Document:

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement"), executed the 24th day of April,
2009, by and between Grant Hartford Corporation, a Montana Corporation, (hereinafter
referred to as the "Company") and Tim Matthews an individual (hereinafter referred to as
"Mr. Matthews").

Grant Hartford Corporation is a Montana Corporation, whose office is at
619 SW Higgins, Suite O, Missoula, Montana  59803 (the "Company").

The Company desires to employ Mr. Matthews to perform certain services and Mr. Matthews
agrees to perform these services on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:

	
1)
	
Period of Employment. MR. MATTHEWS' employment with the Company will begin on
the date set forth above and will continue for a six (6) month period.

	
 
	
 

	
2)
	
Company Approval. MR. MATTHEWS may not take any of the following actions on behalf
of the Company without the express prior written approval of the Company: (i) borrowing or obtaining
credit in any amount or executing any guaranty on behalf of the Company; (ii) executing any written
agreement in the Company's name or which purports to bind the Company; (iii) entering into any oral
agreement in the Company's name or which purports to bind the Company; or (iv) hiring or firing any
employee(s) and/or other independent contractor on behalf of the Company.

	
 
	
 

	
3)
	
Best Efforts. MR. MATTHEWS agrees that he will at all times faithfully, industriously
and to the very best of his ability, experience and talents, perform all of the duties set forth herein.
It being clearly understood that the Company is and must be the primary beneficiary of such ability,
experience and talents.  Such duties shall be primarily rendered by MR. MATTHEWS in the state of Colorado, at the
Company's place of business in the state of Montana and at such other place or places as the interests,
needs, business or opportunity of the Company shall require.

	
 
	
 

	
4)
	
Base Salary:  In consideration for MR. MATTHEWS' services and for compliance with the
terms and conditions of this Agreement, MR. MATTHEWS shall receive a salary of Fifteen Thousand Dollars
($15,000) payable in six (6) equal monthly payments of Two Thousand Five Hundred Dollars ($2,500). It is
anticipated that MR. MATTHEWS' employment will commence on May 1, 2009.

 

	
 

	
(a)
	
MR. MATTHEWS, as Vice President of Marketing, will spend his full time and attention
in assisting in the marketing of the Company.  In addition to MR. MATTHEWS' base salary, he will receive
Twenty-Five Thousand (25,000) shares of the Company's no par value common stock, at a point in time that
the Company is able in accordance with any applicable state or federal rules and regulations.    The
shares will be restricted shares and may be sold only pursuant
to Rule 144 of the Securities Act of 1933, as amended.

Page 1

	
 
	
(b)
	
Bonuses. MR. MATTHEWS will be eligible for any bonuses declares by the Board of Directors of
the Company, in its discretion, during the Term of this Agreement.

	
 
	
 
	
 

	
 
	
(c)
	
In the event that MR. MATTHEWS is required to travel to other locations in furtherance of MR. MATTHEWS' duties
and responsibilities, the Company will provide MR. MATTHEWS with all expenses including, but not limited to, transportation,
lodging, food and other miscellaneous expenses required in the normal course of business.  Any expense over the
amount of Five Hundred Dollars ($500.00) must be cleared with the Company's CEO and CFO prior to incurring any
such expenditure.

 

	
5)
	
Work Schedule and Vacation Benefits. MR. MATTHEWS will be entitled to a total of fifteen (15) days
of paid vacation per year of his employment starting after the first 90 days of employment. MR. MATTHEWS will receive
compensation for time not taken on the typical pay structure shown above. 

	
 
	
 

	
6)
	
Health Insurance.The Company shall not provide group health insurance coverage for MR. MATTHEWS
and his family.

	
 
	
 

	
7)
	
Leave of Absence. Any request for a leave of absence shall be subject to approval
by the Company and shall be without pay. The Company will evaluate any such request and make a determination
after consideration of all relevant factors, including the urgency of the requested leave, from the Company's
perspective and the burdens to the Company which would result from MR. MATTHEWS' absence.

