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Economic overview >>

Outlook 2005 >>

Value of production >>

Metallic minerals >>

Gold >>

Ferrous metals >>

Base metals >>

Industrial minerals >>

Mining investment, financing and taxation >>

Exploration and deposit appraisal activities >>

Financing >>

Mining taxation >>

Mining environment >>

Research and development >>

Strategic activities >>

Economic overview of 2004

Metals and Minerals Markets

In 2004, the worldwide mining industry
benefited from stronger, better synchronized global economic growth.
It also continued to take advantage of the vigour of China's
economy, in spite of various measures taken by the government to
slow it down to a more sustainable pace. The resulting increase in
consumption of metals and minerals was reflected in the prices of
some of these commodities. Prices also greatly benefited from the
depreciation of the American dollar for the second consecutive year
and, in some cases, from major constraints in terms of supply.

The average annual prices of base metals
(copper, nickel and zinc) rose significantly. For the third year in
a row, there was a noticeable rise in the price of gold. The price
of iron ore, fuelled by substantial growth in world steel production
and ore imports by China, also increased considerably.

Outlook for 2005

Regarding metals and minerals

The growth of the global economy should
remain relatively solid in 2005 despite some slowing down due
mainly to the high price of petroleum and a strengthening of the
macroeconomic policies of various countries. Stimulated by the
performance of the global economy and especially by China’s
continuing strong demand, metal and mineral consumption should hold
up.

The prices of metallic substances should
remain generally high in 2005, and some will continue to rise
due to tight markets and a weak supply. Nonetheless, it should be
emphasized that certain base metals may have attained their cyclical
peak in 2004, as production progressively adjusted to market
conditions. Moreover, prices will continue to be strongly volatile,
reacting in particular to:

unforeseen interruptions in production;

fluctuations in the American dollar;

and changing perceptions with respect to the Chinese
demand.

In all, Québec’s 2005 mineral shipments
should continue to benefit from the vigorous global consumption of
metals and minerals, and the high average annual prices for many of
these commodities.

Value of production by NAICS

Mines sector

Mines, quarries
and sandpits
1

Non-metallic mineral
product
manufacturing

Primary metal

manufacturing

Total

NAICS

212 2

327

331

Year

1991

2,425.1

1,550.3

6,259.0

10,234.4

1992

2,206.4

1,464.8

6,086.3

9,757.5

1993

2,144.9

1,452.5

6,325.2

9,922.5

1994

2,446.4

1,649.7

7,695.2

11,791.3

1995

2,748.6

1,697.6

8,972.3

13,418.5

1996

2,790.6

1,792.8

9,271.1

13,854.5

1997

2,855.8

2,063.7

10,294.2

15,213.6

1998

2,823.9

1,923.6

10,828.3

15,575.8

1999

2,709.8

2,092.2

12,080.2

16,882.2

2000

2,895.5

2,379.5

14,296.7

19,571.6

2001

2,711.8

2,489.9

13,819.1

19,020.8

2002

. .

2,763.5

13,682.7

. .

Notes:

1 Corresponds to value of
production. In addition, the data from 1991 to 1993 are based on
the SIC.
2 Mining (except Oil and Gas)

Table produced by the Direction
de la concertation of the MRNF (02.2005) based on data from
Statistics Canada

Metallic minerals

In 2004, the global market for metallic
minerals was rather positive, compared to results recorded for
2003.

Gold in 2004 >>

Ferrous metals in 2004

Iron >>

Niobium >>

Base metals in 2004

Copper >>

Nickel >>

Zinc >>

Gold

Global context

The price of gold has experienced an overall gain
since 2001 despite a number of significant fluctuations. The
average price per ounce in 2004 was $409 US
(London PM Fix), up 12.6% from the average price of $363
in 2003, and compared to $310 in 2002. The daily price
ranged from a floor price of $375 US in May, to a ceiling of
$454.20 in December – a height not seen since 16 years ago.
Nevertheless, gold’s performance was more moderate when measured
in other currencies (e.g., euro, yen) and its value even fell for
some (e.g., Australian dollar, rand). This situation reflects the
significant decline in the value of the American dollar, the
currency of quotation for gold, compared to other currencies. For
this reason, the average price of gold was $532 CA in 2004,
up only 4.7% from its 2003 level of $508 CA.

The performance of the Canadian S&P/TSX Gold Index, which
consists of companies that own gold mines in Canada or elsewhere,
was down by 9.0% in 2004.

The direction of the gold price in 2004 was largely
determined by its demand as an investment purchase, where many
short term investors were active in the market. The weakness of
the American dollar – due to the double deficit of the United
States (Budget and current account) prompted investors to turn to
gold as a safe haven and alternative asset. The other main factors
that contributed to the demand included:

the low real interest rates in the United States (and other
countries);

the persistence of strong geopolitical tensions;

the increase in the price of petroleum;

the arrival of new financial vehicles that make it easier to
invest in gold (like StreetTRACKS Gold of New York, launched in
mid-November);

increased investor interest for commodity investments in
general.

Despite all the attention given by market observers to the
effect of investment-driven gold purchases, the positive influence
exerted by other basic factors should not overlooked. Indeed,
there was an overall reduction in supply due to a combination of
declining worldwide mine production, lower sales from central
banks (due in part to the renewal of the Washington Accord that
limits sales from central European banks) and less recycling of
jewellery and other goods. As for demand, the manufacture of
jewellery and other gold-bearing goods was up, and decreased
hedging activities from mining companies also helped boost the
demand for the precious metal.

Québec’s situation

According to preliminary data, the volume of gold shipments
from Québec’s mines dropped by 14% compared to 2003 figures,
reaching 24.3 tonnes (777,214 ounces). The production
value declined by 10%, from 458 million dollars in 2003
to 415 million dollars in 2004. This shortfall was
mainly due to the temporary shutdown of the Mouska mine, the lower
production at the Doyon mine, and the processing of lower grade
ore at the Beaufor mine.

In September, Cambior began its reorganization of mining
operations at Doyon, resulting in a loss of 130 jobs and a
30% reduction in throughput, from 1,000,000 to 700,000 tonnes
of ore. Cambior is currently mining pillars, which noticeably
impacts mining costs and the life of the mine.

The Sleeping Giant mine (Cambior/Aurizon Mines) reported a 3%
improvement in production for 2004.

In October, Cambior restarted production at the Mouska mine,
which had been shut down since January 2004 to allow for
deepening of the internal shaft.

During the first quarter of 2004, Met-Chem Canada was
awarded a contract by Aurizon Mines to conduct a feasibility study
of the Casa Berardi project. Aurizon also awarded a shaft raising
contract to the mining contractor Ross-Finlay. The project began
at the end of the second quarter and nearly 660 metres of
exploration drifts have since been constructed. In addition, more
than 240 m of the shaft collar have also been successfully
completed. The company is expected to announce during the first
half of 2005 when production will begin.

