prepared from Jerritt Canyon
mineralized rock and have several different gold values. Samples that were used
throughout the year include High with a value of 0.268 ounces per ton (opt),
JCQ01 with a value of 0.117 opt, JCQ02 at 0.256 opt, JCQ03 at 0.051 opt, and
JCQ04 at 0.120 opt. Results from the standards or duplicates are reviewed by
geologists. If there is significant deviation (generally allowance are between
10% and 20%) from the expected value then the batch of samples is re-fired. If
the lab is unable to match the original results within reasonable limits then
the sample is re-fired again until assays are matched. The results from these
analytical determinations are available in the QA/QC section below.

SRK reviewed the Jerritt Canyon assay QA/QC data for 2007 and
finds the results within industry standards. Various graphs representing the
results of the QA/QC program are located in Appendix B.

Data Verification

The Jerritt Canyon mine has tens of thousands of drillholes
throughout the land package in the active mines, mined out areas, and
exploration targets. Over the years the property has been the subject of many
audits in which data verification procedures were carried out.

The geology department has largely completed the task of
storing drillhole logging information and assay data into the AcQuire database
package. Assay data is directly downloaded from the lab (both commercial and
Jerritt Canyons) and goes through automatic and visual validations before being
recorded, thus eliminating data entry errors.

It is SRKs opinion that Jerritt Canyon is conducting
exploration and development sampling and analysis programs using standard
practices and that the data can be effectively used in the estimation of
resources and reserves.

Mineral Processing and Metallurgical Testing

The mineral processing operation at Jerritt Canyon is one of
only three processing plants in Nevada that uses roasting in its treatment of
refractory ores. Initially, Jerritt Canyon was designed to process oxide and
mildly refractory gold ores by conventional cyanidation using chlorine gas for
pre-oxidation of the refractory ores. In 1989, the roasting circuit was added to
the process for the treatment of highly refractory ores which are now being
mined and processed at Jerritt Canyon.

The unit operations at the Jerritt Canyon processing plant are
comprised of the following circuits:

- Primary crushing;
- Secondary crushing;

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33

- Fine ore drying;
- Tertiary crushing;
- Dry grinding;
- Roasting;
- Carbon-in-leach (CIL) with cyanidation and carbon adsorption;
- Carbon stripping;
- Carbon reactivation;
- Merrill-Crowe process using zinc cementation of gold and silver;
- Precipitate refining;
- Oxygen plant; and
- Tailing impoundment.

Table 4 contains historic production and cost data for the
Jerritt Canyon processing plant as well as the budgeted figures for 2008. The
Jerritt Canyon process plant operated at only 80.5% of its budgeted ore
production rate in 2007 due to pinion and bullgear problems with the grinding
mill and air permit limitations. The pinion was replaced in first quarter 2006.
Queenstake replaced the bullgear in June 2007. The production numbers in the
2008 budget reflect the lower production for the first half of 2008 due to air
permit limitations, and full production for the second half of the year.

Table 4: Jerritt Canyon Historic and Budgeted Process Production
  and Cost Data(1)

|Operating Data         | Units      | Actual 2003 | Actual 2004 | Actual 2005 | Actual 2006 | Actual 2007 | Budget 2008
|---------------------- | ---------- | ----------- | ----------- | ----------- | ----------- | ----------- | -----------
|Production Data        |            |             |             |             |             |             |            
|Tons Processed:        |            |             |             |             |             |             |            
|Annual                 | 000s tons | 1,496       | 1,305       | 1,107       | 974         | 968         | 1,317      
|Daily Average          | Tons       | 4,100       | 3,578       | 3,033       | 2,667       | 2,652       | 3,607      
|Ore Grade              | oz Au/ton  | 0.228       | 0.214       | 0.215       | 0.211       | 0.181       | 0.129      
|Recovery               | %          | 88.4        | 87.0        | 86.5        | 86.2        | 88.1        | 89.0       
|Gold Production (1)    | 000s oz   | 302         | 243         | 203         | 170         | 176         | 170        
|Cost Data              |            |             |             |             |             |             |            
|Annual Total Cost      | $000s     | 25,182      | 28,523      | 26,539      | 29,602      | 35,271      | 35,903     
|Unit Processing Costs: |            |             |             |             |             |             |            
|                       | $/ton      |             |             |             |             |             |            
|Ore                    | Milled     | 16.83       | 21.86       | 23.97       | 30.41       | 36.43       | 27.27      
|Gold                   | $/oz Au    | 83.36       | 117.22      | 130.79      | 157.25      | 200.81      | 100.48     

(1)Includes purchased ores for actual 2007 and
budget 2008.

In March 2006, an agreement was reached between Queenstake and
Newmont Canada Limited (Newmont) whereby 500,000 tons of ore per year from
Newmont operations will be purchased by Queenstake and processed through the
Jerritt Canyon processing plant. This agreement is in effect for two years with
an option for three additional years. These additional tons bring the processing
plant closer to full capacity and have a significant impact in reducing the
process operating costs per ton of ore which is reflected in Table 4.

Queenstake forecasts 2008 gold production to be approximately
102,000 ounces from Queenstake ores and an estimated 68,000 ounces from toll
milling ores. Meeting these production forecasts depends on the Jerritt Canyon
processing facility meeting NDEP requirements for startup and continued
operation at the assumed processing rates. Toll milling of ores is tonnage based
and thus Queenstake can only estimate these ounces.. The average gold recovery
is forecast to be 89% for 2008.

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Mineral Resource and Mineral Reserve
Estimates

At Jerritt Canyon, most gold mineralization occurs within
lenticular bodies with relatively sharp hang-wall and foot-wall boundaries. In
order to better model this type of mineralization, detailed wireframe solids
based on geologic and grade continuity (roughly 0.15 opt Au and above) are
created with Minesight software for individual zones. The wireframes are built
using assays of similar value that also show geologic continuity along known ore
controls. More accurate targeting of economic material for excavation with
reduced dilution has been the result. This method is employed at all of the
development projects and most new areas of the active underground mines. Mature,
mostly-depleted portions of the active mines do not use wireframes, but rely on
outlines drawn by the geologist in plan view to define a grade shell with
geologic constraints.

The drillhole database is divided into the separate resource
areas and composited separately. The underground areas are composited into the
predominant sample length, generally 5 foot downhole composites starting at the
top of the drillhole. The areas that are more amenable to open pit mining are
composited into 20 foot lengths starting at the top of the drillhole.

The tonnage factor used for all Jerritt Canyon ore is 12.6
cubic feet per ton. The factor is based on testing done in 2000 at the
University of Nevada, Reno and Chemex lab on a total of 67 samples. The weighted
tonnage factor returned on the samples was 12.616. Since then 50 samples from
Smith Zone 4 (Mahala) and 5 from Steer were analyzed by Zonge Engineering and
Research of Tucson, Arizona. The average for Smith Zone 4 was 12.45 cubic feet
per ton, which is slightly heaver than the average used for all the mines and
the average for Steer was 13.0 cubic feet per ton, which is slightly lighter.
Additional tests were done in 2005 on 22 ore grade samples and 24 waste samples
from Starvation Canyon. The results were 11.8 cubic feet per ton for the ore
grade samples and 12.2 for the waste samples, both of which are heaver than the
12.6 average used at the mines.

Three methods of resource estimation, including Probability
Assigned Constrained Kriging (PACK), Inverse-Distance Weighting (IDW), and
Block-Polygonal, are employed at Jerritt Canyon. Each resource area is initially
interpreted and grade estimated using Mintec Minesight software and subsequently
exported to Maptek Vulcan software for engineering design and reserve
tabulation.

Most of the areas with active underground mining utilize the
PACK method. Development projects and some zones near current mining with
wider-spaced drilling are modeled with the Inverse-Distance Weighting method. A
few projects with limited drilling use the Block-Polygon method.

- Probability Assigned Constrained Kriging (PACK) is a geostatistical method
  applied to most reserve areas at Jerritt Canyon. Detailed indicator and gold
  grade variography is developed for each zone or structural domain interpolated
  with the PACK method. In areas modeled by PACK, blocks within constraining
  wireframe solids and interpreted geologic plan-oriented strings are modeled
  separately from exterior blocks, using composites within the wireframes.
  Exterior blocks are interpolated in a separate pass using exterior samples.
  The percentage of model cells that reside within the wireframes is recorded
  and used for resource tabulation;
- Inverse-Distance Weighting (IDW): This method is used in several resource
  and reserve areas where drilling is too widely spaced to derive variography
  necessary for interpolation with the PACK method. In areas where lenticular
  mineralized bodies have been identified, a wireframe is constructed based on
  geologic and grade continuity. Similar to the PACK method described above,
  model cells interior and exterior to the wireframes are interpolated
  separately using only interior or exterior drillhole samples respectively. The
  percentage of model cells that reside within the wireframes is used for
  resource tabulation; and

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35

- Block-Polygon: A method utilized in some of the resource areas where drill
  hole spacing is insufficient to conduct mine planning and reserve estimation.
  It employs a nearest neighbor two-dimensional search without constraining
  interpretive envelopes.

The PACK method consists of dividing the deposit into low-grade
and high-grade probability zones and then estimating the gold grade within each
of the zones separately. The methodology is summarized below:

|1. | The deposit is divided into geological or structural
      zones within which the geostatistical parameters are expected to be the
      same.                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | Low-grade and high-grade thresholds are chosen based on
      the cumulative frequency plots of the sample data. The typical low grade
      threshold is 0.03 opt and the high-grade threshold is typically 0.15
      opt.                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | For each threshold, composites are assigned indicator
      values and indicator variograms are calculated from the composite
      indicators. The block indicator values are estimated by kriging. The block
      is designated as being within a low-grade envelope if the low-grade
      indicator is greater than 50% and the high-grade indicator is less than
      50%. The block is considered high-grade if the high-grade indicator is
      greater than 50%.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4. | The composites are back-coded from the model as being
      low-grade or high-grade, and variograms are calculated for both
      classes.                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Gold grades are estimated for the high-grade blocks using
      only composites within the high-grade envelope, and likewise, gold grades
      are estimated for the low-grade blocks using only composites within the
      low- grade envelope.                                                                                                                                                                                                                         

Refer to the Table 5 below for a listing of resource estimation
methods by project.

Table 5: Jerritt Canyon Resource Estimation Methods by
Project

|Deposit/Area               | Interpolation Method                       
|-------------------------- | -------------------------------------------
|Mine Areas                 | PACK                                       
|Murray                     | PACK                                       
|Murray Zone 9              | PACK -
      IDW                           
|SSX                        | PACK 
      IDW in inferred shapes (Steer)
|Smith                      | PACK 
      IDW                           
|Smith East                 | IDW 
      PACK                           
|Saval                      | IDW -
      PACK                           
|Starvation                 | IDW                                        
|Wright Window              | PACK 
      IDW                           
|Resource Areas             |                                            
|Burns Basin Pit            | IDW                                        
|California Mtn. Pit (Next) | POLYGONAL                                  
|Coyote Zone 10 Pit         | IDW                                        
|Pie Creek Pit              | IDW                                        
|Road Canyon Pit            | IDW                                        
|Mill Creek                 | IDW                                        
|Burns Basin                | IDW                                        
|California Mtn.            | POLYGONAL                                  
|Coyote Zone 10             | IDW                                        

---

36

|Deposit/Area  | Interpolation Method
|------------- | --------------------
|MCE           | PACK                
|Waterpipe II  | POLYGONAL           
|West Mahala   | IDW                 
|Winters Creek | IDW                 

Most of the reserve and resource areas are built with 15 x 15 x
15 foot blocks, with the exception of the Murray mine where 5 x 5 x 15 foot
blocks are used. Starting in 2005, production models using a block size of 5 x 5
x 5 feet were utilized at the Steer mine and portions of the SSX and Smith mines
in order to better delineate ore boundaries, and thus reduce dilution. Although
these smaller blocks are used, the geologic/grade shapes are drawn to at least
the smallest practical mining units (SMU), usually at least 15 x 15 x 15 foot in
size. For resource reporting conformity at the resolution of the 15 x 15 x 15
foot SMU, the production models are re-blocked to the 15 foot matrix prior to
reporting. As expected, the result of the re-blocking of the 5 foot blocks into
15 foot blocks shows similar contained ounces for zones at lower grades while
there is increase in tonnage and decrease in grade at higher mining-grade
cutoffs.

Variography

There was no new variography run in 2007. All of the
geostatistics used in this resource calculation were compiled from
geostatistical analysis in previous years. Because of the mature nature of the
resource in the areas that geostatical methods are used it is viewed that the
new data would not have a significant impact on the variography. Therefore there
was no change.

Definition of Resource Categories

For resource classification, blocks must lie within interpreted
wireframes or grade shells and have demonstrated continuity of ore-tenor
material (>0.15 opt Au) over multiple drillhole intercepts to be considered
as Measured or Indicated resources. Measured classification requires a minimum
of three drillholes, the nearest composite within 20 feet, and mining history in
the immediate area. Indicated classification requires that the nearest composite
be within 2/3 of the variogram range. Blocks with a distance between drillholes
greater than 2/3 of the variogram range are classified as Inferred. All blocks
outside interpreted wireframe shapes or plan strings are considered to be
Inferred resources.

SRK finds that the resource and reserve models developed by
Jerritt Canyon conform to the definitions set forth in National Instrument NI
43-101 in Sections 1.3 and 1.4 which classify the resource into measured,
indicated, and inferred categories. The standards applied by Jerritt Canyon
conform to the definitions adopted by the Canadian Institute of Mining,
Metallurgy and Petroleum  Definitions Adopted by CIM Council August 20, 2000.

Mineral Resource Checks

SRK imported the Jerritt Canyon block models into Vulcan
software and conducted a series of checks to reconcile the stated resource tons
and grade with the actual block model grades and wireframes and grade shells.
SRK also visually compared the block model grades against drillhole assay
data.

SRK considers that the Jerritt Canyon block models have been
constructed in compliance with accepted engineering practice and can be
considered reasonable global predictors of resources within the modeled areas.

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37

Mineral Resource Statement

The Jerritt Canyon mine resources, including reserves, as of
December 2007 are listed in Table 6. The resources are contained within areas
where mining is currently taking place or where mining is reasonably expected to
take place in the future. The metal ounces are on a contained basis without
adjustment for process recoveries.

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38

Table 6: JerrittCanyonMineralResources,IncludingReserves-December31, 2007

|                           | Measured | Indicated | Measured
      + Indicated | Inferred
|-------------------------- | -------- | --------- | -------------------------- | --------
|                           |          |           | Cont'd                     |         
|Deposit/Area               | Tons     | oz/st     | oz                         | Tons    
|                           |          |           |                            |         
|MURRAY                     | 155.8    | 0.310     | 48.3                       | 26.6    
|MURRAY ZONE 9              | 0.0      | -         | 0.0                        | 210.9   
|SSX                        | 1,815.3  | 0.255     | 462.5                      | 746.1   
|SMITH                      | 587.7    | 0.303     | 178.0                      | 649.1   
|SMITH EAST                 | 19.0     | 0.441     | 8.4                        | 1,043.5 
|SAVAL                      | 12.3     | 0.227     | 2.8                        | 367.5   
|STARVATION                 | 0.0      | -         | 0.0                        | 697.3   
|WRIGHT WINDOW              | 0.0      | -         | 0.0                        | 97.8    
|                           |          |           |                            |         
|Subtotal                   | 2,590.2  | 0.270     | 699.9                      | 3,838.8 
|Stockpiles                 | 35.9     | 0.173     | 6.2                        | 818.3   
|                           |          |           |                            |         
|Pit Resources              |          |           |                            |         
|Burns Basin Pit            | -        | -         | -                          | 29.7    
|California Mtn. Pit (NEXT) | -        | -         | -                          | 8.0     
|Coyote Zone 10 Pit         | -        | -         | -                          | 0.0     
|Pie Creek Pit              | -        | -         | -                          | 190.2   
|Road Canyon Pit            | -        | -         | -                          | 148.6   
|Mill Creek                 |          |           |                            | 78.4    
|                           |          |           |                            |         
|U/G Resources              |          |           |                            |         
|Burns Basin                | -        | -         | -                          | 30.7    
|California Mtn.            | -        | -         | -                          | 32.1    
|Coyote Zone 10             | -        | -         | -                          | 45.2    
|MCE                        | -        | -         | -                          | 4.4     
|Waterpipe II               | -        | -         | -                          | 0.0     
|West Mahala                | -        | -         | -                          | 197.5   
|Winters Creek              | -        | -         | -                          | 148.9   
|                           |          |           |                            |         
|Total                      | 2,626.0  | 0.269     | 706.1                      | 5,570.9 

---

39

SRK is not aware of any possible adverse or unusual
restrictions on mining resulting from legal or title issues, taxation,
socio-economic, or other issues that would affect the Jerritt Canyon operation.
The mine has the permits necessary for operation.

Mineral Reserve Estimate

Essentially all of the current reserves at Jerritt Canyon are
contained in deposits being developed and mined by underground methods. The
exceptions include Wright Window which is planned as an open pit operation,
Starvation Canyon which is a new underground reserve area, and the stockpiles
reposing at the mine portals or remaining from earlier open pit extraction.

The previous sections describe the approach in evaluating
mineralized boundaries and estimating gold grades within the overall resource
envelope. In order to determine the portion of the Measured and Indicated
resources that would qualify for Proven and Probable reserve status, it is
necessary to configure the Measured and Indicated resources into mineable shapes
for the selected mining method, and then apply economic tests for establishing
validity that the reserve blocks will, indeed, show positive economics.

The economic exercise is normally accomplished by calculating a
breakeven cutoff grade, stated in ounces of gold per ton (oz Au/ton), which
equates the total operating costs at the property with gold recovery from the
process plant, and the expected return from gold sales. Total costs include
mining, processing, assessed charges, and site administrative costs. Process
recovery has been relatively constant over several years of operations, and this
value is projected at 89.0% going forward. Revenues reflect an average gold
price experienced during the previous three years, after subtraction of refining
charges and royalties.

The objective of this analysis is to derive a minimum gold
grade in the ground that will just recoup the costs of production. Material not
meeting this hurdle remains a resource, while blocks exceeding the minimum will
be in the mining plan and will be extracted over time. It can be appreciated
that the average grade of material mined and processed will be in excess of the
minimum grade; thus these blocks will cover all variable production costs and
will contribute toward fixed charges and profitability.

Incremental cutoff grades are sometimes employed where certain
costs have already been expended (sunk costs), and the block now must cover only
the remaining down-stream charges. An example is mineralized material which has
been taken from underground and placed in stockpiles at a mine portal for
assaying. Now that the drilling, blasting, loading and underground haulage have
been expended, it may be possible that the rock contains sufficient gold to pay
for surface hauling to the process plant, and the process costs as well, rather
than being carried to a waste dump for disposal. An incremental cutoff grade
calculation at this point will be lower than a breakeven grade, but this
material should provide a marginal contribution to the operation as a whole.

The accepted formula for calculating a breakeven cutoff grade
is given below:

Breakeven Cutoff grade
    =
    Total Costs of Production(Gold Price  Deducts) x Process Recovery


Breakeven cutoff grades were calculated for each mine or
material source and compared to those determined by Jerritt Canyon personnel.
The costs figures are averages obtained for the entire year of 2007, with a
modification for expected processing costs in the coming years. Process charges
in the future assume full throughput for the plant using two roasters, and the
processing of outside material stemming from an agreement between Queenstake and
Newmont Mining Corporation for the purchase of up to 1,000,000 tons of
mineralized material per year. Because management will be working both roasters
(thereby reducing plant operating costs/ton), the benefits of this approach have
been imputed in cutoff grade calculations.

---

40

The following parameters, shown in Table 7, have been used in
determining the various cutoff grades. Excluded from costs are the district-wide
exploration expenses and capitalized development charges.

Table 7: Jerritt Canyon Cutoff Grades Parameters

|Gold Price Plant Recovery Refining
      Charges    | $580/oz 89% $0.78/oz
|--------------------------------------------------- | --------------------
|Total Production Costs, Including Processing, $/ton |                     
|SSX                                                 | $112.21             
|Starvation                                          | $108.44             
|Smith                                               | $103.59             
|Saval 2                                             | $112.21             
|Saval 4                                             | $112.21             
|Wright Window                                       | $47.68              
|Stockpiles                                          | $34.39              
|East DASH                                           | $111.59             

Equating these parameters by the formula shown above, cutoff
grades for the various sources of material can be calculated. These are
presented in Table 8 below:

Table 8: Jerritt Canyon Cutoff Grades (December 2007)

|Material Source    | SRK Breakeven Cutoff, opt Au
|------------------ | ----------------------------
|Stockpile Direct   | 0.06                        
|Stockpile Screened | 0.07                        
|Wright Window      | 0.09                        
|Starvation Canyon  | 0.21                        
|Smith              | 0.20                        
|Saval 2            | 0.22                        
|Saval 4            | 0.22                        
|SSX Complex        | 0.22                        
|East DASH          | 0.22                        

Production from the low-grade stockpiles can be either upgraded
by screening and collection of the fines, or may be delivered to the processing
plant in bulk. Because the mill will be operating at full capacity with the
combination of Jerritt Canyon ore and purchased material, the stockpiles most
likely will continue to be upgraded by screening.

