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North Fork 14 Sapphire Concession

Property Location

The North Fork 14 sapphire concession is located in the renowned Ilakaka Sapphire producing region of southern Madagascar. The concession is 2.5 km by 2.5 km and has an area of 625 hectares (1,544 acres). The property is located approximately 2.5km south of the town of Ilakaka which is mid-distance between the cities of Fianarantsoa and Toliara. Road access from the capital city of Antananarivo (Tana) is via the city of Fianarantsoa, approximately a 12-hour drive on paved roads. Toliara is approximately a 3-hour (210km) drive from the project site and is serviced twice daily by air service from the capital.

The road from the capital to Fianarantsoa is black top; however, it is primarily a contour alignment with continuous curves. About one-third of the highway between the capital and Fianarantsoa has one-lane bridges. Approximately 100km of the road between the Fianarantsoa and the project site is an unimproved track across the flat savana.

Primary access to the project site is via Toliara which has two daily flights from the capital. Toliara is a major seaport for importing equipment; however, port facilities are lacking and ships' cranes must be used for unloading. The road is paved, but in poor condition and the bridges are all single lanes. The rivers can all be portaged for transporting heavy equipment to the project area except during the rainy season, from November to March.

Area Map and Location:

Map of Madagascar with location of North Fork 14 Sapphire Concession

North Fork 14 Sapphire Concession

Google Satellite Picture of North Fork 14 Camp and Testing Equipment

Ownership Chart

MineCore has a 100% direct and indirect interest in Block 14. The mining concession is held in trust for MineCore by Les Pierres Precieuses De Madagascar S.A.R.L. (LPPM) through a Joint Venture Agreement with LPPM and Platinum Works Inc. (PWI) with MineCore having a 49% interest, PWI a 51% interest and LPPM a 0% interest.

PWI is a wholly owned subsidiary of MineCore.

Les Pierres Precieuses De Madagascar S.A.R.L. (LPPM) is owned 85% by Jerry G. Mikolajczyk and 15% by Mr. Chang, a local Malagasy holding the shares in trust for Mr. Mikolajczyk. LPPM is the legal owner of the concession and holds the concession in trust for PWI and MineCore. Madagascar law requires the ownership of the concession to be by a Malagasy resident or Malagasy corporation.

Property Tests

January 2001 to December 2001

Block 14 testing was from January 2001 to September 2001. The mine began producing sapphires in March of 2001 and produced over 107,831 grams of sapphires and semi-precious stones during the period. Many large sapphires over 1 gram were found. The largest blue sapphire found weighed 16.4 grams. The largest pink found was 6.0 grams

June 2001

The North Fork 14 project had an initial evaluation for sapphire and gemstone performed by Behre Dolbear & Company www.dolbear.com in June 2001. The report confirms concentrations of sapphire bearing deposits on the property.

Highlights of the Executive Summary of the Behre Dolbear Report:

"Behre Dolbear & Company was engaged by PWI, Inc. to undertake an initial evaluation of the North Fork 14 property in Madagascar to verify the presence of gem-quality sapphires. The property is within the newly discovered (1998) Ilakaka sapphire area."

"Behre Dolbear undertook a limited sampling program and hand carried sapphires and other recovered gemstones to Thailand for appraisal. The results of the three bulk samples indicate an average of $159 per Bank Cubic Meter (BCM)."

"BEHRE DOLBEAR STRESSES THAT THE $159 PER BCM IS NOT NECESSARILY REPRESENTATIVE OF WHAT VALUE EXISTS ON THE NORTH FORK 14 PROPERTY. A SAMPLING PROGRAM BASED ON SOLID GEOLOGIC PRINCIPLES IS REQUIRED TO DEFINE A RESOURCE AND THE REPRESENTATIVE VALUE OF A BCM OF SAMPLE ON THE PROPERTY. THIS VALUE COULD BE SIGNIFICANTLY LESS OR MORE THAN THE VALUES OBTAINED BY OUR LIMITED SAMPLING PROGRAM."

