PHYSICAL and PITTING REPORT ON THE

SLUM GULCH PROPERTY

IMPERIAL METALS CORPORATION 580 HORNBY STREET, SUITE 200

VANCOUVER, B.C. V6C 3B6

December, 2006 By Steve Robertson and Gary Roste

SUMMARY _________________ The Slum Gulch property was identified as a placer deposit target from air photo work completed by Jacqueline Blackwell for Imperial Metals in early 2005. Wide spaced reconnaissance sampling of surficial gravel later that year returned results of 0.80 g/t gold and 2.68 g/t gold and three samples with insignificant results (private company files). A large land position was acquired by way of staking to cover the full extent of the placer deposit identified from airphotos. Work in 2006 was completed to confirm the presence of gold bearing gravels. The 2006 work reported on in this report includes a one day reconnaissance of the area by the authors and a one day sampling program using a rubber-tired backhoe. A total of 16 samples were gathered and processed. Reconnaissance and sampling confirmed that the area of the property underlain by potentially gold bearing fluvial placer deposits is extensive. Samples were collected along a north – south road through the property on regular 50 metre spacing. Unfortunately, due to poor GPS coverage, the sampling did not extend to the site of the 2.68 g/t sample collected in 2005. Additional sampling, either by pitting or preferably with an auger drill, is recommended for next field season. The expected cost of the program will be approximately $35,000.

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TABLE OF CONTENTS SUMMARY 1 Table of Contents 2 List of Figures and Tables 2 1.0 INTRODUCTION 3 1.1 Background and Purpose 3 1.2 Location and access 4 1.3 Physiography 4 1.4 History 5 1.5 Land tenure 5 1.6 2006 Exploration program 7 1.7 Acknowledgements 7

2.0 REGIONAL GEOLOGY 8 2.1 Regional stratigraphy 8 3.0 SURFICIAL GEOLOGY 10 3.1 General 10 3.2 Slum Gulch 10 4.0 PITTING AND SAMPLING PROGRAM - 2006 11 5.0 RECOMMENDATIONS 13

Statement of Qualifications 14

REFERENCES AND SELECTED BIBLIOGRAPHY 17

LIST OF FIGURES AND TABLES Figure 1.1 Location Map 4 Figure 1.2 Claim Map 6 Figure 2.1 Simplified Stratigraphic Column 9 Figure 4.1 Slum Gulch Pit Samples – 2006 12 Table 1.1 List of Claims 5 APPENDICES APPENDIX A Statement of Expenditures APPENDIX B Assays Certificate

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1.0 INTRODUCTION _______________________________________ 1.1 BACKGROUND AND PURPOSE The Mount Polley copper-gold mine is operated by Mount Polley Mining Corporation, a wholly owned subsidiary of Imperial Metals Corporation of Vancouver, British Columbia. The mine, which is northeast of Williams Lake in the British Columbia interior, opened in 1997 and operated until 2001 and after a four year hiatus, was restarted in 2005. Imperial continues to evaluate opportunities to process profitable mineralized materials at the mine and the Slum Gulch placer property is being examined for that purpose. 1.2 LOCATION AND ACCESS The Slum Gulch property is situated 65 km northeast of Williams Lake in south-central British Columbia (Fig. 1.1). The centre of the Slum Gulch property is at latitude 52º 36.5’N, longitude 121º 34.1’W, or UTM 596861E, 5829691N, in Zone 10 (NAD 83). The nearest settlement is the village of Likely, just one km to the north and east, on the north shore of the western end of Quesnel Lake. Access is gained by a series of idle and overgrown roads transecting the property from the Likely highway and the Ditch Road, which connects Likely to the Village of Horsefly. The second growth covering the property is generally very thick. Slum Gulch is road-accessible for most of the year with minimal snow clearing required in the winter months should a year round operation be established in future. The magnetic declination in 2006 was 19º06’E (Natural Resources Canada, online geomagnetism calculation). The grid used on the property is the UTM grid, which is about 1º east of true north. As a result, compass measurements in the field were made using an effective declination of about 18ºE. The nearest airport is Williams Lake. Driving time to the property from there is about 75 minutes.