In addition to the economic justification for the resource,
factors for mining dilution and recovery need to be considered before the final
mineral reserve statement is issued. At the Jerritt Canyon mines, where the ore
is present as irregular pods, and the mining methods are typically sublevel or
drift-and-fill stoping, any mining dilution occurs at the fringes of the ore
pods or lenses. Within the pods, slices or drifts are extracted and then
backfilled with cemented waste material. When the backfill has consolidated, the
ore between the primary stopes or drifts is then extracted. In the primary cuts,
the interior stope boundaries are surrounded by ore, so little dilution results.
Within the secondary cuts, the walls and/or back are cemented backfill, which is
stronger than the ore or enclosing rocks, and thus little dilution takes place.
It is primarily on the fringes of the individual ore bodies that dilution
occurs, with the amount also being dependent upon the mining method. Jerritt
Canyon engineers have developed a matrix for the different dilution factors
based on experience with the various mining methods, and these are applied in
calculating mineral reserves. All dilution material is applied at zero ounces
per ton.

Table 9 presents historical and projected dilution factors for
the underground operations. Wright Window will be a surface mine, and dilution
should be minimal because of the ability to selectively mine based on blast hole

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41

analyses. Backfilled stopes can stand over substantial vertical
heights. This situation allows the operation to recover nearly all the
identified ore-grade material.

Table 9: Jerritt Canyon Dilution Factors

|Mine*                     | Mining Method                       
|------------------------- | ------------------------------------
|Rock
      Drift-and-Fill | Secondary
      Stope Drift-and-Fill
|SSX
      Complex         | 10                                  
|Murray                    | 10                                  
|Smith                     | 10                                  
|Saval (projected)         | 10                                  

* No dilution has been calculated for Starvation Canyon, but it
is expected to be similar to SSX at the present time.

Mineral reserves are listed in Table 10, using the respective
cutoff grades for each individual mine. It should be noted that the gold price
of $580 per ounce is an approximate average of prices published during the past
three-year period; i.e., from 2005 through 2007. During this time the price was
on an upward trend and certainly the cutoff grades shown in Table 15 are high
(conservative) as compared to those that would be calculated using more recent
values. For example, the December 2007 price, was $220 per/ounce higher than the
three-year average, and thus operational decisions based on short-term prices
will allow more material to be recovered and sold at a profit than indicated in
the reserve table.

Table 10: Jerritt Canyon Reserves  December 31, 2007

|              | Proven | Probable | Total 
|------------- | ------ | -------- | ------
|              |        |          | Cont'd
|Mine          | ktons  | oz/st    | koz   
|              |        |          |       
|Smith         | 92.5   | 0.304    | 28.1  
|SSX           | 513.7  | 0.221    | 113.4 
|Saval         | 11.4   | 0.200    | 2.3   
|Starvation    | 0.0    | -        | 0.0   
|Wright Window | 0.0    | -        | 0.0   
|Sub Total     | 617.6  | 0.233    | 143.7 
|Stockpiles    | 35.9   | 0.173    | 6.2   
|Total         | 653.4  | 0.229    | 149.9 

Mining Operations

Jerritt Canyon is an operating property with over 25 years of
production experience, during which over seven million ounces of gold have been
produced. The Jerritt Canyon mine complex consists of two operating underground
mines located several miles west of the processing plant and administration
facilities which are 50 miles north of Elko, Nevada.

All mines feed the same processing plant, with output from the
underground operations and stockpiles totaling nearly 0.619 million tons during
2007. The producing properties, and their annual production rates, are given in
Table 11:

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42

Table 11: Jerritt Canyon 2007 Production

|Property               | Annual Production (tons)
|---------------------- | ------------------------
|SSX Complex            | 312,208                 
|                       |                         
|Smith Mine             | 117,394                 
|                       |                         
|Stockpiles and Cleanup | 190,331                 
|Total                  | 619,933                 

The full processing plant has the capability of treating
approximately 4,200 tons/day. This rate was quite attainable when the feed
derived mainly from open pit operations, but has been a significant surplus when
accepting material from underground mines simply because the total mine output
cannot attain this daily rate. In early 2006 Queenstake entered into an
agreement with Newmont Mining Corporation to purchase material delivered to
Jerritt Canyon by Newmont, which would supplement mined ores feeding the
roasters and thereby reduce certain unit operating costs. During 2007,
Queenstake processed 348,197 tons of Newmont material.

The plant processed an average of 2,700 tons per day, or just
under 0.97 million tons for the year. Plant capacity is limited to some extent
by the fuel content of the ore (principally contained pyrite) which tends to
enhance temperatures in the roaster and so must be regulated carefully when this
type of rock serves as feedstock. Blending of various mined products is
practiced constantly to reduce deleterious impacts from rock types with high
fuel content, high arsenic content, and so forth. Gold produced in 2007 was
175,646 ounces from 968,130 tons of processed ore and purchased material at a
metallurgical recovery that averaged 88%.

The mines reported production of 429,602 tons of ore, along
with 229,370 waste tons in 2007. The daily ore production rate calculates at
almost 1,176 tons for the complex at an average grade of 0.294 opt. This tonnage
figure was less than budgeted amounts of nearly 503,501 ore tons at a projected
mined grade of 0.265 ounces/ton.

Problems with the ball mill resulted in diminished throughput
for the initial six months of 2007 until a new bull gear was installed. For
2008, mine management is forecasting a total mill throughput of 1.3 million
tons, including 371,000 tons of Jerritt Canyon ore at a grade of 0.303 opt, and
941,000 tons purchased from Newmont.

The mines are operated by trackless equipment. Electric drill
jumbos are used in preparation for blasting, and front loaders excavate the
broken material into diesel-driven Wagner or Tamrock underground mine trucks for
hauling to a pad area outside the portals. Segregation of mined material is
effected near the portals by placing the rock into several windrows; after
dumping in a windrow the mine-truck operator collects a sample from his load for
analysis. Assays from the laboratory then dictate whether that material is
high-grade, low-grade, or waste; the latter is excavated and placed in a waste
dump, whereas the two ore types may or may not be blended depending on
analytical results, and taken to the process facility. Because of the distances
from the several mine portals to the processing plant, large (150 ton) off-road
haulers are used for surface ore transport. These haul roads appear to be well
maintained, they are of adequate width for two-way traffic, and special effort
is expended during the winter months to keep the roadways open from drifting
snow.

Access to the underground mines is through portals, with
internal ramps maintained at grades of 12% to 15%. Typical openings measure 15 x
15 feet in cross section, although consideration is now being given to reducing
some drifts to 10 x 12 feet in size to allow more selective mining and to reduce
development costs. Ventilation is accomplished through the portal openings
(intake air) and through a number of raise bores (exhaust air) six feet to eight
feet in diameter that connect the underground workings to the surface. Certain
of these raise bores also serve as emergency escapeways and are equipped with
personnel capsules and hoisting equipment located on the surface.

---

43

Major mine openings are supported with bolts and mesh which
seem to hold the back and ribs well. Ore is generally developed by drifting
adjacent to the zone in more stable rock and then cross-cutting through the
deposit at specified intervals. Drift-and-fill mining is practiced, with
secondary openings either alongside a backfilled stope or underneath a
previously-filled excavation. In the latter situation, cost savings are
accomplished since the cemented fill does not require artificial support.
Extraction of ore-grade material is near 100%, and mining dilution for the most
part is confined to the stope fringes.

Each mine has its own batch plant located outside the mine
portal. The backfill plants receive screened rock which is stored in bins
adjacent to the fly-ash and cement tanks. These products are blended according
to the backfill mix design, water is added, and the mixture placed into the
underground ore haulage trucks for transport back into the mine stopes.

In addition to the backfill plant, the mines surface
structures generally include a large, well-equipped maintenance shop, mine dry,
and mine office building. The most recent additions were the administration and
shop buildings located at the Steer portal which were constructed in April,
2005.

On February 22, 2008 Queenstake initiated a voluntary shutdown
of operations in the mill and underground mines in order to undertake
maintenance, repairs, and capital improvements at the site. These are expected
to result in improved safety and environmental compliance as well as possibly
increasing gold recovery and lowering operating costs.

Gold recovery in 2007 remained reasonably constant throughout
the year and averaged 88.19% of contained metal delivered to the process plant
(weighted by tonnage). Data were recorded by month, as shown below in Table 12:

Table 12: Jerritt Canyon 2007 Gold Recovery by Month

|Month                         | % Au Recovery
|----------------------------- | -------------
|January                       | 84.85        
|February                      | 85.13        
|March                         | 86.95        
|April                         | 87.52        
|May                           | 89.10        
|June                          | 88.55        
|July                          | 89.76        
|August                        | 89.32        
|September                     | 89.90        
|October                       | 88.20        
|November                      | 88.60        
|December                      | 89.00        
|Average (weighted by tonnage) | 88.19        

The average for 2007 is typical of process recovery attained in
prior years, and is expected to continue into 2008, possibly at an improved rate
because data suggest better recovery when processing Newmont rock.

Gold markets are mature, global markets with reputable smelters
and refiners located throughout the world. Demand is presently high with prices
for gold showing a remarkable increase during the past year--London Final price
averaged just over $695 /ounce for 2007.

Markets for doré are readily available. Jerritt Canyon ships
its doré to the Johnson Matthey refinery in Salt Lake City, Utah.

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44

Jerritt Canyon has a few operational contracts in place at the
present time. Certain exploration drilling activities are under contract, and
subsequent to initiation of the Redevelopment Plan in August, 2005 the Issuer
contracted with Dynatec, Inc. for the purposes of mine development. Queenstake
assumed full development control with its own workforce throughout 2007.

Environmental Issues

Environmental management systems are in place and there is a
qualified environmental staff on site. Various mitigation programs are in effect
as required under the several plans of operations that have been filed and
approved for the project. No unusual costs associated with any of these programs
were identified.

Environmental liabilities at the Mine include:

- High sulfate and Total Dissolved Solids (TDS) in runoff from waste rock in
  the Marlboro Canyon rock disposal area (RDA). Three other RDAs are exhibiting
  high levels of sulfate;
- Ongoing control and management of seepage from the tailings impoundment;
  and
- Air emissions from the processing circuit.

Waste Rock Runoff

Mitigation for this issue has been ongoing for a number of
years and has been well-defined by Jerritt Canyon staff. Staff has worked with
the Nevada Division of Environmental Protection  Bureau of Mining Regulation
and Reclamation (NDEP-BMRR) to develop mitigation and monitoring plans.

The Mine has been working with the NDEP-BMRR to address runoff
with high concentrations of sulfate and TDS from the RDAs. The Mine installed a
sulfate reduction trench in Marlboro Canyon to reduce the sulfate and TDS
concentrations. The trench showed reductions in the concentrations but not to an
acceptable level. Monitoring continued through 2007. This information is
routinely reported to NDEP. Meetings/discussions with NDEP-BMRR have resulted in
the need for Queenstake to look into other possibilities for sulfate reduction.
The data from the Marlboro SRT and from the DASH RDA instrumentation project
will be the basis for any new proposal. The discharge ultimately flows into
Jerritt Creek which flows into Independence Valley through several ranch
properties and infiltrates into the sub-surface. However, it should be noted
that simple analyses downstream from the SRT show acceptable sulfate and TDS
levels

Three other RDAs are also exhibiting elevated concentrations
of sulfate besides Marlboro Canyon. These are: Gracie; Snow Canyon; and, DASH.
Under a schedule of compliance item within the Water Pollution Control Permit
(WCPC), the Mine drilled three holes in the lower lift of the DASH RDA and one
on the middle lift to assess the water flux and sulfate profile of the RDA. The
lower lift of the DASH RDA is an unvegetated the angle of repose slope.
NDEP-BMRR felt this angle of repose face was a significant contributor to the
sulfate generation within the RDA. Preliminarily, this has not been borne out by
the data.

Tailings Impoundment Seepage Control

During 2006 NDEP modified the water pollution control permit to
include an evaporation pond for disposing of excess water from the existing
tailings impoundment and to assist in the ultimate closure and reclamation of
the facility. Due to the footprint of the evaporation pond, Queenstake had to
plug and abandon some of the wells that make up the seepage remediation system
(SRS), as well as a production well, and had to redrill/reinstall these wells at
different locations, as approved by the NDEP-BMRR. All of these wells are now in
place and are operational.

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45

Air Emissions Violations

On February 15, 2007, the Nevada Division of Environmental
Protection  Bureau of Air Pollution Control (BAPC) issued a Compliance
Order to Queenstake. The requirements of the original Order have been
fulfilled. A final order was issued in December of 2007, which requires
submittal of two additional reports to NDEP-BAPC addressing continuous opacity
monitors and measures required to address additional sources of leaks in the ore
processing system. Queenstake has succeeded in correcting numerous items related
to process fugitive emissions from the ore grinding circuit of its mill,
required under the original order.

On March 10, 2008 the Issuer received two Orders from the
Nevada Division of Environmental Protection-Bureau of Air Pollution Control
(NDEP-BAPC). The first Order was a Stop order for the roasters and all support
systems, which required the Issuer to shut down the roasters within 7 days, or
by March 17, 2008. The Issuer had already, of its own accord, shut down
operations at the site in order to address housekeeping and maintenance issues,
some two weeks prior to the issuance of the Stop Order.

The second order was related to on-going concerns that
NDEP-BAPC has had with regard to control and monitoring of air emissions related
to the processing operations. This order has numerous requirements for the
restart of the roasters, principally related to air emissions control,
monitoring, and reporting. Additionally, the Order required Queenstake to
conduct mercury speciation testing of scrubber discharges within 15 days of
start-up after the instrumentation has been installed. Queenstake is planning to
install a calomel-based scrubber system on the roasters to reduce mercury
emissions in the future.

The Issuer is in discussions with NDEP-BAPC and expects a
favorable resolution that will allow startup of the Jerritt Canyon processing
facility in compliance with NDEP-BAPC regulations and requirements.

Reclamation Bond Cost

Approved reclamation and closure plans are in place and the
Mine is concurrently reclaiming disturbance when possible. Reclamation,
consisting of earthworks and reseeding, and closure of mine components,
consisting of characterization and chemical stabilization, are among the most
expensive activities that take place, especially as the operating income begins
to wane. Mine staff and the USFS/NDEP update the reclamation bond on an annual
basis. As of January 2007, the reclamation bond was estimated to be about
US$39.4 million. The 2008 bond is in preparation.

Review of the 2007 bond indicated the amount is appropriate for
mining operations of this size. Bond increases are a result of more surface
disturbance, and increased unit costs (labor, equipment, and fuel costs).
Queenstake has already funded the estimated reclamation and closure costs by
placing US$26.5 million in a commutation account with American Insurance Group
(AIG). Queenstake has a policy with the American Insurance Group (AIG) for a
closure cost and cap insurance policy that has been accepted by the regulatory
agencies to serve both to fund the physical reclamation and post-closure site
management, and meet agency requirements for bonding.

Queenstake has filed suit in Denver, Colorado court against AIG
for $US8 million reimbursement for the construction of the evaporation pond. The
issue is whether the evaporation pond benefits current operations or if it is
solely for reclamation and closure purposes. The matter went to arbitration in
2007, with hearings anticipated in mid-2008.

The evaporation pond is expected to favorably affect the
reclamation bond by reducing the post-operational water management from six
years to two years. NDEP will review the potential bond reduction after
Queenstake operates the evaporation pond for a year to verify performance. The
projected reduction is expected to be on the order of US$1.1 million per year.

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46

Operating permits for the mine are in place and are presented
in Table 13. Environmental management systems are in place and are managed by an
experienced and qualified onsite environmental staff. Operating and maintenance
staffs are informed of their responsibilities during annual MSHA refresher
classes. In addition to MSHA classes, the Mine holds leadership classes for the
supervisory staff. During these classes, supervisors are informed of their
environmental responsibilities.

Table 13: Operating Permits

|Permit/Approval                               |  | Granting
      Agency                                                                     |  | Comments                                                                                                                                                                                                                                                      
|--------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plan of Operations                            |  | USFS                                                                                      |  |                                                                                                                                                                                                                                                               
|Work Plans                                    |  | USFS                                                                                      |  | Annual work plan submitted to USFS and NDEP                                                                                                                                                                                                                   
|Clean Water Act Section 404 Permit            |  | U.S. Army Corps of Engineers                                                              |  | Will be updating the existing 404 fieldwork and permit in
      the near future. There are no triggers requiring the update.                                                                                                                                  
|EPA ID Number                                 |  | U.S. Environmental Protection Agency                                                      |  | The Mine, a large-quantity generator, has the typical
      hazardous wastes found at a mine such as cupels and crucibles. Seven to
      eight barrels of waste paint/solvents, a characteristic waste due to the
      flammability, are generated annually.
|Air Quality Permit                            |  | Nevada Division of Environmental Protection (NDEP)/
      Bureau of Air Pollution Control |  | The Mine has a current Title V air permit received in
      March 2004. A Compliance Order received in 2007, was finalized
      in December 2007r.                                                                                                           
|Reclamation Permit                            |  | USFS and NDEP/ Bureau of Mining Regulation and
      Reclamation (BMRR)                   |  | The bond estimate is updated annually with the USFS &
      NDEP. As of Jan 2007, the reclamation bond was estimated to be about
      US$39.4 million. The mine is currently in the process of updating the bond
      for the USFS & NDEP                   
|Water Pollution Control Permit                |  | NDEP-BMRR                                                                                 |  | One water pollution control permit covers the entire mine
      area. Two issues exist: the tailings seepage/chloride plume; and the high
      sulfate/total dissolved solids emanating from four rock disposal areas.                                       
|Underground Injection Control                 |  | NDEP/ Bureau of Water Pollution Control                                                   |  | Addresses dewatering water from the Murray and Smith
      underground mines.                                                                                                                                                                                 
|Solid Waste Class III Landfill Waiver         |  | NDEP/ Bureau of Solid Waste                                                               |  | The Mine has three authorized landfills at the lower mill
      area, Burns Basin, and Alchem. Employees are instructed during annual MSHA
      refreshers with regard to what is acceptable to dispose of in the
      landfill.                            
|General Stormwater Discharge Permit NVR300000 |  | NDEP/Bureau of Water Pollution Control                                                    |  | An updated general permit was submitted to NDEP in Dec
      2007 due to new permit requirements. No concerns were noted.                                                                                                                                     
|Permit to Appropriate Waters                  |  | NV Division of Water Resources                                                            |  | No concerns were identified. The Mine has sufficient
      appropriations to cover processing and dewatering needs.                                                                                                                                           
|Permit to Construct Impoundments/Dam Safety   |  | NV Division of Water Resources                                                            |  | No concerns identified                                                                                                                                                                                                                                        
|Industrial Artificial Pond Permits            |  | Nevada Department of Wildlife                                                             |  | No concerns identified                                                                                                                                                                                                                                        
|Liquefied Petroleum Gas License               |  | NV Board of the Regulation of Liquefied Petroleum Gas                                     |  | No concerns identified                                                                                                                                                                                                                                        
|Potable Water System                          |  | Nevada State Health Division                                                              |  | Potable water systems are located at the Murray, SSX, and
      millsite. No concerns identified                                                                                                                                                              
|Septic System Permit                          |  | Nevada State Health Division                                                              |  | The Mine has general permits for five systems: SSX;
      Steer; Murray; USA; and Smith. The mill site has a package plant that
      discharges to the tailings impoundment. No concerns identified                                                          

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47

The current closure cost estimate for Jerritt Canyon is
approximately $30 million, assuming the work is accomplished by an in-house work
force. The reclamation cost for the agency bond is somewhat higher at $39.4
million as calculated under the U.S. Forest Service bonding guidelines; this
figure includes agency oversight and administration. Queenstake has a policy
with the American Insurance Group (AIG) for a closure cost and cap insurance
policy that has been accepted by the regulatory agencies to serve both to fund
the physical reclamation and post-closure site management, and meet agency
requirements for bonding.