"Behre Dolbear, however, can confirm the presence of gem-quality sapphires and other lesser value gemstones on the property. PWI is impressed with the values obtained from the samples, which, if confirmed by future work, would suggest a high potential for a commercial operation. A program of geophysical surveys to define the thickest part of the gravel channel, followed by test pitting on a close-spaced basis is recommended to develop a resource/reserve over a mine able portion of the property."

December 2002

As part of it's due diligence procedure in the PWI acquisition, MineCore retained Richard Bachman, an independent geologist, to undertake a review of the North Fork 14 property in Madagascar to verify the presence of gem-quality sapphires, confirm property title, and document current ownership of the concession.

The Independent Geologist spent four days on the North Fork 14 property from December 4 - 8, 2002 visiting three previously mined test pits. Mr. Bachman reviewed current mining activity, visiting informal small miner workings on the property and within the nearby district, examining stratigraphic sections, and conducting a limited audit sampling of a gravel horizon in a production pit. The sample, selection and preparation, which was supervised by Mr. Bachman, produced approximately 20 grams of sapphires (the largest a blue 3.5 gram stone) from approximately one third cubic meter of material. It is estimated that the 20 grams of sapphires recovered have a value of US $4000 to $8000.

The Independent Geologist confirmed the presence of gem-quality sapphires and other lesser value gemstones on the property. He was impressed with the estimated value of sapphires derived from the limited sampling, the widespread artisan mining activity, gem trading, and recognition that Ilakaka was a major new sapphire mining district

THE INDEPENDENT GEOLOGIST STRESSED THAT THE US $4,000 TO $8,000 VALUE PLACED ON THE 20 GRAMS OF SAPPHIRES RECOVERED FROM THE ONE THIRD CUBIC METER OF GRAVEL IS AN ESTIMATE BASED ON CURRENT SAPPHIRE SALES IN THE ILAKAKA AREA AND MAY NOT NECESSARILY REPRESENT THE VALUE OF THE SAME SAPPHIRES SOLD IN THE FUTURE, DUE TO MANY VARIABLE FACTORS, INCLUDING MARKET FLUCTUATIONS. THE MATERIAL PROCESSED WAS SELECTED FROM A PORTION OF THE BASAL GRAVEL IN AN ACTIVELY MINED PIT. IT IS NOT REPRESENTATIVE OF THE GRADE OF SAPPHIRE (GRAMS/CUBIC METER), WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.

Proposed Exploration Plan

Exploration of the property will be conducted in two phases, Phase I - Probing and Phase II - Reserve Drilling and Calculation.

Phase I - Probing

Probe drilling will be conducted to establish depth and thickness of the overburden that will need to be stripped away and of the Raw Ore Material (ROM) which contains gem material. The valuable information will establish the criteria for Reserve Development and Calculations for mine planning. A Reverse Air Circulation (RAC) drill will be used for the drilling. Drill holes will be systematically dug at intervals of 100 meters and will use a drill size of 6-8 inches. It is estimated, based on the Behre Dolbear report of August 2001, the mine-able area on Block 14 is approximately 3 km2. This would require 300 drill holes resulting in 9,000 meters of test holes dug.

Phase II - Reserve Development and Calculation

The Behre Dolbear report of August 2001 states that the gemstone-bearing gravels within the primary deposit covers an estimated 3 km2 of Block 14. To confirm this, test hole spacing at 25-meter centers would discover and define the sinuous gravel channels, although field experience might later permit wider-spaced between sampling points. The 3 km2 area would require 4,800 sampling points and an estimated 120,000 meters of drill holes; a major exploration undertaking. Mining will begin on the tested part of the site, and testing will continue ahead of the operation at a rate of 4 holes per day.

Identification of the thicker gravel channels through Phase I probe drilling would significantly lower the cost and reduce the time required. Gemstone exploration in general is difficult because of the size of sample required to obtain a representative measure of gemstones for each sampling point. With few gemstones in each sample of mostly waste gravel, a large sample volume is required. A minimum sample size is a nominal 1.2 m3 based on a nominal ROM thickness of 1.0 meters.

