Originally discovered in the 1950s as a direct result of post-WWII uranium exploration, the Hoidas Lake property covers more than 30 known rare earth showings situated along a fault structure with a ten-kilometre strike length.

This structure is part of the Black Bay Fault system, a major geological feature that runs for 50 kilometres, southwest to Uranium City. These showings have never been investigated for their rare earth potential until recently, and only one showing (the JAK Zone) has seen any serious exploration work.

Initial trenching on the JAK Zone, carried out by GWMG in 1999, confirmed the presence of significant rare earth element mineralization. Drilling commenced in 2001 and, by 2006, 70 drill holes had been completed in the JAK Zone. From the outset, drill holes were collared on 25-metre centres, with the goal of establishing sufficient resources to merit starting a preliminary economic assessment report as quickly as possible.

Results from the first 70 drill holes are summarized in the resources estimate from Wardrop Engineering.

In 2006, 22 drill holes totaling 2,233 metres (in addition to the initial 70 drill holes) were completed in, and adjacent to, the JAK Zone. This latest drilling was concentrated in the northern portion of the JAK Zone as recommended by Wardrop Engineering. This portion of the JAK Zone covers 325 metres of strike length, with the mineralized veins exhibiting excellent widths and grade to depths of 125 metres below surface.

Over 700 samples have been submitted to the Saskatchewan Research Council in Saskatoon for assay. Each sample is assayed for 37 individual elements including the 15 rare earth elements.

Drill Results

Each drill hole, drilled at an angle to the west, intersected one or more of the mineralized veins. The following table reports the assay results for the vein intersections from the latest 15 drill holes on the JAK Zone:

Preliminary Economic Assesment Report

As a result of Wardrop Engineering's recommendations from their March 43-101-compliant resource estimate, a Preliminary Economic Assesment Report has been commissioned. The initial base case premise of the study will be construction of a 500-tonne-per-day mine-and-mill complex with a 20-year mine life.

Wardrop Engineering will be responsible for

• updating the mineral resource estimate;
• selecting the mining method and developing the general mine plan;
• locating the processing plant and related plant services;
• transportation plans and routes;
• pre-production capital cost estimates;
• operating cost estimates;
• economic model development and defining the mineral reserve;
• evaluating the possible alternatives under the previous categories; and
• project implementation and recommendations.

Golder Associates will look after

• a social economic review;
• environmental management plan;
• permitting, geotechnical and rock mechanics considerations;
• waste management design; and
• reclamation plans.

Melis Engineering Ltd. is responsible for defining

• the processing method;
• a conceptual flow sheet; and
• consumables

related to processing the Hoidas Lake material.

Metallurgy

Metallurgical test work on the Hoidas Lake mineralization is now being finalized at Lakefield Research in Ontario, under the direction of Melis Engineering Ltd.

The REEs at Hoidas Lake are hosted in the phosphate mineral apatite and the silicate mineral allanite. Previous work identified three possible flow sheets for mineral processing of the rare earth minerals and demonstrated that the mineral assemblages are amenable to acid leaching.

Recent work has focused on exploring whether the rare earth values can be upgraded during beneficiation using techniques such as flotation as a possible process step ahead of the hydrometallurgical extraction (leaching). Results have confirmed that the phosphate (apatite) can be separated from the silicates (allanite) by flotation.

Further flotation tests are now underway, as well as exploration to determine whether heavy liquid separation and magnetic separation could be useful in beneficiation.

Hydrometallurgical testing will be initiated to determine the extraction efficiencies of the different lixiviants (both acids and bases) on the different concentrates, tails and "whole ore".

Golder Associates, environmental managers on the project, have completed the majority of the environmental baseline fieldwork. The first round of informational public meetings in the impact communities around Hoidas Lake has also been completed under the direction of Golder.

GWMG'S goal is to provide 10% or more of the US demand for REEs by 2011. This means the potential for annual gross revenues of US$100 million.

To meet this goal, GWMG is aggressively completing process design, engineering, and environmental work in order to complete a Final Feasibility Study. GWMG has also initiated a program of discussions with local stakeholders to encourage community involvement. On the marketing side, GWMG has incorporated