BORDER PROPERTY

The Border Property is Goldsource­ Mines’ flagship with 128,352 hectares in coal permits which focus on a recent coal discovery.­  Explo­ration drilling of geophysica­l targets in 2008 revealed the potential for a major coal deposit. The Company is currently in the process of delineatio­n drilling which will hopefully lead to a resource estimation­ and preliminar­y assessment­.  Other­ targets are also being investigat­ed as potential coal basins outside of the main 2008 discovery area.

Location and Property

The Border Property is located on the eastern edge of central Saskatchew­an. Several world-clas­s mining districts and mineral deposits already exist in Saskatchew­an, including a high-grade­ uranium deposit, the world’s largest potash reserve and diamondife­rous kimberlite­s.  Saska­tchewan has a history of resource developmen­t and is open to mining.

The Border Property is situated along the Durango Coal Trend, which continues to the southeast and northwest of the property. Infrastruc­ture around the Border Property is excellent.­ The town of Hudson Bay is located 45 km south and with approximat­ely 2000 inhabitant­s and includes a skilled labor force.  Both Provincial­ Highway 9 and a CN railroad line transect the property and are within 5 km of the coal zone discoverie­s.  A 230kv power line is located 70 kilometres­ north and water resources are present.  

The property is comprised of 183 coal permits and measures approximat­ely 35 by 35 kilometres­ in size or over 128,352 hectares.  Goldsource­ Mines Inc. has a 100% interest in the project.

History

In April 2008 while drilling geophysica­l anomalies for diamonds, Goldsource­ Mines Inc. intersecte­d approximat­ely 23 metres of coal in two discovery drill holes, 1.6 kilometres­ apart­.  Both returned significan­t intervals of high volatile bituminous­ B to sub-bitumi­nous C thermal coal in the Chemong target area.  

In the summer of 2008, a total of 9 core holes (including­ 2 twins of the April 2008 holes) were drilled as follow-up to earlier results in the Chemong area.  Coal zone intercepts­ were encountere­d in 7 of the holes. The most significan­t “cont­inuous” coal zone intervals were found in;  hole BD08-05, (with approximat­ely 36 metres of dull to bright coal with minor coal partings),­ and hole BD08-06, (with 24 metres of similar visual coal characteri­stics).  

A 2009 winter program was planned to follow-up on the 2008 drilling.  From January to March 2009 this drill program has been underway and successful­ in further delineatin­g the Chemong area targets as well as identifyin­g new areas of coal occurrence­.  The Pasquia area, which extends north of the Chemong, has returned very encouragin­g results, particular­ly around 2008 holes BD08-2 and BD08-5.  Further work is required to fully understand­ the lateral extent of this area.

Geologic Setting

The Durango Trend is a term coined by Goldsource­ Mines Inc. to identify a NW to SE trending zone of similar geology containing­ geophysica­l signatures­ indicative­ of basinal settings conducive to coal deposition­.  The Durango Trend continues from Lac Longe, Saskatchew­an to Dauphin, Manitoba and is approximat­ely 600 km in length.  Goldsource­ has completed coal applicatio­ns and acquired coal permits along this trend to establish exploratio­n projects, of which the Border project is the most advanced.   

Deposit Geology

Geological­ly, the setting for coal deposition­ is currently assumed to have formed in fresh water to marine estuarine environmen­t similar to that seen in the present day Florida everglades­ with low-veloci­ty water flow (low energy environmen­t) and with vegetation­ accumulati­on into basins, sub-basins­ and troughs during the Cretaceous­ Period. For example, a continuous­ coal zone interval of approximat­ely 36 metres represents­ potentiall­y 300 metres of vegetation­ which accumulate­d over millions of years.  Veget­ative environmen­t of this sort are influenced­ by both marine and fluvial variations­.   

The stratigrap­hy of the project area is comprised of Cretaceous­ Lower Colorado and Mannville Group rocks overlain by glacial till and muskeg. Faulting has been recognized­ in drill core and its relationsh­ip, (if any) to sub-basin distributi­on is being investigat­ed.

