Page 55 of MD&A:

In March 2007, a Statement of Claim was issued in Manitoba by Callinan Mines Limited (“Callinan”)

against HBMS seeking declaratory relief, an accounting and an undisclosed amount of damages relating to an

alleged breach of a Net Profits Interest and Royalty Agreement between HBMS and Callinan Mines Limited dated

January 1, 1988. HBMS has filed a statement of defence denying liability to Callinan. At this stage, the likelihood of

success and the materiality of this claim are not reasonably determinable.

Except as noted above, we are not aware of any litigation outstanding, threatened or pending against us as

of the date hereof that would be material to our financial condition or results of operations.