CUSI Cuisine Solutions Inc New (CE)

ITEM 4. INFORMATION ON THE COMPANY

4.A. History and Development of the Company

General

Cusac Gold Mines Ltd. principal place of business and registered and records office is Suite –1600 – 409  Granville Street, Vancouver, British Columbia, V6C 1T2, telephone number (604) 682-2421 and facsimile number (604) 682-7576.  The Company’s website address is www.cusac.com and e-mail address is info@cusac.com . The Company’s contact person is Mr. David H. Brett, Director, President and Chief Executive Officer of the Company.  The Company’s fiscal year ends December 31.

The Company is engaged in the business of acquisition, exploration, development and mining of precious metal resource properties.  The primary focus of the Company is the production of gold from operations at the Cassiar Gold Property (“ Cassiar Gold Property ” or the “ Property ”) located in the Cassiar Mining District of the Liard Mining Division in Northern British Columbia.

The common shares of the Company trade on the Toronto Stock Exchange (“ TSX ”) under the symbol “CQC”, the Over-The-Counter Bulletin Board (“ OTCBB ”) in the United States under the symbol “CUSIF” and the Frankfurt Stock Exchange (“ FSE ”) under the symbol “DCB.”

- 19 -

Incorporation, Name Changes and Authorized Capital

The Company was incorporated pursuant to the laws of the Province of British Columbia on November 19, 1965, as a limited company under the name “Glen Copper Mines Limited” with an authorized capital of 3,000,000 shares without nominal or par value with a maximum price of $1.00 by registration of its Memorandum and Articles.  On March 14, 1966, the Company converted itself from a private company to a public company.  On May 17, 1993, the Company increased its authorized capital to 4,000,000 shares without nominal or par value with a maximum price of $1.00.  On January 18, 1974, the Company changed its name to “Cusac Industries Ltd.” and reduced its authorized capital to 3,000,000 shares without par value.  On May 9, 1978, the Company increased its authorized capital to 10,000,000 shares without par value.  On September 9, 1992, the Company increased its authorized capital to 100,000,000 shares without par value. On December 6, 1994, the Company amended its authorized capital to consist of 105,000,000 shares divided into 100,000,000 common shares without par value and 5,000,000 preference shares without par value. On July 17, 1995, the Company changed its name to “Cusac Gold Mines Ltd.” and amended its authorized capital to consist of 105,000,000 shares divided into 100,000,000 common shares without par value and 5,000,000 preference shares without par value of which the first series, consisting of 250,000 shares, is designated Series A convertible Preference Shares.  On November 26, 2006, the Company changed its authorized capital to an unlimited number of common shares without par value.

The Company had 68,926,436 common shares outstanding as of December 31, 2006.

The Cassiar Gold Property (formerly called the “Table Mountain Gold Property”)

The Cassiar Gold Property (the “ Property ”) located in the Cassiar Mining District of the Liard Mining Division in Northern British Columbia is comprised of approximately 175 square Kilometres (43,243.44 acres) of mostly contiguous mineral claims.  The Company acquired and assembled these mineral claims over a long period of time starting in the 1970s through a combination of staking, outright purchase or option-to-purchase agreements.  Except for the Company’s working interest in claims that are the subject of the Option Agreement with American Bonanza described in further detail below, all of the claims that make up the Property are now owned outright by the Company, with some claims subject to net smelter royalties (“ NSR ”) or net profit interests.

The Company is currently focusing on three key projects within the Property: (1) gold production from the Table Mountain Mine; (2) gold exploration in the Taurus II Project area; and (3) gold exploration in the Taurus Deposit area.  The Company believes that many other areas of the Property have exploration potential and the Company anticipates that it will pursue other opportunities as part of future work programs.  

The Taurus II Project is a gold exploration area with large-scale open pit potential located on mineral claims within the Property that are 100% owned by the Company.  The Taurus II Project is located 3 kilometers north of the Table Mountain Mine and 3 kilometers southwest of the Taurus Project.

The Taurus Deposit is a gold exploration area consisting of a number of broad, low grade, near surface gold zones that are located partly within claims under option from American Bonanza, as described below, and partly within the Company’s 100% owned claims on the Property.

Acquisition of the Cassiar Gold Property

The Company first acquired mineral property interests and conducted exploration activities in the Table Mountain area in 1978. In 1984, the Company conveyed its interests in the Property to a predecessor of Energold Minerals, Inc. (“ Energold ”) that operated a mine and established a mill at the site in exchange for a net profit interest in the production. From 1984 until 1989, the Company received over $6.8 million from its net profits interest in production from the Energold operations. Energold ceased operations at Table Mountain in 1989/1990.

- 20 -

In January 1993, the Company acquired all of Energold’s property interests at Table Mountain, that included Energold’s 300-ton per day mill,  various buildings at the site,  sundry mining equipment, various vehicles, substantial historical mining data and other capital goods in exchange for the issuance of 2,032,229 shares of the Company’s common stock at a deemed value of $1.2 million. Since that acquisition, the Company has invested approximately $7 million in developing ore reserves and improving the mining facilities.  Consequently, the Company became the owner of 100% in the vast majority of the claims that now make up the Property. Periodically, the Company drops certain claims that are deemed to have low exploration potential and adds new claims to cover new areas of interest.  The Property increased in size by 35 km ² during and subsequent to year end.  35 km ² of this increase was by staking and the Option Agreement with American Bonanza (described below) and 2.4 km ² was by purchase of the Wing Gold 1-3, Wildcat 1-2 and Jennie Vein claims for $10,000 and 200,000 common shares.  

Peripheral portions of the Cassiar Gold Property have been subject to various option agreements.  In June of 1994, to fund further exploration on a portion of the Cassiar Gold Property, the Company granted Demand Gold Ltd. (formerly Demand Technologies, Inc., hereinafter “ Demand ”), a British Columbia corporation having certain officers and directors in common with the Company), an option to acquire a 50% interest in 30.2 square miles of the property. Subsequent to December 31, 1997, the option expired.