In September, Century Mining announced that it had finalized
its acquisition of the Sigma-Lamaque complex from McWatters
Mining. The transaction was the result of an agreement reached
with McWatters’ creditors. The agreement stipulates, among other
things, that Century Mining will assume responsibility for a loan
made by Investissement Québec. In November, the company began a
drilling program in the Sigma-Lamaque pit to evaluate and define
the ore-waste rock contact. These data will be used to re-evaluate
mining reserves and, if the case allows, to determine the
feasibility of bringing the project back into production during
the first half of 2005.

Agnico-Eagle Mines reduced its annual production to
300,000 ounces of gold in 2004 and lowered its
predictions for future years. The company continued its major
development work on the Lapa, Bousquet-Ellison, Goldex and LaRonde
II properties in 2004 by investing 14 million dollars.
In August, the company began a 40 million dollar development
project at the Lapa property. This work, which should take almost
two years, will include the sinking of a 825-m exploration
shaft.

In September, Richmont Mines completed the construction of
surface installations at its East-Amphi project. It also completed
the entrance to the access ramp and 770 m of ramp tunnelling
to a depth of 130 metres, only 70 m short of their final
goal.

Wesdome Gold Mines initiated an ambitious 15 million
dollar exploration and development program on its Kiena, Shawkey
and Wesdome properties.

In March, management at the Troilus mine announced an
investment of 18.5 million dollars to increase daily
production from 15,000 to 17,500 tonnes. Integration of the
new equipment began in December. Mining of the J-4 zone, which
began in 2004, now contributes a significant percentage of
the mine’s production.

Outlook for 2005

In 2005, the gold price will continue to be largely determined
by the trend in the value of the American dollar relative to other
currencies. Indeed, despite an environment in which the main
factors affecting gold supply should increase (mining production,
sales from central banks, recycling), and the factors affecting
demand should decrease (the manufacture of jewellery and other
goods, the de-hedging by producers), the most prominent gold
market analysts still predict an average price of $425 to
$450 US per ounce. They are evidently confident that gold
will remain in high demand as an investment in response to the
weak American dollar. The United States’ double deficit will
continue to weigh heavily on its currency, and it appears that a
strong rebound is now unlikely. The predicted behaviour of other
key economic factors, such as low effective real interest rates in
the United States and elsewhere, an inflation hike and persisting
geopolitical tensions, will also have a positive effect on the
investment demand for gold.

The volume of gold shipments from Québec in 2005 should
be similar to that of 2004.

Ferrous metals

Iron >>
Niobium
>>

Iron ore

Global context

After two years of lengthy negotiations, the first agreements
on benchmark prices for iron ore were signed in mid-January 2004,
setting the stage for record-high nominal prices. Québec Cartier
Mining Company (QCMC) and the Iron Ore Company of Canada (IOC)
obtained increases of 21.2% for pellets and 22.33% for concentrate
on the European market. These early agreements attested to steel
producers’ desire to secure ore supplies in a highly tight market.
The significant price increases are primarily attributable to the
unabated Chinese demand, although other factors, such as the rise
in world steel prices and the sharp depreciation of the U.S.
dollar, also came into play. The effect of raising prices, set in
U.S. dollars, on canadian mining compagnies revenues were dampened
buy the strong appreciation of the Canadian dollar that started
it's rally at the end of 2002.

Led by the booming Chinese consumption, global production of
crude steel exhibited exceptionally strong growth in 2004,
exceeding a billion tonnes for the first time ever. According to
preliminary data from the International Iron and Steel Institute
(IISI), world production was up by nearly 9% in 2004, mainly
because of China, which posted growth of over 23%, while output in
other countries grew by roughly 4.5%. Production rose nearly 3% in
Canada, 5% in the United States and 5% in the European Union (15).
With regard to iron ore consumption, it is noteworthy that the
IISI data also show an expansion of approximately 9% in pig iron
production and nearly 18% in direct reduced iron.

According to preliminary data from AME Mineral Economics, the
international steel industry’s excellent performance translated
into an increase of about 11% in apparent iron ore consumption in
2004. China recorded an 27% increase, boosting its imports by
about 40%. Consumption in Europe and North America combined—the
main markets of Québec-Labrador iron ore producers—rose by about
3%, but still remained below the level reached in 2000.

The main world suppliers of iron ore posted a substantial
increase in their sales in 2004. And for the second year running,
these producers operated at full capacity, but they still could
not keep pace with the soaring Chinese demand, a situation that
provided the impetus for producers to step up their expansion
projects. In view of the tight market conditions, a number of
steelmakers moved to secure their ore supplies by locking into
long-term contracts with ore producers.

Situation in Québec

In 2004, the Québec Cartier Mining Company’s shipments
amounted to 9.2 million tonnes of iron ore pellets and 4.3 million
tonnes of concentrate.

Québec Cartier is currently exploring the possibility of
modifying its mining plan to extend its operation of the Fermont
mine in the Côte-Nord region by 10 years.

Iron Ore of Canada (IOC) and Wabush Mines faced strikes that
lasted 12 and 16 weeks respectively and affected their 2004
output. IOC shipped 11.4 million tonnes of ore, compared with its
forecast of 14.9 million tonnes. Wabush Mines shipped a total of
3.8 million tonnes, instead of the 6 million tonnes forecast at
the start of the year.

Outlook for 2005

While the global steel industry will continue its growth in
2005, it is likely to expand at a more moderate rate than in 2004.
This growth will be driven mainly by China, although
industrialized countries should post a slight increase in their
steel production, overall. World demand for iron ore will move up
again, with China leading the way and boosting its ore imports;
however, Chinese imports should increase at a lower rate in 2005.
Global demand from the main markets served by Québec-Labrador
producers should also increase, albeit modestly.

Strong Chinese demand is expected to perpetuate the tight
supply situation that characterized the iron ore market in 2004.
All of the early-year forecasts point to a further rise in ore
prices in 2005. A number of analysts are even predicting
appreciably higher price rises than those of last year. Aside from
the tight market conditions, these predictions are based on the
surge in world steel prices in 2004, the depreciation of the U.S.
dollar and the major investments made by mine producers in an
effort to capture the increased demand.

The three Québec–Labrador iron ore companies are expected to
produce at full capacity in 2005. The pressure that China has been
exerting on the iron ore market over the past few years should
lead to a bigger price increase in 2005 versus 2004. If this
happens, the price of iron ore will have gone up by more than 55%
since 2002.

Niobium

In July 2004, following its merger with Sequoia Minerals,
Cambior became the sole owner of the Niobec mine.

