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BLUE POWER ENERGY CORPORATION

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 11, 2006

AND

MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT

March 13, 2006

57741.v11

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS .......................................................... 1 MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT ..................................................... 3 SOLICITATION OF PROXIES.................................................................................................................................. 3 EXERCISE OF DISCRETION BY PROXIES ........................................................................................................... 3 APPOINTMENT AND REVOCATION OF PROXIES............................................................................................. 3 ADVICE TO BENEFICIAL HOLDERS OF SECURITIES ...................................................................................... 4 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF......................................................................... 4 EXECUTIVE COMPENSATION .............................................................................................................................. 5 Summary Compensation Table ..................................................................................................................... 5 Option/SAR Grants During 2005 Fiscal Year............................................................................................... 5 Aggregated Option/SAR Exercises During 2005 and Financial Year-End Option/SAR Values.................. 5 Compensation of Directors............................................................................................................................ 5 Termination of Employment or Change of Control ...................................................................................... 6 Audit Committee Disclosure ......................................................................................................................... 6 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS .......................... 7 INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS...................................................................... 7 MANAGEMENT CONTRACTS................................................................................................................................ 7 INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS.......................................................... 7 INTERESTS OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON ....................... 8 ELECTION OF DIRECTORS .................................................................................................................................... 9 APPOINTMENT OF AUDITORS............................................................................................................................ 10 SPECIAL BUSINESS – APPROVAL OF THE ACQUISITION OF CHILLY-BIN INC....................................... 10 General ........................................................................................................................................................ 10 The Acquisition........................................................................................................................................... 10 Background to the Acquisition.................................................................................................................... 11 Reasons for the Acquisition ........................................................................................................................ 11 Information About Chilly-Bin..................................................................................................................... 12 The Purchase Agreement ............................................................................................................................ 13 Pro Forma Information About the Corporation Post-Acquisition............................................................... 14 Related Party Transaction ........................................................................................................................... 16 Required Approval ...................................................................................................................................... 16 SPECIAL BUSINESS – APPROVAL OF SHARE CONSOLIDATION ................................................................ 16 SPECIAL BUSINESS – APPROVAL OF CHANGE OF NAME ........................................................................... 17 SPECIAL BUSINESS – APPROVAL OF NEW SHARE OPTION PLAN............................................................. 17 INDICATION OF DIRECTORS AND EXECUTIVE OFFICERS.......................................................................... 19 OTHER BUSINESS.................................................................................................................................................. 19 DESCRIPTION OF THE NEW ALGER PROPERTY............................................................................................. 19 RISK FACTORS ....................................................................................................................................................... 27 ADDITIONAL INFORMATION ............................................................................................................................. 29 APPROVAL .............................................................................................................................................................. 29 APPENDICES Appendix A -- Acquisition Resolution Appendix B -- Consolidation Resolution Appendix C -- Name Change Resolution Appendix D -- Share Option Plan Resolution Appendix E -- Share Option Plan Appendix F -- Audited Financial Statements of Chilly-Bin Inc. Appendix G -- Unaudited Pro Forma Financial Statements of Blue Power Energy Corporation and Chilly-Bin Inc. Appendix H -- Change of Auditor Appendix I -- Audit Committee Terms of Reference Appendix J -- Audited Financial Statements of the Corporation for the fiscal years 2005, 2004, 2003, 2002 and 2001 57741.v11

BLUE POWER ENERGY CORPORATION NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS NOTICE IS HEREBY GIVEN that the annual and special meeting of the shareholders (the "Meeting") of Blue Power Energy Corporation (the "Corporation") will be held on April 11, 2006, at the hour of 10:30 a.m., Toronto time, at the offices of Macleod Dixon LLP, Toronto-Dominion Centre, Canadian Pacific Tower, 100 Wellington Street West, Suite 500, Toronto, Ontario, M5K 1H1 for the following purposes: (1)

to receive the audited financial statements of the Corporation for the years ended May 31, 2005, 2004, 2003, 2002 and 2001 together with the reports of the auditors thereon;

(2)

to elect directors;

(3)

to appoint auditors and to authorize the directors to fix their remuneration;

(4)

to consider and, if deemed advisable, to pass an ordinary resolution, with or without variation, authorizing and approving the acquisition by the Corporation (the "Acquisition") of all of the issued and outstanding shares of Chilly-Bin Inc. ("Chilly-Bin") in exchange for the issuance by the Corporation of one common share in the capital of the Corporation for each common share in the capital of Chilly-Bin;

(5)

to consider and, if deemed advisable, to pass, with or without variation, a special resolution authorizing and approving an amendment to the Corporation's articles of amalgamation to consolidate the issued and outstanding common shares of the Corporation on the basis of one post-consolidation common share for every five pre-consolidation common shares, to take effect following the closing of the Acquisition;

(6)

to consider and, if deemed advisable, to pass, with or without variation, a special resolution authorizing and approving an amendment to the Corporation's articles of amalgamation to change the name of the Corporation from "Blue Power Energy Corporation" to "Cadillac Ventures Inc." or such other name as may be approved by the directors and applicable regulatory authorities, to take effect following the closing of the Acquisition;

(7)

to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution authorizing and approving the adoption of a share option plan; and

(8)

to transact such further and other business as may properly come before the Meeting or any adjournment or adjournments thereof.