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Fig. 1.1: Location and road access of Slum Gulch and Mount Polley in south-central British Columbia, with reference to morphogeologic belts of the Canadian Cordillera. The property is mainly within NTS Map Sheet 093A/12. 1.3 PHYSIOGRAPHY The Slum Gulch property is situated along the eastern margin of the low-lying Fraser Plateau of the British Columbia interior, flanked to the east by the Quesnel Highlands, and the Cariboo Mountains beyond. Elevation on the property ranges from a low of 717 metres at the western shore of Quesnel Lake on the north and east side of the property. The high point in the property is at 980 m (3,215 feet) a.s.l. near the Ditch Road on the west side of the claim. The western portion of the property is sloping to the east , then is relatively flat in the NW-SE Slum Gulch drainage and at the north and eastern sides of the claim is steeply sloping down to the lake (el. 717 m). The relatively flat area in the centre portion of the claim is suspected to be underlain by extensive placer gravels. Climate and vegetation Mean monthly temperatures range from 13.7°C in July to –10.7°C in January. Precipitation averages 755 mm, with 300 mm falling as snow. This data is from Mount Polley mine site, 8 km to the west.

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Forest cover consists of red cedar, Douglas-fir and sub-alpine fir, with lesser black cottonwood, trembling aspen and paper birch. Much of the area has been logged and is now covered by dense re-growth. 1.4 HISTORY The placer activity on the area of the Slum Gulch property is unknown. The location of the property between Cedar Creek and Bullion Pit would suggest that the area had at least been prospected in the past, but airphoto interpretation and site investigation provided no evidence of historic works. The Ditch Road passes through the west side of the Slum Gulch Property and was an important area for infrastructure support during the mining of the bullion pit. It is expected that at the very least, much of the historic logging in Slum Gulch was to support that mine and the associated works. 1.5 LAND TENURE The Slum Gulch Property consists of one placer claim totalling approximately 491 hectares (Table 1.1, Fig. 1.2). The “Polley Placer 1” claim (tenure 521643) is a cell claim that was acquired using the new ‘paper staking’ facilities introduced by the provincial government in 2005. The property is 100% held by Imperial Metals Corporation. There are no underlying royalties or other interests.

Table 1.1: List of Claims, Slum Gulch property, 2006

TITLE NAME TITLE # LEASE SIZE RECORD DATE

EXPIRY DATE REMARKS

POLLEY PLACER 1 521643 490.825 2007/OCT/30 2006/OCT/30

5

!

""""""

"""

""

""

"

"

"

#

#

#

##

521643

Ditch Road

Slum Gulch Creek

596000

596000

597000

597000

598000

598000

5827

000

5827

000

5828

000

5828

000

5829

000

5829

000

5830

000

5830

000

5831

000

5831

000

Likely

/

Figure 1.2 Slum Gulch Placer Claim

0 500 1,000250Metres DATE December/2006

Placer Claim Boundary

Highway

Gravel Road

Rough Road

Secondary Gravel Road

" 2006 Till Samples

# 2005 Till Samples

Quesnel River

Quesnel Lake

Likely Highway

1.6 2006 EXPLORATION PROGRAM This report summarises the objectives and results of 2006 activities involved in exploration. This consisted primarily of:

• One day evaluation of the property for access and suitability of sampling sites.

• One day of sampling with a rubber tired backhoe. Gravel samples were collected into 20 litre plastic buckets.

• Screening and splitting at the Mount Polley minesite

• Samples were submitted to Acme laboratory in Vancouver for analysis

1.7 ACKNOWLEDGEMENTS Contributions to this program were from: Jacqueline Blackwell originally identified the gravel deposits at Slum Gulch from Airphoto interpretation and followed up with field work to confirm the nature of the surficial deposits. Tim Stubley gathered the initial samples which determined that the gravels were indeed auriferous and the recommendation by Jacqueline and Tim eventually resulted in the placer claim being staked. Samples were processed by Brenda Emmerson and Linda Bingham at the Mount Polley minesite. Melissa Darney provided drafting and logistical support for the project.