	
 
	
 

	
8)
	
Minimum Amount of Service.  MR. MATTHEWS hereby confirms that the position contemplated by this
Agreement is that of "Vice President of Marketing" for the Company.  Accordingly, MR. MATTHEWS agrees to devote
his full time and efforts in such capacity.

	
 
	
 

	
9)
	
Conduct. MR. MATTHEWS agrees to conduct himself at all times with due regard to public conventions,
morals and the standards of behavior as prescribed by the Company.  MR. MATTHEWS agrees not to do or commit any act that will
reasonably tend to degrade him or bring MR. MATTHEWS and the Company into public hatred, contempt, or ridicule, or tend to
shock or offend the community in which MR. MATTHEWS represents the Company.  MR. MATTHEWS acknowledges and agrees that this provision
is necessary to protect the Company's goodwill in the community in which MR. MATTHEWS represents it and thus to protect the
reputation of the Company.

 

	
 

	
(a)
	
Anything to the contrary herein notwithstanding this Agreement will not be construed so as to permit
discrimination, harassment, disciplinary action, or dismissal on account of sexual orientation.  The Company supports
diversity in the workplace and, notwithstanding laws or standards to the contrary in any other jurisdiction, will fully
comply with the letter and spirit of Montana Revised Statutes, which prohibit such discrimination.

 

	
10)
	
Confidential Information. MR. MATTHEWS recognizes and acknowledges that all information pertaining to the
affairs, business and clients of the Company, including its 

Page 2

	
 
	
affiliate and constituent organizations, is confidential information.   MR. MATTHEWS shall not during
the term of this Agreement or at any time thereafter, except in the performance of his duties for the Company, use or
divulge to any person, firm, center or other organization, or any governmental agency, any information concerning the
clients, business or affairs of the Company and shall use his best efforts to prevent disclosure of any such information
by others.  All records and papers, computer-generated information, client lists, and other documents relating to the
clients, business or affairs of the Company are confidential information and are, and shall be, and shall remain the
property of the Company and its clients, and no copies thereof shall be made which are not retained by the Company.
Any violation of this restriction may be enforced by means of injunctive relief, in addition to any action for damages
suffered by the Company.  The provisions of this paragraph shall survive the expiration of this Agreement.

	
 
	
 

	
11)
	
Intellectual Property.  All materials, brochures, source codes and other
intellectual property that may be conceived or developed by MR. MATTHEWS, either alone or with others, during
MR. MATTHEWS' employment pursuant to this Agreement, and which relate to or are developed for use in any program
that MR. MATTHEWS may initiate, maintain, supervise, or administer as part of fulfilling his duties under this
Agreement, shall be the sole property of the Company, and shall be deemed to have been created as works
made for hire pursuant to Section 101 of the United States Copyright Act (11 U.S.C. section 101).

	
 
	
 

	
12)
	
Restriction on Use or Disclosure of Trade Secrets. During the term of this Agreement,
MR. MATTHEWS will be dealing with trade secrets of the Company, including Company records and procedural manuals, all
of which are of a confidential nature and are the Company's property and used in the course of the Company's
business.  MR. MATTHEWS will not disclose to anyone, directly or indirectly, either during the term of this Agreement
or at any time thereafter, any of such trade secrets, or use them other than in the course of services provided
to Company under this Agreement.  All confidential information that might be given to MR. MATTHEWS in the course of his
services under this Agreement are the exclusive property of Company and shall remain in its possession and on
its premises, including the Company's premises in the city of Denver and state of Montana.  Under no circumstances
shall any such information or documents be removed without Company's written consent thereto first being obtained.
Any violation of this restriction may be enforced by means of injunctive relief, in addition to any action for
damages suffered by Company.

	
 
	
 

	
13)
	
Records and Property; Delivery Upon Termination - All records, papers, drawings, pictures,
maps, computer information and other tangible documentation relating to the business or the Company, and whether
or not prepared or made by MR. MATTHEWS, are the property of the Company, and MR. MATTHEWS will deliver the same as are in MR. MATTHEWS' possession
or control to the Company at any time upon request.  In particular and without limitation, at the termination of
employment, MR. MATTHEWS shall deliver to the Company all materials within MR. MATTHEWS'possession or control containing or relating
to Confidential Information or Developments.