Closure and reclamation will consist of the following actions:

- Open pits will be reclaimed by partially backfilling the pits with mine
  waste rock produced in the underground mining operations. Level areas in the
  pit bottom will be covered with fine-grained waste rock or growth medium and
  revegetated.
- Portals for the underground mines will be sealed by blasting, backfilling
  or bulk-heading. Raises extending to the surface will be backfilled. Regional
  groundwater levels are below the elevation of the mine portals or raises,
  therefore seepage from the mines is not expected.
- Waste rock disposal area will be left in a condition meeting slope
  stability requirements. Portions of the older rock disposal areas will be left
  with angle of repose side slopes that are covered with durable non-acid
  generating rock. Other rock disposal areas will have final slopes of 2.5H to
  1V. Tops of the rock disposal areas will be graded to route surface water
  runoff away from rock disposal area slopes. Level surfaces of the rock
  disposal areas and the 2.5H to 1V side slopes will be covered with growth
  media and revegetated.
- Haul roads and access roads not included in the final site access
  requirements will be regraded to conform to the original ground contours and
  revegetated. It is understood discussion are currently in progress with the
  USFS to identify roads that will remain. Haul roads that may be left open will
  likely require some level of reclamation to reduce overall road width.
- Sediment control structures will be reclaimed by breaching ponds and basins
  after sediment and erosion control issues are controlled through reclamation
  of the areas draining to the structures.
- The tailings impoundment will be reclaimed by first removing free water
  from the pond through evaporation. The tailings surface will be allowed to dry
  to a consistency to allow operation of earth moving equipment and covered with
  2 to 2.5 feet of material to grade the surface to drain and an additional 1.5
  to 2 feet of growth medium placed for revegetation. Operation of the seepage
  recovery and pumpback system will need to continue for a period of time after
  the tailings impoundment is closed and seepage from the tailings ceases. It is
  assumed the recovered water will be managed by land application over the
  tailings impoundment area to assist in revegetation efforts and by
  evaporation.
- Spent heap leach materials from a leach pad adjacent to the tailings
  impoundment will be excavated and placed as fill for grading the tailings
  impoundment.
- Solution ponds associated with the heap leach pad and the processing plant
  will be reclaimed by removing solution from the pond, and disposal of all
  contained sludge in the tailings impoundment. Pond liners will be folded into
  the ponds and backfilled. Growth medium will be placed over the backfilled
  ponds and revegetated.
- Buildings and structures will be dismantled to the level of foundations and
  either salvaged or disposed of in an approved landfill. Process piping will be
  rinsed and neutralized. Disposition of underground piping is not specifically
  addressed, however SRK would assume it will be necessary to remove all piping.

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48

As the mine progresses closer to closure, the overall detail of
the closure plan may require refinement. The overall closure plan is considered
by SRK to follow proven and accepted industry practices.

Taxes

Queenstake controls more than 119 square miles of ground
encompassing the mine area proper and surrounding acreage. The bulk of this is
in the form of contiguous unpatented mining claims which are held in force by
production from the mining activities. No production royalties are paid for gold
deriving from these claims.

Some property is leased from landowners in the region, and a
royalty is paid on production from these lands. In the future this amount will
average approximately $1.91/recovered ounce.

Nevada does not apply a corporate income tax. Income tax is
levied on the federal level. There is a modest sliding scale tax rate generally
applicable to smaller operations, but given the size of the Jerritt Canyon
activities, the rate is 34.5% of net income after all deductions have been
taken. Queenstake has, in total, suffered a loss since acquiring Jerritt Canyon
in mid-2003, and so no federal income taxes have been assessed.

Property taxes are assessed annually by Elko County on real
estate and personal property controlled by Queenstake.

A sales tax rate of 6.5% is applied to all purchases within
Elko County, and the state levies a 0.63% tax on gross incomes paid, less
credits for certain health benefits for the workers.

Capital and Operating Cost Estimates

Jerritt Canyon is forecasting an expenditure of $58.5 million
over the coming four-year period for mine-related capital items. These include
the categories of: equipment, underground development, and mine facilities. The
largest expenditure outlays will be for mine development at $22.5 million with
an additional $5.2 million for mine equipment. Sustaining capital costs for the
ore processing plant is budgeted at $17.1 million for upgrades to existing
facilities. Sustaining capital costs for surface services and G&A is
budgeted at $1.6 million. G&A sustaining capital at Jerritt Canyon is
typically for the replacement of light vehicles and office equipment. Tailings
impoundment capital is nearly $9.9 million. A breakdown by property is given in
Table 14.

Table 14: Jerritt Canyon Capital Expenditures for LoM
($000s)

Cost Center
      Murray
      SSX Complex
      Saval 4
      Smith
      Starvation Canyon
      Wright Window
      TotalEquipment
    0.0
    0.0
    0.0
    1,075
    4,117
    0.0
    5,192Mine Development
    0.0
    3,492
    1,238
    14,478
    3,243
    0.0
    22,451Mine Facilities
    0.0
    0.0
    0.0
    0.0
    2,224
    70.0
    2,294Process
    
    
    
    
    
    
    17,115Surface Serv; Admn
    
    
    
    
    
    
    1,560Tailings Impndmnt
    
    
    
    
    
    
    9,870Total
    $ 0.0
    $3,492
    $1,238
    $15,553
    $9,584
    $70.0
    $58,482


The operating costs per ton of ore for processing have steadily
increased over the last 7 years from $15.67 in 2001 to $36.43 in 2007, primarily
as a function of the production throughput and energy costs. Of this total,
approximately 75% is for operations and 25% is for maintenance.

As previously noted, the budgeted processing costs for 2008
will be about $27.27/ton of ore, down from an actual 2007 cost of $36.43/ton of
ore. The cost of $36.43/ton represents a reduced throughput capacity in early
2007 due to the impaired bull gear and pinion condition. Queenstake
intentionally operated at a reduced grinding capacity to limit exposure to a
total failure of these components. With the replacement of these components,
milling costs are

---

49

expected to be $27.27/ton. SRK has reviewed the projected 2008
processing costs, at the time of this writing, is reserving judgment as to
whether they are achievable. Achieving them will depend on overcoming the
effects of downtime experienced in early 2008 at the processing plant, the
stop order received from NDEP and future air-quality testing results which
presently limit throughput.

The anticipated operating cost for the next three years is
$97.58 ton of ore as shown in Table 15. The lowest per-ton costs are associated
with the direct and screened stockpiles, since these sources do not bear future
mining charges nor assigned royalty payments. Wright Window is a small area that
will be surface mined, and so the unit costs are significantly less than for an
underground operation. The remaining sources of feed material derive from
underground and have varying estimated costs depending largely on ground
conditions and the need to backfill for support. The highest-cost mining occurs
in the Smith, Saval 2, and Starvation Canyon mines.

Table 15: Jerritt Canyon Operating Costs for LoM per Ton of
Ore in Constant First Quarter 2008 Dollars

|Description               | LoM Value
|------------------------- | ---------
|Mining                    | $37.46   
|Backfill                  | $7.20    
|Expensed Waste            | $9.13    
|Surface Services          | $11.18   
|Processing                | $27.27   
|Site
      Administration | $5.33    
|Total                     | $97.58   

Economic Analysis

SRK has reviewed the internal life-of-mine (LoM) technical
and financial model prepared by Queenstake for Jerritt Canyon Mine.

The LoM plan, technical and economic projections in the LoM
model include forward looking statements that are not historical facts and are
required in accordance with the reporting requirements of the OSC. These forward
looking statements are estimates and involve risks and uncertainties that could
cause actual results to differ materially.

LoM Plan and Economics

The SRK LoM plan and economics are based on the following:

- Reserves of 3.2 million tons at an average grade of 0.227 oz-Au/ton,
  containing a total of 717 koz of gold;
- A mine life of 5 years from 5 mines and various stockpiles, at a total
  average rate of 623 kt per year;
- An overall average metallurgical recovery rate of 89%, producing 638 koz of
  gold over the LoM;
- A cash operating cost of $489/Au-oz, or $97.58/ore-ton on a constant dollar
  basis;
- Total capital costs of $58.4 million being comprised of $5.2 million for
  mine equipment, $22.4 million for capitalized development, and $2.3 million
  for facilities, and sustaining capital of $17.6 million for process, $1.6
  million for administration and surface services, and $9.9 million tailing
  impoundment; and
- Salvage value of $16.9 million

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50

The base case economic analysis results, shown in Table 16,
indicate an undiscounted after-tax net present value of $16.1 million .

Table 16: LoM Economic Results

|Description                                |                                      | LoM Value 
|------------------------------------------ | ------------------------------------ | ----------
|Ore                                        |                                      |           
|Ore Milled-(Jerritt Canyon)                | 3,155 kt                            
|Gold
      Grade                           | 0.227 opt                           
|Contained Gold                             | 717 koz                             
|Process
      Recovery (average)           | 89 %                                
|Recovered Gold                             | 638 koz                             
|Gross Income ($000s)                      |                                     
|                                           | Market Price
      $580/oz           |           
|Gold Sales                                 | $370,240                            
|Net Income from
      Purchased Ores       | -                                   
|Gross
      Revenue                        | $370,240                            
|Refining & Sales                           | ($520)                              
|Net Smelter
      Return                   | $369,720                            
|Royalties                                  | ($3,831)                            
|Gross Income
      From Mining             | $365,889                            
|Operating & Capital Cost
      ($000s)    |                                     
|Mining                                     |                                      | ($118,190)
|Backfill                                   |                                      | ($22,719) 
|Expensed Waste                             | ($28,818)                           
|Surface Facilities                         | ($35,287)                           
|Process                                    |                                      | ($86,033) 
|Site Administration                        | ($16,819)                           
|Purchased Ore                              | (-)                                 
|Operating Costs                            | ($307,865)                          
|                                           | Cash Cost ($/oz)                     | $489/oz   
|                                           | Cash Cost ($/t-ore)                  | $97.58 /t 
|                                           | Cash Operating Margin
      (EBITDA) | $58,024   
|Other Costs                                |                                      |           
|Reclamation
      Accrual                  | ($352)                              
|Other                                      |                                      | $0        
|                                           | Net Income                           | $57,672   
|Capital Cost net of Salvage
      ($000s) |                                     
|Equipment                                  | ($5,192)                            
|Capitalized Development                    | ($22,452)                           
|Facilities                                 | ($2,294)                            
|Process Capital (sustaining)               | ($17,115)                           
|Tailings
      Impoundment                 | ($9,870)                            
|Administration & Surface Services          | ($1,560)                            
|Salvage                                    |                                      | $16,952   
|Capital Costs                              | ($41,531)                           
|                                           |                                      |           
|Cash Flow
      (NPV0.0%)                  | $16,140                             

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51

The expected life of the Jerritt Canyon operation is five
years, based on the current processing rate and reported proven and probable
reserves as of December 31, 2007. The Issuer controls a large land position in
the immediate area and it is expected that future exploration will continue to
convert certain resources to a reserve category over time.

Exploration and Development

Queenstake has been conducting aggressive resource and reserve
development programs throughout its ownership of Jerritt Canyon.

SRK has the following recommendations:

- Continue exploration drilling with the target of locating new areas of
  resource and reserve;
- Try to maximize stockpile haulage to the mill during the non-winter
  seasons;
- Continue to work on the mine to mill reconciliation in respect to tons and
  grade. The staff at Jerritt Canyon has indicated that this will be one of
  their objectives in 2008; and
- Continue to develop ways to minimize the amount of moisture in the ore that
  enters the plant. The moisture typically comes from internal mine water, and
  seasonally from water that enters the stockpiles at the mines and mill.

***(b)******Ketza River Project, Yukon Territory***

The Issuer's interest in the Ketza River Property is the
subject of a report being prepared (the SRK Report), which will be dated March
2008, prepared by SKR Consulting (US), Inc. (SRK), of #3000, 7175 West
Jefferson Avenue, Lakewood, Colorado, USA 80235.

The following description of the Ketza River Property has been
summarized primarily from the SRK Report.

Project Description and Location

The Property is located on the headwaters of Cache Creek, a
tributary of the Ketza River, in the Watson Lake Mining District of the Yukon
Territory, and is centered at 61o 32' N and 132o 13' W on
NTS map sheet 105 F/9 (Figure 6).

The Property consists of 620 Yukon quartz claims and fractions
of claims as shown in Figure 7. Another 66 quartz claims have been converted to
quartz leases covering 853.9ha. All claims are controlled 100% by the
Issuer.

Included in this total are six leased quartz leases and 114
quartz claims covering a silver-lead-gold vein known as the Silver Valley
Property. Silver Valley lies approximately 6km east of the existing Project. The
Silver Valley Property is not included in the current resource and will not be
discussed further in this report.

The validity of the claims was not reviewed by SRK.

An annual royalty is due to the Yukon government on every
producing mine according to the Yukon Quartz Mining Act (Canada). The royalty is
on any profits that exceed the sum of $10k during any calendar year. The royalty
is as follows:

---

52

- On annual profits in excess of $10k and up to $1M, 3%;
- On the excess above $1M up to $5M, 5%;
- On the excess above $5M up to $10M, 6%; and
- On the excess above $10M a proportional increase of 1% for each additional
  $5M.

Environmental permits are in place for exploration and related
activities, as well as the maintenance of the Ketza River camp. The Issuer has
an environmental staff based at the Ketza River camp to routinely monitor
environmental parameters, and also maintains an environmental office in the
provincial capital of Whitehorse. Relevant permits are presented in Table 17.
All permits except the Water License are issued by the Department of Energy,
Mines and Resources or the Department of Environment. The Water License is
issued by the Yukon Water Board.

Table 17: Permits for the Ketza River Project

|Permit/Approval                                        |  | Issuing Agency                                                   |  | Comments                                                                                                                                                                              
|------------------------------------------------------ |  | ---------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Quartz Mining Land Use Permit LQ00156                  |  | Mining Land Use, Department of Energy, Mines and
      Resources |  | Covers all exploration through June 14, 2014.                                                                                                                                         
|Government of Yukon Lease                              |  | Lands Branch, Department of Energy, Mines and Resources          |  | For the occupation of land for the purpose of commercial
      mine, mill, campsite, tailings pond and other facilities.                                                              
|Class A Land Permit                                    |  | Lands Branch, Department of Energy, Mines and Resources          |  | Permit to proceed with the land use operations for road
      maintenance.                                                                                                            
|Quarry Permit                                          |  | Lands Branch, Department of Energy, Mines and Resources          |  | For the removal of 500m3of gravel and
      500m3of limestone rip rap from specified sites.                                                                                           
|Water License QZ04-063                                 |  | Yukon Water Board                                                |  | For the storage of water in, and the discharge of water
      from, an existing tailings impoundment.                                                                                 
|Environmental Health Approvals                         |  | Department of Environment                                        |  | Public Health and Safety Act approvals needed for
      drinking water, food safety and private sewage disposal.                                                                      
|Storage Tank Registration                              |  | Department of Environment                                        |  | For registered ASTs: one 45,000L, one 500L, one 10,000L,
      and four 90,000L_tanks.                                                                                               
|Air Emissions Permit No. 4201-60-025                   |  | Department of Environment                                        |  | Permit to operate a solid waste incinerator capable of
      burning >5kg/day.                                                                                                        
|Solid Waste Permit (Commercial Dump Permit No. 81-013) |  | Department of Environment                                        |  | Permit to operate a dump for commercial purposes and for
      incineration of solid waste generated by commercial activities.                                                        
|Special Waste Permit No. YG41-190                      |  | Department of Environment                                        |  | Allows for storage and handling of waste, oil, waste
      batteries, waste lead nitrate, unspecified substances classified as
      Corrosive Solids, NOS, Class 8, Packing Group 1.

The Quartz Mining Land Use Permit requires a lease-security
payment to be made each year for a limited time. Under the previous permit,
payments of C$26,500 were due April 1 of each year. The recently revised permit
will also require payments to be made but at the time of writing the Department
of Energy, Mines and Resources has not determined the amount. In addition, the
Government of Yukon Lease requires a payment in the amount of C$7,000 to be made
on January 1 of each year. A total of C$3,087,600 has been paid of the Water
License. No further payments are due under the present permit. The Issuer has
notified SRK that it holds all permits required for

---

53

exploration and maintenance of the camp. Additional permits
will be required for mine operations. The Issuer has notified SRK that there are
no environmental liabilities on its Ketza river property.

---

54

Figure 6  Location Map



---

55

Figure 7: Ketza River Project Land Position



Accessibility, Climate, Land Resources, Infrastructure
and Physiography

The Property is located in the Pelly Mountains in south central
Yukon. Terrain is mountainous with elevations ranging from 1,300m above mean sea
level (amsl) to 2,100m amsl. Land use in the area is limited to mining,
trapping, hunting and recreation.

Average daytime temperatures range from highs of
+25oC in summer to lows of -40oC in winter. Average annual
precipitation in Faro, the nearest location for which weather statistics are
available, is 31.6cm and includes annual averages of 21.4cm of rainfall and
111.6cm of snowfall (http://climate.weatheroffice.ec.gc.ca/climate_normals).

Daylight extends to nearly 24hr/day in the summer months,
particularly June. There are only short periods of daylight during the winter.
Exploration can be conducted year-round but heavy winter snow may limit access
to some areas. Mining can be conducted year-round.

Vegetation consists of dwarf birch, spruce, alder and balsam
trees up to the tree line at approximately 1,600m amsl.

The Property is accessible by a 40km all-weather road from Km
323 on the Robert Campbell Highway. The Property is approximately 80km by road
from Ross River and 460km from Whitehorse (Figures 6 and 8). The 40km access
road is kept open year-round and is passable for tractor-trailer-size supply
trucks.

---

56

The surface is owned by the Crown and leased to the Issuer
under the Government of Yukon Lease. Total annual lease payment for the
occupation of land for the purpose of a commercial mine, mill, campsite,
tailings pond and other mine-related facilities is C$7,000.

The community of Ross River is 90km from the Project and
supplies food, fuel and basic medical service. First aid-trained personnel are
on site at the Ketza River camp at all times and a fully stocked Industrial
Ambulance is available. There is an airstrip in Ross River and contractors for
electrical, plumbing, mechanical and vehicle maintenance are available in Ross
River or Whitehorse.

Power to the camp and facilities is provided by 160kV and a
210kV diesel generators. One generator remains off while the other generator
provides power. The two are used alternately to allow for maintenance. A smaller
60kV generator is available as backup. Power for any future mining activities
will be provided by additional generators.

Water for the camp and facilities is available from three
established wells. The primary well is located upstream from the camp, near
Cache Creek. Pumps that are in place can individually produce up to 30gal/min.
An emergency source for water is Cache Creek itself. Power and a pump are in
place so that water can be used from the creek if needed. Water for future
mining operations will be provided by water wells to be drilled on the
property.

The buildings for the camp, kitchen and offices are Atco
trailer units. There are 48 rooms available for lodging. There is a kitchen unit
with dining area and an office complex for technical staff. Shop areas in the
old mill building are functional and are used for maintenance of camp vehicles
and equipment.

The old mill building is in good condition and its use for
future milling activities will be investigated in feasibility studies. West of
camp there is a core logging and core splitting building. All facilities have
available power and water. Core is stored outdoors on-site.

The camp site is permitted for 50 personnel. Technical staff
typically work four weeks on and two weeks off with schedules dependent on the
needs of the camp. A larger camp will be required for future mining operations.
A suitable tailings storage site is present on the property.

Waste generated in camp and from activities associated with the
Project are burned in a trash incinerator or hauled to the Ross River land fill.
Trash awaiting incineration is stored in bear-proof metal storage containers.
There is a chemical treatment facility for sewage located down gradient from the
camp.

Suitable mine waste dump sites are present on the property.

Geologists, engineers, surveyors and other technical people are
hired on a contract basis or employed through the Issuer. There is a Memorandum
of Understanding signed with the Dena Band of the Kaska Nation stating that
First Nations people will be preferentially hired if they qualify for available
jobs.

---

57

Figure 8: Ketza River Project Access



History

The Ketza River Property has a history of exploration and
production dating back to the 1940s. The property consists of several discrete
zones of mineralization as shown on Figure 9. The exploration camp, and core
shed are shown on the map along with the historic tailings pond and mill site.

In June of 2007 YGC completed a merger with Queenstake
Resources Ltd to create the Issuer, the current owner of the property. The
Property is 100% controlled by the Issuer. There are no underlying agreements or
encumbrances.

Lead-silver veins were discovered in the Ketza River area by
prospectors of the Hudson Bay Mining and Smelting Company Limited in 1947. Later
explorers carried out trenching, road building and diamond drilling. Exploration
adits were subsequently developed on the lead-silver veins but little economic
production was achieved.

Gold mineralization on the property was first discovered in
1954 by Conwest Exploration Company Limited (Conwest). Between 1955 and 1960,
Conwest explored several mineralized occurrences with trenching and 75 AX
diamond drill and packsack drillholes. A non-NI 43-101-compliant historic
geological reserve of 68kt grading 12g/t-Au was reported for the Peel 3 and
Peel 3C deposits (now known as the Peel and Ridge zones). The claims were
surveyed and taken to lease during this time.