Reference is made to the attached Management Information Circular and Proxy Statement (the "Circular"), which describes the matters referred to in items (2) to (7) and includes the text of the resolutions to be passed. Only holders of common shares of record on February 23, 2006 are entitled to notice of and to vote at the Meeting. To the extent any such shareholder transfers the ownership of any of his/her shares after that date and the transferee of those shares establishes that he/she owns such shares and demands not later than 10 days before the Meeting that his/her name be included in the shareholders’ list, such transferee will be entitled to vote such shares at the Meeting. A copy of the Circular and Proxy Form accompany this Notice. As a substantial representation of the shareholders is desired, if you are not able to be present at the Meeting, kindly date, sign and return the Proxy Form accompanying this Notice in the envelope provided for that purpose.

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1

DATED at Toronto, Ontario this 13th day of March, 2006. By Order of the Board of Directors, "Jim Voisin" Jim Voisin President

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BLUE POWER ENERGY CORPORATION 360 Bay Street, Suite 500, Toronto, Ontario, Canada M5H 2V6

MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT SOLICITATION OF PROXIES This Management Information Circular and Proxy Statement (the "Circular") is furnished in connection with the solicitation of proxies by the management of Blue Power Energy Corporation (the "Corporation") for use at the annual and special meeting of shareholders of the Corporation (the "Meeting") to be held at the time and place and for the purposes set forth in the attached Notice of Annual and Special Meeting (the "Notice"). It is anticipated that the solicitation will be by mail primarily, but proxies may also be solicited personally by directors, officers and regular employees of the Corporation. The cost of such solicitation will be borne by the Corporation. The form of proxy forwarded to shareholders of the Corporation with the Notice confers discretionary authority upon the proxy nominees with respect to amendments or variations of matters identified in the Notice or other matters that may properly come before the Meeting. The form of proxy affords the shareholder the opportunity to specify that the shares beneficially owned by him/her shall be voted for or withheld from voting or voted against, if so indicated on the form of proxy, any ballot that may be called for, in accordance with the specifications made by shareholders. EXERCISE OF DISCRETION BY PROXIES Shares represented by properly executed proxies in favour of persons designated in the printed portion of the enclosed form of proxy WILL BE VOTED FOR EACH OF THE MATTERS TO BE VOTED ON BY SHAREHOLDERS AS DESCRIBED IN THIS CIRCULAR OR WITHHELD FROM VOTING OR VOTED AGAINST IF SO INDICATED ON THE FORM OF PROXY. Where shareholders have properly executed proxies in favour of the persons named in the enclosed form of proxy and have not specified in the form of proxy the manner in which the named proxies are required to vote the shares represented thereby, such shares will be voted in favour of the passing of the matters set forth in the Notice. The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice, or other matters which may properly come before the Meeting. At the time of printing this Circular, the management of the Corporation knows of no such amendments, variations or other matters to come before the meeting. APPOINTMENT AND REVOCATION OF PROXIES The persons named in the enclosed form of proxy are directors and/or officers of the Corporation. Each shareholder has the right to appoint a person, who need not be a shareholder of the Corporation, other than the persons named in the enclosed form of proxy, to represent such shareholder at the Meeting or any adjournment thereof. Such right may be exercised by inserting such person’s name in the blank space provided in the enclosed form of proxy or by completing another proper form of proxy. All proxies must be executed by the shareholder or his or her attorney duly authorized in writing or, if the shareholder is a corporation, by an officer or attorney thereof duly authorized. The completed form of proxy must be deposited with Equity Transfer Services Inc., Suite 420, 120 Adelaide St. W., M5H 4C3 (416) 361-0470, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to the time of the Meeting or any adjournment thereof at which the proxy is to be used, or deliver it to the Chair of the Meeting on the day of the Meeting or any adjournment thereof prior to the time of voting. A shareholder who has given a proxy has the power to revoke it as to any matter on which a vote has not already been cast pursuant to the authority conferred by such proxy and may do so either: 57741.v11

3

1.

by delivering another properly executed form of proxy bearing a later date and depositing it as aforesaid;

2.

by depositing an instrument in writing revoking the proxy executed by him or her:

3.

(a)

with Equity Transfer Services Inc. at any time up to and including 10:30 a.m. (Toronto time) on the last business day preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used; or

(b)

with the Chair of the Meeting on the day of the Meeting, prior to the commencement of the Meeting or any adjournment thereof; or

in any other manner permitted by law.

ADVICE TO BENEFICIAL HOLDERS OF SECURITIES Only registered shareholders of the Corporation or the persons they appoint as their proxies are permitted to vote at the Meeting. However, in many cases, Common Shares beneficially owned by a person (a “Non-Registered Holder") are registered in the name of a nominee such as an intermediary (an “Intermediary") that the NonRegistered Holder deals with in respect of the Common Shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans) or a clearing agency (such as The Canadian Depository for Securities Limited) of which the Intermediary is a participant. Generally, Non-Registered Holders who have not waived the right to receive meeting materials will either be given a form of proxy or a request for voting instructions (often called a “proxy authorization form"). In either case, Non-Registered Holders who wish their Common Shares to be voted at the Meeting should carefully follow the instructions of their Intermediary or other nominee, including those regarding when and where the proxy or proxy authorization form is to be delivered. VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF The Corporation's authorized share capital consists of an unlimited number of non-participating, redeemable, voting Class B preference shares, an unlimited number of Class C preference shares (issuable in series) and an unlimited number of common shares ("Common Shares"). On March 13, 2006 there were 40,820,728 Common Shares issued and outstanding. Each Common Share entitles the holder thereof (each a "Shareholder", collectively "Shareholders") to one vote at all meetings of Shareholders. All Shareholders of record on February 23, 2006 are entitled either to attend the Meeting or any adjournment thereof and vote thereat, in person, the Common Shares held by them or, provided a completed and executed proxy shall have been delivered to the Corporation, to attend and vote thereat, by proxy, for the Common Shares held by them. As at March 13, 2006 to the knowledge of the directors and senior officers of the Corporation, the only person, firm or corporation who beneficially owns, directly or indirectly, or exercises control or direction over voting securities of the Corporation carrying more than 10% of the voting rights attaching to any class of voting securities of the Corporation, on a non diluted basis, is as follows: Name and Municipality Of Residence