Option Agreement with American Bonanza – Claims Taurus Deposit

In 1995, Cyprus Canada Inc. (“ Cyprus ”) entered into agreements with International Taurus Resources Inc. (“ Taurus ”) and the Company to explore a group of claims comprising approximately 15 square miles north of the current Table Mountain Mine in an area then named the Taurus Project area (the “ Taurus Project ”).  In 1996, Cyprus withdrew from the Taurus Project and the Company entered into an agreement with Taurus to conduct additional work on the Taurus Project.  In 1998, the Company optioned the claims and completed reclamation of the Taurus Project site, but no further work was conducted and the agreement was subsequently terminated.   In 2003, Taurus entered into an agreement with Navasota Resources Ltd (the Company was not a party to this agreement) under which Navasota completed additional diamond drilling and other exploration at the Taurus Project.  Navasota exited the agreement at the end of 2004.

In 2005, Taurus merged with American Bonanza Gold Mining Inc. to form a new company with the similar name, and, accordingly, is the new tenure holder of the claims formerly subject to the Taurus Mining Venture Agreement.

In June of 2007, the Company completed an option agreement (the “ Option Agreement ”) to acquire 46 mineral claims from American Bonanza Gold Corp (“ American Bonanza ”) that cover a large part of the Taurus Project, which has now been renamed the Taurus Deposit (the “ Taurus Deposit ”).  The Option Agreement provides the Company with a working interest in the claims belonging to Bonanza, ten of which are subject to a 2.5% NSR payable to Sable Resources Ltd.  .  

The Option Agreement with American Bonanza calls for Cusac to pay 1.5 million common shares on closing (paid), $6-million over two years ($1.5-million every six months), and $3-million upon completion of a positive feasibility study recommending production, or production, whichever comes first. A further 1.5 million shares are payable in two years. In the event that the price of gold closes above $800 (U.S.) per ounce for a period of 100 consecutive days, Cusac is to pay American Bonanza an additional $1-million in two years and an additional $1-million at feasibility. Cusac may elect to complete the purchase within the first 12 months which will limit Cusac's payments to $6-million, 1.5 million shares and $3-million at feasibility.

Memorandum of Understanding with Dease River First Nation

In September 2006 the Company entered into a memorandum of understanding (“ MOU ”) with the Dease River Band Council of Good Hope Lake, BC, part of the Kaska Nation and whereby the parties have agreed to work together to support the Company’s exploration and mining activities near Cassiar, BC, in a way that respects and acknowledges the rights and aspirations of the Kaska First Nation regarding their Traditional Territories.

Under the MOU, the parties acknowledge that the Company’s Cassiar Gold Property lies within Kaska Traditional Territory, and that rights to traditional uses of the land, such as hunting and fishing, extend across the Property. The MOU also sets out a framework whereby the Company will ensure that information regarding opportunities for employment, contracting, materials supply, and provision of other services are provided to the Dease River Band Council at Good Hope Lake, BC, in a timely manner. The Company presently and in the past has employed and trained members of the Good Hope Lake community, and negotiations are ongoing as to possible supply of lumber, fuel and other goods and services. The MOU also acknowledges that consultation and information sharing are of prime importance and a regular timetable for meetings and discussion is set out.

- 21 -

4.B. Business Overview

The primary business of the Company is the exploration for and production of gold from the Property.  The Company is currently focused on gold production from the Table Mountain Mine and exploration of the areas known as the Taurus II Project the Taurus Deposit.

The Company’s primary interest is in gold resources that are typically in the mountains and not in the low-lying areas where placer mining takes place.  The Company is not interested in gold that may be contained in gravel or loose material in creeks and drainages as these deposits are typically difficult to quantify and hence challenging to ascertain the economic viability of a given claim.  Private individuals with small operations have been known to work some of the placer claims that in some places overlap the Company’s hard-rock claims.

Table Mountain Mine

The core productive portion of the Property is the Table Mountain Mine which has been fully controlled and 100% owned by the Company since 1993. Mining operations at the Table Mountain mine commenced in 1993 and continued until low grades and weak bullion prices forced suspension of continuous operations in the fourth quarter of 1997. Limited operations resumed in July of 1998 and continued until June of 1999. Between April of 1994 and suspension of operations the Company produced approximately 63,000 ounces of gold from the property.  

In 1997, the Company suspended mine operations and entered into “care and maintenance” mode with regards to the Table Mountain Mine, except for a brief production run in 1999, due to the low gold prices in the late 1990’s and early 2000’s and difficulty in raising capital.  

During 2006 the Company raised the capital required to place the Table Mountain Gold Mine back into production focusing on the Rory and East Bain Veins.  Production from the Rory Vein took place on a very limited scale at the end of 2006, and increased in the first quarter of 2007.  In 2006, milling of a total of 325 dry tons grading 0.136 ounces per ton produced 41 ounces of gold. The Company encountered extremely complex structural conditions at the Rory Vein leading to drastically reduced tonnage and grade.  

During the first-half of 2007, the company mined and produced 634 ounces of gold and incurred significant losses from this production.  During the three-month period ending March 31, 2007, posted a net loss of $1,884,379, or three cents per share. The loss is attributable to significantly lower than expected gold production from the Rory Vein at the company's Table Mountain Gold Mine, due mainly to structural and mineralogical complexities. During the quarter the company processed 3,503 tons of ore with an average grade of 0.109 ounce per ton gold, resulting in production of 319 ounces of gold and revenue of $193,758 (net of treatment and refining charges). Subsequent to March 31, the company processed an additional 2,688 tons at an average grade of 0.141 ounce per ton gold producing an additional 315 ounces of gold.

In light of the low tonnage and grades experienced at the Rory vein, the Company initiated a review of the structure, including proposed drilling, to better understand and define the resource. During the second quarter of 2007, the Company has remobilized all mining staff and equipment to the East Bain vein. The East Bain is an extension of West Bain, where Cusac mined 60,000 tons of ore grading 0.40 ounce per ton gold between 1993 and 1995. Until the review of the Rory vein is complete, the Company is reducing its forecast production to 14,000 ounces for 2007, representing production from the East Bain Vein, expected to commence in the third quarter of 2007. The Company also reduced its work force at the mine site during the East Bain vein development period.  Investors should note that no guarantee can be given that expected production will proceed.  Further financing is required to complete the Company’s mining plan and there can be no assurances that such financing will be completed.