---

58

Figure 9: Mineralized Zones and Facilities



In 1983, Pacific Trans Ocean Resources Ltd. optioned the
property from Conwest and carried out limited geochemical and geological surveys
before entering into a joint venture with Canamax Resources Inc. (Canamax) in
1984.

In February 1987, a feasibility study was completed by Canamax
and reviewed by Wright Engineers Ltd (Canamax Resources Inc, 1987). The study
recommended construction of a 320t/d mill and mine complex producing
approximately 50koz-Au/year from a mineable ore reserve base of 460kt averaging
15.3g/t -Au. The reserve estimate preceded Ni 43-101 requirements and is not
compliant with CIM guidelines. Mine life was to be five years and the average
cost per ounce of gold produced was to be in the range of US$220 to US$250. The
estimated cost to build the mine and mill was estimated at US$21M. A production
decision was made in March 1987, and financing was obtained in October 1987. The
mill achieved commercial production in July 1988.

After several months of operation, the oxide ore reserves were
significantly reduced from the Wright feasibility study estimates due to an
error in estimation of the bulk density of the oxide ore. The grade of feed to
the mill was also lower than expected, due to a number of factors including
over-weighting of high-grade samples in the data and dilution from the lower
than expected grade from the footwall mineralization (Strathcona Mineral
Services Limited, 1988). Canamax purchased Pacific Trans-Ocean's interest in the
Project in January 1989.

From July 1988 to November 1990, production from the property
was 100,033oz-Au from 342,395t at an average millhead grade of 11.6g/t -Au.
Average mill throughput over the life of the mine was 364t/d with an average
gold recovery of 88.65% . A summary of total production by zone is presented in
Table 4.4.1 (Hodgson, 1991). It

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59

should be noted that mine production figures were not
reconciled with total mill production of 100,033oz-Au. Based on the numbers
presented in Table 18, the Mine production should have been 131,046oz as opposed
to actual production of 100,033oz.

Table 18: Summary of Total Gold Production July 1988 
November 1990

|Zone                 | Tonnes  | g/t-Au
|-------------------- | ------- | ------
|Ridge                | 95,790  | 13    
|Peel                 | 148,844 | 13    
|Break-Nu             | 54,700  | 10    
|Tarn                 | 18,169  | 8     
|QB                   | 1,987   | 13    
|Knoll                | 2,936   | 6     
|Gully                | 8,136   | 10    
|1430 East            | 600     | 5     
|Peel/Ridge Mine Dump | 11,233  | 6     
|Total                | 342,395 | 11.6  

With the oxide zones nearing depletion, attention was given to
the economic viability of the sulfide mineralization and in November 1990 the
mine and mill ceased treating oxide material. Metallurgical studies were
conducted on sulfide mineralization from several of the deposits. Gold recovery
of 78.3% from the sulfides was forecast with limited capital additions required
to the existing mill. The mill was permitted to treat oxide ore only and
additional permits were required for the treatment of sulfide ore. In June 1991
an amended water license was received but Canamax did not pursue the application
due to corporate conditions, low gold prices and adverse market conditions.

Wheaton River Minerals Ltd. (Wheaton) acquired the property
from Canamax in 1992 and in 1994 transferred it to YGC Resources Inc. (YGC) in
exchange for a controlling interest in YGC, later divested. The claims outside
the mine area were optioned to Hemlo Gold Mines Inc. (Hemlo) from 1993 to 1995.

Hemlo carried out soil sampling, magnetic surveys, bulldozer
trenching and completed three diamond drillholes totaling 499m in the Shamrock
zone area. YGC also conducted diamond drilling in 1994 and 1995 that consisted
of 72 HQ-diameter diamond drillholes totaling 5,622m. The program resulted in
the discovery of the Chimney and Fork zones.

In 1996, YGC completed 14 HQ-diameter holes totaling 1,954m in
the mine area and 21 HQ-diameter holes totaling 3,613m in the Shamrock zone. The
1996 program also consisted of geologic mapping, prospecting and sampling a
number of other anomalous zones. During 1997, 11 holes, totaling 1,217m, were
drilled along the Fork  Nu-zone trend.

From 1955 through 1997, a total of 914 diamond, RC and
percussion drillholes totaling 53,134m of drilling have been completed on the
property. A summary of this is presented in Table 19.

University graduate students completed studies on the property
(Cathro, 1990 and Stavely, 1992). The studies investigated the geology and
mineral deposits of the Ketza district or the mineralogy and geochemistry of the
Ketza Mine deposits. A post-graduate investigation was completed on the
structural geology, stratigraphy, alteration systems, and possible age
relationships of mineralization and postulated intrusive activity (Fonseca,
1997).

Table 19: Summary of Drilling from 1955 to 1997

|Year    |  | Operator                | No. Holes |  | Type of Drilling | Length Drilled (m)
|------- |  | ----------------------- | --------- |  | ---------------- | ------------------
|1955-60 |  | Conwest Exploration Co. | 75        |  | Diamond          | Unknown           
|1984    |  | Canamax Resources Inc.  | 59        |  | Diamond          | 2,424             
|1985    |  | Canamax Resources Inc.  | 60        |  | Diamond          | 6,158             

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60

|Year  |  | Operator                                       | No. Holes |  | Type of Drilling | Length Drilled (m)
|----- |  | ---------------------------------------------- | --------- |  | ---------------- | ------------------
|1986  |  | Canamax Resources Inc.                         | 158       |  | Diamond          | 8,609             
|1987  |  | Canamax Resources Inc.                         | 61        |  | Diamond          | 4,990             
|1987  |  | Canamax Resources Inc.                         | 95        |  | RC               | 5,029             
|1988  |  | Canamax Resources Inc.                         | 70        |  | Diamond          | 5,549             
|1989  |  | Canamax Resources Inc.                         | 127       |  | Diamond          | 5,590             
|1989  |  | Canamax Resources Inc.                         | 79        |  | Percussion       | 1,215             
|1990  |  | Canamax Resources Inc.                         | 9         |  | Diamond          | 1,101             
|1994  |  | Hemlo Gold Mines Inc./YGC Resources Ltd.       | 25        |  | Diamond          | 2,180             
|1995  |  | Hemlo Gold Mines Inc./YGC Resources
      Ltd. | 50        |  | Diamond          | 3,630             
|1996  |  | YGC Resources Ltd.                             | 35        |  | Diamond          | 5,442             
|1997  |  | YGC Resources Ltd.                             | 11        |  | Diamond          | 1,217             
|Total |  |                                                | 914       |  |                  | 53,134            

Canamax Resources Inc, the previous operator of the mine,
expended $11.6M on exploration and feasibility studies beginning in 1984.
Exploration summary reports were prepared annually by Canamax describing
geophysical ground and airborne surveys, geochemical soil sampling, prospecting,
trenching, percussion drilling, RC drilling, diamond drilling and underground
developments.

After YGC acquired the property in 1994, it spent $0.52M in
1994, $0.76M in 1995 and $0.90M in 1996 on exploration. Some 11,090m of
exploration diamond drilling in 110 HQ holes were carried out on the extensions
of mineralized trends, on the peripheries of developed zones and in other
unexplored anomalous areas. The exploration was successful, leading to the
discovery of new gold-bearing oxide and sulfide mineralization on the property.
A summary report on the 1994 and 1995 drilling programs was prepared at the end
of the 1995 season.

Historic Mineral Resource and Reserve Estimates

Pre-production Resource Estimates

Canamax calculated reserve estimates prior to production
using cross sectional methods in which blocks were drawn halfway to the nearest
adjacent drillhole and halfway to the adjacent cross-section except where
geology dictated a reduction in block size due to structural discontinuity.
These estimates used a variety of cut-offs and included or excluded different
satellite deposits, so it is difficult to make meaningful comparisons between
the estimates from year to year. These estimates were done before the NI 43-101
standards were required, and the similarity to todays definitions regarding
measured, indicated and inferred resources are uncertain. Specific Gravity (SG)
values applied to sulfide and oxide are not mentioned in the 1984 resource, but
in 1985 2.8 was used for oxide, and 3.3 was used for sulfide. In 1986 oxide used
3.1 for SG, and sulfide is not mentioned. These preproduction estimates are
summarized in Table 20, and Figure 10.

Table 20: Historic Resource Estimates

|     |                          |                    | Oxide   | Sulfide          
|---- | ------------------------ | ------------------ | ------- | -----------------
|Year | Description              | Cut-off            | Tonnes  | Grade
      (g/t)
|1984 | Peel Pit
      & UG +    | 4g/2.5m (Peel)     | 473,397 | 8.52             
|     | Tarn Pit                 | 2g/2.5m (Tarn)     |         |                  
|1985 | Peel Oxide
      + Misc. | 4g over
      2.5m | 439,077 | 14.62            
|     | Sulfides                 |                    |         |                  
|1986 | PP&P Oxide,              | 4g/t               | 535,000 | 15.02            
|     | Possible Sulfide         |                    |         |                  
|1987 | Same as
      above +    | 4g/t               | 651,188 | 14.46            
|     | new zones
      (Gully,  |                    |         |                  
|     | QB,
      Break & Knoll) |                    |         |                  

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61

Figure 10: Preproduction Resource Estimates



Post-production Resource Estimates

In 2004 and 2005 resource estimates were prepared for YGC by
Gary Giroux (Tables 26 and 27). The 2004 resource was divided into two parts:
manto-style mineralized zones south of the Peel Fault and disseminated and
quartz stockwork mineralization zone north of the Peel fault. This estimate
included all of the drillholes drilled by Canamax in the 1980s and 1990s, as
well as the holes drilled by YGC in the 1990s in the Peel and Shamrock areas.
The 2005 resource added 37 new drillholes completed in the summer of 2005 along
with an additional 121 historic holes in the Bluff, Hoodoo and Lab Zones to the
west of the area estimated in 2004. Shamrock was not updated in 2005.

The bulk density for oxide material was 2.3t/m 3.
Sulfide material was set at a conservative 3.1t/m 3based on
measurements made by Canamax during the feasibility study.

Table 21: YGC Measured and Indicated Resources, 2004-2005

|     | Measured & Indicated        
|---- | ----------------------------
|     | Sulfide + Oxide Resources   
|Year | Area                        
|     | Peel                        
|2004 | Shamrock                    
|2005 | Peel
      + Peng-Lab + Tarn

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62

Table 22: YGC Inferred Resources, 2004-2005

InferredSulfide + Oxide ResourcesYear
      Area
      Tonnes
      g/t
      oz2004
      Peel
      6,270,000
      1.76
      354,800Shamrock
      4,030,000
      1.92
      249,2002005
      Peel + Peng-Lab + Tarn
      10,550,000
      2.37
      805,200


Geological Setting

The Property is located in the Pelly Mountains of central
Yukon. The mountains are made up of a shallow marine miogeoclinal sequence of
rocks forming a carbonate platform bounded by the Omenica Tectonic Belt to the
southwest and a faulted lobe of the Yukon Tanana Terrain to the northeast across
the Tintina Fault. This carbonate platform is known as the Cassiar Terrain or
Pelly-Cassiar Platform (Pelly-Cassiar).

The Pelly-Cassiar is a displaced continental margin of the
ancient North American continent. Rocks of the Pelly-Cassiar consist of a
continental margin sedimentary sequence of the Rocky Mountain Assemblage
composed of interbedded carbonate and clastic units of Paleozoic age. Several
major deformation events have affected the region including a Mesozoic-age
arc-continent collision, doming and uplift during the intrusion of
mid-Cretaceous stocks and an estimated 450km of dextral strike-slip displacement
on the Tintina Fault from the Cretaceous to Tertiary periods.

Four significant thrust faults, the McConnell,
Porcupine-Seagull, Cloutier, and St. Cyr thrusts, parallel the Tintina Fault and
dip generally southwest (Abbott, 1986). Thrusting is believed to have occurred
during the Late Jurassic and Early Cretaceous.

Rocks in the Watson Lake District belong to the Cloutier Thrust
Sheet, which is exposed within an erosional window in the overlying
Porcupine-Seagull Thrust Sheet. The window, known as the Ketza-Seagull arch,
forms an elongated northwest-trending structure probably related to buried
Cretaceous intrusions. The intrusions are apparently centered in two areas known
as the Ketza Uplift and the Seagull Uplift. Structures in the window are
characterized by steeply dipping normal faults.

The Ketza Uplift is thought to be caused by a buried intrusion
(Parry and others, 1984 and Parry and others, 1985). The following supporting
evidence has been cited for the presence of a buried intrusive:

- The presence of a magnetic anomaly;
- Development of hornfels in sedimentary rocks; and
- Hydrothermal alteration immediately north of the Ketza River gold mantos.

The hornfels has been dated by whole rock K-Ar at 101+/-4Ma, in
the Mid-Cretaceous (Cathro, 1988). The uplift exposes the oldest rocks of the
Clouthier Thrust Sheet, which are Lower Cambrian carbonates and older clastic
rocks. The rocks surrounding the uplift are Upper Cambrian and younger clastic
and carbonate rocks.

Geology of the Ketza River Property

The Property is underlain by Lower Cambrian carbonate and
clastic sedimentary rock units. The Lower Cambrian units (Map Units 1a, 1b, 1c,
1d, and 1e) form a conformable series (Figure 11) which is unconformably
overlain by Late Cambrian black shale (Fonseca, 1998). The lithostratigraphic
succession described below was adopted by previous workers (Read 1980). The
general surface geology is outlined in Figure 12.

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63

Local Lithology

The oldest rocks are Unit 1a which is composed of interbedded
brown to rusty weathering argillite, phyllite, variably bedded impure siltstone,
sandstone, quartzite, limestone and calcareous units. The unit outcrops in the
center of the Ketza Uplift north of the Peel fault that encompasses the Shamrock
target.

Unit 1b is a narrow bed (25 to 60m) of fossiliferous,
well-laminated silty limestone that appears to be transitional from the
underlying argillite to the overlying phyllitic limestone. The unit does not
crop out on the property but has been intersected in drillholes.

Unit 1c is a recessive weathering unit of 75 to 105m thickness
composed of brown to gray-green phyllitic limestone, calcareous mudstone and
argillaceous limestone. The upper contact of the unit is gradational with the
overlying massive to thick bedded blue gray limestone. This unit crops out in
exposures along Cache Creek above the mill site.

Unit 1d is host to all replacement-type manto mineralization on
the property. The lower contact is gradational and arbitrarily defined when the
well-bedded limestone becomes the major component. The unit is from 120 to 180m
thick. The limestone is a gray, uniformly bedded, clean limestone with
distinctive Archeocyathid fossils (FSLT) occurring near the top of the unit. An
internal stratigraphy has been reCoGnized in the mine site area. The internal
beds are separated on the basis of textures. Beds of massive fine-grained
light-gray limestone (MSLT), blue fine-grained crystalline limestone (BXLT),
thin and wispy silt banded limestone (WBN), and silty black limestone (BSLT) are
reCoGnizable in drill core and outcrop. The unit is locally dolomitized (DOLT),
recrystallized and orange weathering near in the vicinity of mineralization. The
limestone is resistant and forms prominent cliffs and ridges throughout the
region.

Unit 1e is composed of a thin (0 to 50m) green mudstone bed
which forms a distinctive marker horizon. The unit is locally to pervasively
clay- or talc-altered in the vicinity of mineralization. The mudstone is
generally recessive, poorly exposed and often required additional ground support
in the underground workings where it formed the hanging wall of the Peel zone.

Unit 2a is composed of carbonaceous to graphitic black shale
with a well-developed slaty cleavage. The thickness of the unit is unknown as
the top of the unit is not exposed on the property. The unit crops out in the
fault-bounded panels at the Peel Oxide zone and in the Sue Creek area north of
Cache Creek. A discontinuous unit of dull orange-weathering dolomite, Unit 2b,
outcrops in the western portion of the property. This is a regional unit mapped
by Read (1980) that was not reCoGnized on the property by Canamax.

Alteration

Dolomitization or iron carbonate replacement (FECO) alteration
envelopes the manto mineralization and is especially well developed in areas
lateral to the mantos where the host limestones are brecciated. The carbonate
replacement deposits result in the migration and precipitation of calcite in the
rocks surrounding the mineralization. Sheeted white calcite veins are exposed in
the footwall rocks in the Break open pit and amorphous white calcite banding
occurs in the BXLT unit in proximity to the Peel/Ridge zones and in the upper
plate rocks in the Hoodoo area. The calcite-rich limestone beds are referred to
as zebra rock.

Silicification, sulfidization, and bleaching are closely
associated with quartz-sulfide veins in sedimentary rocks in the
argillite-hosted targets. Skarn mineralization at the Project is rare, and
usually does not yield significant gold values. Epidote, biotite and diopside
hornfels are wide-spread in Unit 1a, with quartz-sericite enclosing a core of
quartz and silicification.

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64

Structure

The Property lies on the southern flank of a westward plunging
anticline which is cored by the Unit 1a argillite exposed along Peel Creek. The
strata are strongly folded with limbs ranging from steep to flat-lying. A later
deformation has overprinted these structures with broad, open folds and drag
folds that occur adjacent to thrust faults.

A synclinal closure has been mapped in the Peel Ridge mine site
area where mineralized bodies occur on both limbs of the fold. A major synclinal
fold with parasitic anticlinal folds has been mapped northwest of the mine site
area in the upper plate rocks overlying the Peel thrust fault. Limestone beds of
Unit 1d host gold-bearing oxides and sulfides at the Hoodoo and Comet zones in
the core and on the western limb of a tight anticline.

In the region, the thrust faults are northeast-directed with
displacements of up to 450m. The Peel fault is thought to be a reactivated
thrust fault that pre-dates the block faulting. It is cross cut and offset in
the Peel - Ridge fault by northwest-trending faults. The Peel fault intersects
the Ridge zone ore deposit and juxtaposes Lower Cambrian argillite Unit 1a over
the Lower Cambrian limestone Unit 1d. The fault has two different orientations
changing from steeply dipping east of the Ridge zone to shallow dipping over the
Ridge zone and to the west. The fault has been traced westward to the area of
the Lab deposit.

The stratigraphy, thrust faults and folds have been disrupted
by numerous reverse, normal and strike-slip faults. High angle block faults
related to uplift and doming are prominent. Detailed mapping in the underground
workings indicates that the Peel and Ridge oxide deposits occur within a 200m
wide zone of structural deformation bounded by two northwest trending block
faults.

The Ketza Uplift is composed of uplifted and altered Lower
Cambrian Unit 1a strata. Structures within the uplift include thrust faults,
upright folds, and high-angle normal faults all of which have strong spatial
association with plutonic related type deposits. An apophysis of a
mid-Cretaceous stock is postulated to lie beneath the core of the uplift and the
Peel Creek anticline. Possible hornfels in the Unit 1a argillite along Peel
Creek and a coincident aeromagnetic anomaly are cited as supporting this
hypothesis. Block faulting predates, or was contemporaneous with, the
mineralizing event and the faults acted as conduits for the metal-bearing
solutions.

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65

Figure 11: Stratigraphic Column



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66

Figure 12: Generalized Geology Map



Exploration

In May of 2005, YGC commenced drilling at the Ketza River
Project, and has been drilling continuously since then, with the exception of
holiday shutdowns. In 2006, the main Project area was flown for new
one-meter-contour topographic map coverage. In the spring of 2007 the Ketza
claim block was expanded on the south and west. A limited amount of
reconnaissance work was conducted in 2006, followed by a major effort in 2007,
yielding several new target areas. Ground magnetic and gravity surveys were
carried out over known mineralization. A soil sampling program was completed in
the area of Peel Ridge north to the top of Shamrock Mountain. A petrographic
study was completed for manto-style mineralization.

Samples from three 1996 drillholes were analyzed for
multi-element geochemistry in an attempt to determine the presence of a zonation
pattern that might point to the location of a postulated buried intrusive as
postulated by Fonseca (1998). The holes were located at the QB Zone, the 3M Zone
and one in between. The ratios of gold-arsenic and gold-bismuth indicated that
the QB Zone hole was closest to the intrusive (Stroshein, 2006).

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67

Rock Sampling

Tarn Pit

The wall of the Tarn Pit was channel sampled in the fall of
2006. A total of 40 samples were collected, each one 5.0 m in length. The
samples averaged 2g/t-Au, with a high of 9.7g/t -Au.

Creek Zone

Outcrops just above the pad for holes KR-06-920 through 922
contain massive pyrite with black coatings on the crystal surfaces. The black
coating is assumed to be chalcocite since the samples ran approximately 0.2% Cu.
Other dark grains in the rock were identified as tetrahedrite. All four samples
contained gold values.