Christopher C. Dundas Toronto, Ontario 57741.v11

Number of Common Shares

Percentage of Issued and Outstanding Common Shares

5,000,000

12.25%

4

EXECUTIVE COMPENSATION Summary Compensation Table The following table contains information about the compensation paid to, or earned by, Gordon R. Wilton, who was the President of the Corporation and was acting in the capacity of the Corporation’s Chief Executive Officer and Chief Financial Officer during the fiscal year ended May 31, 2005. The Corporation had no executive officers whose salary and bonus exceeded $150,000 during the fiscal year ended May 31, 2005. Annual Compensation

Name and Principal Position

Gordon R. Wilton President & Director

Long Term Compensation Award $ Payouts Securities under Restricted Options / Shares or LTIP(2) SARS(1) Units Payouts (#) (#) ($)

Financial Year-End May 31

Salary ($)

Bonus ($)

Other Annual Comp. ($)

2005(3)

Nil

Nil

Nil

Nil

Nil

Nil

Nil

2004

Nil

Nil

Nil

Nil

Nil

Nil

Nil

2003

Nil

Nil

24,000(4)

Nil

Nil

Nil

Nil

All Other Compensation ($)

(1)

“SAR” means a right, granted by a company as compensation for employment services or office to receive cash or any issue or transfer of securities based wholly or in part on changes in the trading price of publicly traded securities. The Corporation has not granted any SARs.

(2)

“LTIP” means a plan providing compensation intended to motivate performance over a period greater than one financial year. The Corporation does not have an LTIP.

(3)

Mr. Wilton was the President from April 1, 1996 until November 1, 2005, at which time Jim Voisin was appointed President.

(4)

Pursuant to an agreement dated December 15, 1988, as amended, the Corporation paid $2,000 per month in management fees to Northern Mining Properties, a partnership of which Mr. Wilton was a 50% beneficial owner. The agreement was terminated at the end of the fiscal year ended May 31, 2003.

Option/SAR Grants During 2005 Fiscal Year The Corporation did not grant options to Named Executive Officers during the fiscal year ended May 31, 2005. Aggregated Option/SAR Exercises During 2005 and Financial Year-End Option/SAR Values No options were exercised by Named Executive Officers during the fiscal year ended May 31, 2005 and no options were held by Named Executive Officers as at May 31, 2005. The Corporation did not effect any downward pricing of stock options during the fiscal year ended May 31, 2005. Compensation of Directors During the fiscal year ended May 31, 2005, no director was paid any amount as compensation for his directorship.

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Termination of Employment or Change of Control The Corporation has no plan or arrangement in respect of compensation received or that may be received by Named Executive Officers to compensate such officers in the event of the termination of employment (resignation, retirement, change of control) or in the event of a change in responsibilities following a change in control. Audit Committee Disclosure The Corporation’s audit committee is composed of three directors: Maurice Stekel (Chair), Jim Voisin and Neil Novak. Two of the three members of the audit committee (Messrs. Stekel and Novak) may be considered to be independent and all are financially literate (as determined under Multilateral Instrument 52-110 Audit Committees (“MI 52-110”)). Mr. Voisin is President of a consulting company that provides investor relations services and Messrs. Stekel and Novak have acted as directors and/or audit committee members of a number of public issuers in the past and as such each has obtained experience in performing his responsibilities as a member of the Corporation’s audit committee. As well, each of the audit committee members owns his own business and in such capacity has experience in the preparation, analysis and/or evaluation of financial statements generally and an understanding of internal controls and procedures for financial reporting. Given the scope and nature of the Corporation’s business, its financial statements and the accounting issues arising therefrom are relatively uncomplicated. Based on the foregoing, it is the Board’s conclusion that each of the members of the audit committee has an understanding of the accounting principles used by the Corporation to prepare its financial statements, the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and reserves and experience in evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation’s financial statements. The charter of the Corporation’s audit committee is set out in Appendix I to this Circular. The Corporation is considered to be a venture issuer for the purposes of MI 52-110 and as such is exempt from the requirements of Parts 3 (Composition of the Audit Committee) and 5 (Reporting Obligations) of MI 52-110. The following table sets out the aggregate fees billed by the Corporation’s external auditors in each of the last two fiscal years for the category of fees described. 2005 Audit Fees Audit-Related Fees Tax Fees All Other Fees Total

2004

$ 4,000

$ 4,000

-

-

500

500

-

-

$ 4,500

$ 4,500

Since the commencement of the Corporation’s most recently completed financial year, there has not been a recommendation of the audit committee to nominate or compensate an external auditor which was not adopted by the Corporation’s Board of Directors. Since the commencement of the Corporation’s most recently completed financial year, the Corporation has not relied on the exemption in Section 2.4 (De Minimus Non-Audit Services) of MI 52-110, or an exemption from MI 52-110, in whole or in part, granted under Part 8 (Exemptions) of MI 52-110. The audit committee has adopted specific policies and procedures for the engagement of non-audit services as described in “Procedures for Approval of Non-Audit Services” in the Audit Committee’s Charter. 57741.v11