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2.0 REGIONAL GEOLOGY _______________________________________ This section is taken with edits from Rees and Ferreira 2006. 2.1 REGIONAL STRATIGRAPHY 2.2.1 Stratigraphy Quesnel Belt The region has been called Quesnel Belt or Quesnel Trough; both are valid, but Quesnel Belt will be used in this report. The terms pre-date ‘Quesnellia’ or ‘Quesnel terrane’, which have more comprehensive tectono-stratigraphic meanings. The Quesnel Lake area is situated roughly in the middle of the belt so is referred to as the Central Quesnel Belt. Nicola Group The relevant Quesnel Belt stratigraphic record began in the Middle Triassic and extended through the Early Jurassic. Over the years, this stratigraphy has been given several different names in the Quesnel Lake area, but we follow Panteleyev et al. (1996) in using Nicola Group for the entire assemblage, the same term as used in southern British Columbia. A simplified regional stratigraphic column is shown in Fig. 2.1, consisting of the elements most pertinent to the regional setting of Slum Gulch.

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Fig. 2.1: Simplified stratigraphic column of the Quesnel Belt for the Slum Gulch region.

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3.0 SURFICIAL GEOLOGY

_______________________________________ 3.1 General The principal geological source of reference for the region containing the Slum Gulch property is the provincial government’s geological survey report on the Central Quesnel Belt by Panteleyev et al. (1996). This comprehensive study contains many more details of the physical, historical, geological and economic aspects of the region than can be included in the present report. There are no known accounts of previous work on the placer deposits on the Slum Gulch Property however a significant amount of literature exists on the history and related geology of placer deposits in the Cedar Creek through Quesnel Forks area. 3.2 Slum Gulch The erosional landforms and surficial deposits on the property are consistent with previous work in the region suggesting that the region has been affected by Quaternary glaciation. The large paleo-glaciofluvial channel identified from air photo mapping in the centre portion of the claim appears to be a perched fluvial deposit related to glacial retreat in the area. This channel is speculated to be of similar origin to other gold-producing areas in the district. Five samples were collected from this area (TS05-337 to TS05-341), with reported gold flakes observed in TS05-338. The presence of gold in these gravels is very encouraging and will result in a recommendation for ground truthing of the extent of the channel in a follow-up program.

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4.0 PITTING AND SAMPLING PROGRAM - 2006 _______________________________________ The 2005 reconnaissance work which led to the acquisition of the property was sufficient in grade to warrant an auger drilling program to assess the placer gravel deposits on the claim. Unfortunately, due to the busy exploration season in 2006, Imperial was unable to secure an auger drill for the program and it was determined that a pitting program with a rubber tired backhoe would be implemented instead. The area of samples TS05-338 (2.68 g/t Au) and TS05-339 (0.8 g/t Au) were located and a series of planned pit locations were marked in the field. The pit locations were marked out about every 50 metres on the main access route, starting in the east and progressing toward the west (Fig 4.1). Unfortunately, due to poor GPS coverage under the thick second growth canopy, the pitting ended short of the area where the best results had been located the previous year (near TS05-338). A sample of gravelly material was extracted from each pit at about one metre depth, and after the largest cobbles (greater than 10 cm) were removed, the samples were placed into 20 litre buckets and taken to the Mount Polley core logging facility for further processing. The samples were screened to a -10 mesh grain size, placed into a plastic sample bag and sent to Acme lab for analysis. The results of the sampling are found in appendix B and presented on Figure 4.1.