Gully Pit

The Gully Zone is part of the Shamrock target, and was mined by
Canamax in the late 1980s, yielding approximately 8,000t of oxide grading
10.0g/t -Au (Hodgson, 1991). Mining stopped when sulfide mineralization was
encountered, leaving a prominent massive sulfide rib protruding from the pit
floor, and a highly oxidized shear zone along its side.

In mid-August of 2006, a series of chip and channel samples
were collected across the massive sulfide rib and the adjacent shear zone. The
assays of the samples contained significant amounts of gold.

Soil Sampling

Aurora Geosciences was contracted to conduct a soil sampling
program large portions of Peel Ridge and Shamrock Mountain in 2007. The sampling
was done on a 50m grid, and targeted areas where 200m spaced soil lines had
identified anomalous gold. Results are being analyzed at the time of this
report.

Topographic Surveys

On August 29, 2006 Aero Geometrics of Vancouver flew the
Project, including the existing claim block in 100km2 of new
coverage. Two sets of digital topographic maps, with 10m and 1m contour
intervals were produced.

In early September 2007, Aero Geometrics of Vancouver flew
portions of the Project in which mining claims had been staked since the survey
the previous year. The mapping is in progress, and will have a 5m contour
interval.

Mineralization

Mineralization on the property is generally of two types: manto
and chimney, carbonate-hosted replacement deposits that occur south of the Peel
fault and quartz-sulfide fissure veins and quartz-breccia zones in siliciclastic
rocks that occur north of the Peel fault. Over 30 targets and prospects have
been identified on the property. For purposes of resource estimation the area
has been divided into four model areas with most of the targets falling into one
of the following areas (Figure 13):

- Tarn
  Area:                           
  Tarn
- Penguin-Lab
  Area:             
  Penguin, Flint, Lab and Hoodoo;
- Peel
  Area:                             Ridge,
  Peel, Nu-Break
- Shamrock
  Area:                   Gully,
  QB, 3M.

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68

All areas except Shamrock occur south of the Peel fault and
contain manto and chimney, carbonate-hosted replacement deposits while Shamrock
occurs north of the Peel fault and contains quartz-sulfide fissure vein and
quartz breccia zones in siliciclastic rocks. The Knoll and Freds Vein deposits
were not modeled for the resource.

Mineralized Zones

Peel, Penguin-Lab and Tarn areas are generally of the gold-rich
carbonate-hosted chimney- and manto-style sulfide mineralization and its
oxidized equivalent. The lone exception to this is Freds Vein East, which is a
quartz-sulfide vein hosted by siliciclastic rocks immediately north of the Peel
fault. While Freds Vein East is geologically similar to the mineralization in
the Shamrock area, it falls within the Peel area because of its location on Peel
Ridge.

The mantos and steeply-plunging chimneys are preferentially
hosted by three limestone facies of Unit 1d: BXLT, MSLT and WBN, which are
confined to the south side of the Peel fault. The location of mineralization is
controlled by high-angle planar and listric normal faults, fold hinges and by
the location of the three favorable carbonate facies. In general, the mantos
have an elongate geometry.

Principal sulfide mineralogy consists of pyrrhotite, pyrite,
arsenopyrite, marcasite and minor chalcopyrite. Galena and sphalerite are rare.
Oxidized mineralogy primarily consists of hematite and goethite. Scorodite,
after arsenopyrite, is common. A distinctive lustrous hydrous iron silicate
mineral named hisingerite is present, and is often associated with high-grade
gold values.

Sulfide mantos include Peel Sulfides, Peal East Sulfides,
Penguin, Tarn, Lab and Flint. Oxide mantos include Peel Oxides, Break-Nu, Ridge
and Hoodoo.

Tarn Zone

The Tarn zone is located approximately 2km west of the Ketza
River Camp in the headwaters of Cache Creek. Mineralization consists of two
mixed oxide-sulfide bodies ranging from 85m to 115m in length, 35m to 60m in
width and 5m to 8m in thickness. Mineralization is exposed in the Tarn pit and
extends to 75m in depth and is approximately horizontal. Strike is about
015o.

Approximately 18kt of oxidized Manto-style mineralization was
mined from the Tarn zone in the late 1980s. Current exploration focuses mainly
on the sulfide Manto beneath the oxide.

Penguin Zone

The Penguin zone is manto-style sulfide mineralization located
approximately 1.25km west of the Ketza River Camp, also in the Cache Creek
drainage. Two mineralized bodies occur within a presently defined area of
approximately 425m in length, 100m in width and 15m in thickness. The first
zone, formerly known as the Flint zone, is sub-vertical with a plunge of
25o to the southwest. It is approximately 150m in length, 60m in
height and 10m in width. This zone occurs 90m below the surface with an azimuth
of 050o.

The second zone is more flat-lying with approximate dimensions
of 150m in length, 115m in width and 4m in thickness. It occurs approximately
120m below the surface with a plunge of 4o to the southwest and an
azimuth of 020o.

Lab Zone

The Lab Zone is manto-style sulfide mineralization located
approximately 1.25km northwest of the Ketza River Camp on the southern slope of
Peel Ridge. The Lab zone consists of four distinct zones that occur over an area

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69

measuring 320m x 400m and average 5m in thickness. The four
bodies occur in two pairs at right angles to one another with the arms striking
northeast and southeast. The former Calcite zone is now included in this zone.

Hoodoo Zone

The Hoodoo zone is manto-style oxide/sulfide mineralization
located approximately 1.5km northeast of the Ketza River Camp on the southern
slope of Peel Ridge. Early drilling stopped once sulfide mineralization was
reached but recent drilling has been targeting the sulfide mineralization
underlying the oxide mineralization exposed at surface. Recent exploration has
also been successful in extending the oxide mineralization. Geometrically the
Hoodoo zone is a flattened cylinder with a presently defined diameter of 70m and
a thickness of 15m.

Peel Model Area Occurrences

Peel Zone

The Peel zone is located about 0.75km north of the Ketza River
Camp on the south flank of Peel Ridge. Mineralization consists of irregular
interconnected lenses and pods in area approximately 400m long x 400m wide zone.
The Peel zone consists of the Peel West, Ridge, Main Peel, or Peel oxide, zones.
The Nu-Break and Freds Vein East zones are also on Peel Ridge but are somewhat
to the east of the main grouping of mineralized bodies that comprise the Peel
zone.

Peel West Zone

The Peel West zone consists of four mineralized bodies with a
generally circular footprint. The four bodies occur over an area measuring 320m
x 260m and range in thickness from one to 10m. The mineralized bodies are
exposed at the surface and extend to a depth of 60m. The overall azimuth of the
zones is 325o.

Ridge Oxide Zone

The Ridge oxide manto zone as presently defined consists of
three separate mineralized bodies occurring over an area approximately 500m in
length, 85m in width and 50m in thickness. Individual mantos vary from 5 to 10m
in thickness. The zone is exposed at the surface and extends to a depth of 120m.
Mantos dip from fairly flat-lying to 55o to the north. Azimuths range
from 070o to 350o.

Production from the oxide mineralization in the Peel and Ridge
deposits was approximately 148,844t at an average grade of 13g/t-Au. Oxide
mineralization is cut off by the bounding northwest-trending East Side
fault.

Nu-Break Zone

The Nu-Break zone consists of oxide/manto mineralization
located approximately 1.0km north-northeast of the Ketza River Camp on the nose
of Peel Ridge. The overall dimensions of the mineralized body as presently
defined are approximately 175m in length, 75m in width and 30m in thickness. The
zone is exposed at the surface and extends to a depth of 95 m below the surface.
The azimuth of the zone is approximately 300o with a dip of
75o to the south.

Freds Vein East

Freds Vein East is a quartz-sulfide vein-like occurrence in
siliciclastic rocks on the north side of the Peel fault. The vein is located on
the north side of Peel Ridge in the Peel Creek drainage approximately 1.0km
north of the Ketza River Camp. The exposed strike of the structure is
approximately 100m. The width is difficult to

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70

characterize and the down dip extension has not yet been
defined. The zone is exposed at the surface. The strike varies from
065o to 080o and dip varies from 80o to
85o south.

Shamrock Model Area Occurrences

All of the mineralization in the Shamrock area occurs in
siliciclastic rocks north of the Peel Fault. Mineralization occurs as fissure
veins, breccia zones and disseminations rather than chimneys and replacement
mantos.

Gully Zone

The Gully Vein is a quartz-sulfide vein occurring in
siliciclastic rocks north of the Peel fault. The vein is located approximately
1.75km north of the Ketza River Camp on the south flank of Shamrock Mountain in
the Peel Creek drainage. Samples from drilling range up to 37.6g/t -Au. The
overall dimensions of the mineralized body as presently defined are
approximately 300m in length, 100m in depth and 4m in thickness. The zone
extends from the surface to 125m with an azimuth of 165o, a dip of
45o west and a plunge of 9o.

QB Zone

The QB zone consists of multiple irregular lenses of
quartz-breccia occurring in siliciclastic rocks north of the Peel fault. The
vein is located approximately 1.75km northeast of the Ketza River Camp on the
south flank of Shamrock Mountain in the Peel Creek drainage. The overall
dimensions of the mineralized body as presently defined are approximately 525m
in length, 220m in width and 2m to 70m in thickness. The zone extends from the
surface to a depth of 270m with an azimuth of 140o and a plunge of
040o to the south.

3M Zone

The 3M zone is located about 2.5km northeast of the Ketza River
Camp on the ridge between Peel and Misery Creeks. Mineralization consists of
quartz breccia and disseminations in siliciclastic rocks. The mineralized body
is approximately 525m in length, ranges from 2m to 12m in width and extends to
230m in depth. The upper part contact of mineralization ranges from 40m to 90m
below the surface. The azimuth of the mineralized body is 150o and
the dip is 010o to the west.

Knoll Zone

The Knoll zone is located about 3.0km northeast of the Ketza
River Camp on the north slope of Shamrock Mountain. It is just outside of the
Northwest edge of the Shamrock model area. It is comprised of a body of oxide
mineralization measuring 45m x 35m with a thickness ranging from 4m to 10m. It
is exposed at the surface and has been mined on a limited scale in the past.

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71

Figure 13: Drillhole Locations and Modeled Areas with
Deposit Names



Drilling

From May of 2005 through December of 2007, the Issuer drilled a
total of 674 holes for a total of 88,196m (Table 23). The principal objective of
the drilling programs was the continued definition of known mineralized areas
and the testing of newly discovered areas. All diamond drillholes completed in
the resource area since 2005 are shown in Figure 13.

Table 23: Summary of Diamond Drilling 2005 Through 2007

Year
      Operator
      No. of Holes
      Type drilling
      No. of m Drilled2005
    YGC Resources Ltd.
    99
    Diamond
    12,7342006
    YGC Resources Ltd.
    270
    Diamond
    33,8742007
    YGC Resources Ltd.
    305
    Diamond
    41,587Total
    
    674
    
    88,196


All of the drilling from 2005 through 2007 was diamond
drilling. Holes were started with NQ-sized core (47.6mm in diameter) or HQ-sized
core (63.5mm in diameter) and reduced to NQ-sized core as required. Holes
drilled for metallurgical purposes are HQ-sized (63.5mm) .

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72

Collar location are obtained by using a combination of a Leica
total station and a Trimble R8 differential GPS. Downhole surveys are done using
Reflex Maxibor II downhole survey tool. Prior to 2007 acid tests were used to
measure dip changes down hole.

Drill core is currently stored on site. Drill logs are entered
directly into a laptop in the core shack using DrillKing software. Recovery and
Rock Quality Designation (RQD) are recorded for each hole. Drilling Targets and
results:

Drilling was successful in extending and/or defining limits of
mineralization on the Peel, Tarn, Gully, QB and Lab zones. Parts of these remain
open. Drilling on the Penguin and Calcite extension of Lab Zone was successful
in defining mineralization at the location of magnetic highs.

A lack of significant mineralization was found by the drilling
of the Peg-Fury (south of QB zone), Creek, Megawatt (south of Peel area), Nose
and Bluff zones, as well as the previously untested ground between Lab and Peel.
The Thrust vein, near Tarn was found to be cut off by a low angle fault at
shallow depth.

The results were inconclusive at the Crest, Freds Vein East,
and Break Zones, and more drilling will be required to either define or disprove
significant mineralization at these zones. Significant mineralization was
drilled at Hoodoo, but definition of the nature and orientation of the
mineralization will require more drilling.

Sampling Method and Approach

The sampling procedures associated with the drilling programs
utilized by YGC after acquiring the Ketza River property are described in this
section. Little is known of the sampling methods employed by earlier operators.
Sampling procedures, collection and security for the Issuer were completed under
the direction of Qualified Person Ed Gates.

During the diamond drilling programs, geological personnel
attended the drill at regular intervals as well as during drilling of
mineralized intersections of predicted zone drillholes. Geologic personnel are
on hand to determine the completion depth of each hole and to shut down the
drillhole. The core is delivered to the core shack at the end of each working
shift or when the drillhole is completed.

The core is laid out in sequence at the core shack. The core is
logged directly into laptop computers by geologists and sample intervals are
marked on the core and recorded on the drill logs. The core is then stored
within the core shack and samples are split in sequence. Personnel conducting
the sampling are supervised by the geologist who logs the core.

All drill core is logged and photographed before sampling. The
descriptions are entered onto prepared log forms on laptop computers using coded
entries for lithology, texture, structure and mineralogy.

Oxide and sulfide mineralization are sampled on the basis of
geologic features. Maximum sample interval for HQ core is 1.5m and 3.05m for NQ
core. The minimum sample interval is 0.2m. Once samples are identified and
marked, sample tickets are stapled into the sample locations. Sample intervals
and geology are then logged into Drill King software.

Core is then taken into the splitting room where sampled
intervals are split or cut (massive sulfide intervals are cut with a diamond
saw. Core from oxide zones often occurs as iron oxide rubble. In these
instances, the rubble is sampled with a spoon rather that split or cut.

Half of the sample is placed in the sample bag and half is
retained in the core box for future reference. The detachable half of the sample
ticket is remove from the core box and placed inside the sample bag. The
remaining

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73

half of the sample ticket remains in the core box with the
corresponding sample number. Core boxes are then remove to a designated core
storage yard where they are placed on core racks.

Sealed sample bags are then place in large white rice bags, the
rice bags are labeled with the hole number, the contained sample numbers and the
rice bag are numbered for transport (i.e. Bag 1 of 6). Rice bags are then placed
in an outside storage bin where they await shipping.

Samples are transported by company personnel at least once per
week to Canadian Freightways in Whitehorse, Yukon. A sample shipment form is
filled out and kept on file, indicating the date, truck being driven, person
transporting the samples, hole numbers and number of bags. Upon arrival in
Whitehorse, samples are directly loaded upon pallets at Canadian Freightways and
shipped to ALS Chemex.

As a rule, core recovery is very good in limestone and sulfide
mantos, very good in the Gully vein and the argillite wallrock, moderate in the
QB zone stockwork and fault intersections and moderate to poor in the oxide
mantos.

Sample Preparation, Analysis and Security of Samples

In the 1980s Canamax used Northern Analytical Laboratory in
Whitehorse, YT and Rossbacher Labs in Burnaby, BC. For sample preparation and
analysis. In 2006-2007, YGC used Eco-Tech labs in Kamloops, BC. In 2006-2007 all
sample preparation was done by ALS Chemex in their Elko, Nevada or Terrance
British Columbia sample preparation facilities. No sample preparation was done
on site.

ALS-Chemex (2006-2007):

Samples are dried at 110-120 C and then crushed with either an
oscillating jaw crusher or a roll crusher. The ALS Chemex QC specification for
crushed material is that >70% of the sample must pass a 2mm (10 mesh) screen.
A whole or split portion derived from the crushing process is pulverized using a
ring mill. The ALS Chemex QC specification for final pulverizing is that >85%
of the sample be less than 75 microns (200 mesh) A 30g split is fire assayed and
the resultant bead is parted and digested with aqua regia, and the final result
is measured using Atomic Absorption. Assays above 1.0ppm were re-assayed using a
gravimetric finish.

Eco-Tech Labs followed essentially the same process.

Quality Controls and Quality Assurance

2005-2007 (YGC-YNGC)

The YGC-YNG laboratory Quality Assurance/Quality Control
(QA/QC) program consists of inserting a blank sample into the sample stream at
the top of every hole and then inserting either a standard sample or blank
sample at every 15th sample. If a hole has less than 15 samples, a
standard and blank are inserted at the end of the hole.

The blanks are non-commercial material, composed of locally
derived barren limestone, and have not been certified to be of zero grade.

Prior to mid-year 2006, a non-commercial moderate grade
pseudo-standard was used, which had been collected from a mineralized outcrop
in the Ridge pit and blended by hand. When this first standard was depleted, a
second supply of higher grade material was collected and blended from a local
high grade stockpile. These standards were inserted simply to ensure that the
lab would catch high grade assays, and not necessarily to assess the precision
of the lab. The shortfalls of these non-commercial standards was realized, and
commercial standards from CDN Resource Laboratories Ltd were used starting in
2006.

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74

After mid-year 2006, for manto-styled mineralization Gold Ore
Reference Standard CDN-GS-10A (9.78+/ - 0.53g/t) or CDN-GS-10B (8.6 +/- 0.49g/t)
was used. For stockwork-style mineralization Gold Ore Reference Standard:
CDN-GS-2B (2.03 +/- 0.12g/t) was used.

Due to communication issues, the standard insertion protocol
was not strictly adhered to once a particular standard supply was depleted.
There were minor labeling issues where blanks and standards had labels swapped,
or the wrong standard label was recorded. These issues were identified and
corrected as confirmed by comparing the geochemistry of the multi-element assay
results to those of the standards. The problems reflected an issue with check
sample handling and not with lab results.

Occasionally, higher-grade gravimetric assays were re-assayed
as a check; all of these refires were within acceptable ranges of the original

Interpretation

Graphs were plotted for each set of standards, and blanks.
These are shown in Figures 14 to 17. With the exception of a few anomalies which
may represent mislabeled samples, most of the commercial standards behave as
well can be expected. Only a few assays are outside of the 2 standard deviations
range, and most are within one standard deviation. The non-commercial standards
assayed with a much wider variation, but consistently showed elevated grades as
would be expected, although not at precise grades as one would expect from the
commercial standards. The blank samples show several anomalous results which may
be due to mislabeled samples, sample preparation contamination, or anomalous
gold present within the blank.

Figure 14: Laboratory QA/QC Blank Samples



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75

Figure 15: Laboratory QA/QC 1-2g Commercial Standards



Figure 16: Laboratory QA/QC 10g Commercial Standards



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76

Figure 17: Laboratory QA/QC,Non-Commercial
Standards



Mineral Processing and Metallurgical Results

Two programs of metallurgical test work have been recorded for
Ketza River as follows:

- Lakefield Research in 1986-87; and
- PRA in 2003-04.

The results of these test programs are summarized below.

YNG is currently conducting a metallurgical test program at PRA
in Vancouver, Canada to determine and optimize the metallurgical characteristics
and process flow sheets of the ore types that comprise the current resource. At
this time, no preferred processing flow sheet has been defined for Ketza River
awaiting results from the current program being done at PRA.

Lakefield Research 1986-1987 Test Work

A series of standard cyanide leach tests were run under various
conditions of grind, pre-aeration and leach time, with and without CIL
(carbon-in-leach). The precise conditions of the individual tests are reported,
along with the results, in Lakefield Research (1986a, 1986b, 1987).

The initial results reported by Lakefield (Lakefield Research
(1986a, 1986b) indicated that excellent gold recoveries (over 94%) could be
achieved at a relatively coarse grind (69% minus 200 mesh) and 48hr retention
time, without pre-aeration. Residues contained significantly less than 1g/t-Au.
These tests were carried out on a single composite sample.

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77

A series of nine additional samples from the oxide zone was
subjected to confirmatory tests (Lakefield Research, 1987). The recoveries on
these tests were significantly lower, with only two samples yielding residues
below 1g/tAu. Average recoveries were 87%. Further tests at finer grinds (80%
minus 200 mesh) were carried out on these nine samples, and although recoveries
fell short of those anticipated from Lakefield Research (1986a and 1986b), they
were consistently over 90%.

YNG is currently conducting a sampling and testing program to
determine metallurgical characteristics of the ore types that comprise the
current resource.

PRA 2003-2004 Test Work

The most recent metallurgical test work for Ketza River was
conducted at PRA in Vancouver, Canada between November 2003 and October 2004.
This test work was bench-scale and included:

- Flotation (batch) for the production of rougher and scavenger concentrates;
- Direct cyanide leaching with and without pre-aeration;
- Bulk density determination; and
- Specific gravity determination.

None of the tested samples were identified as to
representativeness of a specific ore type, and only the bulk density
determinations identified the sample source. Others were identified only as a
composite.

