Metals - Mining

Seismic Program:
The seismic data recently acquired in the Bay St. George Basin has been processed and is currently being interpreted. The new data is primarily focused on the Hurricane Prospect approximately 20 kilometers south of the Flat Bay project in Western Newfoundland. The Hurricane Prospect covers approximately 100 square kilometers along the Western flank of the Bay St. George basin and provides multiple target zones based on seismic interpretation. The new seismic data will assist in target selection for the 2005 drill program.

Storm Prospect:
The Company also reports that Terralliance Inc. has agreed to an extension of their farmout agreement on the Storm Prospect to July 28, 2005. The Storm Prospect is situated approximately 10 kilometers northeast of the Flat Bay Project. It consists of an anticline structure (approximately 20 square kilometers) with marine and non-marine sandstone reservoir targets as well as limestone targets. These targets represent different rock types of a younger age than the reservoir at Flat Bay, thus providing better primary reservoir quality potential. Terralliance may earn a 50% working interest in the Storm Prospect by paying 66 2/3rds of the drilling and completion costs on the earn-in wells.

Flat Bay #1
The Flat Bay #1 well encountered pumping problems during the testing phase in the summer of 2004. Residual frac sand at the bottom of the hole causes the pump to malfunction: Flat Bay #1 is a shallow oil discovery at 195 meters which requires further pumping to retrieve all the frac fluid from a previous stimulation operation before any determination of oil flow can be made. The Company is reviewing options to resume testing of the well in a cost-effective manner. However operations would not commence before the Spring of 2005.

2005 Drill Program:
Hydrocarbon shows in the recently drilled Flat Bay #2 well confirm the existence of a large-scale active petroleum system in the basin. Up to now, the focus has been on only one reservoir target, the Fischells Brook conglomerate-sandstone. The 2005 drilling program will test other potential reservoirs within the Storm and Hurricane Prospects. Preliminary interpretation of the new seismic data on the Hurricane Prospect indicates numerous targets of varying depth with multiple trapping scenarios on this very large structure. The number of wells to be drilled in the upcoming program will be a function of the depths of the selected targets. At this time it is anticipated that four wells will be drilled. A solicitation for expressions of interest from drilling contractors has been sent out. It is the Company’s plan to acquire a rig for a late spring-early summer commencement of the drill program. Scheduling will depend on rig availability. The Company has sufficient funds to carry out the program.

Stock Symbol: TSX: VUL
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