For the exploration, the project will utilize a Mobile Drilling Rig capable of drilling sample holes up to 60 meters deep with a width of 2 meters. The rig will work with a mobile exploration test unit and a Backhoe.

History

1998 - Sapphire discovery in Ilakaka, Southern Madagascar

1998 - Block 14 staked and Permit number H56-98-47, Ilakaka/EIII IHOSY, Faribrany Fianarantsoa, Firondronana, IHOSY, Firaisana, Ilakaka was granted by the Minister of Mines and Energy, Madagascar to Gem Mining Corporation S.A.R.L.

2000 - Gem Mining Corporation S.A.R.L. assigns Permit H56-98-47 to Les Pierres Precieuses de Madagascar S.A.R.L. (LPPM)

2001 - LPPM sets up test jigs to test Block 14. Block 14 testing was in operation from January 2001 to September 2001. The testing produced sapphires beginning March of 2001 and produced over 107,831 grams of sapphires and semi-precious stones during the period. Many large sapphires over 1 gram were found. The largest blue sapphire found weighed 16.4 grams. The largest pink found was 6.0 grams.

2001 - PWI enters into agreement with LPPM to acquire Block 14 subject to tests.

2001 - Behre Dolbear completes bulk sample tests on Block 14

2001 - PWI acquires 80% interest in Block 14 from LPPM and enters into a Joint Venture Agreement with LPPM and North Fork 14 Investment Group, Inc. (NF14) with PWI having an 80% interest, LPPM a 10% interest and NF14 a 10% interest.

2002 - AGDM has Richard Bachman perform due diligence on Block 14. Richard Bachman confirms sapphire presence on Block 14.

2002 - AGDM acquires a 49% interest of Block 14 from PWI and enters into a Joint Venture Agreement with PWI, LPPM, and NF14 with AGDM having a 49% interest, PWI having a 31% interest, LPPM a 10% interest and NF14 a 10% interest.

2003 - PWI acquires 3.5% interest in Block 14 from NF14 and enters into a Joint Venture Agreement with AGDM, LPPM, and NF14 with AGDM having a 49% interest, PWI having a 34.5% interest, LPPM a 10% interest and NF14 a 6.5% interest.

2004 - PWI acquires 10% interest in Block 14 from LPPM and 6.5% interest in Block 14 from NF14 and enters into a Joint Venture Agreement with LPPM and NF14 with PWI having a 51% interest, LPPM a 0% interest and NF14 a 0% interest

2004 - MineCore, formerly AGDM, acquires 100% of PWI

2004 to Present - Concession taxes current, no activity on property

Formation and Mineralization

There are two distinct sapphire occurrences in the North Fork 14 area, a primary deposit in the Carapace formation and a secondary deposit resulting from the erosion of the Carapace formation. More extensive geological mapping and study will be required to confirm Behre Dolbear's initial opinion.

The wide range of gemstones (e.g. blue and pink sapphires) identified in the Ilakaka placer deposits indicate that the host gravels originated from several sources and were then introduced into a major drainage. The well-rounded pebbles and cobbles in the Carapace gravel suggest they were transported a substantial distance.

Primary Sapphire Deposits

The sapphire-bearing gravels of the Carapace formation occur as intermittent gravel layers. There appears to be two primary horizons, an upper gravel, Zone 1, which is lean in sapphires and worked by artisan miners, and a lower gravel, Zone 2, which has been explored by seven test pits on three concessions, North Fork 11, 14 and 17. The lower gravels contain varying amounts of gem-quality sapphires and other gemstones. The lower gravel varies from sand grading to pebbles to sand grading to cobbles and the gravel bars are reported to be discontinuous. Clay balls were not observed; however, the gravels have a high, 10 percent to 30 percent, moisture content. The lack of standing water in any of the open cuts indicates a lack of ground water transmisivity.

The gravel beds vary in thickness from a few centimeters to 5m in thickness and averages a nominal 1.5m. Occasionally, one may observe up to a 5.0m thickness. The gravel bed can be described as a braided flood plain deposit. In one pit which exposed over 3.0m of gravel, one side of the gravel bar had been eroded away and was replaced by fine sandy/silt.