The Company’s planned work program for the balance of 2007 is to develop and produce gold from the East Bain vein.  If the company is successful in raising additional funds and production from the East Bain Vein proceeds as planned, the Company expects to produce 14,000 ounces of gold in 2007.

- 22 -

Taurus II Project

Cusac first began exploration on the Taurus II Project in 2005, continued in 2006 and discovered the Oro System.  During June of 2007, the Company completed an additional 5 drill holes on the Oro Vein.  Results of 3 of these holes were available at time of writing and, as disclosed via press release, included an intersection grading 20 grams per tonne gold over 1.1 meters and is considered by management to be a target for high-grade underground gold mineralization.  Further exploration is planned for the Oro Vein.

Taurus Deposit

A 25-hole diamond drill program is under way to expand and further define the Taurus Deposit.  Drilling on the Oro Vein is now complete and assays are pending. Our immediate goal is to complete the additional work required to commence a National Instrument 43-101-compliant prefeasibility study, focusing on the 88-Hill zone as a potential starter pit.

Competition

We compete with other mineral resource exploration companies for financing, for the acquisition of new mineral properties and for the recruitment and retention of qualified employees and other personnel. Many of the mineral resource exploration and development companies with which we compete have greater financial and technical resources. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.

Mineral Claims

The mineral claims owned outright by the Company consist of full and fractional mineral claims and Crown Grants.  In British Columbia, “Free Miner’s Certificate” holders may freely claim mineral rights, now done completely through an online system, on areas open to staking under the Mineral Tenure Act, subject to paying prescribed fees and performing a minimum amount of work each year (or pay cash in lieu of such work).

The Company’s hard rock mineral claims expire in 2008 and may be renewed automatically provided that the regulatory minimum investment in assessment work is duly filed with the appropriate provincial authorities each year.  Crown Grants are acquired as a fee simple interest in the minerals in perpetuity granted to the holder.  Once obtained, no further work or filings are required to keep Crown Grants in good standing except for the payment of taxes.  Presently the Company has performed sufficient work such that the Property is in good standing with the government until the year 2009.  Work currently underway will provide additional credits that the Company plans to apply, likely extending the expiry dates of the claims several more years into the future.

The Option Agreement with American Bonanza provides the Company with a working interest in the claims owned by American Bonanza and an option to acquire those claims outright, subject to making the required payments and satisfying all of the other conditions outlined in the Option Agreement as described above.

4.C. Organizational structure

The Company has one inactive wholly-owned subsidiary, Gulf Titanium Inc., incorporated pursuant to the laws of the State of Montana.

- 23 -

4.D. Property, Plants and Equipment

Office Space

The Company subleases its office space on a month-to-month basis at –1600 - 409 Granville Street, Vancouver, British Columbia, V6C 1V5 pursuant to an agreement with Equitable Real Estate.  The monthly rental payment is $2,872.99.

The Cassiar Gold Property

A report entitled “Technical Report on the Rory Vein, Table Mountain Gold Property, Liard Mining district, British Columbia, Canada “ dated November 14, 2004 and  “Technical Report on Taurus II Project, Table Mountain Gold Property, Liard Mining district, British Columbia, Canada” dated October 13, 2005 have been prepared for the Company by Dale A. Sketchley, M.Sc., P.Geo. (the “Sketchley Report”).  A further technical report on the Taurus Deposit was recently prepared for the Company by Kevin Palmer, P.Geo, and Andre de Ruijter, P.Eng. of Wardrop, titled “Technical Report on the Taurus Deposit – Liard Mining District, B.C.” dated June 11, 2007 (the “Wardrop Report”).  These reports can be reviewed in their entirety through the website www.sedar.com .

The following information has been summarized from these Technical Reports.

Except for the claims that are the subject of the Option Agreement with American Bonanza, all of the claims that make up the Property are now owned outright by the Company, with some claims subject to net smelter royalties (“NSR”) or net profit interests.  A list of the claims owned outright by the Company are as follows:

- 24 -

A list of the claims that are the subject of the Option Agreement with American Bonanza and which comprise part of the Taurus Deposit are as follows:

- 25 -

(1)

Claim subject to 2.5% NSR payable to Sable Resources Ltd.

- 26 -

Location

The Property is situated in northern British Columbia, 115 km southwest of Watson Lake, Yukon Territory, and 120 km northeast of Dease Lake, British Columbia (see Figure 1).  The Cassiar Gold Property is located in the Cassiar Mining District of the Liard Mining Division of British Columbia (see Figure 2).  

Figure 1.  Cassiar Gold Property – Provincial Location Map.

- 27 -

The following map shows the location of the Taurus II Project and the Taurus Deposit in relation to the Cassiar Gold Property:

Figure 2: Cassiar Gold Property Map

Accessibility, Climate, Infrastructure and Physiography

Accessibility

The Property is accessible via Highway 37, a major access route from British Columbia to the Yukon and Alaska, which is maintained and kept open all year.  The small town of Dease Lake, 120 km south of the Property, has an airport with regularly scheduled air service.  Watson Lake in the Yukon, which is 115 km northwest of the Property via Highway 37 and Alaska Highway, only has charter air service available.

One can reach the Property either directly by car or first by plane to Dease Lake or Whitehorse, Yukon followed by a drive on Highway 37 or the Alaska Highway.  The abandoned town of Cassiar is northwest of the Property and the unincorporated settlement of Jade City is on Highway 37 at the road entrance to Cusac’s mine’s (the “Cusac Mine”) facilities.  Numerous secondary haul roads, accessible by two-wheel-drive vehicles, connect to all parts of the Property from Highway 37.  Four-wheel-drive and off-road vehicles are required to access more remote areas of the Property where roads or trails are in poor condition.

Climate

The climate is characterized by short warm summers and long cold winters.  Underground mining, which is most common, can be conducted year round, and small open pit mining, which is less common, is conducted in the summer months.