The Niobec mine operated at full capacity, producing nearly
3,450 tonnes of niobium. This represents an increase of more than
6% over the 2003 level.

In November, Québec’s Minister of the Environment gave the
BAPE a mandate to conduct an impact assessment on a proposed
niobium mine project in order to determine the potential effects
on surface waters and groundwater in the municipality of Oka.

Base metals

Copper >>
Nickel
>>
Zinc
>>

Copper

Global context

The upswing in global mine production during the second half
of the year was not mirrored fully in refined copper output in
2004, since smelters had to replenish their stocks of concentrate,
which had fallen to low levels. As a result of the small increase
in output, coupled with the significant rise in consumption
largely attributable to the United States and Asian countries, the
deficit of refined copper on the international marketplace
worsened in 2004. Stocks declined sharply and the inventories held
on metal exchanges contracted throughout the year, tumbling to a
year-end level nearly 85% below that for 2003 and the lowest level
posted since the late 1980s.

Supported by robust market fundamentals, the price of copper
soared in 2004, with prices also being buoyed by investment fund
interest in base metals. The average annual cash price on the
London Metal Exchange (LME) shot up by about 60% compared to 2003,
rising to US$1.30/lb, the highest level since 1995. The price of
copper ended the year on a high note, at US$1.49/lb. Given the
major deficit in the global marketplace and the low copper
inventories, the price of this metal was very volatile during the
year, reacting to news about the Chinese economy, potential
production shutdowns and the performance of the US dollar.

The concentrate supply constraints affecting smelters
gradually eased up in 2004. After a difficult start to the year,
treatment and refining charges rose substantially during the
second part of the year. Furthermore, information available at
year-end 2004 appears to show that the charges set out in annual
contracts will double in 2005.

Situation in Québec

The Horne smelter’s 2004 output was slightly higher than the
level forecast at the start of the year (145,000 tonnes). The
appreciable increase in revenues derived from processing fees may
provide the impetus for stepped-up production at the Horne smelter
in 2005.

The Louvicourt mine, the main copper producing mine in Québec
in 2004, will cease operating in summer 2005.

In November, Campbell Resources became the sole shareholder of
Corporation Copper Rand (CCR). It expects to begin commercial
production at the Copper Rand 5000 copper and gold mine in the
first quarter of 2005. The mine has been in a pre-production phase
since November 2004.

Campbell Resources continued exploration work at its Corner
Bay copper deposit near Chibougamau, and a ramp is to be driven in
2005.

Outlook for 2005

Although consumption of refined copper should stay firm in
China, Western countries will cut back on their consumption,
particularly the United States, leading to a drop in the global
rate of expansion. The increase in mine production will have more
of an impact on the supply of refined copper in 2005, since
smelters have already moved to replenish their stocks of
concentrate. As a result, the refined copper market should
stabilize gradually during the year, bringing about a significant
reduction in the deficit situation for the year as a whole. Copper
prices will continue to benefit from fairly tight market
conditions, in a context characterized by record low inventories
on metal exchanges. Analysts believe that the average annual price
of copper will remain high in 2005, but most of them foresee a
slight decrease from the 2004 level.

Nickel

Global context

In 2004, world consumption of primary nickel continued to be
buoyed by the growth in stainless steel production, which accounts
for nearly two-thirds of consumption, as well as by an upturn in
other nickel uses. The rise in consumption was not as strong as
forecast at the start of the year, because of the high nickel
prices, which also affected supply. The high price resulted in:

Greater availability of recycled stainless steel;

Selling of stockpiles of nickel and stainless steel,
particularly in China;

A substitution effect from the stepped-up production of
classes of stainless steel that contain less nickel.

The international market for primary
nickel continued to be characterized by tight conditions in 2004,
although predictions about shortfalls were generally revised
downward over the course of the year.

With the tight market situation and
low stocks on the LME, nickel prices remained true to their
reputation of being highly volatile, in 2004. The price fluctuated
between US$8.06/lb, posted on January 6, and US$4.78/lb, posted on
May 18, ending the year at US$6.90/lb, compared to US$7.55/lb at
year-end 2003. Although the price peaked early in the year, a
number of analysts said that it was higher than warranted by the
market fundamentals at that time, owing to speculative buying.
Nickel prices fell sharply in the first few months of the year,
before edging up again and sustaining their high overall level for
the year. The average annual cash price for nickel on the London
Metal Exchange (LME) rose from US$4.37/lb to US$6.27/lb, an
increase of more than 40% and the highest level since 1988. Nickel
prices were also buoyed by investment fund interest in base
metals, which was stimulated by the weak US dollar.

Situation in Québec

The Raglan mine, on the Ungava Peninsula, is the only nickel
producer in Québec. In 2004, its output totalled 26,552 tonnes of
nickel, up 5.7% over 2003. Research is continuing with the aim of
boosting production by almost 40% within the next few years.

Outlook for 2005

Global consumption of primary nickel should expand at a faster
rate in 2005, particularly since China appears to have stopped
selling off stockpiles. International stainless steel production
is expected to continue its upward trend. Inco will begin
production at its Voisey’s Bay nickel deposit in Labrador. Nickel
consumption will likely be constrained again this year by tight
supply conditions. The world market should therefore be close to
equilibrium or show a small shortfall.

The nickel market will continue to be buoyed by its relatively
solid fundamentals. With low stocks on the LME, the average annual
nickel price is likely to be high in 2005, although most analysts
are predicting a slight drop from the 2004 level. Factors such as
the recycled stainless steel supply and substitutions could always
come into play and change the picture, as they did last
year.

In 2005, the Raglan mine expects to produce 20,700 tonnes of
nickel, or 25% less than a year earlier, owing to a planned
shutdown at the processing plant in order to make changes to the
grinding circuit. In 2006, annual nickel production should
decrease to 25 Kt.

Zinc

Global context

Global production from zinc mines
grew only slightly in 2004, and the Western world’s output
actually declined, slowing the production of refined zinc. The
Western market also had to cope with a sharp drop in China’s
exports of refined zinc, as this country may have become a net
importer. Consumption grew at a high rate, once again bolstered by
Chinese demand, but also by the significant upturn in Western
demand, particularly in the United States. For the first time
since 1999, the global refined zinc market moved into a deficit
position. Stocks on the LME nonetheless remained high owing to the
influx of unreported stocks over the course of the
year.

The average annual cash price of
zinc on the London Metal Exchange (LME) rose a little more than
25% from the 2003 level, to US 47.5¢/lb, the highest level since
2000. The price of zinc nonetheless increased at a slower rate
than several other base metals, on account of the high zinc
inventories. The price rose substantially at year-end, however, as
a result of the improved market fundamentals, including a steady
decline in stocks listed on the LME during the last quarter. The
price ended the year at US 57.6¢/lb, its high point of the year.
Zinc prices also benefited from investment fund interest in base
metals.