	
 
	
 

	
14)
	
Absence of Restrictions Upon Disclosure and Competition - MR. MATTHEWS agrees not to disclose improperly
to the Company any confidential information that MR. MATTHEWS has acquired from others prior to being employed by the Company.
In addition, MR.

Page 3

	
 
	
MATTHEWS represents that, except as disclosed otherwise in writing to the Company, (i) MR. MATTHEWS is not bound by any
agreement with any previous employer or other party to refrain from using or disclosing any trade secret or other
confidential or proprietary information which needs to be disclosed or used by MR. MATTHEWS in the course of MR. MATTHEWS' employment
with the Company or to refrain from competing, directly, or indirectly, with the business of such previous employer or other party and (ii) MR. MATTHEWS'
performance of all the terms of this Agreement as an employee of the Company does not and will not
breach any agreement to keep confidential any information, knowledge or date acquired by MR. MATTHEWS in
confidence or trust prior to MR. MATTHEWS' employment with the Company.

	
 
	
 

	
15)
	
Outside Activities. While MR. MATTHEWS renders services to the Company, MR. MATTHEWS will not engage
in any other gainful employment, business or activity without the written consent of the Company.  While
MR. MATTHEWS renders services to the Company, MR. MATTHEWS also will not assist any person or organization in competing with
the Company, in preparing to compete with the Company, or in hiring any employees of the Company.

	
 
	
 

	
16)
	
Termination of Agreement by the Company.  This Agreement may be terminated by the Company
in accordance with the following provisions:

 

	
 
	
(a)
	
If MR. MATTHEWS materially violates accepted standards of moral conduct, or if MR. MATTHEWS commits an act of fraud,
dishonesty, or embezzlement, the Company may terminate this Agreement, without prejudice to any other remedy available
to the Company either at law, in equity or under this Agreement; provided, however, that prior to the effective date
of such termination, MR. MATTHEWS shall be given an opportunity at a specially convened meeting of the Company's Board of
Directors to respond to the allegations triggering such termination.

	
 
	
 
	
 

	
 
	
(b)
	
If MR. MATTHEWS is convicted of: (i) a misdemeanor involving moral turpitude; or (ii) a felony of any nature
during the term of his employment, the Company may terminate this Agreement, without prejudice to any other remedy
available to the Company either at law, in equity or under this Agreement. 

	
 
	
 
	
 

	
 
	
(c)
	
If MR. MATTHEWS commits an act, or fails to act, by which MR. MATTHEWS willfully breaches this Agreement, or if MR. MATTHEWS
habitually neglects the duties that he is required to perform under the terms of this Agreement, the Company may
terminate this Agreement, without prejudice to any other remedy available to the Company either at law, in equity
or under this Agreement.

	
 
	
 
	
 

	
 
	
(d)
	
In the event of termination under this Section 17, the Company's obligations to MR. MATTHEWS under this
Agreement shall cease, except for monthly compensation accrued to the date of termination. Concurrent with any
termination under this Section 17, the Company shall provide MR. MATTHEWS with a written explanation of the ground(s) for
termination.

Page 4

This Agreement may be terminated by MR. MATTHEWS in accordance with the following provisions:

	
 
	
(e)
	
In the event that the Company breaches this Agreement as set forth in Sections 4 to
7 of this Agreement. 

	
 
	
 
	
 

	
 
	
(f)
	
If MR. MATTHEWS chooses to willfully leave the Company after submitting his resignation.

 

	
17)
	
Company Severance for involuntary termination

A formal Company severance policy has not yet been established, however, MR. MATTHEWS will be
entitled to the following severance package following an involuntary termination:

	
 
	
 

	
18)
	
After the completion of six (6) months of employment, MR. MATTHEWS will receive a 1⁄2
month of salary as severance.