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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS As at May 31, 2005, there were no equity securities authorized for issuance pursuant to equity compensation plans. The Corporation has not granted options or rights to purchase any of its equity securities to any person as compensation. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS None of the directors or executive officers, or their respective associates or affiliates, are or have been indebted to the Corporation or its subsidiaries since the beginning of the last completed financial year of the Corporation. MANAGEMENT CONTRACTS The Corporation was party to a management agreement with Harper Capital Inc., a corporation beneficially owned by Bernice Bregman, the President and director of Harper Capital Inc. Harry Bregman is an officer of Harper Capital Inc. Pursuant to the management agreement, the Corporation paid $2,000 per month in exchange for management and supervisory services. The agreement was terminated on October 25, 2005. During the year ended May 31, 2005, the Corporation was charged the sum of $24,000 as management fees. As at October 25, 2005, the Corporation was indebted to Harper Capital Inc. in the amount of $171,119.14 for unpaid management fees, for funds advanced by Harper Capital Inc. to the Corporation, and for accounts receivable held by Harper Capital Inc. that Harper Capital Inc. had purchased from certain creditors of the Corporation on August 31, 2005 (collectively, the "Debt Amount"). On October 25, 2005, Harper Capital sold the Debt Amount in exchange for an aggregate sale price of $145,000. The Debt Amount was subsequently settled by the Corporation by the issuance of Common Shares to the holders of the Debt Amount. See below under the heading "Interest of Informed Persons In Material Transactions -- The Debt Settlement". INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS No director, executive officer or proposed nominee for election as a director of the Corporation, no person beneficially owning, directly or indirectly, or exercising control or direction over Common Shares carrying more than 10 percent of the voting rights attached to all voting securities of the Corporation, and no associate or affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction since the beginning of the Corporation’s last completed fiscal year or in any proposed transaction which, in either case, has materially affected or will materially affect the Corporation, except for the following. The Debt Settlement On November 1, 2005, the Corporation settled all of its outstanding liabilities, amounting to $171,119, through the issuance of 28,519,855 Common Shares to seven arm's-length creditors (the "Debt Settlement") (representing an effective subscription price of $0.006 per Common Share. The Corporation issued 4,074,265 Common Shares to each of Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin (together, the "Creditors"). Following this transaction, each Creditor held approximately 12.04% of the issued and outstanding Common Shares. In connection with the foregoing transaction, each of the Creditors entered into a pooling agreement with the Corporation, pursuant to which each Creditor deposited all of its shares issued pursuant to the Debt Settlement in escrow for release on the following basis: (a) 50% of the initial number of escrowed Common Shares to be released from time to time within 60 days following the Listing Date at the discretion of the Corporation; and (b) 50% of the initial number of escrowed Common Shares to be released from escrow from time to time within 120 days following the Listing Date at the discretion of the Corporation; where the Listing Date means the date upon which the Common 57741.v11

7

Shares are listed and posted for trading on the TSX Venture Exchange Inc. or any other exchange or trading facility acceptable to the Corporation. Following the Debt Settlement, the Board accepted the resignation of Lawrence Harding appointed Jim Voisin, Neil Novak and Maurice Stekel as directors of the Corporation and appointed Jim Voisin and Gordon Wilton as President and Secretary, respectively. The Offering On December 30, 2005, the Corporation completed a private placement financing under which it issued 8,475,000 flow-through units of the Corporation (the "Units") at a price of $0.02 per Unit for aggregate gross proceeds of $169,500 (the "Offering"). Each Unit comprised one Common Share issued on a flow-through basis pursuant to the Income Tax Act (Canada) and one-third of one Common Share purchase warrant. Each whole Common Share purchase warrant entitles the holder to acquire one Common Share at a price of $0.03 per Common Share until December 30, 2006. Pursuant to the Offering, Neil Novak, a director and "related party" (as defined in Ontario Securities Commission Rule 61-501 ("Rule 61-501")) of the Corporation, purchased 250,000 Units and Norman Brewster, a "related party" of the Corporation, purchased 1,350,000 Units. As a consequence, the participation of Neil Novak and Norman Brewster in the Offering constituted a "related party transaction" that was subject to Rule 61-501. As the Offering included a "flow-through" component and therefore had to close on or before December 31, 2005, the directors of the Corporation made the decision to close the Offering on December 30, 2005, which was less than 21 days following the date of the initial decision of the Board to proceed with the Offering, which was December 30, 2006. The securities issued under the Offering are subject to a four-month hold period, until May 1, 2006. The Corporation relied on the exemptions under subsections 5.5(2) and 5.7(2) of Rule 61-501 to exempt it from obtaining a formal valuation of the Offering and minority shareholder approval for the Offering on the basis that neither the fair market value of the Units or the consideration therefor, insofar as it involves interested parties, exceeded the market capitalization of the Corporation on the date that the Offering was agreed upon. The aggregate participation of Neil Novak and Norman Brewster in the Offering was less than 7% of the market capitalization of the Corporation at the time the Offering was agreed upon. The Acquisition The Corporation has entered into a share purchase agreement dated February 28, 2006 with Alfer Inc., Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin (collectively, the "Vendors") pursuant to which the Corporation has agreed to acquire (the "Acquisition") all of the issued and outstanding common shares of Chilly-Bin Inc. ("Chilly-Bin"), which total 25,000,000, in exchange for 25,000,000 Common Shares. Jim Voisin, a director of the Corporation, is an "informed person" of the Corporation, as defined in National Instrument 51-102. Nominex Ltd. is beneficially owned by Neil Novak, a director and "informed person" of the Corporation, and his wife. Additionally, each of the Vendors, with the exception of Alfer Inc., holds 4,074,265 Common Shares, which is equal to approximately 9.98% of the issued and outstanding Common Shares. As a result, the Corporation considers these Vendors to be informed persons of the Corporation. A detailed description of the Acquisition follows below under the heading "Special Business -- Approval of the Acquisition of Chilly-Bin Inc." INTERESTS OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON No person who has been a director or executive officer of the Corporation at any time since the beginning of its last completed financial year, no proposed nominee for election as a director, and no associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, except, in respect of the Acquisition, the interests of Neil Novak, who, together with his wife, is a beneficial owner of Nominex Ltd., one of the Vendors, and Jim Voisin, one of the Vendors, 57741.v11