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""

"""

"

"

""

"

"

"

"

"

"

"

#

#

#

#

#

521643

262973

262972

262971

262970

262969

262968262967

262966262965

262964262963

262962

262961 262960262959

262958

TS05-337

TS05-338

TS05-339

TS05-340

TS05-341

(0.006 g/t Au)(0.027 g/t Au)

(0.011 g/t Au)(0.039 g/t Au)

(0.008 g/t Au)

(0.009 g/t Au)(0.016 g/t Au)

(0.004 g/t Au)(0.058 g/t Au)

(0.018 g/t Au)(0.006 g/t Au)

(0.015 g/t Au)

(0.023 g/t Au)

(0.019 g/t Au)

(0.005 g/t Au)

(0.031 g/t Au)

(0.0 g/t Au)

(2.68 g/t Au)

(0.8 g/t Au)

(0.0 g/t Au)

(0.0 g/t Au)

597000 59800058

2900

0

5829

000

5830

000

5830

000

/

Figure 4.1Slum Gulch Pit Sampling - 2006

0 200 400100Metres SCALE 1:8,000 DATE December/2006

Placer Claim Boundary

Highway

Gravel Road

Rough Road

Secondary Gravel Road

" 2006 Till Samples (Au ppm)

# 2005 Till Samples

Quesnel River

5.0 RECOMMENDATIONS _______________________________________ Recommendations include additional sampling, in a similar manner to the 2006 program. Use of a backhoe to pit in 2006 was a result of the inability to find an appropriate auger rig due to the level of exploration activity and scarcity of drilling equipment, so pitting was used as an indicator method to further focus the area to be examined. Although the results were generally disappointing, samples were not extracted from the most promising area of the property, and only tested a selected horizon of material, about 1 metre below surface. Implementation of a more extensive and detailed sampling program using an auger drill will be necessary to better assess the merits of the property. An auger drilling program with a minor amount of cat work for brushing out existing roads is recommended at an expected cost of $35,000.

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REFERENCES and SELECTED BIBLIOGRAPHY

_______________________________________ Bailey, D.G. (1978): The geology of the Morehead Lake area, south-central British

Columbia; unpublished Ph.D. thesis, Queen’s University, 198 pp. Bailey, D.G. (1988): Geology of the Hydraulic map area, NTS 093A/12; B.C. Ministry

of Energy, Mines and Petroleum Resources, Preliminary Map 67, 1:50,000. Blackwell, J. and Stubley, T. (2005): Surficial geology of the Mount Polley property,

report for Imperial Metals Corporation. Levson, V. (2001): Regional till geochemical surveys in the Canadian Cordillera: sample

media, methods and anomaly evaluation; in: Drift exploration in glacial terrain (McClenaghan, M.B., Bobrowsky, P.Y., Hall, G.E.M. and Cook, S.J., eds.), Geological Society of London Special Publication, 185, pp. 45-68.

Logan, J.M. and Mihalynuk, M.G. (2005): Regional geology and setting of the Cariboo,

Bell, Springer and Northeast porphyry Cu-Au zones at Mount Polley, south-central British Columbia; in Geological Fieldwork 2004, B.C. Ministry of Energy and Mines, Paper 2005-1, pp. 249-270.

Panteleyev, A., Bailey, D.G., Bloodgood, M.A. and Hancock, K.D. (1996): Geology and

mineral deposits of the Quesnel River-Horsefly map area, Central Quesnel Trough, British Columbia; B.C. Ministry of Employment and Investment, Bulletin 97, 156 p.

Rees, Chris and Ferreira. Lee (2006): Geological report on the Mount Polley Property

and Summary of 2005 Exploration. Stubley, T. and Blackwell, J. (2005): 2005 Surficial geology of the Mount Polley

property; internal report for Imperial Metals Corporation, October, 2005.

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APPENDIX A

SUMMARY STATEMENT OF EXPENDITURES

Truck and Fuel 3 days X $100 $100

Geologists 2 geos X 2 days $780 Samplers 2 samplers X 2 days $420 Backhoe $477 Sample processing 2 labourers X 2 days $840 Shipping $200

Room and Board (geologist only) 4 days at $140/ days $560 Assays $480 Equipment Rental for processing $240 Report Writing and Drafting $500 Filing, Recording Fees $982

____________

Total $5,779

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APPENDIX B

Assay Certificates

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