	
 
	
 

	
19)
	
Death. This Agreement shall terminate upon the death of MR. MATTHEWS during its term.
The acquired stocks and accrued benefits are transferable to the designated beneficiaries of MR. MATTHEWS.

	
 
	
 

	
20)
	
Disability. In the event that MR. MATTHEWS shall be prevented from performing the services required
of his under this Agreement by reason of any disability and such disability shall continue for a period of three
(3) months, or longer, then at the option of the Company, and upon written notice to MR. MATTHEWS from the Company, this
Agreement shall be deemed terminated on the day specified in such notice. To be clear, all stock, and all other
earned benefits will be at the disposition of MR. MATTHEWS to continue as investor or to get it in lump sum and will not
be lost, sacrificed or changed in any way; MR. MATTHEWS will be entitled to all such benefits and securities up until the
time of the aforesaid notice date.  Disability shall be defined under the Federal Social Security Laws as it
relates to disability claims.

	
 
	
 

	
21)
	
Meet and Confer; Arbitration.  Whenever during the term of this Agreement, any disagreement
or dispute arises between the parties as to the interpretation of this Agreement or any rights or obligations arising
thereunder, such matters shall be resolved whenever possible by meeting and conferring.  Any party may request such
a meeting by giving notice to the other, in which case such other Parties shall make themselves available within seven
(7) days thereafter.  If such matters cannot be so resolved within ten (10) days from such meeting, and do not involve
any claim of material breach or termination of this Agreement, either party may seek arbitration in accordance with the
then prevailing rules of the American Arbitration Association (or any successor thereto) ("Association") to the extent
not inconsistent herewith, in Riverside County, California, upon notice to the other party of its intention to do so.
Provided, however, that the time periods for meeting and resolving the arbitral claims under this sub-paragraph which
serve as a pre-condition to the initiation of arbitration shall not apply to the non-arbitral claims of material breach
or termination of this Agreement.  The parties agree that in any such arbitration each party shall be entitled to
reasonable discovery as provided by the District Court Civil

Page 5

	
 
	

Rules.  The parties will select an arbitrator in accordance
with the rules of the Association.  If the parties fail to select or agree upon the selection of an arbitrator within
ten (10) days after being requested in writing by the Association to do so, the Association shall appoint an arbitrator
to resolve the dispute.  All hearings shall be conducted within thirty (30) days after the arbitrator is selected, shall
be conducted in the presence of the arbitrator and the decision of the arbitrator will be binding upon the parties.
The costs and expenses of the arbitration shall be advanced if and when required by the Association, each party to share
equally in such advances.

	
 
	
 

	
22)
	
Notices. Any notices to be given hereunder by either party to the other may be effected either
by personal delivery in writing or by mail, registered or certified, postage prepaid with return receipt requested.
Mailed notices shall be addressed to the parties at the addresses set forth below, but each party may change the address
by written notice in accordance with this paragraph.  Notices delivered personally will be deemed communicated as of actual receipt; mailed
notices will be deemed communicated as of three (3) days after mailing.  The addresses of each party are as follows:

 

	
To Company:
	
Grant Hartford Corporation

619 SW Higgins, Suite O

Missoula, Montana  59803

(604) 926-8430

	
 
	
 

	
To TIM MATTHEWS:
	
TIM MATTHEWS

______________________________

______________________________

 

	
23)
	
Entire Agreement of the Parties.  This Agreement supersedes any and all agreements,
either oral or written, between the parties hereto with respect to the rendering of services by MR MATTHEWS for the
Company and contains all of the covenants and agreements between the parties with respect to the rendering
of such services in any manner whatsoever.  Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not embodied herein, and that no other agreement, statement, or promise not
contained in this Agreement shall be valid or binding. 

	
 
	
 

	
24)
	
Partial Invalidity. If any provision in this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remaining provisions will nevertheless continue in full
force without being impaired or invalidated in any way.