The concentrate supply problem that
smelters faced persisted in 2004, and for the third consecutive
year there was a drop in treatment charges set out in annual
contracts. The year-end forecasts also point to a further decrease
in these charges in 2005. Smelters were nonetheless able to take
advantage of the high zinc prices in 2004, thanks to price
participation escalator. This should also happen in 2005 since a
new price increase is foreseen.

Situation in Québec

Zinc shipments from mines rose nearly 2% in 2004 from about
253,000 tonnes to 257,000 tonnes. This small upturn is due mainly
to the higher zinc output at the LaRonde mine.

The CEZinc refinery in Salaberry-de-Valleyfield operated at
full capacity in 2004, producing nearly 275,000 tonnes of zinc
metal. The outlook for 2005 is equally promising, given the higher
prices and the low supply situation forecast for the zinc
market.

The Bell-Allard mine, which accounted for 35% of the zinc
produced in Québec in 2004, ceased operating in October of the
same year. At the Bouchard-Hébert mine, which contributed 20% of
the zinc produced in 2004, operations are slated to end in spring
2005.

In July, Noranda decided to put off development of the
Perseverance project located a few kilometres southwest of
Matagami, because of the low zinc price (US$0.44/lb). No date was
given for the resumption of operations, and the start-up of
production is now deferred to at least 2007.

Outlook for 2005

In 2005, global consumption of refined zinc should continue to
increase, but at a more moderate rate than last year. Chinese
demand is expected to remain high. However, since production is
expected to expand slowly due to concentrates being in short
supply, the world refined zinc market should continue to exhibit a
deficit. In addition, Chinese exports may keep moving downward in
2005, and some analysts are even suggesting that China will be a
net importer. The buoyancy of the market fundamentals for zinc
should allow the average annual price to rise again in 2005,
although more modestly than last year.

Industrial Minerals in 2004

Limestone >>
Chrysotile
>>
Dolomite
>>
Graphite
>>
Ilmenite
>>
Mica
>>
Stone
>>
Brine
>>
Salt
>>
Silica
>>
Steatite
>>
Peat
moss >>

Limestone

In 2004, Graymont announced major
investments at its Bedford and Marbleton plants. At Bedford, $10
million will be invested to increase the hourly production rate of
quicklime from 400 to 600 metric tonnes. The increase in price of
natural gas over the past few years has forced Graymont to convert
one of its two furnaces, which have been shut down for a year, to
another source of energy. In 2005, Graymont’s production should be
comparable to that of 2004.

The demand for limestone products,
mainly cement, should increase sufficiently to maintain an upward
pressure on prices.

Chrysotile

Chrysotile shipments increased
slightly in volume (about 2.5%), thanks mainly to strong growth in
the Asian demand for chrysotile-based building materials. However,
strong appreciation of the Canadian currency compared to the
American dollar and the competition Quebec mines face on
international markets from other producers have led to a 15%
decrease in the price of fiber compared to 2003.

During 2004, the Jeffrey Mine
operated intermittently and produced about 50,000 tonnes. On
December 21, the Superior Court approved a settlement accepted in
the autumn by shareholders and creditors.

LAB Chrysotile announced the
suspension, for an indefinite period, of activities at the Lac
d’Amiante mine starting in November, 2004. The company’s entire
production will come from the Bell underground mine.

Several scientific articles
published in 2004 confirmed that chrysotile fiber has a very low
toxicity and that products containing chrysotile are safe when the
fiber is encapsulated. Two studies carried out in the United
Stated and the United Kingdom have for example demonstrated that
over the last 100 years, workers involved in the fabrication,
installation, maintenance, and removal of friction and
fiber-cement products have not suffered from diseases associated
with exposure to this fiber.

Dolomite

The Dolomex plant at
Portage-du-Fort, acquired by Cambior at the beginning of 2004,
closed in October of the same year. Dismantling of the plant and
site restoration should be completed by the summer of 2005.

Graphite

In 2004, the Lac-des-Îles mine near
Mont-Laurier maintained production comparable to the level in
2003. An intensive program to develop a new pit has been
undertaken.

The production of exfoliated
graphite at the Timcal plant in Terrebonne was similar to that in
2003. Timcal has started using concentrate from its Lac-des-Îles
plant as part of the feed required for its Terrebonne plant. The
remainder of the feed comes from China.

Ilmenite

In January, QIT-Fer et Titane
announced a project of about $500 million to modernize its
metallurgical complex in Sorel. With this investment, the annual
production of enriched slag (UGS) will increase from 250,000 to
325,000 tonnes. However, this should have little impact on the
production level at the Lac Tio Mine at
Havre-Saint-Pierre.

Mica

In 2004, Mica Suzorite produced more
than 160,000 tonnes of ore at its Bédard mine near Parent. This
amount should be sufficient to feed the Boucherville treatment
plan for the next four years. As the automobile sector, which
accounts for about 60% of mica production, is anticipated to
decline in 2005, demand for mica could be lower in 2005.

Stone

The production of stone and building
materials was similar to the level in 2003.

Glendyne, the world’s second largest
producer of natural slate, plans to increase its production from
20,000 to 40,000 tonnes in the next few years. The company plans
to develop byproducts from waste (for concrete, roofing tar,
paints, etc.) as well as new markets in landscaping and slate
flooring.

Brine

Junex began production at two new
brine wells in the Bécancour area. Daily production from these two
wells was 30,000 liters. Including these two new wells, Junex had
eight brine wells in production in 2004. In addition, the company
is about to start production at its primary transformation pilot
plant where natural brine will be converted into more concentrated
brine (33% dissolved salts instead of the current 24%).

Salt

Mines Seleine, property of Rohm and
Haas of Philadelphia, maintained its Québec production of about
1.25 Mt of sodium chloride (NaCl). The salt produced is used
mainly in the de-icing of Québec’s roads.

Silica

Exploration Québec/Labrador Inc.
extracted a 13,000-tonne sample of silica from its Lac Daviault
quartzite deposit, near Fermont, to supply a Thetford Mines
customer. In 2005, production of silica from the quartz quarry
should double, reaching more than 20,000 tonnes. The company
expects to be able to invest nearly $2 million and thus be able to
supply other markets (silicon metal, silica glass, and high
quality glass).

Unimin Canada Inc. is Canada’s
largest silica producer. The company has two deposits in
production: a quartzite deposit at Saint-Donat-de-Montcalm and a
siliceous sandstone deposit at Saint-Canut. It also operates
silica sand production plants at both quarries. Production in 2004
was similar to that in 2003. Markets should remain stable in
2005.