- 28 -

Infrastructure

Existing infrastructure on the Property is well able to support the type of historic underground mining operations but, except for favourable road access, no infrastructure is currently in place to support a large scale open pit mining operation envisaged at the areas known as Taurus and Taurus II (see Figure 1 for location of these areas). The Company’s underground operational infrastructure is well established with defined reserves outlined (see below) whereas the Property’s open pit mining is considered exploratory in nature.

The mill on the Property (the “ Cusac Mill ”) was constructed in 1986 and was last operated in 1999 prior to recommencement of production in late 2006.  During the first quarter of 2007, the Cusac Mill developed a problem with a conveyor system that moves ore into its primary jaw crusher.  The problem was being caused by deterioration of the ramp that trucks were using to dump ore into the corse ore bin, such that the ramp was leaning on the building housing the conveyor, creating preassure and causing the conveyor to jam.  During March and April, the Company rented a portable crusher , as repairs to the ramp were best undertaken during warmer summer weather.  Final repairs to the conveyor and ramp are expected to take place in July 2007 at a cost of approximately $75,000.

There are two tailings disposal facilities, one of which has been partially reclaimed.  Deposits of material from placer mining are present along McDame Creek.  In 2004, management of the Company estimated asset retirement obligations totalling approximately $500,000 (consisting of estimated annual payments of approximately $50,000 for a period of 10 years) based on its understanding of the requirements to reclaim, decommission and clean up the Table Mountain Mine.  Subsequent to the end of the period, on June 13, 2005, the BC Ministry of Energy and Mines (the “Ministry”) issued M-127, an amended mining permit, (the “Amended Permit”) to the Company, whereby the Company must complete, to the satisfaction of the Ministry, reclamation work in the order of $705,000 when the Table Mountain Gold Mine closes.  Under the Amended Permit, the Company is required to pay a bond payment of an additional $150,000 per year by December 31 of each year for three years and $140,556 in the fourth year, for an aggregate total of $705,000.  The Company obtained from the Ministry an extension of time to June 1, 2006 to place the $150,000 required at December 31, 2005, which was completed on time.  The Amended Permit provides that the Company may reduce the liability of the annual bond increase amount by performing required reclamation work.  Work permits are required on an as-needed basis in advance of the work being conducted.

During 2006, the Company received a further amended M-127 Permit allowing the Company to proceed with its planned mining of the Rory and East Bain Veins.  The Amended M-127 Permit adjusted the bond requirement such that in addition to the $150,000 placed into bond prior to June 30, 2007, a further $290,556 is required to be placed into bond as follows:

Physiography

Valleys on the Property are comprised of shallow lakes and swamps with thick, stunted growths of pine and spruce.  Treed areas on the Property extend upland where they give way to open brush and alpine meadows. Although the surrounding mountainous areas are rugged, much of the Property has rolling topography.  Placer workings extend from McDame Lake to McDame Creek for about 20 km.

- 29 -

History and Previous Work

History of the Cassiar Gold Property

In 1934, the first gold-bearing quartz veins were found in Quartzrock Creek.  Following this, numerous veins were discovered and many claims were staked.  The higher-grade portions of these veins were exploited by small-scale mining over the next forty years.  At one point, half-a-dozen abandoned mill sites with capacities of less than 12 tons per day existed in the area.  Well-known individuals that played an important role in the early years include John Vollaug, Hans Ericksen, J.R. Boulton, John Hope, F. Callison, Pete Hamlin, and Fred and Guilford Brett.  Cusac’s interest in the area began with the prospecting efforts of Fred and Guilford Brett who formed Glen Copper Mines Ltd., which evolved into Cusac Industries Ltd., and in 1995, Cusac Gold Mines Ltd.  At present, the Company’s mineral claims cover the entire Cassiar Gold Camp (which includes all gold occurrences in the Cassiar mountain range in the vicinity of the former town of Cassiar, Table Mountain and Jade City).

In 1978, Agnes and Jennie Mining Company Limited and Nu-Energy Development Corp., which later amalgamated to become Erickson Gold Mining Corporation (“ Erickson ”), commenced the first large scale production from the Jennie Vein in the Main Mine (see Figure 3 for the location of the various veins on the Cassiar Gold Property).  In 1979 and 1980, Cusac conducted work in the area of the Cusac Mine.  During 1980, Plaza Mining Corporation (“ Plaza ”) commenced open pit production from the eastern portion of the Vollaug Vein.  Between 1978 and 1984, development of the Main Mine (also known as the Erickson Mine) was expanded to include workings on four main levels to exploit the Jennie, Maura, Alison, and Bear Veins.  Esso Resources Canada Limited conducted exploration around the Main Mine in the early 1980s.

- 30 -

Figure 3: Schematic Longitudinal Sections of the Cassiar Gold Property.

Exploration around Quartzrock Creek by United Hearne Resources Limited in the late 1970s lead to the commencement of production at the Taurus Mine in 1981, which continued until 1988.  At the same time, Sable Resources Ltd. and Plaza Resources Ltd. developed underground workings on the east side of 88 Hill, which is in the area marked “Taurus” on Figure 3 and within the area called “Taurus Project” on Figure 2 above.

In 1982, Cusac discovered and conducted minor work on several veins at Pooley Creek.  In 1983, Erickson commenced production from the Troutline Mine at the eastern end of the Vollaug Vein and from various open pits along the Vollaug Vein.  In the following year, Cusac optioned its property to Erickson (which had acquired Plaza in the previous year) and continued to expand its property holdings.

In 1985, Total commenced production from the Eileen Vein (which is part of the “Cusac” area on Figure 3 above) in the Cusac Mine and, in 1986, discovered additional veins in the area.  During 1988, Total started work on level 10, a 2.5 km drift to access the Michelle High Grade Vein (also part of the “Cusac Mine”) (the “ MHG Vein ”), which could not be accessed from the Cusac Mine because of high water flows.  Production from the Cusac Mine and Main Mine ceased, with only minor production continuing on the Vollaug Vein.  Work on level 10 ceased in 1989 due to high costs and high water flows.