	
 
	
 

	
25)
	
Attorneys' Fees. If any action at law or in equity, including an action for declaratory
relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled
to reasonable attorneys' fees, which may be set by the court in the same action or in a separate action brought for
that purpose, in addition to any other relief to which that party may be entitled.

Page 6

	
 
	
 

	
26)
	
Governing Law. This agreement will be governed by and construed in accordance with the laws
of the State of Montana.

	
 
	
 

	
27)
	
Captions for Convenience Only. The captions of the various paragraphs herein are for convenience
only, and none of them is intended to be any part of the body or text of this Agreement, nor is intended to be referred
to in construing any of the provisions hereof.

	
 
	
 

	
28)
	
28)	Changes Respecting MR. MATTHEWS - No provision of this Agreement shall give BJ the right to be retained
in the employ of the Company.  BJ agrees that any subsequent change or changes in his duties, salary or compensation shall
not affect the validity or scope of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement in Denver, Colorado, on the date and year
first above written.

	
MR. TIM MATTHEWS:

MR. TIM MATTHEWS
Vice President of MarketingBy: ______________________________
This _____ day of April, 2009 	
By COMPANY:

Eric Sauve, President, CEO and CFO
Grant Hartford CorporationBy: ______________________________
This _____ day of April, 2009

Page 7Nancy Hanks Project

Geology and Drilling Report for 2008

Executive Summary

     The Garnet project is located forty miles east of Missoula
in Granite County. The projects are part of the historic gold mining district of Garnet, Montana. This
mining district produced approximately 150,000 ounces of gold from underground hard rock mining and an
additional 500,000 ounces from the many placer operations from the late 1800's though the start of WWII.
The gold contained in the hard rock deposits was primarily found in shallow to moderate dipping quartz veins,
stock work systems, and shear zones, hosted by Cretaceous granodiorite, Paleozoic sediments, and upper
Proterozoic quartzites.

     During the 2nd half of 2008, the Grant Hartford Corporation
began a definition drilling program consisting of 54 reverse circulation drill holes (12,497.5 feet),
examining three ore systems. Drill targets were based on results from exploration conducted by Pegasus
Gold between Dec., 1989 and Dec., 1992 and many historical records, maps, and other geologic reports.
Pegasus Gold completed 147 reverse circulation holes (47,601 feet) and six core holes (1,710 feet).
Combined, the total drill footage available for reserve calculation and mine planning is 31,808.5 feet.

     The Pegasus Project Summary, (Stimson 1992) reported a
potentially mineable reserve for the Nancy Hanks deposit (which includes the Dewey Vein system) of 3.2
million tons with an average grade of .040 opt Au and a waste to ore stripping ratio of 2.2 to 1. This
calculation was based on 16 cross sections, 43 reverse circulation holes, 3 core holes, and 9 trenches.
The Brower Report  (1999) indicated a "6 year mine life with 6,972,000 short tons of gold ore averaging
..086 troy ounces per short ton". Waste rock totals 4,452,000 tons for a strip ratio of 1:1.6. "Tonnages,
pit grades, and boundaries were derived from computerized mine design software, using extensive drill hole
data from earlier assessment work." (Pegasus data 1989-1992).

     These reserve estimates are based on open pit extraction
with high grade vein systems included. A new reserve calculation will need to be made in 2009. It can
include both an underground (high-grade) reserve and an open pit reserve. Additional drilling in 2009
should be directed to enlarge and improve both of these reserve calculations.

     The Tostman deposit is located 1,500 feet west of the
Nancy Hanks deposit. No drilling was completed in 2008 in this area. The company has permitted drill
sites to better define this deposit in 2009. The Pegasus project summary reported approximately 1.4
million tons of open pit material with an average grade of 0.037 opt Au with a 2:1 waste to ore stripping
ratio. This estimate is based on two cross sections, 9 reverse circulation holes, 1 core hole, and two trenches.

1

Introduction

     This report details drill plans, results, and conclusions of
exploration activities conducted at the Garnet Project by the Grant Hartford Corporation during 2008. Drilling
commenced in early July and was ended for the season in late December. Drilling was halted primarily due to
in-climate weather, to evaluate results, and to plan our exploration goals for 2009. All drilling was completed
by O'Keefe Drilling of Butte, MT, using reverse circulation rigs.