Steatite

In October 2004, Les Pierres
Stéatite Inc. closed its dimension stone plant in the
Saint-Pierre-de-Broughton area and moved it to the 7th
Concession road in East-Broughton, close to the quarry. The
company specializes in the production of blocks for sculpting,
refractory stone for stoves, and monumental stone. Production
slowed slightly in 2004 compared to 2003. The company hopes to
develop the European market in order to return to its 2002
production level.

Peat moss

Peat moss production declined
severely in 2004, due mainly to a rainy summer that made
harvesting very difficult. However, the volume of shipments and
the value of sales in 2004 increased by 12 and 26%, respectively,
compared to 2003.

In March 2004, Premier Tech Ltd.
opened a commercial office in Mexico in order to demonstrate the
advantages of using peat moss in the production of forest plants.
Also, Premier Tech Environnement recently received a second
favorable notice from the Secrétariat de la Commission des
avis techniques français for its peat moss filter process
Ecoflo.

Mining investments, financing and taxation in 2004

The mining industry is a sector of the economy
that makes substantial yearly investments into mine complexes in
order to develop known deposits and continue mine production.

In addition, investments are also made towards the
exploration and development of new deposits to replenish ore
reserves.

Exploration and deposit appraisal activities

The 2004 year was the most active for mining
exploration in Québec since the end of the 1980’s. According to
preliminary data, exploration and development expenditures reached
204 million dollars, representing an increase of 70 million (52%)
compared to 2003 and the fourth consecutive annual increase. The 204
million dollar amount equals 4.1% of the worldwide exploration
budget, which totaled 3.8 billion dollars US in 2004 according to
the Metals Economics Group. This puts Québec in 6th place
when compared to a list of the most explored countries in the world
for 2004.

Intense exploration for the following commodities
was the reason behind Québec’s strong upswing in expenditures:

precious metals – an increase of 41 million (61%), reaching
110 million dollars;

base metals – an increase of 9 million (46%), reaching 61
million dollars;

diamonds – an increase of 9 million (48%), reaching 27 million
dollars.

Sources:

MRNF, Secteur des mines, Direction du
développement minéral, Service de l’imposition et des données
minières (for data related to Québec);
Metals Economics
Group (for worldwide data).

Note:

2004P refers to preliminary data.
2005CI
means companies’ intentions for 2005.

A detailed description of many of Québec’s
exploration and development projects can be found in the MRNF Report
on mineral exploration activities, or by accessing the 2004 link
from the Hot Spots web page. A number of projects worth mentioning
are summarized below.

Gold in Northwestern Québec

Alexis Minerals Corporation and Noranda intersected auriferous
veins that assayed 3.19 g/t over 15 metres while drilling their
Noralex property. The property lies 10 km northwest of the Doyon
and Mouska mines.

Agnico-Eagle Mines began rehabilitation work on the mining
infrastructure at its Goldex property near Val-d’Or. Approximately
10 million dollars will be invested to improve the degree of
confidence in its probable reserve estimate of 21.77 million
tonnes at 2.4 g/t gold.

At its Croinor property, South Malartic Exploration recovered
1,981 ounces of gold during a bulk sampling of 20,000 tonnes that
was completed in February. The company also announced that it had
reached an agreement with the Camflo mill to process 65,000 tonnes
of ore from July to December 2004.

To the east of Val-d’Or, drilling by Alexis Minerals
Corporation on the Hogg showing – part of the company’s Cadillac
Group project – intersected a skarn-type mineralized zone yielding
values of 21.2 g/t gold and 0.56% copper over 3.8 metres.

North of the Selbaie mine, International Taurus Resources and
Fairstar Explorations recovered 3,428 ounces of gold from an 8,300
tonne bulk sample at the Fenelon deposit. An estimate of measured
(4,002 tonnes at 18.36 g/t) and indicated resources (52,255 tonnes
at 19.71 g/t) was announced for the central zone.

In the central part of the Urban-Barry belt, 120 km east of
Lebel-sur-Quévillon, Noront Resources conducted a drilling program
on its Windfall property. Several holes intersected pyritic zones
containing significant gold grades, including 8.55 g/t gold over
13.4 metres.

Copper, zinc and gold in Northwestern Québec

On October 1st, Campbell Resources completed almost
9,000 m of definition drilling at the Copper Rand mine in
Chibougamau. Extraction of the copper-gold ore began in November
and commercial production should begin in January 2005.

In the Matagami region, drilling by Noranda intersected
massive and semi-massive sulfides over 6.9 metres at a depth of
465 metres. The new showing, named “Renaissance”, is located seven
kilometres southeast of the company’s concentration mill.

West of Rouyn-Noranda, partners Noranda and Alexis Minerals
Corporation revealed an impressive intersection on the Lac
Montbray property: 5.16 metres at 5.61% copper, 1.70% zinc, 0.34
g/t gold and 17.6 g/t silver. The zone was reached at a vertical
depth of 110 m.

Gold, zinc and diamonds in the James Bay territory

In the Near North, close to the Opinaca reservoir, Virginia
Gold Mines defined a rich gold-bearing system using surface
fieldwork and drilling. The zone extends over a lateral distance
of approximately 300 metres and a depth of more than 225 m. The
project, known as “Eléonore”, consists of two main zones: Roberto
(18.85 g/t gold over 16 m) and Roberto Est (4.05 g/t gold over 17
m). This new, strongly auriferous gold environment has generated
enormous interest, leading to the acquisition of a large number of
claims in the area.

In the La Grande greenstone belt, Virginia Gold Mines and its
partner Noranda announced the discovery of volcanogenic massive
sulfide horizons on the Coulon property:

the DOM zone (9.94% zinc, 2.12% lead, 0.73% copper and 96.38
g/t silver over 19.5 m);

and the DOM NORD zone (12.65% zinc, 1.54% lead, 1.36%
copper, 125.31 g/t silver and 0.3 g/t gold over 4.7
m).

Ashton Mining of Canada and SOQUEM invested approximately 18
million dollars north of the Otish Mountains to conduct a bulk
sampling program comprising 635 tonnes of kimberlitic rocks
collected from the Renard cluster. The planned target is 300 to
400 carats in order to properly evaluate the diamond value. A
415-tonne bulk sample collected in 2004 from drill core and
reverse circulation drilling yielded 282 carats of diamonds,
including 12 stones weighing more than one carat. The
processing of a 3.87-tonne sample of float from the Lynx property
also yielded an estimated diamond content of 120 carats per 100
tonnes.

Majescor Resources confirmed the discovery of several
kimberlite blocks up to 50 cm wide on its Portage property.
Thirty-two diamonds larger than 0.075 mm were recovered from a
138-kg sample collected from the float material.