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all as more particularly described above under the heading "Interest of Informed Persons in Material Transactions -The Acquisition" and below under the heading "Special Business -- Approval of the Acquisition of Chilly-Bin Inc.". ELECTION OF DIRECTORS The directors of the Corporation are authorized to fix the number of directors on the board of directors of the Corporation (the “Board ") between a minimum of 3 directors and a maximum of 11 directors. The Shareholders will be asked to elect five directors for the ensuing year. The persons named in the enclosed form of proxy intend to vote Common Shares for the election of the nominees whose names are set forth below. Management of the Corporation does not contemplate that any of the nominees will be unable to serve as a director but, if that should occur for any reason prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee in their discretion. Each director elected will hold office until the close of business of the first annual meeting of Shareholders following his election unless his office is earlier vacated in accordance with the bylaws of the Corporation. The names of all of the nominees, their position with the Corporation, their principal occupation or employment during the last five years, the dates upon which they became directors of the Corporation, if applicable, and the number of Common Shares beneficially owned by them, directly or indirectly, or over which control or direction is exercised as of March 13, 2006, are as follows: Name, Position with Corporation and Municipality of Residence

Principal Occupation

Period(s) Served As Director

Shares Held or Over Which Control or Direction is Exercised(1)

Jim Voisin President and director Heidelberg, Ontario

President of Greenstone Consulting Inc., a company that provides investor relations services.

November 1, 2005 to present

4,074,265

Neil Novak, Director Cambridge, Ontario

President of Nominex Ltd. and Billiken Management Services Inc. (both private geological consulting and management companies); President, CEO and director of Spider Resources Inc.

November 1, 2005 to present

250,000(2)

Maurice Stekel, Director Toronto, Ontario

Independent business consultant.

November 1, 2005 to present

Nil

Nicole Brewster, Toronto, Ontario

Independent business consultant. Formerly, a registered representative and professional financial planner with Desjardins Securities.

n/a

125,000(3)

William McCullough Toronto, Ontario

President, Superior Logistical Services Inc., a company that provides primary freight brokerage and logistics services

n/a

Nil

(1)

The information in the foregoing table as to Common Shares beneficially owned or over which control or direction is exercised, not being within the knowledge of the Corporation, has been furnished by each respective nominee.

(2)

Mr. Novak holds 250,000 Common Shares directly. Nominex Ltd., a corporation beneficially owned by Mr. Novak and his wife, and of which Mr. Novak is an officer and director, holds 4,074,265 Common Shares. Mr. Novak also holds common share purchase warrants to purchase 83,333 Common Shares at a price of $0.03 per Common Share until December 30, 2006.

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(3)

Ms. Brewster also holds common share purchase warrants to purchase 13,888 Common Shares at a price of $0.03 per Common Share until December 30, 2006.

PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE ELECTION OF THE ABOVE-NAMED NOMINEES, UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER SHARES ARE TO BE WITHHELD FROM VOTING IN RESPECT THEREOF. MANAGEMENT HAS NO REASON TO BELIEVE THAT ANY OF THE NOMINEES WILL BE UNABLE TO SERVE AS A DIRECTOR BUT, IF A NOMINEE IS FOR ANY REASON UNAVAILABLE TO SERVE AS A DIRECTOR, PROXIES IN FAVOUR OF MANAGEMENT WILL BE VOTED IN FAVOUR OF THE REMAINING NOMINEES AND MAY BE VOTED FOR A SUBSTITUTE NOMINEE UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER SHARES ARE TO BE WITHHELD FROM VOTING IN RESPECT OF THE ELECTION OF DIRECTORS. APPOINTMENT OF AUDITORS McCarney Greenwood LLP, Chartered Accountants, have been the auditors of the Corporation since September 20, 2004. The former auditor, Stewart Wright, Chartered Accountant, resigned at the request of the Corporation effective as of that date. In connection with this change of auditor, the Corporation issued a notice of change of auditors to McCarney Greenwood LLP and to Stewart Wright and received a response from both parties as required under National Instrument 51-102. The notice and letters were filed with the applicable regulatory authorities and are attached to this Circular as Appendix H. The persons named in the accompanying form of proxy intend to vote such proxy in favour of the re-appointment of McCarney Greenwood LLP, Chartered Accountants, as auditors of the Corporation for the ensuing year, or until their successor is appointed, at a remuneration to be fixed by the Board, unless the Shareholder has specified in the proxy that his or her shares are to be withheld from voting in respect to this. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPOINTMENT OF McCARNEY GREENWOOD LLP, CHARTERED ACCOUNTANTS, AS AUDITORS OF THE CORPORATION AND IN FAVOUR OF AUTHORIZING THE BOARD OF DIRECTORS TO FIX THE REMUNERATION OF THE AUDITORS, UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER SHARES ARE TO BE WITHHELD FROM VOTING IN RESPECT THEREOF. SPECIAL BUSINESS – APPROVAL OF THE ACQUISITION OF CHILLY-BIN INC. General The Acquisition, if completed, will result in the acquisition by the Corporation of all of the issued and outstanding shares in the capital of Chilly-Bin. In accordance with applicable regulatory requirements, the Board is requesting that the Acquisition be approved by the Shareholders. The Acquisition The Corporation has entered into a share purchase agreement dated February 28, 2006 (the "Purchase Agreement") with Alfer Inc., Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin (collectively, the "Vendors") pursuant to which it has agreed to purchase all of the outstanding shares in the capital of Chilly-Bin, which total 25,000,000 (the "Chilly-Bin Shares"), in exchange for the issuance by the Corporation of one Common Share for each Chilly-Bin Share, for an aggregate issuance of 25,000,000 Common Shares. The Board has fixed the consideration for the 25,000,000 Common Shares at $0.01 per Common Share. 57741.v11