In 1991, as Total wished to divest itself of all North American mineral assets, Cusac purchased all such assets, free and clear of any royalties and re-opened the Cusac Mine.  In 1993, Cusac commenced production on the Bain Vein (the “ Bain Mine ”).  During the development of the Cusac decline to the MHG Vein, the Big Vein, both part of the Cusac Mine on Figure 3, was defined and mined.  Mining of the MHG Vein commenced in June 1995, and continued through 1997.

The Katherine Vein, also part of the Cusac Mine, was open pit mined during 1995, and in early 1996, the level 10 development was extended by 250 metres.  Additional mining was conducted on the Vollaug, Melissa, and Lily Veins during 1996 and 1997, and surface mining was done on the Bear Vein during 1998.

- 31 -

In 1995, Cyprus entered into agreements with Taurus and the Company on the Taurus Project, which resulted in the definition of an inferred open pitable resource.  In 1996, Cyprus withdrew from the Taurus Project, and the Company entered into an agreement with Taurus, under which agreement the Company conducted additional work that defined an indicated resource.  In 1998, the Company optioned the claims and consolidated the entire Cassiar Gold Camp under one operator.  The Company completed reclamation of the Taurus Mine site, but no further work was conducted, and the agreement was subsequently terminated.

During 2002, Cusac conducted diamond drilling on the East Bain Vein , located on strike of the Bain Vein on Figure 3, which confirmed the existence of a gap with the West Bain Vein, but failed to extend the vein to the east.  In 2004, the Company spent approximately $1.2 million on exploration on the Property, resulting in the discovery and definition of the Rory Vein.  .

Due to low gold prices and difficulty in raising capital, the Company suspended mine operations in 1997 and entered into a “care and maintenance” mode with regards to the Table Mountain Gold Mine, except for a brief mill run in 1999.

As described above, partly due to significantly increased gold prices, the Company completed a financing enabling the Company to recommence the operation with the objective of producing gold again from the Property.  To time of writing, the Company’s gold production has been minimal and there can be no assurance that any gold production will result from the Company’s current efforts.

History of the Taurus II Project

In 2005, the Company developed an exploration program designed to test bulk-tonnage gold targets in the vicinity of the existing Taurus Deposit. The Taurus Deposit is a disseminated gold prospect that lies on the Cassiar Gold Property as well as claims owned by American Bonanza (please refer to the claim map in “Property Description and Location”). On claims owned 100% by the Company in the vicinity of the Taurus Deposit is an area where the geology and previous exploration indicates the possibility of a n open pit style disseminated gold deposit and/or underground style high‑grade quartz vein gold mineralization. The Company’s new exploration initiative in this area is called the Taurus II Project.

The Company reported several encouraging new targets with bulk tonnage, disseminated gold potential had been outlined during Phase I of its Taurus II Project initiative. The top priority target was a zone of alteration and quartz veining where past trenching returned potentially economic gold values in quartz and altered wall rock. Phase I involved a detailed compilation, digitization and interpretation of the Company’s Taurus Deposit area data base created over three decades through work by various companies working in the Cassiar Gold Camp.

The second priority target, called the Somerville System, a 500 by 100 meter area located approximately 200 meters from the Backyard System to the west, was also the site of extensive trenching by Energold that outlined abundant quartz veining and alteration zones with samples displaying potentially economic gold values.

During Phase II of the Company’s Taurus II Project exploration, a total of 13 holes comprising 2, 444 meters of diamond drilling were completed. The drilling outlined low-grade gold mineralization over potentially economic widths, although the results are preliminary and no economic analysis had been concluded.

A total of 1,140 meters were drilled in 6 holes on the Backyard System which is the largest exposed zone of quartz veining and carbonate-pyrite altered volcanics on the Taurus II Project area. Significant results in the Backyard System include 1.43g/t Au over 3.7 meters in hole 05BY-03, 3.72 g/T Au over 2.20 meters in hole 05BY-04, and several other intercepts of more than 2 meters grading at or above 1 g/t in the Backyard System holes.

During June of 2007, the Company completed an additional 5 drill holes on the Oro Vein. Results the drilling confirm the potential for economic gold mineralization and as such management desires to complete further exploration of the Oro Vein, although no currently approved plans and budgets for such work are in place.

- 32 -

History of the Taurus Deposit

The Taurus Deposit was originally covered by seven claims of the Cornucopia Group staked by J.C. Simpson in 1935.  Simpson carried out stripping, trenching and rock sampling until 1944.  The following year, Benroy Gold Mines Ltd. optioned the property and completed more than 700 metres of trenching and 1500 metres of diamond drilling.

The claims were restaked in 1959 by Couture and Copeman who hand-mined 25 tons of high-grade ore from a short adit.  In 1960, Cornucopia Exoplorations Ltd. was incorporated to acquire the property and in 1961 changed its name to Hanna Gold mines Ltd. and proceeded with 1180 metres of drifting and crosscutting, and 1000 metres of diamond drilling.

In 1964, Newconex Canadian Exploration Ltd. optioned the property and completed an additional 180 metres of drifting and crosscutting and 210 metres of drilling.  In 1972, hanna gold Mines became Dorchester Resources ltd. and rehabilitated and resampled the main 3600 level adit, and completed another 223 metres of underground diamond drilling between 1973 and 1975.  In 1978, Ashlu Gold Mines Ltd. optioned the property and completed 7.2 kilometres of ground-based magnetometer and electromagnetic surveys.  In 1979, United Herne Resources Ltd. optioned the property and continued underground development and drilling.

A 135 tonne per day mill was constructed at the Taurus Deposit in 1980-81, treating 220,000 tones of ore, averaging 5.14 grams per tonne gold prior to closing in 1988.  During the time of the mine operation exploration was limited to gaining information on accessible mineralization from existing workings.  This meant primarily the veins located above the Decline Fault.  A few holes did however penetrate the decline fault and several pyrite veins were intersected in addition to a unit described as rhyolite.

After the closure of the mine at the Taurus Deposit, several companies explored other mineralized areas of the property that were not actively explored during the time of operations.  Geochemistry, geophysics and more than 25,000 metres o drilling were completed between 1993 and 1997.  Companies involved included Cusac, Sable Resources ltd., International Taurus Resources Inc., Hera Resources Inc., Cyprus Canada and Navasota Resources in 2003.

