SAKOA

Coal was first discovered in the region in the early part of the last century and was mined underground in the Sakoa coalfield from 1941 to 1972. Exploration was conducted periodically from the 1920s to the late 1980s and comprised mapping, trenching, diamond drilling, underground exploratory mining and geophysical surveys. Historic resource estimates for the entire region have covered a broad range from several hundred million tonnes to the BRGM’s estimate of as high as two billion tonnes. Most historical exploration has been focused on a relatively small area in the vicinity of the old mine and it is considered that the remainder of the region, which comprises the greater part of the Sakoa and Sakamena coalfields and includes the Company’s holdings, is under-explored.

NI 43-101 - TECHNICAL REPORT ON PROPOSED EXPLORATION OF THE SAKOA SOUTH COAL PROJECT MADAGASCAR - January 31, 2007

Within the Company’s license area, coal-bearing sediments in the Sakoa and Sakamena fields have been identified along 27 kilometres of strike and historical data suggests that coal seams of economic significance may occur over almost the entire strike length. Seam thicknesses up to 5 metres have been recorded from near-surface to depths of over 170 metres. The down-dip extent of seams remains to be determined but appears to be open at depth. Coal qualities are variable however the thicker and more ubiquitous No. 4 and 5 seams usually exhibit raw coal ash contents in the range of 15% to 35%. Limited washability data indicates that the coal can be beneficiated to yield a product suitable for the thermal export market.

Exploration coverage of the Company’s concession area is currently not sufficient to allow coal resources and qualities to be reliably estimated in accordance with prescribed industry standards. However more detailed exploration in an adjacent area with subsequent feasibility studies by NORWEST and others resulted in estimated resources of at least 100 million tonnes along an 8 kilometre strike length to a depth of 300 metres (It should be noted that these historic estimates are not compliant with NI-43101 Standards of Disclosure for Mineral Projects).

The main Sakoa and Sakamena coalfields are considered to be the Company’s main economic targets at this stage. However the PAM concessions also include at least nine other occurrences of Coal Measures with strike lengths ranging from 1 to 8 kilometres. Two of the fields are known to be coal-bearing (Beroy and Vohipotsy) but are poorly explored while the remainder appear to be virtually unexplored. All fields will be investigated during the exploration program.

Initial exploration work will commence in the northern sector of the Company’s concession area where historical data suggests that at least two coal seams ranging in thickness from 1.5 to 5.0 metres may be present over a 12 kilometre strike length. The prime objectives will be to confirm seam continuities and thickness and determine coal qualities. It is expected that the information obtained will be sufficient to allow resource estimates to be made in accordance with internationally accepted reporting codes and will form the basis for conceptual mine planning.

Mark Stewardson, Pr.Sci.Nat., a qualified person as defined by National Instrument 43-101, has overseen the initial phase of examination and evaluation of data from the coal deposits and has supervised the preparation of information in this release. He is a U.K. based coal geologist with over 25 years experience in evaluating, developing and managing coal projects worldwide, including many in Africa, Australia and Indonesia. He will be preparing a Technical Report on the coal deposit in accordance with NI 43-101 for the Company.