Yukon

YUKON Projects, Keno Hill, Yukon

Mega Precious Metals Inc. is exploring in the historic Keno Hill silver district, Canada’s second biggest primary silver camp after Colbalt, Ontario. The Keno Hill area is located roughly 38 kilometres northeast of Mayo and 350 kilometres due north of the capital of Whitehorse, Yukon.

Mining in the Keno Hill silver camp began operation 1913 when 55 tonnes select high grade ore was mined from the Silver King claim on Galena Creek on the northwest end of Galena Hill. When mining finally ceased in 1989, a total of 6,657 tonnes of silver (214,035,599 ounces), 322,698 tonnes of lead and 198,141 tonnes of zinc had been mined from 39 mines, both large and small. The average silver grade of production was 1,374.9 grams/tonne (40.1 ounces/ton). The bigger producers were the:

Hector-Calumet (1935-72)	96,219,690 oz.Ag	406,912,502 lb. Pb	334,570,797 lb. Zn
Elsa (1925-89)	30,158,040 oz.Ag	47,708,019 lb. Pb

The project is comprised of the SpiderMan property (5 claims) and the Fisher property (67 claims), giving Mega a total land position of approximately 1384 hectares on the southeast slope of Galena Hill.

The contiguous Spider, Man and Ag claims are located on Galena Hill immediately to the east and along trend of the Eagle Vein. A 1971 geochemical soil survey completed by United Keno Hill Mines Ltd. (UKHM) of the property outlined a 300 metre lead-silver anomaly on the Man claim extending along strike from trenches exposing the Eagle Vein. The anomaly has not been explained by trenching, nor has it been drill tested.

The Fisher claims overly historic hand dug shafts where M. Philpot of Bema Industries Limited reported in 1980 that a sample of galena-quartz vein material found in dumps assayed 22,311 g/t silver. The claim area has been the subject of various geochemical work programs in the late 1970s. Work completed by StrataGold in 2006 on the Fisher claims has outlined a moderate silver soil geochemical anomaly (values to 2.5 g/t Ag) extending a kilometre northeast from the historic shafts along a strong linear (McLeod fault?) towards and intersecting with the Eagle vein-fault structure.

The 2008 Work Program included the following:

A 610 line-kilometre airborne magnetic gradiometer and VLF-EM survey was flown over the entire Eagle Project area. Preliminary interpretation of the magnetic survey has indicated the continuation of a number of possible structures in the area of the Eagle vein and McLeod linear.
A detailed geochemical soil survey of the Spider, Man and Ag claims (249 samples) confirmed the 1971 United Keno Hill Mines Ltd. soil anomaly. The survey produced a strong linear, coincident, multi-element (Ag-Pb-Zn-As-Sb) anomaly extending more than 350 metres east across the Man claim along the same trend as the Eagle vein. The core of the anomaly is highlighted by 14 samples ranging between 403 and 4,036 ppm lead, and 2.1 to 3.5 ppm silver.
A total of 253 soil samples were collected on the Fisher grid area, increasing sample density and confirming the anomaly in the grid area, and expanding the grid to the west over the area of the historic workings.
Four trenches were attempted in 2008 to test the Fisher anomaly, but failed to penetrate through thick permafrost frozen overburden.
Geological mapping was limited, largely due to thick overburden on the south slope of Galena Hill.

The 2009 work program will focus on the Eagle vein structure.

The focus of the 2009 work program will be core drilling 3,500 metres. Drilling will test Eagle vein structure, the Man geochemical anomaly area, the junction between the Eagle structure and the projection of the McLeod fault and additional structures indicated by the geophysical survey.
On the Fisher geochemical anomaly, Mega is also investigating a follow-up program of rotary air blast (RAB) surficial drilling in preparation of core drilling in 2009.
Compilation of all historic data is planned in combination with the re-mapping and re-opening historic trenches, notably east and west of the main Eagle trenches.

Spider, Man & Ag Claims

On March 12, 2008 Mega purchased an outright 100% interest in the Spider, Man, Ag, Blue and One claims located in the Keno City area from William Mann of Whitehorse for $20,000. The Spider, Man and Ag claims cover a total of 46.96 hectares on the east flank of Galena Hill, along strike to the east of the Eagle vein.

The Blue and One are individual isolated claims of 17.86 hectares in the valley bottom near Keno City and 19.26 hectares on the south slope of Keno Hill, respectively.

Fisher Option

On July 7, 2008, Mega entered into an option agreement with StrataGold Corporation (“StrataGold”; SGV-TSX) to earn the exclusive right and option to acquire a 100% title and interest in the Fisher claims. The Fisher property is comprised of 67 contiguous quartz mining claims totalling 1,620 hectares on the southeast slope of Galena Hill.

To fully exercise the option Mega must:

Incur Exploration Costs totalling $4 million over four years.
Make total cash payments of $625,000 over four years to StrataGold.
Issue 1 million common shares of Mega over four years to StrataGold.
In addition Mega Silver shall grant StrataGold a 2% Net Smelter Royalty (NSR). At any time Mega may purchase 1% of the NSR by paying StrataGold $1 million.