- 33 -

In 1988, drilling in the 88 Hill area discovered the 1988-1 and 1988-2 vein systems. Hole 88- 5 intersected 5.99 g/t over 12.34 metres; subsequently, a small open pit extracted 2600 tonnes grading 2.06 g/t from the 1988-2 vein. The 1994-drill program, completed by International Taurus, totalled 7,592 metres in 88 holes, predominantly on the north side of the highway, west along strike from the Taurus workings, dubbed the Taurus West zone. Drilling, mainly NQ size, encountered a mineralized zone locally over 200 feet in width, consisting of a quartz stockwork system in a broad zone of pyritic altered basalt. An example of this mineralization is recorded in drill hole, 94-56 which intersected 1.6 g/t over 44.5 metres core length. Cyprus Canada Inc. conducted an extensive diamond drilling program of 12,692 metres in 79 holes concentrated in the Taurus West, 88 Hill, and Taurus Mine areas. In March 1995, four holes drilled on section 1100W intersected long intervals of disseminated pyrite mineralization that included 2.47 g/t over 86 metres in T95-29 in the Taurus West area. Unfortunately, continuity between holes combined with metallurgical test recoveries resulted in lower emphasis on Taurus West as a target in subsequent programs.

Both diamond core and reverse circulation (RC) percussion drills have been used on the property. Variable core recoveries have resulted in some statements that RC is the preferred technique. Broughton, D. and Masson, M. (1996): Report on 1995 Exploration Program on the Taurus Deposit, B.C., NTS 104P/5, Unpublished Report for Cyprus Canada Inc. concluded that these variances between core and RC holes in disseminated pyrite mineralization were the result of statistical variation, systematic overestimation of grade due to contamination in RC samples, Cusac Gold Mines Ltd. 16 0753250100-REP-R0001-02 Technical Report on the Taurus Deposit – Liard Mining District, B.C. and/or a more representative sample from RC due to the greater sample size. No firm conclusion can be made from their study.

In late 2003, Navasota Resources Limited conducted a two-phase program consisting firstly of general geological compilation with some geochemistry, as well as limited remapping and re-logging of specific core. Phase II consisted of a drill hole program made up of 13 NW holes totalling 1,974 metres in length. The holes were designed to test the zones identified in post-1994 work. In general terms, these results confirmed the results reported in previous programs on the Taurus Deposit. The zones intersected in the 2003 program do not seem to match up identically with those from previous work; therefore, more work is needed to understand the nature of the zones on the property. Difficulties arising from the high nugget affect associated with the T4 mineralization may be the cause of this, and some small test pits and/or underground sampling may be needed to understand the geology better.

Geological Environment

The Property contains numerous occurrences of gold-bearing quartz veins, many of which have been mined underground.  Numerous old surface disturbances such as access roads, trenches, open pits, underground staging areas, and drill sites occur throughout the property and have been reclaimed.  The Property is centered on a 15 km long, gold-bearing hydrothermal system that developed along and adjacent to the northerly-trending Erickson Creek Fault Zone (“ECFZ”).  Vein systems extend outward from the ECFZ and are up to four miles long.  Most of the historic production on the Property has come from quartz veins less than one mile from this fault.

Faulting is an important geological factor in determining where gold occurs on the Property, as faults provide openings in the ground for molten rock containing minerals to come up closer to surface from deep in the earth to form quartz “veins” and other formations.  The faulting can be quite small, such as a few feet, or large, such as several miles.  Geologists theorize that gold is deposited in quartz veins, rock fractures and other openings in rocks by hot water circulating through these open spaces over many years.  This geological phenomenon, referred to as “hydrothermal,” is the process whereby waters from surface or flowing underground through aquifers comes in contact with superheated underground rocks called “intrusions.”  The water becomes superheated and then gets thrust into cracks and openings in the surrounding rocks.  Gold and other metal rich molecules, such as sulfur rich minerals like pyrite,  is transported in solution through the rock fractures and precipitated into porous openings in the quartz or other rocks.  

Gold mineralization on the Property appears as follows:

1.

Type I - Narrow (1-10 feet wide), high-grade gold in quartz veins typically mined from underground in small volumes; and

- 34 -

2.

Type II - Wide (30-400 feet wide) zones of low-grade gold in altered greenstones and quartz mineralization typically mined from surface in high volumes.

Historic production from the Property has come from Type I, whereas Type II is the subject of more recent exploration only.  Gold reserves on the Property exist in high-grade quartz veins, whereas no low-grade reserves have as been outlined.  However, the Company is currently focusing most of its exploration activity on the second type of mineralization, as deposits of this type typically have larger size potential.

Exploration

The majority of exploration work conducted on the Property has been carried out by the Company and previous owners over a period of many years.  This work includes geological mapping, geophysical surveys, soil sampling, trenching, drilling, and underground drifting.

The Company was actively exploring the Property in the mid 1990s but scaled down efforts between 1998 and 2001 during a time of depressed gold prices and difficult market conditions for raising exploration funds.  Since 2001, the Company has increased exploration activity and spent $1.2 million in 2004.  The 2004 exploration program was aimed at discovering high-grade vein style gold mineralization as the Company sought to outline sufficient reserves to recommence commercial production.  These activities lead to the discovery and delineation of the Rory Vein.  An estimate of probable Mineral Reserves in the Rory Vein to date is outlined below.

Exploration in 2005 focused on the Taurus II area of the Property.  Taurus II is an area with the potential for Type II veins described above.  Type II vein systems are more likely to be amenable to low-cost, bulk-tonnage surface mining than the Type I veins typical of the underground operation.  Work during 2005 consisted of geological interpretation of historic data and diamond drilling.  The drilling resulted in a recommendation by independent Geologist Dale Sketchley recommending further expenditures of $1.53 million.  