Nickel in the Far North

Canadian Royalties continued exploration work at their
Expo-Ungava property, 15 km south of the Raglan mine, which has
been in operation since 1998. The company announced revised
estimates of indicated resources at its Mesamax deposit (1.84
million tonnes at 1.9% nickel, 2.3% copper, 5.2 g/t platinum and
palladium), and a preliminary estimate for inferred resources at
its Mequillon deposit (1.4 million tonnes at 0.7% nickel, 0.9%
copper, 2.7 g/t platinum and palladium). In addition, Canadian
Royalties discovered another high grade surface showing near
Mesamax that grades 2.25% nickel, 5.70% copper, and 10.01 g/t
platinum and palladium over 56.6 m.

Goldbrook Ventures also reported the discovery of high grade
Ni-Cu-Pt-Pd showings on its Bélanger property in the western part
of the Cape Smith Belt. A drill hole returned average grades of
1.35% nickel, 0.61% copper and 2.88 g/t platinum and palladium
over an interval of 49.35 metres. Further west, Knight Resources
and Anglo American Exploration (Canada) announced several
interesting intersections, including 24.5 metres at 1.71% nickel,
0.8% copper and 1.33 g/t platinum and palladium.

Further south and between the 55th and
56th parallels, Virginia Gold Mines and BHP-Billiton
completed a drilling program of almost 1 million dollars at the
Gayot project.

Other projects

The 2004 year also witnessed renewed interest for exploration
in other regions or for new substances, including:

uranium, notably in the Caniapiscau reservoir region;

copper and nickel in the Grenville Province, on the
Côte-Nord (North Shore) and in Lac-Saint-Jean;

titanium dioxide in the Grenville Province north of
Forestville on the Côte-Nord (North Shore);

copper associated with iron oxide-copper-gold
mineralizations in the Gaspé region.

Stone and industrial minerals

NAMCA successfully continued their development work at two
architectural stone deposits. Located at Maria and Saint-Armand,
the deposits consist of rosy violet limestone breccia and whitish
grey calcilutite respectively.

Junex began drilling two new brine wells at Bécancour. Once in
production, these wells will allow the company to increase its
daily production capacity of natural brine.

Finally, exploration for graphite continues in some areas of
the Côte-Nord region, and limestone that may be of interest for
cement manufacturing has been identified in the Percé area of the
Gaspé region.

Financing of mineral exploration activities

Funds raised in the Québec capital market by
mineral exploration companies are used to carry out numerous
exploration and development projects in the province. This financing
is in the form of common shares, flow-through shares or debentures.

During the first nine months of 2004, financing raised from
the Québec capital market for exploration and development projects
totalled $47.1 million, compared to the $36.4 million raised
during the corresponding period of 2003. Mineral exploration
companies plan to use 34% of this funding for projects in
Québec.

A total of $3 million in flow-through shares were purchased
directly by private investors in Québec during the first nine
months of 2004. According to information filed with the
Autorité des marchés financiers during the final months
of the year, the proceeds of flow-through share offerings to
Québec investors should total between $20 million and $25 million
in 2004.

To this amount must be added the funds raised by flow-through
limited partnerships across the country (which were especially
active in 2004) from Québec private investors, a portion of which
goes to Québec in the form of flow-through investments in mineral
exploration companies. These limited partnerships are expected to
invest between $20 million and $25 million in the flow-through
share offerings of mineral exploration companies in
Québec.

Sodemex and Sodemex II made equity investments amounting to
nearly $4 million in 22 exploration companies, with roughly
85% of this amount being destined for projects in Québec.

The Solidarity Fund QFL, including the regional funds of
Abitibi-Témiscamingue, Nord-du-Québec and Côte-Nord, invested $2.2
million in the capital stock and debentures of 10 exploration
companies.

The Diversification of Exploration Investment
Partnership (SIDEX), a partnership dedicated to the
diversification of exploration investment, signed more than $6
million in investment agreements with 19 exploration companies in
the first nine months of 2004.

Flow-through and non-flow-through financing sought outside
Québec by exploration companies operating in Québec should reach
levels comparable to or higher than those seen in 2003.

Securities regulation

The price outlook for the key mineral commodities
and the tax incentives provided in Québec are the main factors that
explain the high level of financing raised in Québec for mineral
exploration. Changes in the securities regulation context in 2004
likewise facilitated access to funds for a number of companies.

Last spring, the Autorité des marchés financiers
announced that it would exempt companies from the provisions of
Québec Policy Statement Q-4 dealing with the distribution of
securities of mining exploration and development companies
operating in the primary sector. It also announced that, with a
view to harmonizing procedures with other jurisdictions in Canada,
it would in future grant a discretionary exemption for any
financing raised from a person who qualify as accredited
investors, as defined in Multilateral Instrument 45-103,
Capital Raising Exemption.

The work to simplify the securities regulation system and
harmonize the regulations will continue in 2005. One of the
changes envisaged is a passport model for securities regulation
that would give issuers access to the capital markets of all
participating provinces and territories through the securities
regulator in their primary jurisdiction. To find out more, visit
the Web site of the Autorité des marchés financiers.

Mining taxation in 2004

Tax credit for resources

Budget Speech on March 30, 2004: the gouvernement du Québec
announced an improvement in the tax credit for resources
(refundable portion) that applies to corporations that develop no
mineral resource.

The overall 45% credit to which eligible mining corporations
can be entitled is distributed as follows:

Companies that are not mining
a
mineral resource

Other
companies

Refundable
portion

Non-
refundable
portion

Total

Refundable
portion

Non-
refundable
portion

Total

Expenses relating to
mineral resources

Near and Far
North

Elsewhere in Quéec

38.75%

30%

6.25%

15%

45%

45%

18.75%

15%

26.25%

30%

45%

45%

Expenses relating to natural resources
(cut
stone)

15%

n.a.

15%

15%

n.a..

15%

This credit is taxable under the Québec
Taxation Act, the federal Income Tax Act and the
Mining Duties Act.

The taxation of the credit applies to eligible expenses
incurred after June 12, 2003.

Flow-through share system

The permanency of the system was announced during the Speech
of March 30, 2004.

Additional deductions of 10.42% and 20.83% that could
previously be claimed by individual investors have been increased
to 25% each.

Overall deduction can attain 150%.

For flow-through shares issued after the Budget
Speech:

deductions regarding issue expenses of flow-through shares can
be transferred to an investor;

the additional capital gains exemption is available.