Geologic Setting

     The Garnet Project is located in the Garnet Range in West Central
Montana. This property can be found in the historic Garnet Mining District. There have been numerous geologic
evaluations over the years of the Garnet Range (c.f. Pardee, 1917, Kaufman, 1957, Sears, 1990, Reichl and Reynolds,
1988 to 1990).

     There are three main geologic units in the project area. The
Pre-Cambrian Garnet Range Quartzite, a Paleozoic sequence of sedimentary deposits, and the Cretaceous age Garnet
Range Granodiorite.  The Paleozoic sedimentary rocks sequence includes limestones, dolomitic limestones, and various
shales. Most of the economically enriched zones occur along the contact between the Garnet Range granodiorite and
the Paleozoic sedimentary sections. There are local marble units probably formed from limestones contacting the
intrusive Garnet Range Stock (granodiorite). The Garnet Range Stock ranges from an un-altered, medium grained, salt
and pepper granodiorite to highly chloritic and/or propolytically altered, iron stained sections.

     Structurally, the district has a general east-west fabric which
parallels the contact between the granodiorite and the sedimentary rocks. There are several large fault systems
none of which indicate movement of over a few hundred feet. Most of the faults strike E-W in the Nancy Hanks system
and range from 20-40 degrees dipping north. Fractured zones and/or bedding planes along the contact area, allowed
hot fluids (probably associated with the stock placement) to permeate the granodiorite and leave economically valuable
minerals. Many of the fractures are quartz filled and contain various levels of sulfides (primarily pyrite). The higher
grade veins generally contain large amounts of leached sulfides and give rise to a "red ore" such as the one found in
the Nancy Hanks Mine which averaged around 8 OPT Au. Gold is the most common economic mineral in the district including
telluride minerals, with minor amounts of silver and copper.

2008 Exploration Planning and Results

     Grant Hartford's 2008 exploration program was designed to further
evaluate eight target areas. Most were based on results obtained by Pegasus Gold's exploration project (1989-1992).
The Pegasus Garnet Project Summary (Stimson, 1992), identified 16

2

different "mineralized areas" of high grade gold ore. Numerous historical accounts and records
were also used to determine the most promising targets.

     Due to the encouraging results obtained in the first three zones
drilled, no drilling was conducted on any of the other targets in 2008. All three zones were found in the Nancy
Hanks/Dewey vein system. During 2008, Grant Hartford completed 54 holes with total drill footage of 12,497.5 feet.
Drill locations were based on high grade intercepts reported by Pegasus. Plans called for confirmation of these
high-grade intercepts, tightening drill spacing for more accurate reserve estimation, adding more mineable tonnage
to the previously calculated reserves, and evaluating the high-grade intercepts for underground extraction. The
Pegasus program focused on open pit extraction and did not calculate high grade underground reserves separately.

Dewey (N. Nancy Hanks)

Six holes were drilled on the North Dewey deposit totaled 2,085 feet. 97' of which had grades
ranging from .100 - .958 OPT (ounces per ton) Au. The North Dewey has several oxidized quartz vein systems contained
in granodiorite. These are at several different levels and would be extractable with underground mining methods.
More holes will be drilled to the west and east to try to expand this system in 2009.

- GHD4-08 Hole 4 was drilled to 360 feet and encountered 7' of .447 OPT in white coarsely
crystalline marble. This was our "discovery hole for the" marble zone discussed later in this report. This zone
is further explored in holes drilled in the Nancy Hanks pit.

- GHD5-08 This hole encountered 5' @ .104.

- GHD6-08 There were minor intervals of grade encountered in the .08-.100 range. This hole
hit historic workings at 185' and 10' of sample 185-195 was lost. This corresponds to historic working encountered
in Pegasus holes NHC-4 and NH8-89. These zones may be worth more examination with holes to the south, east, or west.