The results of these tests are summarized below in Table 24.

Table 24: Summary of PRA Metallurgical Test Results
2003-2004

|Date   | Test/Description                           | Sample                        | Units | Results                 
|------ | ------------------------------------------ | ----------------------------- | ----- | ------------------------
|Nov-03 | Flotation; P8074μm;                        | Composite 1; head grade of    | %     | Au recovery = 82.2      
|       | Rougher-Scavenger Concs (1)                | 9.15 g/t Au; 0.8 g/t Ag       | %     | Ag
      recovery = 66.2
|Nov-03 | Cyanide Leach #1; pH 10.5; 72
      hrs;   | Composite 1; head grade of    | %     | Au recovery = 77.3      
|       | 40%
      solids; P8074μm; 1 g/L NaCN      | 9.15 g/t Au; 0.8 g/t Ag       | %     | Ag
      recovery = 19.1
|Mar-04 | Cyanide Leach #2; pre-areate 16
      hrs; | Composite 1; head grade of    | %     | Au recovery = 65.9      
|       | pH 10.5; 72 hrs; 40% solids,               | 9.15 g/t Au; 0.8 g/t Ag       | %     | Ag recovery = 70.3      
|       | P8085μm; 1g/L NaCN                         |                               |       |                         
|Mar-04 | Cyanide Leach #3; pre-areate 16 hrs;       | Composite 1; head grade of    | %     | Au recovery = 91.3      
|       | pH 10.5; 72 hrs; 40% solids,               | 9.15 g/t Au; 0.8 g/t Ag       | %     | Ag recovery = 60.6      
|       | P8085μm; 1g/L NaCN                         |                               |       |                         
|Mar-04 | Cyanide Leach #4; pre-areate 16
      hrs; | Composite 1; head grade of    | %     | Au recovery = 82.0      
|       | pH 10.5; 72 hrs; 40% solids,               | 9.15 g/t Au; 0.8 g/t Ag       | %     | Ag recovery = 74.6      
|       | P8054μm; 1g/L NaCN                         |                               |       |                         
|Mar-04 | Cyanide Leach #5; pre-areate 16 hrs;       | Composite 1; head grade of    | %     | Au recovery = 78.0      
|       | pH 10.5; 72 hrs; 40% solids,               | 9.15 g/t Au; 0.8 g/t Ag       | %     | Ag recovery = 66.6      
|       | P8054μm ; 1g/L NaCN                        |                               |       |                         
|Sep-04 | Specific Gravity                           | Composite 1 (average 2 tests) | g/cm3 | 4.265                   
|Oct-04 | Bulk Density - Waxed                       | KR-96-575 57.95m 5.93g/t Au   | g/cm3 | 2.58                    
|Oct-04 | Bulk Density - Waxed                       | KR-96-575 57.95m 5.93g/t Au   | g/cm3 | 2.57                    
|Oct-04 | Bulk Density - Waxed                       | KR-96-575 52.4m 0.86g/t Ag    | g/cm3 | 3.66                    
|Oct-04 | Bulk Density - Pulverized                  | KR-96-575 57.95m 5.93g/t Au   | g/cm3 | 2.71                    
|Oct-04 | Bulk
      Density - Pulverized            | KR-96-575 52.4m 0.86g/t Ag    | g/cm3 | 3.66                    

(1)Recovery represents total recovery for rougher
and scavenger concentrates.

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78

The test results indicate the following:

- Good gold and silver recoveries of 82.2% and 66.2%, respectively, were
  obtained by flotation into rougher and scavenger concentrates at a fine grind
  of P8074μm using standard flotation conditions and reagents;
- Good gold and silver recoveries averaging 72% and 68%, respectively, were
  obtained by direct cyanidation with a 16 hour pre-aeration using standard
  leaching conditions and a 72 hour leach time at fine grinds of P80
  54μm and 74μm;
- Less favorable recoveries were achieved without pre-aeration at the same
  leaching conditions;
- Bulk density determinations averaged 2.62 and 3.66g/cm3for the
  two samples using waxed and pulverized methods; and

Specific gravity determinations averaged 4.265g/cm 3
as an average of two tests on the same sample.

.Mineral Resource and Mineral Reserve Estimates

A series of standard cyanide leach tests was run under various
conditions of grind, pre-aeration and leach time, with and without CIL
(carbon-in-leach). The precise conditions of the individual tests are reported,
along with the results, in Lakefield Research (1986a, 1986b, 1987).

The initial results reported by Lakefield (Lakefield Research
(1986a, 1986b) indicated that excellent gold recoveries (over 94%) could be
achieved at a relatively course grind (69% minus 200 mesh) and 48hr retention
time, without pre-aeration. Residues contained significantly less than 1g/t-Au.
These tests were carried out on a single composite sample.

A series of nine additional samples from the oxide zone was
subjected to confirmatory tests (Lakefield Research, 1987). The recoveries on
these tests were significantly lower, with only two samples yielding residues
below 1g/tAu. Average recoveries were 87%. Further tests at finer grinds (80%
minus 200 mesh) were carried out on these nine samples, and although recoveries
fell short of those anticipated from Lakefield Research (1986a and 1986b), they
were consistently over 90%.

The Issuer is currently conducting a sampling and testing
program to determine metallurgical characteristics of the ore types that
comprise the current resource.

In 2007, the Issuer undertook a complete update of the Ketza
River resource estimate. Compared to previous estimates, the 2007 update
included 637 additional drillholes in the resource database and reflected a
significantly enhanced understanding of geologic controls on mineralization in
both the manto and Shamrock zones. The 2007 resource estimate was also
undertaken with a view to transition the Project from an exploration project to
a feasibility/development project.

Accordingly, the focus of the 2007 resource estimate was to
identify measured and indicated resource shapes with grades and continuity that
could serve as the starting points for definition of mineable shapes and
reserves as part of the ongoing pre-feasibility study that the Issuer has
commenced on the property. Unlike previous resource estimates, a hard geologic
boundary was used to tightly constrain resource shapes in three dimensions.

The resource estimation was done by Russ White (SRK) with
assistance in wireframe modeling and input from Larry Snider (the Issuer). Larry
Snider also performed the pit optimizations used for distinguishing Open Pit
from Underground resources.

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79

The drillhole database is currently maintained at the Ketza
Minesite in acQuire software, and was transferred from a Drill King database in
late 2007. It contains information for 1,360 drillholes, including 674 core
holes from the 2005 to 2007 programs, 591 core holes from pre-2005 programs
(1984-1996), and 95 RC holes from 1987.

Data was extracted from acQuire and imported to Vulcan in 4
separate tables.

- Collar Location Surveys Hole ID, Northing, Easting, Elevation and
  Hole Depth;
- Downhole Orientation Surveys - Downhole depth, Azimuth and plunge of hole
  at various downhole depths;
- Geologic Logs  Table 25 lists the fields recorded in drillholes from 2005
  to 2007. Only the LCODE field was entered in the database for previously
  drilled holes. Table 26 lists the common lithologies logged at Ketza River;
  and
- Assays -From, to, and gold assay

Table 25 Geology Database Fields

|Field       | Description            | Entry         
|----------- | ---------------------- | --------------
|LCODE       | Lithology Code         | Alpha Code    
|STR1        | Structure 1            | Alpha Code    
|STR2        | Structure 2            | Alpha Code    
|TXTR1       | Texture 1              | Alpha Code    
|TXTR2       | Texture 2              | Alpha Code    
|PO          | Pyrrhotite             | Percentage    
|PY          | Pyrite                 | Percentage    
|APY         | Arsenopyrite           | Percentage    
|CPY         | Chalcopyrite           | Percentage    
|OXMIN       | Primary Oxide Mineral  | Alpha Code    
|OXINT       | Intensity of oxidation | Alpha Code    
|Description | Geologic Description   | Freeform Alpha

Table 26 Most Common Lithology Codes

|LCODE | Description                     | LCODE | Description                  
|----- | ------------------------------- | ----- | -----------------------------
|MSLT  | Massive-oolitic
      limestone | BSLT  | Black siltstone              
|WBN   | Wispy banded limestone          | SQA   | Siltstone/Quartzite/Argillite
|ARG   | Argillite                       | VEIN  | Vein                         
|LST   | Limestone                       | CAS   | Casing                       
|FSLT  | Fossiliferous
      limestone   | QTE   | Quartzite                    
|ARS   | Argillite/Siltstone             | FZ    | Fault zone                   
|OXIDE | Oxide
      Mineralization      | QAS   | Quartzite/Argillite/Siltstone
|SULF  | Massive sulfide(>50%)           | BA    | Black argillite              
|QSA   | Quartzite/Siltstone/Argillite   | OVB   | Overburden                   
|MUD   | Mudstone                        | HFLS  | Hornfels                     
|SAQ   | SLT/ARG/QTE                     | AQS   | Argillite/Quartzite/Siltstone
|BXLT  | Blue crystalline limestone      | PHIL  | Phyllite                     
|SLT   | Siltstone                       | QTZ   | Quartz                       

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80

|LCODE | Description                   | LCODE | Description
|----- | ----------------------------- | ----- | -----------
|ASQ   | Argillite/Siltstone/Quartzite | GO    | Gouge      

The gold value was recorded in the database using the following
priority: average of fire assays, if available, single fire assay if available,
or AA assay. Unsampled intervals are omitted from the database and treated as
zero values in the compositing routine, and lost-core intervals recorded as -9.
Previous databases had recorded below-detection-limit (BDL) assays as values
ranging from 0.015 to 0.000 depending on the detection limit and the person
doing data entry. The lowest detection limit from any program was 0.005g/t, so a
standard BDL value of 0.001g/t was chosen as a flag that the sample was actually
assayed, but had negligible gold. Raw assays were capped at 100g/t for all
deposits, which affected 8 assays out of 29,650 assays. Further reduction of
risk due to anomalous assays was accomplished with high-grade distance
restrictions during estimation.

Of the 1,360 drillholes in the Ketza database, 82 Drillholes
were rejected from the database due primarily to irreconcilable location issues.
A few were rejected due to the hole orientation which drilled directly down the
vein making any given intercept biased or unable to be extrapolated accurately
to any given volume. Three RC holes were also rejected due to likely downhole
contamination. Figure 18 is a drillhole location map showing the drilling that
was used for resource estimation. Another 34 non-resource holes contained no
significant mineralization and were drilled outside of any deposit of interest.
Although they were not specifically excluded they had no influence on this
resource estimate. Another 35 were drilled in the Knoll Zone which is
essentially mined out and therefore was not estimated. Table 27 is a summary of
drillholes used and rejected by model area.

Table 27: Summary of Drillholes used and Rejected by Model
Area

|      | Used
      for Resource | Rejected | Non-Resource | Total         
|----- | ----------------------- | -------- | ------------ | --------------
|Model | Number                  | Length   | Length       | Number        
|Area  | of
      Holes          | Drilled  | Sampled      | of
      Holes
|PEEL  | 583                     | 51,502   | 14,111       | 38            
|PENG  | 335                     | 38,575   | 12,312       | 20            
|SHAM  | 216                     | 27,133   | 18,702       | 10            
|TARN  | 75                      | 6,452    | 1,901        | 12            
|KNOLL |                         |          |              | 2             
|Total | 1209                    | 123,662  | 47,028       | 82            

Mineralized envelopes were defined based upon lithology codes
and gold assays, and modeled as wireframes in either Minesite or Vulcan
software. In most areas these represent limestone hosted manto and chimney
zones. In the Shamrock model area, these are siliciclastic hosted veins and
stockworks. Fifty-two separate wireframes were created, 23 in the Peel Area, 13
in the Penguin-Lab area, 12 in the Shamrock area, and 4 in the Tarn area. The
locations of these shapes are shown in Figure 19. Cross-sections are shown in
figures 19 through 21.

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81

Figure 18: Drillhole Locations and Modeled Areas with
Deposit Names



Figure 19: Cross-Section, Peel Deposit



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82

Figure 20: Cross-Section, Gulley Deposit



Figure 21: Cross-Section, Lab
Deposit



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83

The geologic database was used to determine the intensity of
mineralization, and the oxidation state of the mineralization. A temporary field
called TotSu was derived by adding the percentages of all of the logged
sulfides (PO+PY+APY+CPY).

An oxidation code was calculated based upon the geologic logs,
with influence from the LCODE, the total sulfides and the OXINT fields:

The resulting codes (valued 1 through 5) can be described as
follows:

| | 1. | Massive Oxide.            
| | -- | --------------------------
| | 2. | Moderate Oxide.           
| | 3. | Moderate or Unmineralized.
| | 4. | Moderate Sulfide.         
| | 5. | Massive Sulfide.          

The highly variable specific gravity of the ore mineralization
has been a significant issue at Ketza in the past. The oxide mineralization is
very light, and the sulfide material is extremely heavy. Estimates made prior to
mining did not adequately account for this. Very high-grade oxide material was
extrapolated into sulfide areas and ounces were over-estimated. Due to this
issue, exhaustive studies were undertaken by Canamax in the late 1980s to get a
more accurate density factor for the oxide material which was their primary mill
feed.

In 2006 numerous density measurements were made on sulfide ore,
yielding an average density of 4.2 for sulfide ore in the Flint, Gulley, Freds
Vein and Tarn areas.

In late 2007, specific gravity measurements were collected for
101 samples from across the entire deposit area. Due to the relatively few
samples measured and the apparent irrelevance of area on the measurements,
samples were analyzed primarily by lithology/ore type. Only a few samples of
pure oxide and sulfide material were collected for this program because
exhaustive studies had been made of these previously by Canamax in the late
1980s and YGC in 2005-2006. The samples taken in 2007 confirmed these previous
studies and that the average SG of the unmineralized material is 2.75. Based
upon the results form all of the studies, the following scheme was used for
assigning specific gravity values to each drillhole composite:

- Default: SG = 2.75;
- High-grade default, Au greater than 5.0g/t: SG = 3.1;
- Oxide: SG = 2.2;
- Moderate oxide: SG = 2.5;
- Moderate Sulfide: SG = 3.7; and
- Sulfide: SG = 4.2.

Table 28 lists the average and minimum and maximum SG values
for the various rock types at each of the areas.

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84

Table 28:Statisticsfor SG Data

|Material-> | ASQ
      + Min (Qtz Vn) | Dilution | Host Rock | LS + Min | Oxide | Sulf
|---------- | ------------------------ | -------- | --------- | -------- | ----- | ----
|Area       | #                        | Avg      | Min       | Max      | #     | Avg 
|Flint      |                          |          |           |          | 2     | 2.84
|FV         | 3                        | 2.76     | 2.68      | 2.84     | 2     | 2.77
|Gully      | 5                        | 2.83     | 2.7       | 3.24     | 3     | 2.76
|HD         |                          |          |           |          | 3     | 2.51
|Lab        |                          |          |           |          | 2     | 2.77
|Peel       |                          |          |           |          | 5     | 2.90
|Peng.      |                          |          |           |          | 2     | 3.04
|QB         | 9                        | 2.76     | 2.6       | 3.06     | 9     | 2.92
|Tarn       |                          |          |           |          | 3     | 2.73
|Total      | 17                       | 2.78     | 2.6       | 3.24     | 31    | 2.83

---

85

After the Specific Gravity value was assigned, another database
field (SGAU) was calculated by multiplying SG by the Gold Assay.
This was used in the compositing process to weight the composites by SG.

Drillhole assay data was composited at downhole lengths of
1.5m, broken at mineralized envelope boundaries. Unsampled intervals were
carried at a zero grade. A very few intervals of lost core, usually resulting
from highly oxidized mineralized zones, were omitted from the composites. The
majority LCODE field was recorded in composites, while SGAU, REDOX, and SG were
length-weight averaged as numeric values. After the composites were created, the
gold value was back calculated with the formula: AU = SGAU / SG.

Variograms were generated from 1.5m composites for each main
group of ore zones (Figures 22 and 23). Each group had at least one orientation
which yielded a recognizable variogram structure, but rarely more than one. This
is not uncommon for such discontinuous zones with limited spatial extent and
moderate drill spacing. The relative similarity of the recognizable variogram
ranges, influenced the choice of Major and Semi-Major axis of the search radius
in the grade estimation. Variogram model attributes are listed in Table 29.

Table 29: Variogram Model Parameters

|Deposit Area | Nugget | Sill_Dif | Range
|------------ | ------ | -------- | -----
|Peel         | 1.20   | 2.2      | 54   
|Ridge        | 0.28   | 1.6      | 51   
|Fork/Break   | 1.50   | 1.1      | 50   
|Lab          | 1.00   | 2.7      | 51   
|Hoodoo       | 1.00   | 4.6      | 60   
|Peng/Tarn    | 1.00   | 1.6      | 45   
|Gully        | 1.00   | 0.7      | 50   
|QB           | 2.00   | 2.0      | 60   
|3M           | 0.50   | 1.7      | 47   

Univariate statistics were used to determine high-grade
restriction levels for each individual area. The Gully deposit was treated
separately from the rest of Shamrock, as it has more consistent high-grade than
the QB and 3m zones. Probability plots and grade histograms were reviewed and
are summarized below in Table 30. Inside the mineralized envelopes, the Peel
area has the most consistent high-grade material, while Shamrock has the least.
The high-grade outside of the mineralized envelopes is relatively insignificant,
and in some cases high-grade restrictions were not required.

Table 30: Composite Summary Statistics by Model Area

|Model Area      | Count
      #Assays | g/t-Au
      Average | Quartile g/t-Au | HG
      Limit
|--------------- | ------------------- | -------------------- | --------------- | --------------
|Min             | Q1                  | Q2                   | Q3              | Max           
|Peel Inside     | 2,366               | 5.07                 | 0.00            | 0.14          
|Penguin Inside  | 1,038               | 2.74                 | 0.00            | 0.02          
|Shamrock Inside | 830                 | 1.83                 | 0.00            | 0.10          
|Tarn Inside     | 228                 | 4.14                 | 0.00            | 0.50          
|Gully Inside    | 246                 | 3.29                 | 0.00            | 1.21          
|Peel Outside    | 8,739               | 0.157                | 0.001           | 0.003         
|Penguin Outside | 7,401               | 0.102                | 0.001           | 0.001         
|Sham. Outside   | 7,779               | 0.147                | 0.001           | 0.005         
|Tarn Outside    | 997                 | 0.066                | 0.001           | 0.001         
|Gully Outside   | 4,107               | 0.068                | 0.001           | 0.001         

---

86

Four block models were defined for the model areas as shown in
Figure 18. Each block model consists of a framework with 5m cube blocks.
Wireframes of the 52 mineralized envelopes were used to assign a percentage
inside the envelope, and estimations were made separately for the inside and
outside block fractions. Any block which had more than 0.5% inside a mineralized
envelope was assigned a code corresponding to the wireframe.

Grade estimations were made using the inverse distance squared
estimation method. A minimum of 3 samples were required with a maximum of 12
composites used for each block. Based on the relative similarity of the
recognizable variograms, a standardized search radius of 50m x 50m was used. The
minor axis was generally kept down to between 7 and 12m depending on the zones
thickness and geometry. Zones which did not conform to a plane required wider
minor searches to ensure continuous estimation of blocks.

Estimation of block grades for the blocks and fractions outside
the mineralized envelope used a consistently narrow search to avoid smearing
grades over a spherical region. The orientation of the search radii for the
outside blocks varied from region to region depending upon the apparent
alignment of ore grades.

AUSG and SG values were estimated in the block models. This was
done as a means of weighting the estimation by the specific gravity of the
samples. Other variables include number of composites, distance to the closest
composite and average distance to composites used in the estimation. Gold values
were back calculated with the following formulas by dividing AUSG by SG.

An extra gold variable was estimated simply as a means of
applying the high-grade gold restriction. This restriction prevents a composite
above a specific threshold from influencing any block beyond a distance which is
shorter than the search radius. In this case the restricted search radii used
for samples above the threshold was 35m x 35m x 5m inside the mineralized
envelopes, and 20m x 20m x 5m for samples outside the mineralized envelopes.

Resources were classified by distance to nearest sample within
most ore shapes. Any block which was within 35m of the nearest sample was
designated as indicated, except in a few ore shapes which were forced to the
designation of inferred. In a few shallow, well-drilled mineral envelopes,
measured resources were allowed where the distance to the nearest composite was
less than 15m, and at least 12 composites were used to estimate the block. This
was allowed in 2 shapes in Peel, 2 in Lab and in the Gully zone in Shamrock.
Blocks which were more than 35m from the nearest sample were designated as
inferred in all ore shapes. Since these alignments used for outside blocks are
approximate and subject to revision, all outside block grades are considered
inferred.