10

At the Meeting, Shareholders will be asked to consider, and if deemed advisable, to pass a resolution approving the Acquisition. Following the Acquisition, the Corporation proposes to consolidate the Common Shares on the basis of one post-consolidation Common Share for every five pre-consolidation Common Shares and change the name of the Corporation from "Blue Power Energy Corporation" to "Cadillac Ventures Inc.", or such other name as may be approved by the Board and applicable regulatory authorities. Details of the foregoing consolidation and name change follow under the headings "Special Business -- Approval of Share Consolidation" and "Special Business -- Approval of Change of Name", respectively. Background to the Acquisition The Corporation was formed on February 19, 1996 under the laws of the Province of Ontario by the amalgamation of Blue Power Energy Corporation, 1155698 Ontario Inc. and 1155697 Ontario Inc. The Corporation currently has no operating assets and has been inactive for the past several years following the sale of an interest in an oil and gas property in 2000. Since then, the Corporation has been seeking a new business opportunity while maintaining its reporting issuer status in British Columbia, Alberta and Ontario. The Common Shares are traded on the Canadian Unlisted Board (CUB) over-the-counter system under the symbol BLU. Chilly-Bin is a privately-owned Ontario corporation that owns a property known as "The New Alger Property" comprising Mining Concession CM0240PTA in the Township of Cadillac registration division of Abitibi Province of Quebec together with the related Surface Rights (the "New Alger Property"). A detailed description of the New Alger Property follows under the heading "Description of the New Alger Property". Chilly-Bin acquired the New Alger Property from Alfer Inc. pursuant to an agreement of purchase and sale dated January 31, 2005 in exchange for 5,000,000 Chilly-Bin Shares. Alfer Inc. also retained a 1% net smelter returns production royalty from the sale of all minerals produced from the New Alger Property. No work has been done on the New Alger Property to date by Chilly-Bin. On November 16, 2005, Chilly-Bin issued 20,000,000 Chilly-Bin Shares to Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin in satisfaction of funds advanced by them, which totalled in the aggregate $47,980, which represents an effective subscription price of $0.0024 per share. Reasons for the Acquisition Following the reconstitution of the Board on November 1, 2005, the Board decided to seek business opportunities in the mineral exploration sector. The Board believes that the resource sector offers sound opportunities for a junior public company seeking to reactivate. Canadian capital markets are receptive to resource enterprises and commodity prices have improved over the last several years. In anticipation of the Corporation's acquisition of Canadian mineral properties, the Board approved the flow-through share Offering in December, 2005 (see "Interest of Informed Persons in Material Transactions" above). Following the closing of the Offering, the acquisition of the New Alger Property, through Chilly-Bin, was presented to the Board. As Messrs Voisin and Novak are beneficial shareholders of Chilly-Bin, the disinterested directors of the Board formed an ad hoc committee (the "Committee") comprised of Messrs. Wilton, Iscove and Stekel to review the Acquisition. The Committee performed its due diligence on the New Alger Property, including a review of the Technical Report (as defined below), and unanimously determined that the Acquisition is in the best interests of the Corporation. The Committee arrived at its determination after considering a number of factors, including the proposed share exchange ratio for the Acquisition (which the Committee members believe is fair taking into account the respective assets of the Corporation and of Chilly-Bin) as well as the following: (a)

57741.v11

the Corporation currently has no material assets, no source of funding and no prospects;

11

(b)

it is unlikely that the Corporation will be able to obtain any type of additional financing without a mineral property;

(c)

the Acquisition should provide an opportunity for the revival of the business of the Corporation and permit it to become actively involved in the mineral exploration industry and permit the Corporation to access additional funding; and

(d)

the Committee believes that the exchange of Common Shares for Chilly-Bin Shares on the basis of one-for-one represents fair value for the Common Shares and that the Acquisition is fair to Shareholders from a financial point of view;

In concluding that the Acquisition is fair to, and in the best interests of, the Corporation and in recommending that the Shareholders vote in favour of the Acquisition, the Committee did not assign any relative or specific weight to the foregoing factors that were considered, and individual Committee members may have given differing weight to different factors. The Committee members are, however, unanimous in their recommendation that the Shareholders vote in favour of the Acquisition. Information About Chilly-Bin Chilly-Bin was incorporated on October 21, 2004 under the laws of the Province of Ontario as 2056867 Ontario Corp. On October 28, 2004, Chilly-Bin amended its articles to change its name to "Chilly-Bin Inc.". Chilly-Bin is authorized to issue an unlimited number of common shares. On March 13, 2006 there were 25,000,000 common shares in the capital of Chilly-Bin issued and outstanding. Chilly-Bin issued 5,000,000 Chilly-Bin Shares on January 31, 2005 at an effective subscription price of $0.0111 per share in consideration for the acquisition of the New Alger Property from Alfer Inc. Chilly-Bin issued 20,000,000 Chilly-Bin Shares on November 16, 2005 at an effective subscription price of $0.0024 per share to settle all of its outstanding debts. Each of the following persons is a shareholder of Chilly-Bin and holds 10% or more of the voting securities of ChillyBin.