Federal Tax Reform

As announced in the 2003 federal budget, the new
taxation system for resource income is being gradually implemented
over a five-year period starting in 2003. It includes the following
elements:

the introduction of an income tax deduction for crown
royalties and mining taxes;

the elimination of the 25% resource allowance;

a reduction in the general corporate tax rate on resource
income from 28% to 21%;

a 10% tax credit for mineral exploration expenditures. The
credit will be granted to corporations that directly incur
qualifying exploration expenditures for the following minerals:
diamonds, base metals, precious metals and industrial minerals
that, through refining, become base metals or precious metals.

The mining environment in 2004

Environmental regulations

In November, the Ministère de l’Environnement (MENV)
tabled Québec’s Sustainable Development Plan for Québec, which
allows for the creation of a “Green Fund”, the appointment of a
sustainable development commissioner and the adoption of an
accountability mechanism. The government plan also proposes an
amendment to the Québec Charter of Human Rights and Freedoms to
create a new right, the right to live in a healthy environment.
The Ministère des Ressources naturelles et de la Faune
(MRNF) will develop a plan of action that conforms to the strategy
and each new mining project will be assessed in accordance with
its new approach. Public consultation is planned for winter of
2005.

In June, the government adopted the 2004-2007 Biological
Diversity Strategy and Action Plan for Québec. The Department will
participate by promising to institute, by 2007, an intervention
and rehabilitation program for abandoned tailing storage
sites.

Bill 44 was adopted in December of 2004. Under this law, the
Ministère de l’Environnement is authorized to demand
environmental information from businesses and bill them for
services rendered. In a parliamentary commission, Minister Mulcair
reassured the mining industry by declaring that mine operators
will not be subjected to double-billing, having already been
required to submit to the requirements of the Industrial Waste
Reduction Program (Programme de réduction des rejets
industriels: PRRI).

The Kyoto Protocol came into effect on February 16, 2005
following its official ratification by Russia in 2004. According
to the agreement, Canada will aim to significantly reduce its
greenhouse gas emissions during the period 2008-2012. The mining
industry is among the major greenhouse gas emitters and its
representatives are negotiating an agreement with the federal
government.

In the end, chrysotile was not included in the list of
dangerous products submitted to the Rotterdam Convention.
According to this treaty, exporting a listed chemical product
would not be permitted without the knowledge and consent of the
country importing the substance.

On November 24th, the Ministère de
l’Environnement adopted by decree the Règlement sur les
redevances exigibles pour l’élimination des matières résiduelles
et des sols contaminés. The objective of this regulation is
to stipulate the amounts payable relating to the disposal of
residual materials and contaminated soils at disposal sites. For
the mining industry, these new measures will affect the cost
related to the disposal of residual material, especially at the
rehabilitation of contaminated soils at mine closure.

On December 2nd, the MRNFP – in cooperation with
the Ministère de l’Environnement (MENV) – began to revise
the guidelines for mine site rehabilitation and the MRNFP-MENV
memorandum of understanding. Although the last modifications to
the rehabilitation guide date back to 1997, a number of
legislative changes have been brought into effect since then,
notably by the MENV, thereby necessitating an update.

A plan to modify the Regulations respecting mineral
substances other than petroleum, natural gas and brine was
submitted to the Ministère du Conseil exécutif for
tabling during a session of the Cabinet. With regards to mine site
rehabilitation, the proposed modifications will include the
removal of a provisional measure that was applicable during the
two years prior to March 1995 – the date at which regulations came
into effect. The plan also proposes to remove a measure that
allows companies to carry over, from one year to the next,
payments towards the financial guarantee.

Rehabilitation

In 2004, the Department invested nearly $320,000 towards
environmental monitoring, maintenance and follow-up of mine sites
transferred back to the State.

An action plan for the rehabilitation of abandoned mine sites
in Québec is currently being developed. The cost of this work is
estimated at 75 million dollars. Various measures are currently
being examined that would ensure adequate financing for this work,
which may be spread over 15 years.

The clean up of the Manitou site began in 2004 once the
Department released some of the buildings following a call for
tenders. The Department is analyzing the collected data and should
begin preparing the rehabilitation master plan in 2005.

On November 1st, the Department accepted the
closure of the East Malartic mine site following an agreement with
the trustee of McWatters Mining Inc. The Department ensures the
maintenance and security of the site and buildings (processing
plant and service structures) until a new buyer is able to
recommence mining activities or undertake demolition work.

The rehabilitation and security work that began in 2003 at
mine sites near Schefferville is now complete in accordance with
the agreement between the Department and the IOC. The completion
of this work means that the IOC was released of its environmental
obligations as defined by the Mining Act.

Research and Development in 2004

In 2004, the Ministère des Ressources naturelles de la Faune
et des Parcs (MRNFP) gave $200,000 dollars to the
CRSNG-Polytechnique-UQAT Chair in the Environmental Management of
Mining Wastes. This sum completes the Department’s $400,000
commitment towards the first phase (2001-2006) of the Chair. The
Department also participates in the scientific and steering
committees. Steps towards renewing the Chair for a five-year
period are already underway.

The Department continued to be involved with the Mine
Environment Neutral Drainage (MEND) research program and
technology transfer. A new international organization – the
Partnership for Acid Drainage Remediation in Europe (PARDE) – has
joined MEND in the search for solutions to acid mine drainage. In
2004, the research budget is 125 000 $.

The Department was presented with a major research report that
establishes priorities for mining-related research (excluding the
subject of ore treatment) over the next several years. The authors
of the report, financed in part by the Société de recherche et
de développement minier (R&D committee of the Québec
Mining Association; SOREDEM) and the Department, recommended that
massive investments be injected into research in order to sustain
the development of Canada’s mining industry. The amount needed for
Québec would total annually more than 15 million dollars.

In 2003, the University of Québec in Abitibi-Témiscamingue
(UQAT) and Télébec Mobilité created the Laboratoire de
recherche sur les communications souterraines (a research
laboratory specializing in subterranean telecommunications; LRCS)
with the aim of producing a versatile underground communications
system that will improve the safety of miners. In December 2004,
Télébec announced that it will invest one million dollars to
finance another three years of the project.

Nichromet and LAB Chrysotile announced the construction of a
pilot plant for the extraction of nickel metal and magnesium
by-products from mine residues. At a cost of 7 million dollars,
the plant will create 25 jobs for two years. If the results are
conclusive, the project could advance to the commercial stage with
the construction of a plant worth 100 million dollars that would
create approximately 300 jobs and produce 10,000 tonnes each of
nickel and magnesium by-products. The main advantages of this
hydrometallurgical process include the absence of liquid effluents
and the availability of raw material. The region’s resources could
provide 1.5 million tonnes of nickel – enough for 150 years of
production.