This mineral inventory of all estimated (unmined) material
above a 1.0g cut-off is supplied for comparison to previous resources which were
listed in this fashion (Table 31). This is only considered an inventory, as much
of the material will likely never be recoverable with an open pit, and should
therefore be listed at a higher cut-off.

---

87

Figure 22: Peel Model Variograms



---

88

Figure 23: Penguin-Lab Shamrock Variograms



---

89

Table 31 Mineral Inventory at a 1.0g/t CoG

|            | Measured
      + Indicated | Inferred
|----------- | -------------------------- | --------
|Area        | kt                         | koz     
|Peel        | 2,444                      | 409     
|Penguin-Lab | 965                        | 138     
|Shamrock    | 1,630                      | 149     
|Tarn        | 86                         | 10      
|Total       | 5,125                      | 706     

Resource Definition

In order to distinguish between potential Open Pit Resources
and Underground Resources, pit optimizations were performed using Minesights
Lerchs-Grossmann implementation. The parameters used for these optimizations
were fairly liberal, as this exercise was done simply to determine which blocks
could reasonably be expected to be mined at open pit cut-offs. A 1.0g/t resource
cut-off was applied to any block that could optimistically be mined by an open
pit, and a 3.0g/t cut-off was applied to blocks outside of the optimistic pit,
to account for higher underground mining costs for those blocks. This was not
done as definition of reserves, simply as a way of eliminating the portion of
the Mineral Inventory which could not reasonably be expected to be recovered
economically.

Pit Optimization Net Value Calculation

A net value was calculated for every block in the model. The
net value considers mining cost, ore (process) cost, and recoverable gold value
as outlined below. The block model tracks the fractions of blocks within
mineralized envelope wireframes separately from the portion outside of the
wireframes. The portion inside the wireframe typically is higher-grade and
represents the potential ore portion of the block. Ore costs and recoverable
values can be applied to the inside and outside block fractions separately.
Calculation of the values outlined below results in the net value for each
block.

| |  | Mining Cost:The calculation for mining cost is
      fairly simple and involves multiplying the volume of the block by a
      tonnage factor to come up with a block tonnage. If blocks intersect
      topography, the block tonnage is reduced by the percent portion of the
      block above topo. A $2.82/t value is multiplied by the block tonnage to
      come up with a per block mining cost. For the purposes of the cost to mine
      a block of material, a blanket tonnage factor of 2.75t/m3was
      applied on the premise that changes in density will not markedly change
      the cost to blast, mine, and haul a given volume of rock as factors such
      as haul distance and equipment size are usually more important;
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Ore Cost:The total process cost and any
      additional ore tonnage costs are calculated for the potential ore fraction
      of each block. The per tonnage costs are multiplied only by the tonnage of
      the potential ore fraction of each block;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Recoverable Value:Likewise, the recoverable value
      is calculated only for the potential ore fraction of each block. The gold
      grade is multiplied by price per gram, ore tonnage and the metallurgical
      recovery;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Ore Revenue:Ore costs per block are then
      subtracted from the recoverable value, and if the result is positive, this
      is the ore revenue for the block. If the ore costs exceed the recoverable
      value, then it is not worth processing the block, and the ore revenue is
      set to zero; and                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Net Value:The net value of the block is simply
      the ore revenue minus the mining cost. Analysis of net values within the
      blocks can be used to determine waste, sub-ore, and ore based on
      mine-cut-off versus mill-cut-off. A waste block will have a negative net
      value equal to the cost to mine the block. An ore block will have a net
      value of more than zero, and is worth mining by itself. A sub-ore block
      will have a                                                                                                                                                                                                                                                                               

---

90

negative net value greater than the mining cost, and is worth
processing, but only if it needs to be mined in order to get to an ore
block.

| | Optimization Parameters              |                                 
| | ------------------------------------ | --------------------------------
| |                                      |                                 
| | Gold Price:                          | $1,000 US$/troy oz              
| |                                      |                                 
| | Metallurgical recovery               | 85%                             
| |                                      |                                 
| | Specific Gravity                     | SG variable as modeled per block
| | (for gold content and process costs) |                                 
| |                                      |                                 
| | Specific Gravity                     | 2.75                            
| | (for mining costs)                   |                                 
| |                                      |                                 
| | Mining cost/t                        | US$2.82                         
| |                                      |                                 
| | Process cost/t-ore                   | US$12.00                        

These parameters are based on a cost profile assuming an
operation of 1,500t-ore/d and an overall 8:1 stripping.

Lerchs-Grossmann Pit Optimization

Once the net values have been calculated, the Lerchs-Grossmann
process operates solely on these, using the specified pit slope. In the pit
optimization analysis, blocks must contain enough revenue in the VAL fields to
not only pay for their own mining, but also help pay for waste blocks above
them. Very low-grade blocks (with only minor revenue after process to partially
offset their own mining) can have their mining paid for by higher-grade blocks
below them, thus they can be treated as a form of incremental ore. Note that the
cut-off grade for each block will differ slightly as there are a variety of
modeled SGs which influence the net value in conjunction with the gold grade.
The output of the process is a surface file, which can be used in tabulating
resources from the block model. The mineral resource for Ketza River is
presented in Table 32. Figure 25 is a map showing the extent of the pits
resulting from this exercise.

---

91

Resource Statement

Table 32: Ketza River Resource Statement

|                       | Open
      Pit Resource | Underground
      Resource | Combined
      (OP+UG)
|---------------------- | ----------------------- | -------------------------- | ----------------------
|Area                   | kt                      | g/t-Au                     | koz                   
|Measured               |                         |                            |                       
|Peel                   | 303.2                   | 7.17                       | 69.8                  
|Penguin-Lab            | 205.2                   | 7.70                       | 50.8                  
|Shamrock               | 182.5                   | 3.65                       | 21.4                  
|Tarn                   | 0.0                     |                            | 0.00                  
|Total Measured         | 690.9                   | 6.39                       | 142.0                 
|                       |                         |                            |                       
|Indicated              |                         |                            |                       
|Peel                   | 1,878.6                 | 5.14                       | 310.6                 
|Penguin-Lab            | 567.7                   | 3.56                       | 65.0                  
|Shamrock               | 519.6                   | 3.58                       | 59.8                  
|Tarn                   | 54.6                    | 4.26                       | 7.5                   
|Total Indicated        | 3,020.5                 | 4.56                       | 442.9                 
|                       |                         |                            |                       
|Measured and Indicated |                         |                            |                       
|Peel                   | 2,181.80                | 5.42                       | 380.4                 
|Penguin-Lab            | 772.9                   | 4.66                       | 115.8                 
|Shamrock               | 702.1                   | 3.60                       | 81.2                  
|Tarn                   | 54.6                    | 4.26                       | 7.5                   
|Total M&I              | 3,711.4                 | 4.90                       | 584.9                 
|                       |                         |                            |                       
|Inferred               |                         |                            |                       
|Peel                   | 298.1                   | 2.79                       | 26.7                  
|Penguin-Lab            | 188.1                   | 2.33                       | 14.1                  
|Shamrock               | 229.7                   | 2.83                       | 20.9                  
|Tarn                   | 46.3                    | 2.20                       | 3.3                   
|Total Inferred         | 762.2                   | 2.65                       | 65.0                  

Grade tonnage curves were calculated at 0.5g/t cutoff
intervals. Figure 26 shows grade tonnage curves for the entire mineral envelope
and the grade tonnage curve only within the $1000 gold optimized pit shapes.

---

92

Figure 25: Optimized Pits, $1,000 Gold



---

93

Figure 26: Grade Tonnage Curves



---

94

*(c)*        
*Other Properties*

Silver Valley Property, Yukon  The Issuer was granted
an option to acquire a 100% interest in six (6) claims located in the Yukon
Territory. The primary focus of exploration for this property will be silver,
with a secondary focus on gold, lead and zinc. The Issuer has staked an 114
claims around the six claims, and these are registered in the name of the
Issuer.

Bay Property, Yukon  The Issuer has staked 36 claims
near Watson Lake, Yukon. The primary focus of exploration for this property will
be silver.

Silver Bar, Arizona -The Issuer has a 100% interest in
55 claims in Pinal County, Arizona. The focus of exploration of this property
will be gold and copper.

Greenwood properties -The Issuer owns a 75% interest in
31 claims in the Greenwood Mining District in southeast British Columbia. These
claims are subject to a 2% net smelter returns royalty. The remaining 25%
interest in this gold property is owned by Intrepid Minerals Corporation. This
property was written down to a nominal amount in the current year.

ITEM
5:          DIVIDENDS

5.1Dividends

To date, the Issuer has not paid any dividends on its common
shares and has no dividend policy with respect to the payment of dividends.

ITEM
6:          DESCRIPTION OF CAPITAL
STRUCTURE

6.1General Description of Capital Structure

The Issuer is authorized to issue an unlimited number of common
shares without par value (the "Common Shares"). 175,233,430 Common Shares are
issued and outstanding as at March 24, 2008. The Issuer also has 21,175,932
Share Purchase Warrants (the Warrants) outstanding. Each warrant, when
exercised, will entitle the holder to purchase one common share of the Issuer at
a price of $3.00 per share on or before June 20, 2012.

Holders of the Common Shares of the Issuer shall be entitled to
notice of, to attend and vote at any meeting of the shareholders of the Issuer
and to one vote per share on a ballot. Shareholders will be entitled to receive
dividends as and when declared by the Board of Directors of the Issuer as a
class, subject to prior satisfaction of all preferential rights to dividends
attached to all shares of other classes of shares ranking in priority to the
Issuers Shares in respect of dividends. Shareholders shall be entitled in the
event of any liquidation, dissolution or winding-up of the Issuer, whether
voluntary or involuntary, or any other distribution of the assets among its
shareholder for the purpose of winding-up its affairs, and subject to prior
satisfaction of all preferential rights to return of capital upon dissolution
attached to all shares of other classes of shares ranking in priority to Common
Shares in respect of return of capital on dissolution, to share rateably,
together with the holders of shares of any class of shares ranking equally in
respect of return of capital, in such assets of the Issuer as are available for
distribution.

---

95

6.2Constraints

There are no constraints imposed on ownership of securities of
the Issuer to ensure that the Issuer has a required level of Canadian ownership.

6.3Ratings

The Issuer has not received a security rating with respect to
its Common Shares.

ITEM
7:          MARKET FOR SECURITIES

7.1Trading Price and Volume

The following table sets out the market price range and trading
volume of the Common Shares on the Exchange under the symbol YNGfor the
periods indicated:

Period
    High ($)
    Low ($)
    Close ($)
    Volume2007 January
    $3.00
    $1.75
    $2.32
    3,351,500****February
    $2.63
    $1.80
    $2.05
    3,460,500****March
    $2.05
    $1.53
    $1.61
    3,119,200****April
    $2.29
    $1.59
    $1.95
    4,315,800****May
    $2.05
    $1.62
    $1.67
    1,912,000****June
    $1.80
    $1.52
    $1.65
    1,766,400****July
    $1.72
    $1.15
    $1.29
    4,462,600****August
    $1.46
    $1.05
    $1.35
    8,979,600****September
    $1.85
    $1.26
    $1.79
    5,513,800****October
    $1.77
    $1.39
    $1.70
    6,948,600****November
    $1.85
    $1.51
    $1.59
    5,765,900****December
    $1.64
    $1.25
    $1.41
    5,375,4002008 January
    $1.75
    $1.38
    $1.65
    4,677,600****February
    $1.69
    $1.40
    $1.55
    4,055,300****Week ending March 7
    $1.79
    $1.55
    $1.75
    2,334,400****Week ending March 14
    $1.80
    $1.64
    $1.66
    932,200****Week ending March 21
    $1.72
    $1.58
    $1.60
    871,353****Week ending March 28
    $1.70
    $1.56
    $1.65
    994,757


The Issuer also has 21,175,932 warrants outstanding which,
commencing November 7, 2007, traded on the Exchange under the symbol
YNG.WT. The Warrants expire on June 20, 2012.

Period
    High ($)
    Low ($)
    Close ($)
    Volume2007
      November
    $0.65
    $0.40
    $0.40
    347,600****December
    $0.55
    $0.55
    $0.55
    3,0002008
      January
    $0.75
    $0.60
    $0.65
    28,100****February
    $0.75
    $0.59
    $0.59
    9,000****Week ending March 7
    $0.73
    $0.70
    $0.73
    16,300****Week ending March 14
    N/A
    N/A
    N/A
    0


---

96

Period
    High ($)
    Low ($)
    Close ($)
    Volume****Week ending March 21
    N/A
    N/A
    N/A
    0****Week ending March 28
    $0.60
    $0.60
    $0.60
    4,000


7.2Prior Sales

The Issuer does not have any class of securities which are
outstanding but not listed or quoted on a marketplace.

ITEM
8:          ESCROWED SECURITIES

8.1Escrowed Securities

Set forth below are details of the Issuers securities held in
escrow as at December 31, 2006:

Designation of Class
    No. of Securities held in escrow or that
      are subject to a contractual restriction on transfer
    Percentage of ClassCommon Shares
    2,361,646*
    1.35%


|* | The escrow agent is Pacific Corporate Trust Company
      (PCTC) of 2nd Floor, 510 Burrard Street, Vancouver, B.C., V6C
  3B9.
|- | --------------------------------------------------------------------------------------------------------------------------------

Pursuant to an agreement dated February 22, 2005 between
various shareholders of the Issuer, PCTC and the Issuer, 15,899,110 Shares (the
Escrow Shares) were deposited in escrow with PCTC as escrow agent on the
listing of the Issuers shares on the Exchange. The Escrow Shares are released
as follows:

On the date the Applicants shares were listed on the
      Toronto Stock Exchange (April 13, 2005)
    1/10 of the Escrow Shares (released)6 months after the
      listing date
    1/6 of
      the Escrow Shares (released)12 months after
      the listing date
    1/5 of
      the Escrow Shares (released)18 months after
      the listing date
    1/4 of
      the Escrow Shares (released)24 months after
      the listing date
    1/3 of
      the Escrow Shares (released)30 months after
      the listing date
    1/2 of
      the Escrow Shares (released)36 months after
      the listing date
    the
      remaining Escrow Shares


ITEM
9:          DIRECTORS AND OFFICERS

9.1Name, Occupation and Security Holding

Name of Director/Executive Officer, Province
      or State and Country of Residence
    Principal Occupation during the past
      five years
    Current Position and Date of
      AppointmentRobert E. Chafee(3)(2)Ontario,
      Canada
    Chairman and CEO of Etobicoke Ironworks Inc.
    Director, May 19, 2005 to dateGraham Dickson British Columbia, Canada
    President of Celec Inc., June 1993 to date.
    President, Chief Executive Officer and
      Director, from April 17, 1997 to date


---

97

Name of Director/Executive Officer, Province
      or State and Country of Residence
    Principal Occupation during the past
      five years
    Current Position and Date of
      AppointmentJohn R.W. Fox(3)(4)British
      Columbia, Canada
    President of Laurion Inc. since 1998.
    Director, March 18, 2005 to dateIain J. Harris(2)(4)British
      Columbia, Canada
    Chairman of Summit Holdings Ltd since February
      1995
    January 5, 2007 to datePeter M. Holbek British Columbia, Canada
    President of Viking GeoScience January 2003 to
      date; Vice President, Exploration of Atna Resources Ltd., November 1996 to
      October 2002.
    Director, October 6, 2005 to dateR.J. (Don) MacDonald(1)British
      Columbia, Canada
    Senior Vice President and CFO of NovaGold
      Resources Inc. January 2003 to date; Senior Vice President and CFO of
      Forbes Medi-Tech Inc. from 2001 to 2003.
    Director, July 7, 2005 to dateDorian (Dusty) Nicol Colorado, U.S.A.
    Executive Vice President, Exploration and
      Director of the Issuer since May 2007; President and Chief Executive
      Officer of Queenstake Resources Ltd. from March 2005 to May 2007 and Vice
      President of Exploration from 1999 to 2003.
    Director, May 18, 2007 to dateE. Lynn Patterson British Columbia, Canada
    Retired since 1998.
    Chairman and Director, May 19, 2005 to datePeter Bojtos Colorado, U.S.A.
    Director of Queenstake Resources Ltd. from 2000
      to May 2007; a professional engineer and a director of several public
      companies.
    Director, May 18, 2007 to dateNeil J.F. Steenberg(3)(4)Ontario, Canada
    Lawyer; Partner and chair of the national
      corporate finance and securities practice at Gowling Lafleur Henderson,
      LLP, from 1994 to 2003.
    Director, March 25, 2005 to dateChristopher Oxner British Columbia, Canada
    CFO and Controller of the Issuer since July
      2005; accountant at 636809 BC Ltd from January 2004 to May 2005;
      Controller of BJs Budget Lodge Ltd from April 1998 to December 2003.
    Chief Financial Officer, Controller and
      Assistant Secretary, July 7, 2005 to dateGraham Scott British Columbia, Canada
    Lawyer; Principal, Vector Corporate Finance
      Lawyers from July 1, 2001 to date.
    Secretary since May 19, 2005


|(1) | Chair of the Audit Committee.                  
|--- | -----------------------------------------------
|(2) | Member of the Audit Committee                  
|(3) | Member of the Compensation Committee           
|(4) | Member of the Corporate Governance
  Committee.

The directors are elected at the Annual General Meeting for a
period of one year. The Issuers next Annual General Meeting is scheduled to be
held on May 27, 2008 and it is anticipated that all of the above directors will
be nominated for re-election. Officers of the Issuer are appointed by the Board
of Directors.

---

98

As of March 24, 2008, 7,026,785 common shares of the Issuer are
beneficially owned, or controlled or directed, directly or indirectly by the
directors and executive officers, as a group, representing 4.01% of the issued
and outstanding voting securities (175,233,430 common shares).

9.2Cease Trade Orders, Bankruptcies, Penalties or Sanctions

Other than as set out below, during the 10 years prior to the
date of this AIF, none of the directors or executive officers of the Issuer or a
shareholder holding a sufficient number of securities of the Issuer to affect
materially the control of the Issuer, has been a director or officer of any
other issuer that, while that person was acting in that capacity:

|(a) | was the subject of an order that was issued while the
      director or executive officer was acting in the capacity as director,
      chief executive officer or chief financial officer, or                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | was subject to an event that was issued after the
      director or executive officer ceased to be a director, chief executive
      officer or chief financial officer and which resulted from an event that
      occurred while that person was acting in the capacity as director, chief
      executive officer or chief financial officer.

In June 2000, the Ontario Securities Commission ordered that
the management and certain insiders of Link Minerals Ventures Inc. (Link) be
prohibited from trading in securities until Links annual financial statements
were filed. As a director of Link at that time, Mr. Bojtos, a director of the
Issuer, was subject to the order.

The British Columbia Securities Commission issued a cease trade
order against Link in August 2001 for failure to file annual financial
statements. Mr. Bojtos, a director of the Issuer, was a director of Link at that
time.

Mr. Bojtos was a director of Sahelian Goldfields Inc.
(Sahelian) when it was the subject of a proposal under the Bankruptcy and
Insolvency Act (Canada), which proposal was approved by the creditors and by the
courts in August 2001. Sahelian is now reorganized.

Mr. Bojtos was a director of Sahelian in May 1999 when a cease
trade order was issued by the British Columbia Securities Commission and in June
2000 when the Ontario Securities Commission issued a cease trade order against
Sahelian for failure to file annual financial statements for its 1998 fiscal
year, and the first quarter interim financial statements within the time
required. Sahelian was reorganized under the Bankruptcy and Insolvency Act
(Canada) in 2002 and both cease trade orders were lifted.

During the 10 years prior to the date hereof, no director or
executive officer of the Issuer, or a shareholder holding sufficient securities
of the Issuer to affect materially the control of the Issuer has become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or been subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the director, executive officer or shareholder.

On December 8, 2003, Mr. Harris entered into a Settlement
Agreement with the staff of the Alberta Securities Commission (the Commission)
arising from the sale in June 2000, of 10,000 shares of Newport Petroleum
Corporation (Newport), a reporting issuer of which Mr. Harris was at the time
a director. In the Agreement, Mr. Harris agreed that he made such sale while in
possession of undisclosed material facts relating to Newport, and that he failed
to file an Insider Report with respect to the sale. Under the Agreement, Mr.
Harris agreed to pay an administrative penalty of $25,000, and a contribution of
$25,000 to the costs of the investigation. Mr. Harris did not accept the
Commissions position that the facts justified a prohibition on his being a
director or officer of a reporting issuer. On December 9, 2003, the Commission
ordered Mr. Harris to resign as a director or officer of any reporting issuer in
which he then held such a position, and prohibited him from becoming or acting
as a director or officer, or as a director and officer, of any reporting issuer
for a period of six months from December 9, 2003.