In 2006, exploration efforts concentrated on the Taurus II area to the west of the mineralized zones discovered in 2005. The western portion of the Taurus II Project area is partially overlain by metamorphosed sediments (argillites) and has had relatively little previous exploration. The geology of the western part of the Taurus II area is similar to that of the rest of the Cassiar Gold Property, with flat-lying argillite "caps" exerting a strong control on gold deposition, and early results indicate that here gold mineralization was also trapped below the argillites.

The 2006 exploration program began in June with an extensive soil geochemical survey covering the entire Taurus II 'argillite cap', (862 Ha). A total of 2,720 soil samples were collected and analysed. A trenching program commenced in August in the areas where the soil sample results indicated gold anomalies. Approximately 20% of the soil anomalies have been investigated to date. The trenching program uncovered numerous intensely altered, volcanic-hosted quartz vein zones including the 'Oro Vein' system. The Oro system is a large quartz vein located on the eastern margin of the argillite unit containing gold mineralization in both the quartz vein and the volcanic host rock. Along strike 1.3 kilometers to the west of the Oro Vein is the newly discovered 'Blue Zone'.

Following the trenching, a drilling program was initiated consisting of 21 holes totaling 3,280 meters. The Oro Vein was the first target, where 12 drill holes delineated an east-west strike length of 230 meters. The Oro Vein returned intersections grading up to 4.11 g/t over 4.25m, 0.96 g/t gold over 11.9m ,and 1.67 g/t gold over 9.1m. The Blue Zone drilling returned intersections grading up to 1.04 g/t gold over 28.4m. The average width of the Oro Vein is 6.9 meters in angled drill holes (the true width of the vein has not been determined). The Oro Vein is open to the west, and at depths below 50m, with the widest intersections to date located at the west end of the vein.

Mineral Reserves

The Taurus Deposit hosts no gold reserves.  However, an inferred resource (as defined under Canada’s securities regulation governing disclosure of mining information, National Instrument Policy 43-101), of 1.04 million ounces has be calculated by Wardrop Engineering Inc.  The resource is contained in 32.4 million tonnes of material grading 1 gram of gold per tonne.  The Company is taking steps to increase the confidence of this resource such that eventually a mineral reserve can be defined, but there can be no assurance that the resource will ever become economically minable.

- 35 -

East Bain Vein

In 2002, an exploration program was conducted that comprised of eleven drill holes, four of which intersected the East Bain Vein. Based on all the results to date, probable Mineral Reserves of 28,000 tons grading 0.50 ounces of gold per ton have been outlined on the East Bain Vein based on a cut off grade of 0.27 ounces per ton and a gold price of $535.

Rory Vein

In 2004, the Company discovered a gold bearing vein on the Property called the Rory Vein. Diamond drilling during the year outlined a probable Mineral Reserve of 16,000 tons grading 0.49 ounces of gold per ton based on a cut off grade of 0.31 ounces per tonne and a gold price of $535 per ounce. During 2007 the Company experienced significant difficulty mining the Rory Vein due to heavy faulting and discontinuous mineralization. As such, the company has determined that a full review of the reserve is required and until such time as the review is complete the Company no longer regards the Rory Vein as contain any mineral reserves.

During 2007, the Company mined 6,191 tons of material from the Rory Vein with an average grade of 0.12 ounces of gold per ton, which was well below the expected grade of 0.49 ounces per ton.

Mineral Resources – Taurus Deposit

CAUTIONARY NOTE TO U.S. INVESTORS
CONCERNING ESTIMATES OF INFERRED RESOURCES

This Annual Report uses the term “inferred resources”. We advise U.S. investors that while this term is recognized and required by Canadian regulations, the SEC does not recognize it. Inferred resources have a great amount of uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

The following is information based on the Wardrop Report:

The resource estimate is based on drill hole data from the property. Trends of mineralization were established using categorical indicator techniques. A bulk density of 2.7 tonnes per cubic metre (t/m3) was used for determining tonnage.

During the resource estimate unsampled intersections have been set to zero grade. This is likely to result in a conservative estimate, particularly in areas comprised predominantly of pre-1995 drilling.

At a cutoff grade of 0.50 grams per tonne (g/t) Au, there is an Inferred Mineral Resource of 32.4 million tonnes at an average Au grade of 1.0 g/t, which equates to a metal content of 1,040,886 troy ounces of Au. Table 1.1 summarizes the mineral resource for the property by area at a 0.5 g/t Au cutoff.

- 36 -

Due to the uncertainty of Inferred Mineral Resources it cannot be assumed that all, or any part of this resource will be upgraded to an Indicated or Measured Resource as a result of continued exploration. To justify upgrading of the mineral resource demonstrated economic viability is required.

Production

The Cassiar Gold Camp is one of British Columbia’s major placer districts with recorded production of about 74,500 oz of gold (2,317 kg) between 1874 and 1895 (Holland 1950).  Minor placer production still continues today.

The first hard rock production occurred in 1934 when one ton of rock, containing four ounces of gold, was shipped and exported.  In 1939, 114 oz (3.5 kg) of gold were recovered from 130 tons of rock taken from the Jennie Vein.  During the 1940s, 1950s and 1960s, a maximum of 100 tons of ore was mined from the main deposits in the Cassiar Gold Camp (Diakow and Panteleyev 1981).  

The largest producer in the camp, the Main Mine, was in operation from 1979 until 1988.  Approximately 150,000 oz (4,666 kg) of gold were produced from the Jennie-Maura-Alison and Bear Vein systems (Glover 1998).  The Taurus Mine operated between 1981 and 1988, and it produced 35,000 oz (1,089 kg) of gold (Trenaman 1997).  A small amount of this production came from the Plaza adit and open cuts on 88 Hill.  The Vollaug Vein was mined from various open pits and underground workings between 1980 and 1997.  Approximately 50,000 oz (1,555 kg) of gold were produced from this structure (Glover 1998).  Mining commenced on the Eileen-Michelle-Lily Vein system in 1986, and continued until 1997, with about 90,000 oz (2,799 kg) of gold produced (Glover 1998).  Production from the Bain Vein system spanned the period from 1993 to 1995, and totalled 24,000 oz (746 kg) of gold (Glover 1998).  Surface production from the Bear Vein in 1998 totalled about 1,000 oz (31 kg) of gold. Recorded production from the camp totals about 423,500 oz (13,172 kg) of gold.  