Number of Chilly-Bin Shares

Percentage of Issued and Outstanding Chilly-Bin Shares

Alfer Inc.

5,000,000

20%

Elen Enterprises (Ontario) Inc.

5,000,000

20%

Allan Ringler Services Inc.

2,500,000

10%

George Duguay Services Inc.

2,500,000

10%

Kalwea Financial Corp.

2,500,000

10%

Peter Miller

2,500,000

10%

Nominex Ltd.

2,500,000

10%

Jim Voisin

2,500,000

10%

Name

57741.v11

12

Frank Smeenk has been the President and sole director of Chilly-Bin since its incorporation on October 21, 2004. Neil Novak, a director of the Corporation, has been the Secretary-Treasurer of Chilly-Bin since incorporation. Following completion of the Acquisition, Mr. Smeenk will be removed and the board of directors of Chilly-Bin will be made up of nominees of the Corporation. Chilly-Bin has not paid any of its officers or directors for their services as such, and Chilly-Bin has not granted any options to purchase any of its securities to any person. No officer or director of Chilly-Bin is indebted to ChillyBin. The Purchase Agreement The Purchase Agreement contains representations, warranties, terms and conditions and indemnities that are standard for an agreement of this type prepared in accordance with Canadian commercial practices, including the following: 1.

the closing date of the Acquisition will be April 18, 2006 (or such earlier or later date as may be mutually acceptable to the parties). In the event that the Acquisition is not completed by May 31, 2006, the Purchase Agreement shall terminate and the Corporation and the Vendors will be released from their obligations under the Purchase Agreement;

2.

representations and warranties by the Corporation regarding, among other things:

3.

57741.v11

(a)

its corporate status and authority;

(b)

the execution of the Purchase Agreement being duly authorized by the Corporation and not conflicting with or constituting a breach of or an encumbrance under any other instrument by which the Corporation is bound;

(c)

the execution of the Purchase Agreement being duly executed and delivered by the Corporation and constituting a legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms;

(d)

the Common Shares to be issued to the Vendors being fully paid and non-assessable upon issuance; and

(e)

the status of the Corporation and its public disclosure record under applicable securities legislation;

representations and warranties by the Vendors regarding, among other things: (a)

the corporate status and authority of corporate Vendors, the legal capacity, competence and authority of individual Vendors, and the corporate status and authority of Chilly-Bin,

(b)

the execution of the Purchase Agreement being duly authorized by each Vendor, not conflicting with or constituting a breach of or an encumbrance under any other instrument by which such Vendor or Chilly-Bin is bound;

(c)

the Purchase Agreement being duly executed and delivered by each Vendor and constituting a legal, valid and binding obligation of each Vendor, enforceable against such Vendor in accordance with its terms;

(d)

no person having any agreement or option for the purchase of the Chilly-Bin Shares from the Vendors and each Vendor being the registered and beneficial owner of its Chilly-Bin Shares, free and clear of any encumbrances;

(e)

Chilly-Bin's authorized capital; and

13

(f) 4.

5.

Chilly-Bin's ownership of the New Alger Property;

the closing of the Acquisition will be subject to conditions precedent, including the following: (a)

receipt of all corporate, legal and regulatory proceedings, approvals and consents as are reasonably considered necessary by the solicitors of the Corporation and the Vendors respectively;

(b)

all the representations and warranties of the Corporation and the Vendors contained in the Purchase Agreement being true and correct at the closing of the Acquisition with the same effect as if made at the time of the closing of the Acquisition;

(c)

receipt of Shareholder approval of the Acquisition; and

(d)

no action or proceeding, at law or in equity, and no investigation being pending or threatened by any Person to restrain, restrict or prohibit or materially adversely affect the consummation of the Acquisition, or trading in Common Shares; and

the Purchase Agreement may be terminated by a party to the Purchase Agreement if any of the conditions in favour of that party is not satisfied or complied with at or before the time of the closing of the Acquisition.

There can be no assurance that the above provisions of the Purchase Agreement will not be revised. As well, there can be no assurance that the Acquisition will be completed.

Pro Forma Information About the Corporation Post-Acquisition The following information contains certain forward looking statements. Words such as "may", "would", "could", "will", "expects", "anticipates", variations of such words and similar expressions are intended to identify these forward looking statements. Specifically all statements in this section of the Circular address activities, events or developments that the Corporation expects or anticipates will or may occur in the future, with respect to the Corporation following the completion of the Acquisition. Actual results could differ materially from those expressed or implied by such forward looking statements. The following diagram illustrates what will be the corporate structure of the Corporation and its subsidiaries following the Acquisition and the Name Change: Cadillac Ventures Inc. (formerly Blue Power Energy Corporation) (Ontario) 100% Chilly-Bin Inc. (Ontario)

100% The New Alger Property (Quebec) Following the Acquisition, the board and management of Chilly-Bin will comprise nominees of the Corporation. 57741.v11

14

Pursuant to the Acquisition, the Corporation will issue 25,000,000 Common Shares to the Vendors. The following table shows the effect of the Acquisition on the share capital of the Corporation: Number of Common Shares

Percentage of Total

Common Shares Issued and Outstanding Prior to the Acquisition

40,820,728

62.02%

Common Shares Issued Pursuant to the Acquisition

25,000,000

37.98%

Total

65,820,728

100%

Following the Acquisition, the Corporation proposes to consolidate the Common Shares on the basis of one postconsolidation Common Share for every five pre-consolidation Common Shares (the "Share Consolidation"). Fractional Common Shares will not be issued. (See below under "Special Business -- Approval of Share Consolidation"). Following the Share Consolidation, there will be approximately 13,164,145 Common Shares issued and outstanding. This number does not take into account fractional shares rounded up as part of the Share Consolidation. The following table sets out the shareholdings of the principal Shareholders of the Corporation, post-Acquisition and post-Share Consolidation, assuming a total of 13,164,145 issued and outstanding of Common Shares:

Number of Common Shares

Percentage of Issued and Outstanding Common Shares

Elen Enterprises (Ontario) Inc.

