Leta Arm Mineralized Corridor

The Leta Arm Mineralized Corridor lies within the Leta Arm Fault Zone ("LAFZ"), and parallel to, the northern extension of the West Bay - Indin Lake Fault Zone; a major regional structure hosting the former producing Giant and Con gold mines to the south (13 million ounces of historic gold production). The LAFZ is a broad structure with a strike length in excess of 10 kilometres that transects the central portion of the Indin Lake Belt, and hosts four historic gold deposits (Diversified, North Inca, Lexindin, and #3) and several gold showings.

2011 Drill Results

Merc drilled 44 holes (11,929 metres) within the leta Arm Corridor at the North Inca, #3, Diversified, and Lexindin deposits.

2011 Drill Highlights:

Gold deposits within the Leta Arm Corridor include:

North Inca Deposit

North Inca consists of several parallel north striking silicified zones of variable widths hosted bymetavolcanic and metasedimentary rocks. Historical (1940's) development was limited to shallow vertical depths, leaving thedeposit open at depth. The en-echelon nature of the vein sets indicates the deposit’s potential to continuealong strike. Winter (Phase I) drilling tested the eastern most mineralized zone (East Zone) situatedwithin metasediments. Five holes drilled from three lake setups returned several high-grade intersectionswith zone widths much wider than previously recognized (see June 15, 2011 news release). Phase IIdrilling targeted near surface mineralization within metavolcanic rock located 150 metres west (WestZone) of the East Zone. Step out holes were successful in extending known mineralized zones laterallyand to depth. The holes confirm the high-grade nature of the mineralization and expand the widths ofthe mineralized zones. In addition, new zones were intersected and known zones extended to depths inexcess of 100 metres. Visible gold was observed in the most northerly step out hole, NI11-10, (assayspending) extending the North Inca mineralized structure over 250 metres northward. North Incacontinues to deliver encouraging results while remaining open in all directions. Drilling to date hasconfirmed its high-grade nature, significant mineralized widths, and the potential to deliver new zonesalong strike and merge with the #3 and Diversified Deposits.

#3 Deposit

The #3 Deposit lies along the Leta Arm Fault Corridor 450 metres south of the Diversified shaft. The North Inca East zone, Diversified, and #3 metasediment-hosted gold deposits may be part of the same mineralized structure as they have similar gold grades, mineralized widths, general morphology, and when viewed in longitudinal section, share the same orientation. Six sectional holes were drilled in Phase II to test the dimensions of the #3 Deposit, a near surface prospect defined by 1940's overburden trenching and limited diamond drilling to a vertical depth of 50 metres. Current drilling confirmed the high-grade nature of the deposit mineralization and extended the deposit to a vertical depth of 200 metres. This represents a significant expansion of this deposit and reaffirms the huge potential present within the Leta Arm Fault Corridor.

Diversified Deposit

The Diversified deposit shares similar characteristics to the North Inca deposit. The deposit's "Main Zone", which lies within metasedimentary rocks, has been traced for 220 metres based upon historical drilling and underground development. Merc’s Phase I drilling has confirmed the high-grade nature of the deposit's mineralization, defined zone widths that significantly exceed those previously reported, and extended the high-grade mineralization to new depths. In Phase II two sectional holes were drilled 120 metres south of previous Phase I drilling. The step-outholes successfully intersected the projected mineralized horizons. All mineralized zones continue to remain open laterally and to depth.

Lexindin Deposit

The Lexindin Deposit is located approximately 1.2 kilometres north of the Diversified shaft. Tensional, en-echelon, quartz veins lying obliquely to branches of the main shear zone make up the mineralized zones at Lexindin. Veins dip steeply north within the 40 metre to 60 metre wide shear zone and openup laterally with increased depth. Exploration drilling has been limited to less than 150 metres vertical depth with historical intersections of 113.80 g/t Au over 3.05 metres, 18.85 g/t Au over 1.53 metres, and 22.97 g/t Au over 2.37 metres. Initial drilling at Lexindin was part of our Phase II program with the goal of establishing mineralized continuity between the various deposits within the Leta Arm Fault Zone.

2011 Prospecting Activities

14 target areas were prospected (mapping and sampling) throughout the Leta Arm Corridor during the summer field season. Results have confirmed the presence of significant gold showings returning assay results from trace to 35.40 g/t gold (outlined in red on the map below).