- GHD7-08 was designed to expand the newly discovered zone of 7' @.447 found in GHD4-08.
It would also re-explore NH65-92. This hole encountered 5' @ .117 OPT in the Pegasus zone. This hole also hit the
ore zone in marble and had 10' @ .208 OPT.

- GHD8-08 This hole was drilled to determine the extents of the 2 zones of interest to the
north. Hole 8 did not encounter the new zone which cut it off to the north, but had 5' @ .074 OPT Au in the Pegasus zone.

- GHD9-08 Hole 9 hit no grade of interest. Holes 8 & 9 cutoff the "marble" zone to the north.

3

NANCY HANKS PIT

High Grade Veins

There were several different ore zones targeted in the Nancy Hanks Pit during 2008. The first
target was a shallow oxidized quartz vein from 5 to 60 feet from the surface. This vein was discovered in a drill
sump excavated in the pit. The location matches historic records which mention an un-mined vein above the historic
workings. The first sample taken from this vein had a grade of 2.73 OPT Au and 3.78 OPT Ag. Copper grades up to 3%
were found in this deposit. This vein varies from 1.5 to 3 feet in thickness and dips at roughly 30 degrees to the
NW. Several other veins continue to the NW and will be further defined during the beginning of the 2009 drill program.
These veins are at various levels and should allow extraction by underground methods. There are several high grade
intercepts north of the pit, which will be explored as well. A previously undiscovered vein was found approximately
200 feet below the surface. This is an oxidized vein hosted in white crystalline marble that averaged .346 OPT over
a strike length of XXX. Several of the holes encountered historic workings which will be
useful for mine planning in the future.

-GHN36-08 was drilled at the west end of the pit to further define the extents of the marble
zone. A high grade vein was discovered which is approximately 100 feet in depth. The interval from 95-105 has an
average grade of 1.338 OPT Au. The interval from 95-175 had an average grade of .289 OPT Au.

-GHN43-08is located approximately 75 feet west of the existing pit and continued to indicate
the continuation of the vein systems found in the pit. It contained 50' of .078 opt Au which included 5' of .354 opt
Au and 5' of .206 opt Au which are associated with the high grade veins found to the east in the pit area.

Nancy Hanks Pit Material

Holes P2-P9 were drilled vertically with depths varying from 30-60 feet for a total of 332.5 feet
with high grade intercepts ranging from .098-.828 opt Au. Numerous ore grade veins were encountered containing
altered/oxidized shallow dipping (10-30 degrees) quartz veins contained in granodiorite. Due to the proximity to
the surface, this material is only extractable by open pit methods. The average depth of mineable material averages
35' from the surface, with a grade of .069 OPT. This deposit appears to be getting thicker and richer to the northwest.
Plans for drilling this extension are included in early 2009 exploration. Grades of over .800 OPT Au over 7.5' were
found in the most NW hole. This vein system dips towards the northwest, appears to be continuous, and an extension to
the west and north would greatly increase mineable tonnage using underground mining methods. Just south of the pit edge,
the igneous/sedimentary boundary is found with white crystalline marble being the predominant rock type. There are also
small inclusions of other sediments such as limestone and quartzite as well as skarn formation. This contact area will
be drilled further in 2009.

4

"Marble" Zone

Holes GHN20-26 have been drilled to further expand the zone discovered in holes GHD 4 & 7.
2,135 feet of reverse circulation drilling has been done so far to explore this ore deposit. Over 35 feet of which
had grades ranging from .098-.882 opt Au in the target zone.

These holes go through granodiorite/altered granodiorite for approximately 150 feet. They then
encounter marble grading to limestone away from the intrusive granodiorite. The ore is encased in the marble section.

-GHN20-08 was drilled vertically to encounter the marble zone discovered previously. This
hole expanded the ore zone another 20 feet to the west. Ore was encountered in altered/ oxidized quartz veins enclosed
in white crystalline marble.

