BOUNDARY PROJECT     Caramelia

The Caramelia Property, located ~ 38 kilometres northeast of Osoyoos, BC in the Greenwood Mining Division, is comprised of 2,000 hectares of crown granted and located mineral claims, contiguous on the southeast boundary with the Company's Old Nick Property. The historic Cariboo-Amelia Mine in the McKinney Gold Camp is located in the north central part of the Caramelia Property. The Cariboo-Amelia Mine, BC's first dividend paying lode gold mine commenced production in 1894. Total production to 1962 was 137,000 tons yielding 82,000 ounces of gold.

Merit Mining owns 100% interest in the Caramelia Property, subject to non-overlapping net smelter return royalties of 2% to 3%.

Host rocks over the Caramelia Property are carbonaceous quartzites, argillites, limestone, greenstone and serpentinized basic rocks of the highly mineralized Anarchist Group, all of which are intricately folded and faulted.

Historically exploration on the Caramelia Property has been directed toward the discovery of vein-type gold deposits. Gold City conducted programs in 2002, 2003 and 2004 in search for sub parallel veins to the main Cariboo-Amelia vein.

In 2002 Gold City and subsequently Merit in 2003 and 2004 conducted biogeochemical (bark) surveys under the supervision, of Dr. Colin Dunn, a well known biogeochemical specialist. Bark geochemistry is a promising exploration tool in thick, till-covered area, such as the Caramelia property, due to the deep and broad tapping root system of specific tree species. Dr. Dunn has identified areas that require more detailed examination.

In November 2003, Merit Mining conducted a trenching program comprised of twelve trenches. The trench results did not indicate a distinct source of the biogeochemical anomalies. Snow forced the discontinuation of the trenching program before all of the biogeochemical anomalies could be tested.

The principal anomalous trend, 340 degrees, extends from the Billie vein system in the southwest to the northeastern side of the property. The main target for further work is where the 070 degree conjugate trend intersects the principal trend in the area of Rice Creek and a small tributary. Additional anomalies in the Billie, Minnie Ha Ha and Dolphin vein areas also warrant additional work.