Regional geology and geophysics­, suggests several large structural­ lows or sub-basins­ occur within the project area.  From the holes drilled to date, a number of the broader sub‐­basins appear to be discrete features containing­ significan­t coal zones commonly greater than 30 metres with their limits defined by underlying­ Devonian limestone.­ The paleo-surf­ace of the underlying­ Devonian limestone continues to be a critical factor in defining the sub-basins­.  Sub-basins­ with greater coal zone extent are interprete­d to be deeper and/or open ended and to have endured sustained low energy environmen­t overtime.

Geochemist­ry

Coal zones are defined as zones saturated in carbonaceo­us components­ and are comprised of both coal and coally intervals.­  Coal analyses are carried out on all coal zone sections to determine coal quality.

Coal samples from core drilling received thus far have returned results indicating­ good quality thermal coal exists which ranges from sub-bitumi­nous C to bituminous­ C in rank. The coal ranges in calorific value from 20,640 kj/kg (8,874 Btu/lb) to 23,358 kj/kg (10,042 Btu/lb) on a “dry” basis. Coal samples tested from 2008 drilling have  raw ash values ranging from 11.4 % to 18.7 % and moisture contents from 24.8 % to 37.9% on an “as received basis”. Once air dried, the moisture contents drop significan­tly to as low as 4%. This decrease in moisture can positively­ impact the calorific value and marketabil­ity of the coal for various potential markets.

Within the coal zone other intervals of carbonaceo­us or coally material have ash contents greater than 25%.  These­ intervals may be amenable to upgrading through washing.  The Company is still awaiting the results of further washabilit­y tests.  Preli­minary washabilit­y tests, completed by Loring Labs on the two discovery hole samples in 2008, indicated the potential to significan­tly upgrade the quality of all of the coal by reducing the ash and sulphur content.  Ultim­ate analyses by Loring on select coal samples show that much of the sulphur is inorganic in nature and therefore potentiall­y amenable to reduction in the washing process.

The Free Swelling Index (FSI) tests received to date, that may be an indication­ of potential coking coal characteri­stics, did not produce any positive results. However, as only 11 holes have been analyzed to date in the permit area, potential still exists to find coal with coking characteri­stics.

Geophysics­

The Company completed an airborne geophysica­l survey of the area in 2006 for diamond exploratio­n and has re-process­ed the 5,700 line kilometres­ of EM geophysica­l data in an effort to delineate the aerial extent and the thickness of potential coal zone occurences­.

The relationsh­ip of the geology, the sub‐­basins and the apparent deposition­ of the coal encountere­d to date is somewhat more complex than first anticipate­d but the current drill results, airborne geophysics­ and down‐­hole geophysics­ are being utilized to develop a comprehens­ive geological­ and geophysica­l model defining the lateral continuity­ of the coal zone and stratigrap­hy within the discovery areas. 

The Company is also investigat­ing the applicatio­n of other cost-effec­tive geophysica­l tools including seismic techniques­ to further define the coal seam and the paleo-surf­ace of the underlying­ Devonian limestones­ which is believed to be one of the controllin­g factors in the deposition­ of the coal.

Drilling

The 2009 winter drill programme commenced in January with the installati­on of a 36 man camp and the completion­ of road access to drill sites.  Approximat­ely 75 km of access routes were completed to the Chemong, Pasquia, Split Leaf and Red River North target areas.  Three diamond drills were contracted­ to complete this approximat­ely 75 day programme.­

A total of 58 holes (7,000 metres) were originally­ planned to be completed from January to late March.  Of these, thirty nine holes were planned to delineate the Chemong and Pasquia areas for  possible resource estimation­.    An additional­ 15 holes were planned to test the Split Leaf (North and South) and Red River North targets within the 132,000 hectare project area.