-GHN21 through 26-08 were drilled at various azimuths and dips to expand the "marble" zone to
the west and south. These holes resulted in grades of from .140 to .788 OPT Au in the ore zone with thicknesses averaging
approximately 5'. This drilling has given us a strike length of over 80'. It also appears the zone is becoming larger up
dip as we move to the west.

EAST DEWEY

The East Dewey drilling indicates several ore zones at differing depths. This would allow ore
extraction at many different levels using underground mining techniques. Plotting of drill traces indicates faulting
with minor movements of 20-30 feet. This system is structurally complex and core drilling will be used to further
define this deposit. There is a great potential to block out a large underground reserve in the East Dewey system
indicated by the large number of high grade intercepts encountered. Further definition will be completed in 2009.
There are also several targets west of this area which will be examined in 2009. Primary ore veins are contained in
altered granodiorite in shallow (10-30 degrees) north dipping structures. Drill holes to the south ended in mixed
altered sediments and minor endoskarn/exoskarn. This boundary will be a focus for drilling in 2009.

13 holes were drilled in the East Dewey system totaling 4,495 feet of which over 130 feet contained
with high grade intercepts ranging from .098 - .620 opt Au.

- GHS2-08 was designed to examine NH82-92 (20" @ .558/ 15' @ .777) Several zones of ore
grade material were encountered with intercepts of 5' @.291, 15' @ .099, 5" @.105, and 5' @ .104 opt Au.

- GHS10 through 19-08 were drilled from the same location as hole GHS2-08. Numerous ore
grade zones were encountered in these holes ranging from .080 OPT to .620 opt Au.  Ore is found in oxidized veins
contained in altered granodiorite.

5

Conclusion

The drill program for 2008 was an overall success with multiple high-grade zones intercepted.
The Company's 2008 drill program discovered and expanded ore zones indentified by Pegasus in the East Dewey and
North Dewey zones. Drilling on the Nancy Hanks deposit confirmed mineable ore grade material identified by Pegasus
with open boundaries in several directions. The potential to define additional ore grade tonnage is high. A new
ore zone at the 200 foot level in the area of Nancy Hanks pit was discovered which is open in three directions.
Inputting the Company's 2008 drill data and the Pegasus drill data into a sub-surface mine modeling program will
provide the Company with an updated open pit reserve calculation and an underground high-grade reserve calculation.

Recommendations

It would be prudent for the Company to complete the following tasks in 2009:

	
1.
	Enter all existing geological, geophysical and geochemical data, including the Pegasus drilling
data, and the Company's 2008 drilling data, into a sub-surface 3D mine modeling program to determine an updated
reserve calculation,
	
2.
	Engage a metallurgical lab to analyze samples from the 2008 drilling program to determine the
correct grind size, and conduct specific gravity concentration and flotation tests, in order to determine a flow sheet,
	
3.
	Based on the data from the flow sheet, engage an engineering firm to design and provide bids
for the construction of a milling facility to process high grade ore,
	
4.
	Engage a Geophysical firm to conduct Induced Polarization tests on the North Dewy target to
identify additional anomalous areas for drilling during the 2009 season.
	
5.
	Engage an underground mining engineer to provide cost estimates for underground ore
extraction on indentified deposits,
	
6.
	Drill up to 150 reverse circulation holes on targets identified in the area of the
Nancy Hanks  and Dewey to block out high grade ore for extraction, and to complete definition drilling
to improve the Nancy Hanks' open pit reserve calculation to a proven/measured reserve category,

	
7.
	Upon completion of the 2009 drilling program engage an engineering firm to begin a
feasibility study for processing low grade ores utilizing open pit mining methods,
	
8.
	Drill at least 2 additional high value targets of the 16 high grade targets identified
in previous drill programs. I recommend drilling the Free Coin / Willie claims and the Tostman / Cascade
claims which were permitted and bonded in the 2008 Operational Plan,

References

Brower, John C., 1999, Mineral Property Valuation, Garnet and Copper Cliff Mining Districts

Stimson, Eric, 1992  Garnet Project Summary,  Pegasus Gold Corporation

6

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