Silver production from various deposits on the Property generally amount to 75% of gold production.  

2006 production was minimal as milling of ore commenced immediately prior to a planned holiday shutdown.  In 2006, milling of a total of 325 dry tons grading 0.136 ounces per ton produced 41 ounces of gold.

During the 1st half of 2007, the company mined and produced 634 ounces of gold and incurred significant losses from this production.  

Planned and Recommended Work Programs

Table Mountain Gold Mine

During 2006 the Company raised the capital required to place the Table Mountain Gold Mine back into production focusing on the 44,000 tons of probable reserves in the Rory and East Bain Veins grading 0.46 ounces per ton gold.  Production from the Rory Vein took place on a very limited scale at the end of 2006, and increased in the first quarter of 2007.  The Company encountered extremely complex structural conditions at the Rory Vein leading to drastically reduced tonnage and grade, resulting in significant losses from operations, as described above.  

The Company’s planned work program for the balance of 2007 is to develop and produce gold from the 28,000 tons of probable reserves located in the East Bain vein grading 0.5 ounces per ton.  If the company is successful in raising additional funds and production from the East Bain Vein proceeds as planned, the Company expects to produce 14,000 ounces of gold in 2007.

- 37 -

Taurus Deposit

A 25-hole diamond drill program is now under way to expand and further define the Taurus Deposit. A team of geologists led by Cusac Vice-President of  Exploration, Lesley Hunt, and Senior Project Geologist, Mike Glover, is supporting the drill program and executing on a series of other recommendations in the report. Drilling on the Oro Vein is now complete and assays are pending.

Cusac believes that the Taurus Deposit has the potential to increase in size, grade and resource confidence level, particularly in the 88-Hill and 88-West zones, which form the heart of the deposit. Cusac's immediate goal is to complete the additional work required to commence a National Instrument 43-101-compliant prefeasibility study, focusing on the 88-Hill zone as a potential starter pit.

A previous scoping study was completed by Mineral Resources Development Inc. in 1996 for Cyprus Canada Inc. and metallurgical testing was carried out at that time by Hazen Research and others. The Hazen work showed 77-per-cent whole ore cyanide leach gold recovery for crushed and milled 88-Hill mineralization and 95-per-cent flotation recovery. Some of the Taurus mineralization, mainly in the Taurus West zone, has been found to be refractory, whereas the bulk of the resource has been found to exhibit reasonable recovery rates. A detailed review of past metallurgical work is contained in the Wardrop Report. The Wardrop Report recommends that new metallurgical tests be completed to verify past work and to determine if the Taurus Deposit is heap-leachable.

Key findings and recommendations of the Wardrop Report include:

·

The resource calculation is based on 372 drill holes and 15,787 assays;

·

Numerous unsampled drill core intervals (mainly pre-1994 drilling) have led to a conservative resource estimate and this core should be sampled and assayed (under way);

·

Relogging of drill core should be done to integrate past work into a consistent lythological framework and thereby increase confidence in the resource (under way);

·

A reliable geological model for the deposit should be developed to add further confidence to future resource calculations (under way);

·

Infill drilling (14 holes recommended at 150 metres each) is recommended;

·

Larger diameter metallurgical drilling (HQ, six holes) mainly on 88-Hill followed by column and other tests is recommended (under way);

·

The deposit is potentially heap-leachable. Encouraging past recoveries of up to 74 per cent need to be properly defined and confirmed (under way);

·

Exploration drilling (five holes) should be completed to test possible expansion of the deposit to the west.

Taurus II Project

The Sketchley Report concluded that:

·

Potential exists in the Taurus II Project area to outline gold-bearing vein –alteration systems that could be amendable to open pit mining.

·

Emphasis should be placed on looking for litho-structural features that could have controlled hydrothermal fluid flow resulting in the coalescing of swarms of anatomising gold-bearing vein-alteration zones to form areas worthy of additional exploration.

- 38 -

·

The Dribble Creek area is a corridor of exploration interest, particularly where the Backyard, Somerville, North Notch, Newcoast and Newcoast West areas trend into the Erickson Creek Fault Zone and adjacent parallel structures.  

The Sketchley Report recommends further exploration expenditures of $1.53 million.

A three phase exploration program with a budget of $1.53 million was proposed: phase I would comprise base line studies that are needed to develop targets; phase II involves diamond drilling of high priority targets; and phase III is follow-up diamond drilling. This phase of the program was completed in 2006.

A description of the work program was as follows:

1.

A GIS image base is required to ensure all information is compiled with appropriate geographic relationships.  This recommendation was carried out by way of a helicopter borne LIDAR (Laser Imaging Detection and Ranging) survey.

2.

Detailed historical geological mapping needs to be incorporated with GIS image base to provide a better understanding of the geological setting of the area.  This work is ongoing and is being correlated with the LIDAR data.

3.

Petrographic and gold occurrence studies are needed to understand gold relationships.

4.

Soil sampling will update fragmented and spotty historical coverage to provide consistent coverage for GIS integration.  A large scale geochemical grid was established leading to anomalous zones being trenched and in some cases drilled.

5.

Magnetic and VLF-EM testing will help to understand the usefulness of these tools considering that the Bain Vein in the Cusac Mine area was discovered by following up a VLF-EM anomaly. Testing should be done over the Backyard and Newcoast areas.  This work was carried out but problems with instrumentation and data collection rendered the findings inconclusive.

6.

Examination of outcrops and anomalies on the ground is needed to place all baseline information in context before investigation by drilling.  This was carried out.

7.

Surface land ownership in the area of the Backyard System should be obtained before further exploration is conducted.  Surface rights in this area were clarified but exploration was not carried out here as other targets took priority.

8.

Drilling should be done by diamond coring to understand geological relationships.  A total of 21 drill holes were completed.

Additional Technical Information

The Company has filed at www.sedar.com a number of in depth technical reports by independent experts relating to the Cassiar Gold Property including detailed geological and engineering discussions, which are available free of charge to investors seeking additional information of a technical nature.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

- 39 -