COREM is involved in 24 precompetitive research projects. In
addition, 25 other projects are at the preliminary research stage
to assess their potential. Thanks to ten completed projects, COREM
now offers products that can be installed in its members’ plants.
In 2005, the organization will develop their business plan for the
2006-2008 period. Due to the success of its research in the field
of iron, COREM succeeded in recruiting Corus, a major company
based in Great Britain that boasts nearly 50,000 employees around
the world. Corus, formerly known as British Steel, is currently
the most important steel producer in England.

CONSOREM, the Mineral Exploration Research Consortium is an
applied research organization dedicated to mineral exploration
technologies in Québec. It represents a link between various
mineral industry players from companies, the government and
universities. CONSOREM’s research projects revolve around three
main themes:

hydrothermal alteration signatures;

data integration for mineral exploration;

opportunity studies for specific types of mineralization.

In 2004, the Department
continued its collaboration with CONSOREM through financial
support ($90,000) and active participation on the research
steering committee and the board of directors.

Strategic Activities in 2004

First Nations

By signing the Peace of the Braves Agreement with the Cree on
February 7, 2002 and the Sanarrutik Agreement with the Inuit on
April 9, 2002, Québec has pledged to encourage and facilitate the
signing of agreements between mining promoters and the Aboriginal
peoples.

Three native mineral exploration funds, to which the
Department granted $650,000 in financial support during the
2004-2005 fiscal year, are currently active:

the Nunavik Mineral Exploration Fund, active since 1998;

the Nitassinan Innu Mining Fund, active since March 2002;

the Cree Mineral Exploration Board, created in March
2002.

In 2004, 75 Crees (25% of the labor force) worked at the
Troilus gold mine north of Chibougamau and 65 Inuit (14% of the
labor force) worked at the Raglan nickel mine in Nunavik.
Moreover, more than 50 Cree and Inuit prospectors worked for
mining companies exploring in the James Bay and Nunavik areas.

Québec’s Strategy for Protected Areas

The Department contributes to the creation of protected areas,
at the same time as it looks after the interests of the mining
sector.

The area of land set aside in protected areas continued to
increase: from 2.9% of the landmass in 1999
(48,000 km2) to 5.4% in 2004
(90,016 km2). Québec’s strategy concerning
protected areas is to reach 8% of its surface area, that is,
133,000 km2.

Work continued to identify new territories of interest in the
natural provinces of the Abitibi and James Bay Lowlands (F), the
central Laurentians (D), and the Mistassini Highlands (G).

In 2004, a strategy aimed at protecting exceptional geological
sites was developed, and the population can now propose potential
sites to the Department.

In 2005, work will be carried out in the natural province of
the southern Laurentians (C).

In 2005-2006, the Department will propose legal means to
protect designated exceptional geological sites.

Mining Act

The Act to amend the Mining Act was sanctioned on
December 18, 2003. In addition to modifications to the financial
guarantee, the following measures are among the main changes:

A claim holder may renew claims if they are located within a
4.5 km radius circle of a claim for which there is an excess of
assessment work credits.

Map designation within a staking park is possible under
certain conditions.

Municipalities and intermunicipal boards may obtain an
exclusive lease for exploitation of surface mineral substances
for the construction and maintenance of their road networks.

In the public interest, the granting of mining titles on
certain territories can be temporarily suspended for a maximum
period of six months during the preparation of a ministerial
order concerning, for example, the creation of a protected area.

Committee on the National Diamond Strategy

On July 20, the Steering Committee of the Strategy, composed
of representatives of the provinces and territories and co-chaired
by Québec and the Northwest Territories, presented its report to
the provincial and territorial mines ministers during the Mines
Ministers’ Conference in Iqaluit. The ministers approved the
National Diamond Strategy action plan. The fifteen recommendations
set forth in the action plan are framed around three aspects that
underlie the development of the diamond market in Canada: the
supply of Canadian-sourced diamonds, the demand for diamonds
processed in Canada, and the regulation of the markets. These
three aspects must be taken into account if the diamond industry
is to be developed in a sustainable way.

The provincial and territorial Premiers received the action
plan and approved the National Diamond Strategy at the Council of
the Federation held at Niagara-on-the-lake, from July 28 to 30,
2004. The Premiers mandated the provincial and territorial mines
ministers to continue to plan the implementation of the
Strategy.

Ministers Brendan Bell of the Northwest Territories and Sam
Hamad of Québec made public the action plan of the Strategy on
September 24, 2004. The industry gave it a very favorable welcome.

Strategy for the Accelerated Development of Québec’s Diamond
Potential

Québec’s diamond strategy was announced on June 14, 2004 in
Matane in the presence of the Premier of Québec. This strategy
comprises 14 measures aimed at enhancing exploration, development,
cutting, polishing, and jewelry making.

Copper Plan

In order to facilitate the discovery and development of new
copper deposits in northwestern Québec and to ensure the
availability of feed to the Horne smelter, the government has
until now encouraged mining exploration by renewing and improving
existing fiscal measures and by acquiring geoscientific knowledge
in priority sectors, including those of Rouyn-Noranda and
Matagami.

The Department began the production of mineral potential maps
for base metals for the Abitibi region and the southern part of
the James Bay territory. About 120 regional maps will be launched
at the next Prospectors and Developers Association of Canada
Convention (PDAC). These maps will show many new exploration
targets for copper in Québec.

As an additional measure contributing to the same objectives,
a Copper Plan committee was struck in 2004. It is composed of
representatives of the Québec Mineral Exploration Association, the
Québec Mining Association, Coalition Noranda, SOQUEM, the
Ministère des Ressources naturelles et de la Faune, and the
Ministère du Développement économique, de l’Innovation et de
l’Exportation.

Québec’s Granite Strategy

The Department made particular efforts to encourage the
development of the granite sector:

An advisory board composed mostly of industry
representatives was set up.

A granite section was developed on the Internet website of
the Department.

Inventory surveys were carried out and promotional documents
were published.

Geoscientific Activities at the Department

The Department invested more than $3.5 million in inventory
surveys and geoscientific studies. Work was concentrated in the
most accessible areas and was carried out in response to the need
for increased resources, especially copper, zinc, and gold. The
Department also sought to highlight the mineral potential of new,
poorly known sectors in the extension of the Chibougamau mining
camp, on the North Shore, and in Gaspésie. During the summer of
2004, seven geological surveys and about fifteen thematic studies
were carried out in various areas. The first results were revealed
in November during Québec Exploration 2004.

Québec Exploration 2004

The second edition of Québec Exploration was held from
November 22 to 25. Organized jointly by the Ministère des
Ressources naturelles, de la Faune et des Parcs and the Québec
Mineral Exploration Association, the event attracted nearly
1,200 participants from the mining exploration sector,
geoscientific research organizations, and the business
world.

A colloquium on Québec’s geological heritage was held
immediately following Québec Exploration 2004.

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