A crude GPS survey of the exposures of the sapphire-bearing gravels indicates a gentle dip, approximately 4 degrees, to the south. Comments were made that several visiting geologists proposed the theory that the Malio River, which now flows toward the north, formerly flowed south. The test mine operator commented that this coincides with his belief that the sapphires' size decreases to the south. The extent of the gemstone-bearing gravels would suggest a much larger river system was present at the time of deposition.

The crude GPS survey of the water tables at each test pit indicate that the water table to be level with each test pit concluding that the test pits are connected by the same horizon or zone. Test Pits on the East of the Malio River had identical water table levels. Test Pits on the West side of the Malio River also had identical water table levels with each other on the West side. However, the water levels on the East side and the West side were not identical.

LPPM Geologist inspecting Zone 1 horizon on North Fork 14 Block

Gravel horizon, Zone 2, bearing sapphires with clay overburden

Gravel Horizon, Zone 2, over 3 meters thick, note water table

Gravel Horizon, Zone 2, Test Pit 14-3, note water table

Gravel Horizon, Zone 2, Test Pit 14-2, note water table

Secondary Sapphire Deposit

The test pit operator reportedly dug a pit along side the Malio River, which has been mapped as being in the basement Isalo II formation and found a sapphire-bearing channel. The shape of the excavation indicates that it may have been an oxbow. This main channel deposit was characterized as having large boulders, up to 1m in size and also containing above average size sapphires. A thin gravel extended a reported 10m outward from one side of the oxbow. The operator reportedly was able to follow the channel for only a short distance before it was truncated.

Behre Dolbear postulates that this secondary-type deposit is the result of erosion of the primary gravels in the Carapace formation with a concentration of sapphires in the main stream channel. If this theory is correct, then the secondary deposit could have significant economic value since an estimated 50 percent of the Carapace formation has been eroded away in the North Fork area. Additional exploration will be required to confirm this theory.

Testing Zone 3, dewatering as Zone 3 is below riverbed

Probable (Indicated) Reserves

Testing on the Block 14 property confirms that the property has 3 gravel horizons or zones that have sapphire occurrences. A model, based on artisanal diggings, was developed which assumes that the 3 zones are throughout the whole property with the exception where the Islo River intersects the property and elevation. Based on this model, the indicated resources, as prepared by MineCore for the North Fork 14 concession are estimated at:

MINECORE STRESSES THAT THE AVERAGE OF US$159 BCM VALUE PLACED PER CUBIC METER OF GRAVEL IS AN ESTIMATE BASED ON THE BULK SAMPLING TESTS COMPLETED BY BEHRE DOLBEAR FOR ZONE 2.

"BEHRE DOLBEAR STRESSES THAT THE $159 PER BCM IS NOT NECESSARILY REPRESENTATIVE OF WHAT VALUE EXISTS ON THE NORTH FORK 14 PROPERTY. A SAMPLING PROGRAM BASED ON SOLID GEOLOGIC PRINCIPLES IS REQUIRED TO DEFINE A RESOURCE AND THE REPRESENTATIVE VALUE OF A BCM OF SAMPLE ON THE PROPERTY. THIS VALUE COULD BE SIGNIFICANTLY LESS OR MORE THAN THE VALUES OBTAINED BY OUR LIMITED SAMPLING PROGRAM."

IT IS NOT REPRESENTATIVE OF THE GRADE OF SAPPHIRE (GRAMS/CUBIC METER), WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.

Monte Carlo Simulation

The simulation was designed to answer the question of what potentially could be the probable (indicated) reserves for the North Fork 14 Block. The simulation estimates that the probable (Indicated) reserves is between $138 Million and $128 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $3.3 Billion and a 0% probability that the probable (indicated) reserves would $128 Billion.

A Monte Carlo simulation calculates an end result based on the range of possible outcomes for key variables and the probabilities of those various outcomes. Assumptions are built into a model of the business and the accuracy of those assumptions and the model jointly determine the usefulness of the simulation. By running the simulation a large number of times, the confidence of achieving a desired result can be estimated. This is in contrast to planning with definitive numbers or with best case, likely case and worst-case scenarios. The Monte Carlo simulation covers all the possible cases.

