Dubenski Property

Exploration - Dubenski Property

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Since acquisition in 2007 of the Dubenski Property, Houston completed the following exploration work:

• A Phase I, 17 hole, 1,798.6 m NQ-sized diamond drill program aimed at providing a NI 43-101 compliant Mineral Resource estimate of the Shaft Zone gold deposit. This program was conducted in January and February, 2008 and was designed and managed by WGM. Readers are referred to WGM’s technical report (Dunbar and Kociumbas, 2009) for details on this drill program. DB08-05 was the best drill hole of the section and intersected 256.94 g/mt gold over a core length of 3.00 metres (7.494 oz/st gold over 9.84 feet) including 763.10 g/mt gold over 1.0 metres (22.257 oz/st gold over 3.28 feet).
• Cut approximately 23 line-km of new grid with lines spaced 50 and 100 m apart, oriented north-south. Pickets were established at 25 m stations. Approximately 40 % of the grid lies on lakes.
• Matrix GeoTechnologies Ltd. (“Matrix”) completed a 22.5 km ground Induced Polarization (“IP”) / Apparent Resistivity survey on 20 of the grid lines.  The survey was conducted from February 5 to March 27, 2008.  Eight Quantitative Sections were constructed including lines L23+00E and L23+50E that cross the Dubenski Shaft Zone gold deposit. This reconnaissance survey identified the 1.7 km long IP chargeability anomaly, the DMZ, encompassing the Shaft, Central and East Gold Zones.
• The completion of stripping and channel sampling approximately 400 m west of the Shaft Zone in an area that was initially stripped but not sampled by previous operators of the Property. Results did not exceed 1.0 g/t.
• A Phase II, 22 hole, 2,232.5 m diamond drill program completed in November-December 2008, designed and supervised by B.J. McKay Ltd. The best intercept from this program was 2.00 g/t over 22.45m, also 3.21 g/t over 9.45m in drillhole DB08-32.      
• A Phase III, 18 hole, 2,000.0 m diamond drill program completed in March, 2009 designed and supervised by B.J.McKay Ltd. The best intercept from this program was 2.79 g/t over 38.9 m in drillhole DB09-47.
• Matrix GeoTechnologies Ltd. (“Matrix”) completed a 5 km ground Induced Polarization (“IP”) / Apparent Resistivity survey on six of the grid lines to fill in the area between two previous geophysical surveys. The survey was conducted in April and May 2009. Three subparallel IP chargeability trends were depicted. Trend 1 corresponds to the DMZ and is 900 m long and open in both directions. Trend 2 lies approximately 150 m south of Trend 1 and extends for 700 m. Trend 3 lies approximately 150 m south of Trend 2 and extends for 700 m. All three IP anomalies are continuous and are open at depth (HLM News Release, April 29, 2009). The Matrix survey work identified several high priority target anomalies for follow-up investigation and possible diamond drilling testing. The IP anomalies appear to be stronger at depth in the areas of known gold mineralization.

·         Updated NI 43-101 mineral resource estimate was received. Gold ounces in the Indicated Category increased by 84%. A 10,730m drill program was recommended by P&E Consultants and B.J. McKay Ltd.

·         Completed a Phase IV 4,900 m diamond drilling program on the Dubenski property. From December 2009 to March 2010 the drill program expanded the Dubenski mineralized zone from 365m to a length of 425m. It also confirmed that the Shaft and Central Zones are in fact one mineralized gold zone, renamed the Dubenski Gold Zone (DBGZ). The DGBZ is open to depth, and the east towards the Peninsula Zone.

·         The most significant diamond drill hole of the Phase IV program was DB10-70 encountering 19m of 9.99g/t gold, including 3.10m of 57.28g/t.

·         Gold mineralization was defined to a maximum depth of 130m. 64 of 95 drill holes from the Phase I, II, III, and IV drill programs encountered grades of 3.50 g/t Au or higher.

During Fiscal 2011 HLM completed the following exploration work on the Dubenski Property:

• A Phase V, 4 hole, 1,784 m diamond drill program completed in August 2010 designed to test the down-dip and down plunge extension of the Dubenski Gold Zone. The program was both designed and supervised by B.J. McKay Ltd. 
• The Phase V program encountered several intersections bearing anomalous gold values, specifically with hole DB10-98 where the best intersection was 11 metres of 0.824 g/t gold. 
• Holes 97 and 98 have provided the indication of mineralization down to a depth of approximately 450m from surface.

The recent drilling of Phases IV and V indicate that the previously outlined zones, Shaft Zone, East Zone and Central Zone etc are part of a larger continuous zone of alteration and mineralization that stretches from 22+30 E to 26+00E. This nomenclature has been maintained to facilitate digital modeling as each zone required a different capping value.

The known Dubenski gold deposit(s) along the DGZ are hosted by felsic to intermediate volcaniclastic rocks (tuffs, ashes and agglomerates), lesser amounts of intermediate volcanics and minor amounts of interbedded cherty sediments. Historically the deposit is comprised of three distinct gold zones which are concordant and parallel to the local volcanic stratigraphy. From west to east the shaft, central and peninsula zones made up the historical Dubenski Gold Zone. The third zone, the Peninsula Zone, lies east of the Central Zone under Flint Lake and would require drilling from the ice in winter or a barge in summer. Future plans by HLM on the Dubenski Property is to conduct downhole geophysical surveys with these deeper holes. Additional to exploration efforts at depth lies the necessity to increase the resource on the Dubenski Gold Zone via infill drilling and possible strike length extension to the east in the medium term.

B.J. McKay Ltd. has stated that “overall, the gold mineralized structure, referred to as the DMZ, dips vertical to steeply south, parallel to stratigraphy striking 105° to 110°, rather than the shearing direction which strikes 85° to 90°, dipping steeply north. Gold mineralization is concentrated within multiple pinch and swell zones / lenses or shoots of quartz-sericite schist (felsic to intermediate tuffs) in association with silicification and elevated pyrite mineralization. Not all silicified zones carry gold, and although gold is always associated with pyrite, the reverse is not always true. Typical accessory minerals to gold are black chlorite, quartz (± quartz and quartz-carbonate veins), sericite and occasionally trace amounts of fuchsite and chalcopyrite.”

Dubenski Mineral Resource Mineral Resource and Mineral reserve estimates

The most current mineral resource estimate in compliance with NI 43-101 and CIM standards was done on the Dubenski Property on the West Cedartree Project. The resource estimate was undertaken by Eugene Puritch, P.Eng. and Antoine Yassa, P.Geo. of P&E, Brampton, Ontario. The effective date of the resource estimate was October 31, 2009 and does not include any drilling phases done subsequent this date.

Table 3: Dubenski Gold Zone Resource Estimate Utilization Optimized Pit Shell