---

99

Peter Holbek was a director of Western African Ventures
Exchange Corp. (West African) between November 24, 1999 and November 30, 2002.
On April 3, 2002, West Africa was subject to a cease trade order issued by the
British Columbia Securities Commission for failure to file required financial
information. A similar order was issued by the Alberta Securities Commission on
April 4, 2002. Both orders were revoked in June 2002 and trading was reinstated
on June 27, 2002.

The foregoing information, not being within the knowledge of
the Issuer, has been furnished by the respective directors, officers and
shareholders holding a sufficient number of securities of the Issuer to
materially control the Issuer.

Subsequent to January 1, 2008, no director or executive officer
of the Issuer or a shareholder holding a sufficient number of securities of the
Issuer to affect materially the control of the Issuer, is or has been subject
to:

|(a) | any penalties or sanctions imposed by a court relating to
      securities legislation or by a securities regulatory authority or has
      entered into a settlement agreement with a securities regulatory
      authority; or
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                 
|(b) | any other penalties or sanctions imposed by a court or
      regulatory body that would be likely to be considered important to a
      reasonable investor making an investment decision.                                      

9.3Conflicts of Interest

The Issuer has adopted, in accordance with Appendix M of the
Issuers Corporate Governance Manual, a code of conduct and conflict of interest
guidelines for directors and officers including disclosure requirements.

ITEM
10:        PROMOTERS

10.1Promoters

Under the definition of "promoter" contained in Section 1 of
the Securities Act (British Columbia), Graham Dickson, President of the
Issuer, is a promoter of the Issuer, since he took the initiative of
substantially reorganizing the business of the Issuer. Mr. Dickson beneficially
owns or controls or directs, directly or indirectly, 2,606,000 common shares
(1.49% of the issued and outstanding) of the Issuer. 380,700 of these shares are
subject to escrow. See Escrowed Securities for further details.

ITEM
11:        LEGAL PROCEEDINGS

11.1Legal Proceedings

The Nevada Department of Environmental Protection (NDEP)
mandated that the Issuer construct an evaporation pond facility as part of
Jerritt Canyons long-term closure and reclamation plan. The Issuer and its
legal advisers believe that reimbursement for the cost of the evaporation pond
is covered under its reclamation insurance policy.

The Issuer filed suit on January 19, 2007 against the Insurer
in United States District Court for the District of Colorado. The suit seeks
US$8.4 million for construction of the evaporation pond at the Issuers Jerritt
Canyon operations in Nevada plus an unspecified amount for additional damages as
a result of the Insurers failure to reimburse the Issuer under its reclamation
costs insurance policy. The Issuers insurance policy includes coverage in
respect of reclamation related costs arising as a result of changes in
applicable environmental laws and government mandates. The matter has been
referred to arbitration.

---

100

ITEM 12:        INTEREST
OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

12.1Interest
of Management and Others in Material Transactions

Each of the following directors and senior officers has an
interest in the Issuers Stock Option Plan which was approved by the Issuers
shareholders on May 18, 2007:

Name of Optionee
      Position of Optionee (Director/Officer/ Employee/Consultant)
    Date of Grant
      No. of Shares
      Exercise Price
    Expiry DateGraham Dickson
      Director
    Apr.
      14, 2005
      500,000
      $0.60
    Apr.
      14, 2010Neil Steenberg
      Director
    Apr.
      14, 2005
      250,000
      $0.60
    Apr.
      14, 2010John Fox
      Director
    Apr.
      14, 2005
      250,000
      $0.60
    Apr.
      14, 2010Graham Scott
      Officer
    Apr.
      14, 2005
      250,000
      $0.60
    Apr.
      14, 2010Richard Appel
      Consultant
    Apr.
      14, 2005
      150,000
      $0.60
    Apr.
      14, 2010Robert Chafee
      Director
    Oct.
      1, 2005
      250,000
      $0.60
    Oct.
      1, 2010Lynn Patterson
      Director
    Oct.
      1, 2005
      250,000
      $0.60
    Oct.
      1, 2010Don MacDonald
      Director
    Oct.
      1, 2005
      250,000
      $0.60
    Oct.
      1, 2010Chris Oxner
      Officer
    Oct.
      1, 2005
      150,000
      $0.60
    Oct.
      1, 2010Peter Holbek
      Director
    Oct.
      1, 2005
      250,000
      $0.60
    Oct.
      1, 2010Graham Dickson
      Director
    Jan.
      5, 2007
      600,000
      $2.77
    Jan.
      5, 2012John Fox
      Director
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Neil Steenberg
      Director
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Don MacDonald
      Director
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Robert Chafee
      Director
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Peter Holbek
      Director
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Lynn Patterson
      Director
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Graham Scott
      Officer
    Jan.
      5, 2007
      50,000
      $2.77
    Jan.
      5, 2012Iain Harris
      Director
    Jan.
      5, 2007
      300,000
      $2.77
    Jan.
      5, 2012Chris Oxner
      Officer
    Jan.
      5, 2007
      25,000
      $2.77
    Jan.
      5, 2012Dusty Nicol
      Director
    June
      20, 2007
      50,000
      $3.85
    July
      27, 2008Peter Bojtos
      Director
    June
      20, 2007
      20,000
      $3.85
    July
      27, 2008Dusty Nicol
      Director
    June
      20, 2007
      42,500
      $5.70
    July
      5, 2009Peter Bojtos
      Director
    June
      20, 2007
      24,000
      $5.70
    July
      5, 2009Graham Dickson
      Director
    Aug.
      10, 2007
      1,000,000
      $1.74
    Aug.
      10, 2012Lynn Patterson
      Director
    Aug.
      10, 2007
      400,000
      $1.74
    Aug.
      10, 2012Chris Oxner
      Officer
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012John Fox
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Bob Chafee
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Iain Harris
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Neil Steenberg
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Peter Holbek
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Don MacDonald
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Peter Botjos
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Dusty Nicol
      Director
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012Graham Scott
      Officer
    Aug.
      10, 2007
      200,000
      $1.74
    Aug.
      10, 2012


During the year the Issuer was charged a total of US$122,556 in
management fees by a company owned by a director.

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101

ITEM
13:        TRANSFER AGENTS AND
REGISTRARS

Item 13.1Transfer Agents and Registrars

The Registrar and Transfer Agent for the Issuer is:

Pacific Corporate Trust Company
    Pacific Corporate Services Limited2nd Floor, 510 Burrard Street
    100 University Ave, 11th FloorVancouver, B.C., V6C 3B9
    Toronto, ON M5J 2Y1


ITEM
14:        MATERIAL CONTRACTS

Item
14.1Material
Contracts

Set forth below are details of every contract, other than a
contract entered into in the ordinary course of business, that is material to
the Issuer and that was entered into within the most recently completed
financial year, or before the most recently completed financial year but is
still in effect:

|1. | Incentive Stock Option Plan (the Plan) authorizing the
      reservation of no more than 10% of the Issuers outstanding shares for
      issuance under the Plan.                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                           
|2. | Pursuant to a Consulting Agreement effective June 1, 2006
      with Celec Inc. (Celec), the Issuer retained Celec to provide the
      personal services of Graham C. Dickson as the President and as consultant
      to the Issuer for a period of two years for an annual payment of
      $180,000.
|   |                                                                                                                                                                                                                                                                                                           
|3. | Pursuant to Stock Option Certificates dated April 14,
      2005, October 1, 2005, January 5, 2007 and August 10, 2007, the Issuer
      granted options to Directors and Senior Officers as set out in Item 12.1
      above                                                                             

ITEM 15:        INTERESTS
OF EXPERTS

15.1Names of Experts

Landy A. Stinnett, of SRK Consulting (US), Inc. of Denver,
Colorado, USA is the author of the SRK Report referred to in Section 5.4(a)
hereof. Mr. Stinnett is a Professional Engineer in Wyoming (#4502).

Russell White and Leah Mach, of SRK Consulting (US), Inc. of
Denver, Colorado, USA are the authors of the SRK Report referred to in Section
5.4(b) hereof. Mr. White is a Registered Geologist with the State of Washington
(#2293) and Ms. Mach is a Certified Professional Geologist with the American
Institute of Professional Geologists (#10940).

Mr. Gates of Spokane, Washington, is a licensed geologist in
the state of Washington - #2253. Mr. Gates is also a Certified Professional
Geologist with the American Institute of Professional Geologists - CPG#10902.

15.2Interests
  of Experts

Messrs. Stinnett and White and Ms. Mach have no registered or
beneficial, direct or indirect, interest in the securities of the Issuer.

Edward Gates has options to purchase 130,000 shares of the
Issuer at a price of $0.82 per share until January 26, 2011.

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102

ITEM
16:        ADDITIONAL INFORMATION

Additional information relating to the Issuer may be found on
SEDAR at www.sedar.com. Additional
information, including directors and officers remuneration and indebtedness,
principal holders of the Issuers securities, and securities authorized for
issuance under equity compensation plans, if applicable, is also contained in
the Issuers Information Circular pertaining to its most recent Annual General
Meeting that involved the election of directors and in the Issuers comparative
financial statements and MD&A for its most recently completed financial
year.

Set forth below is the additional information required pursuant
to Form 52-110F1, Audit Committee Information Required in an AIF:

*1.******The
Audit Committees Charter*

The Issuers audit committee (the Audit Committee) is
governed by an audit committee charter, the text of which is attached as
Schedule A to this AIF.

The Audit Committee has also adopted a Whistleblower Policy,
the text of which is attached as Schedule B to this AIF.

The purpose of the Audit Committee is to act as the
representative of the Board of Directors in carrying out its oversight
responsibilities relating to:

- The audit process;
- The financial accounting and reporting process to shareholders and
  regulatory bodies; and
- The system of internal financial controls.

*2.******Composition
of the Audit Committee*

The Issuers audit committee is comprised of three directors,
as set forth below:

|Robert Chafee | R.J. (Don) MacDonald | Iain Harris
|------------- | -------------------- | -----------

As defined in MI 52-110, the Board of Directors of the Issuer
has determined that all members of the audit committee are independent and are
financially literate, meaning that he must be able to read and understand
financial statements.

The Chairman of the Audit Committee, Mr. MacDonald, has
accounting and financial expertise, meaning that he possesses financial or
accounting credentials or has experience in finance or accounting.

*3.******Reliance on Certain Exemptions*

At no time since the commencement of the Issuers most recently
completed financial year, has the Issuer relied on the following exemptions:

| | (a) | the exemption in section 2.4, De Minimis Non-audit
      Services;                                
| | --- | --------------------------------------------------------------------------------------------------
| | (b) | the exemption in section 3.2, Initial Public
      Offerings;                                     
| | (c) | the exemption in section 3.4, Events Outside Control
      of Member;                             
| | (d) | the exemption in section 3.5, Death, Disability or
      Resignation of Audit Committee Member; or

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103

| | (e) | an exemption from Multilateral Instrument 52-110,
      Audit Committees, in whole or part granted under Section 8,
      Exemptions.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------

*4.******Reliance
on the Exemption in Subsection 3.3(2) or Section 3.6*

At no time since the commencement of the Issuers most recently
completed financial year, has the Issuer relied on the exemption in subsection
3.3(2), Controlled Companies, or section 3.6, Temporary Exemption for
Limited and Exceptional Circumstances.

*5.******Reliance
on Section 3.8*

At no time since the commencement of the Issuers most recently
completed financial year, has the Issuer relied on the exemption in section 3.8,
Acquisition of Financial Literacy.

*6.******Audit
Committee Oversight*

At no time since the commencement of the Issuers most recently
completed financial year, has a recommendation of the Committee to nominate or
compensate an external auditor not been adopted by the Board of Directors.

7. ****Pre-Approval
Policies and Procedures

The Committee has adopted specific policies regarding the
engagement of the external auditors appointed by the shareholders of the Issuer
(the Auditors) consistent with the Committees charter with a view to ensuring
the Auditors independence. These pre-approval policies relate to the engagement
of audit services, audit-related services and non-audit-related services.

*8.******External Auditor Service Fees (By Category)*

Set forth below are details of fees billed by the Issuers
external auditor in each of the last two fiscal years for audit services:

Fiscal Year End
    Audit Fees
    Audit-Related
      Fees(1)
    Tax Fees(2)
    All Other
      Fees(3)December 31,
      2006
    $36,750
    Nil
    Nil
    NilDecember 31,
      2007
    $230,500
    $64,5800
    Nil
    Nil


|(1) | The aggregate fees billed in each of the last two fiscal
      years for assurance and related services by the Issuers external auditor
      that are reasonably related to the performance of the audit or review of
      the Issuers financial statements and are not reported under Audit
      Fees.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                               
|(2) | The aggregate fees billed in each of the last two fiscal
      years for professional services rendered by the Issuers external auditor
      for tax compliance, tax advice and tax planning.                                                                                                               
|    |                                                                                                                                                                                                                                                                                                               
|(3) | The aggregate fees billed in each of the last two fiscal
      years for products and services provided by the Issuers external auditor,
      other than the services reported under clauses 1, 2 and 3
  above.                                                                                            

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104

Schedule A to the Annual Information Form of
Yukon-Nevada Gold Corp. (the "Issuer")

CHARTER OF THE AUDIT COMMITTEE


This charter (the Charter) sets forth the purpose,
composition, responsibilities, duties, powers and authority of the Audit
Committee (the Committee) of the Board of Directors (the Board) of the
Issuer.

1.0        Purpose

The purpose of the audit committee (the Committee) is to: (a)
assist the Board in fulfilling its oversight responsibilities with respect to
financial reporting and disclosure requirements; (b) ensure that an effective
risk management and financial control framework has been implemented by
management of the Issuer; and (c) be responsible for external and internal audit
processes.

2.0        Composition
and Membership

The Board will appoint the members (Members) of the Committee
after the annual general meeting of shareholders of the Issuer. The Members will
be appointed to hold office until the next annual general meeting of
shareholders of the Issuer or until their successors are appointed. The Board
may remove a Member at any time and may fill any vacancy occurring on the
Committee. A Member may resign at any time and a Member will cease to be a
Member upon ceasing to be a director.

The Committee will consist of three directors that meet the
criteria for independence and financial literacy established by applicable laws
and the rules of the stock exchange upon which the Issuers securities are
listed, including Multilateral Instrument 52-110 - Audit Committees. In
addition, each director will be free of any relationship which could, in the
view of the Board, reasonably interfere with the exercise of a members
independent judgment.

The Board will appoint one of the Members to act as the
Chairman of the Committee. The secretary of the Issuer (the Secretary) will be
the secretary of all meetings and will maintain minutes of all meetings and
deliberations of the Committee. In the absence of the Secretary at any meeting,
the Committee will appoint another person who may, but need not, be a Member to
be the secretary of that meeting.

3.0        Meetings

Meetings of the Committee will be held at such times and places
as the Chairman may determine, but in any event not less than four times per
year. Twenty-four (24) hours advance notice of each meeting will be given to
each Member orally, by telephone, by facsimile or email, unless all Members are
present and waive notice, or if those absent waive notice before or after a
meeting. Members may attend all meetings either in person or by conference call.

At the request of the external auditors of the Issuer, the
Chief Executive Officer or the Chief Financial Officer of the Issuer or any
member of the Committee, the Chairman will convene a meeting of the Committee.
Any such request will set out in reasonable detail the business proposed to be
conducted at the meeting so requested.

---

105

The Chairman, if present, will act as the Chairman of meetings
of the Committee. If the Chairman is not present at a meeting of the Committee,
then the Members present may select one their number to act as Chairman of the
meeting.

A majority of Members will constitute a quorum for a meeting of
the Committee. Each Member will have one vote and decisions of the Committee
will be made by an affirmative vote of the majority. The Chairman will not have
a deciding or casting vote in the case of an equality of votes. Powers of the
Committee may also be exercised by written resolution signed by all Members.

The Committee may invite from time to time such persons as it
sees fit to attend its meetings and to take part in the discussion and
consideration of the affairs of the Committee.

In advance of every regular meeting of the Committee, the
Chairman, with the assistance of the Secretary, will prepare and distribute to
the Members and others as deemed appropriate by the Chairman, an agenda of
matters to be addressed at the meeting together with appropriate briefing
materials. The Committee may require officers and employees of the Issuer to
produce such information and reports as the Committee may deem appropriate in
order to fulfil its duties.

4.0        Duties and
Responsibilities

Subject to the powers and duties of the Board of Directors, the
duties and responsibilities of the Committee are as follows:

|A. | The Audit Committee shall review and recommend updates to
      its terms of reference to the Corporate Governance Committee of the Board
      of Directors annually.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                       
|B. | The Audit Committee shall meet not less often than four
      times per year.                                                                                         
|   |                                                                                                                                                                       
|C. | The Audit Committee shall have responsibility
  for:                                                                                                                  
|   |                                                                                                                                                                       
|   | i.                                                                                                                                                                    
|   |                                                                                                                                                                       
|   | ii.                                                                                                                                                                   
|   |                                                                                                                                                                       
|   | iii.                                                                                                                                                                  
|   |                                                                                                                                                                       
|   | iv.                                                                                                                                                                   
|   |                                                                                                                                                                       
|   | v.                                                                                                                                                                    
|   |                                                                                                                                                                       
|   | vi.                                                                                                                                                                   

|D. | The Audit Committee shall ensure that effective lines of
      communication are maintained with the external auditor, internal auditors,
      financial management and the board of directors.                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                  
|E. | The Audit Committee shall review with the auditors of the
      Issuer the relationships existing between them and the management of the
      Issuer to ensure an effective liaison in the coordination of audit effort
      regarding completeness of coverage, avoidance of redundant efforts and the
      effective use of audit resources.

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106

|F. | The Audit Committee shall review, discuss and consider
      with the auditors their approach to risk assessment, scope and plan of
      their audits. The review may include:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                
|   | i.                                                                                                                                                                             
|   |                                                                                                                                                                                
|   | ii.                                                                                                                                                                            
|   |                                                                                                                                                                                
|   | iii.                                                                                                                                                                           
|   |                                                                                                                                                                                
|   | iv.                                                                                                                                                                            
|   |                                                                                                                                                                                
|   | v.                                                                                                                                                                             
|   |                                                                                                                                                                                
|   | vi.                                                                                                                                                                            

|G. | The Audit Committee shall consider and review with the
      auditors and management of the Issuer:
|-- | ---------------------------------------------------------------------------------------------------
|   |                                                                                                    
|   | i.                                                                                                 
|   |                                                                                                    
|   | ii.                                                                                                
|   |                                                                                                    
|   | iii.                                                                                               

|H. | The Audit Committee shall review the annual consolidated
      financial statements which are to he submitted to the board of directors
      including management's discussion and analysis, if any,
      contained therein, or in any other relevant documentation. The review, may
      include:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                      
|   | i.                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                      
|   | ii.                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                      
|   | iii.                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                      
|   | iv.                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                      
|   | v.                                                                                                                                                                                                                                                                                                   

|I. | The Audit Committee shall review with management of the
      Issuer and the auditors quarterly interim financial statements and if
      appropriate recommend approval of such quarterly statements to the board
      of directors.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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107

|J. | The Audit Committee shall consider and review with
      management:
|-- | --------------------------------------------------------------------
|   |                                                                     
|   | i.                                                                  
|   |                                                                     
|   | ii.                                                                 
|   |                                                                     
|   | iii.                                                                

|K. | The Audit Committee shall review legal, regulatory and
      social matters that may have a material impact on the financial
      statements, related the Issuer compliance policies and programs and
      reports prepared to manage and monitor the Issuer compliance policies. The
      Audit Committee shall receive reports concerning the Issuer's
      environmental management program on a quarterly basis, and review ongoing
      environmental compliance Issues.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|L. | The Audit Committee shall confirm and assure the
      independence of the auditors, including a review of management consulting
      services and related fees provided by the auditors.                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|M. | The Audit Committee shall meet with management and the
      auditors in separate executive sessions to discuss any matters that the
      Audit Committee or these groups believe should be discussed privately with
      the Audit Committee.                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|N. | The Audit Committee shall have the power to conduct or
      authorize investigations into any matters within the Audit Committee's
      scope of responsibilities. The Audit Committee shall be empowered to
      retain independent counsel, accountants, or others to assist it in the
      conduct of any investigation.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|O. | The Audit Committee shall perform such other functions as
      assigned by law or the board of directors, and may review other items of
      an internal control or risk management nature which may from time to time
      he brought before the Audit Committee.                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|P. | The Audit Committee shall conduct a self-assessment at
      least annually, and discuss the results with the board of
  directors.                                                                                                                                                                                                                                                                                                                                               

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108

Schedule B to the Annual Information Form of
Yukon-Nevada Gold Corp. (the "Issuer")

WHISTLEBLOWER POLICY


The Issuers whistleblowing policy is posted on its website at
https://www.openboard.info/ygc/index.cfm

---