The simulations were run 500,000 times with graphs and statistics produced to interpret the outcomes. The range of outcomes for yield was based on the Behre Dolbear samples taken in 2001, and the price range was taken from "The Guide to Wholesale Gem Pricing". The wholesale price based on the grade and yield is then reduced by 50% to establish the market value of the uncut rough stone.

There are 54 assumptions, 3 for each of the 18 variables that are used to produce probable (indicated) reserves for the North Fork 14 sapphire bearing block. The simulation random draws a number from a universe created. The universe is established by projecting the worst case, best case and most likely case assumption. The distribution of the universe is selected based on the sampling tests performed and the likely outcome of continued sampling. The Triangular distribution was chosen as it best reflects the range and the frequency of selection based on the tests providing an average result.

The following table has the assumptions used in running the Monte Carlo simulation:

MINECORE STRESSES THAT THE ASSUMPTIONS USED IN THE MONTE CARLO SIMULATION ARE NOT REPRESENTATIVE OF THE ROM, ROM THICKNESS, YIELD, SIZE, GRADE OF SAPPHIRE (GRAMS/CUBIC METER) OR VALUE WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.

North Fork 14 Probable (Indicated) Reserves

The simulation estimates that the probable (Indicated) reserves is between $138 Million and $128 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $3.3 Billion, a 10% likelihood that the probable (indicated) reserves would be approximately $26.9 Billion and a 0% probability that the probable (indicated) reserves would $128 Billion. The mean is estimated at $13.2 Billion and the median is estimated at $10.2 Billion.

MINECORE STRESSES THAT THE ASSUMPTIONS USED IN THE MONTE CARLO SIMULATION ARE NOT REPRESENTATIVE OF THE ROM, ROM THICKNESS, YIELD, SIZE, GRADE OF SAPPHIRE (GRAMS/CUBIC METER) OR VALUE WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.

North Fork 14 Zone 1 Probable (Indicated) Reserves

The simulation estimates that the probable (Indicated) reserves is between $100 Thousand and $1.7 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $35 Million, a 10% likelihood that the probable (indicated) reserves would be approximately $411.7 Million and a 0% probability that the probable (indicated) reserves would $1.7 Billion. The mean is estimated at $192.8 Million and the median is estimated at $147.2 Million.

MINECORE STRESSES THAT THE ASSUMPTIONS USED IN THE MONTE CARLO SIMULATION ARE NOT REPRESENTATIVE OF THE ROM, ROM THICKNESS, YIELD, SIZE, GRADE OF SAPPHIRE (GRAMS/CUBIC METER) OR VALUE WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.

North Fork 14 Zone 2 Probable (Indicated) Reserves

The simulation estimates that the probable (Indicated) reserves is between $469 Thousand and $10.8 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $222.7 Million, a 10% likelihood that the probable (indicated) reserves would be approximately $2.7 Billion and a 0% probability that the probable (indicated) reserves would $10.8 Billion. The mean is estimated at $1.2 Billion and the median is estimated at $926.8 Million.

MINECORE STRESSES THAT THE ASSUMPTIONS USED IN THE MONTE CARLO SIMULATION ARE NOT REPRESENTATIVE OF THE ROM, ROM THICKNESS, YIELD, SIZE, GRADE OF SAPPHIRE (GRAMS/CUBIC METER) OR VALUE WHICH MAY BE EXPECTED IN THE PRODUCTIVE GRAVEL HORIZONS, WHICH EXISTS THROUGHOUT THE PROPERTY.

North Fork 14 Zone 3 Probable (Indicated) Reserves

The simulation estimates that the probable (Indicated) reserves is between $722 Thousand and $124 Billion with a 90% likelihood that the probable (indicated) reserves would be approximately $2.0 Billion, a 10% likelihood that the probable (indicated) reserves would be approximately $25.5 Billion and a 0% probability that the probable (indicated) reserves would $10.8 Billion. The mean is estimated at $11.8 Billion and the median is estimated at $8.8 Billion.