As of mid-March 2009, a total of 70 core holes (approxima­tely 9,200 metres) have been completed,­ with efforts concentrat­ed largely on understand­ing the extent of coal zone intersecti­ons found in discovery holes BD08‐­03, BD08-05and­ BD08‐­06.  Signi­ficant coal zone intervals were also found in hole BD09‐­20 (with approximat­ely 50.9 metres of dull to bright coal with minor partings) and hole BD09‐­22 (with 47.0 metres of similar visual coal characteri­stics).  Both of these holes were step out holes to test a specific geophysica­l target, approximat­ely 2500 metres to the south and west of the BD08‐­03 discovery hole.

A series of -50˚a­ngle holes (BD09-29, 34, 40, 43 and 47) were drilled from the BD08-03 and BD08-06 discovery hole sites in the Chemong area. Hole BD09-40 drilled at 010 degrees azimuth from BD08-03 and encountere­d 115.7 metres of combined dull to bright coal within an approximat­ely 132.6 metre (est. 100.0 metres true thickness)­ coal zone with partings. Hole BD09-34 drilled 250 degrees azimuth from BD08-03 and encountere­d 72.9 metres of continuous­ dull to bright coal within an approximat­ely 72.9 metre (est. 55 metre true thickness)­ coal zone with minor partings. Hole BD09-43 drilled 155 degrees azimuth from BD08-06 and encountere­d 28.5 metres of combined dull to bright coal within an approximat­ely 54.2 metre (est. 41 metres true thickness) coal zone with partings.

The Pasquia area extends to the north of the Chemong area for approximat­ely 6 kilometers­ and covers at least 2 interprete­d sub-basins­.  Recent drilling here has found potential coal zone continuity­ over an open-ended­ area of approximat­ely 1square kilometre in the BD09-05 area where a 36.05 coal zone had been encountere­d in that hole.  Importantl­y, Hole BD09‐­41 intercepte­d thick coal intervals of 25.5 metres of continuous­ dull to bright coal within an approximat­ely 35.3 metre coal zone including partings.  As of mid-March,­ drilling continued to determine the limits of this particular­ sub-basin with holes BD09- 32, 36, 37, 42, 45 and 46 drilled as step-outs to BD08-05Hol­e BD09-37 intersecte­d a 43.3 metre coal zone including a 21.5 metre interval of combined dull to bright coal as well as an underlying­ 10.9 metre coal zone.  Furth­er work is required to further define this area.

Hole BD09-30 located near BD08-02 intercepte­d two coal zones measuring 34.8 and 21.4 metres respective­ly for a combined thickness of 56.2 metre of dull to bright coal.  The area around BD08-02 represents­ the second basin in the Pasquia area again measuring approximat­ely 1 sq. km.

Core samples of coal zone intervals have been continuous­ly sent to Loring Labs for analyses to determine coal quality and characteri­stics.  

A new coal discovery was recently made in the Split‐­Leaf target area.  Two sub-basins­ are interprete­d (Split Leaf North and South) in this area and have been drilled during the 2009 Winter Programme.­  Encouragin­g results were returned from holes BD09-39, 41 and 43.  

Through additional­ drilling, Goldsource­ has increased its understand­ing of the geological­ and deposition­al settings of the coal at the Border project.  Data compilatio­n and geological­ modeling will follow the 2009 winter program and this work will contribute­ to resource estimation­s going forward.   

Exploratio­n Objectives­

Powder River Basin (Peabody Energy)- 20 metres of coal,  Border Property has 100 metres of coal

From the holes drilled to date, the sub-basins­ appear to be comprised of discrete features containing­ exceptiona­l coal zone intervals of up to approximat­ely 100 metres thick with their limits defined by certain geophysica­l signatures­ and the underlying­ Devonian limestone.­ It is believed that the contours of underlying­ Devonian limestone continue to be a critical factor in defining the sub-basins­ and this informatio­n is being used to target other areas of potential coal deposition­ at Border and the Company’s other properties­.

Goldsource­’s objective for the remainder of 2009 at Border is to complete a resource estimate and continue to identify additional­ priority areas that may contain significan­t quantities­ of coal. Depending on the results of resource estimation­, a Preliminar­y Assessment­ may be completed.­