1,814,853

13.79%

Allan Ringler Services Inc.

1,314,853

9.99%

George Duguay Services Inc.

1,314,853

9.99%

Kalwea Financial Corp.

1,314,853

9.99%

Peter Miller

1,314,853

9.99%

Nominex Ltd.

1,314,853

9.99%

Jim Voisin

1,314,853

9.99%

Total Issued and Outstanding

13,164,145

100%

Name

Attached to this Circular as Appendix G are the unaudited pro forma financial statements of the Corporation and Chilly-Bin, which present the Corporation's consolidated financial position after giving effect to the Acquisition and the Share Consolidation. The pro forma consolidated balance sheet of the Corporation and Chilly-Bin dated as at December 31, 2005 should be read in conjunction with the unaudited balance sheet of the Corporation for the sixmonth period ended November 30, 2005 and the audited balance sheet of Chilly-Bin dated as at December 31, 2005 (see "Audited Financial Statements of Chilly-Bin Inc." in Appendix F to this Circular). Readers are cautioned that changes will have occurred in each company since the date of the relevant balance sheets. 57741.v11

15

Related Party Transaction All of the Vendors, with the exception of Alfer Inc., hold, directly or indirectly, or exercise control or direction over, approximately 10% of the issued and outstanding Common Shares. Each of Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin (a director of the Corporation) own 4,074,265 Common Shares, being approximately 9.98% of the issued and outstanding Common Shares. Nominex Ltd. is a corporation beneficially owned by Neil Novak, a director of the Corporation, and his wife. For the purposes of the Acquisition, the Corporation considers these seven Vendors to be "related parties" of the Corporation and therefore "interested parties" in respect of the Acquisition, as defined in Rule 61-501. As a result, the Acquisition is a "related party transaction" that is subject to Rule 61-501, which requires the Corporation to obtain (i) a formal valuation of the Acquisition; and (ii) approval for the Acquisition by a majority of the votes cast by disinterested Shareholders at the Meeting, unless an exemption from such requirements is available under Rule 61-501. As the Common Shares are traded on the Canadian Unlisted Board (CUB) over-the-counter system, the Corporation has relied on the exemption in item 3 of section 5.5 of Rule 61-501 from the requirement to obtain the formal valuation referred to in (i) above. This exemption applies where "no securities of the issuer are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States." Because the Corporation considers these Vendors to be "interested parties", the Corporation is required to obtain minority shareholder approval for the Acquisition. Required Approval Shareholders will be asked at the Meeting to consider and, if deemed advisable, pass with or without variation, an ordinary resolution as set forth in Appendix A to this Circular (the "Acquisition Resolution") authorizing the Corporation to purchase all of the Chilly-Bin Shares in exchange for one Common Share for each Chilly-Bin Share pursuant to the Purchase Agreement. The Acquisition Resolution provides that the directors of the Corporation may determine not to effect the Acquisition at any time prior to the closing of the Acquisition without further action on the part of the Shareholders. To be effective, the Acquisition Resolution must be passed by at least a majority of the votes cast in respect of the Acquisition Resolution at the Meeting, other than votes attaching to Common Shares ("Excluded Shares") beneficially owned, or over which control or direction is exercised, by an "interested party" or a "related party" of an interested party (all as defined in Rule 61-501). For greater certainty, votes attaching to Common Shares beneficially owned, or over which control or direction is exercised, by Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin, or insiders of any of them, if applicable, or any associates or affiliates of them, which includes the Common Shares held directly by Norman Brewster and Neil Novak, are Excluded Shares. To the knowledge of the Corporation, after reasonable inquiry, the aggregate number of Excluded Shares is 30,119,855. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE ACQUISITION RESOLUTION UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER SHARES ARE TO BE VOTED AGAINST SUCH RESOLUTION. In the event that Shareholder and/or regulatory approval is not given to the Acquisition, the Corporation will not acquire the Chilly-Bin Shares. SPECIAL BUSINESS – APPROVAL OF SHARE CONSOLIDATION Shareholders will be asked at the Meeting to consider and, if deemed advisable, pass with or without variation, a special resolution as set forth in Appendix B to this Circular (the "Consolidation Resolution") authorizing the Corporation to amend its articles of amalgamation to consolidate the Common Shares on the basis of one post-consolidation 57741.v11

16

Common Share for every five pre-consolidation Common Shares (the "Share Consolidation"). No fractional Common Shares will be issued in connection with the Share Consolidation and, in the event that a Shareholder would otherwise be entitled to receive a fractional share upon the Share Consolidation, the number of Common Shares to be received by such Shareholder will be rounded up to the next highest whole number of Common Shares. Should the Consolidation Resolution be approved, the effective date of the Share Consolidation shall be the date immediately following the closing of the Acquisition, or such other date that the Board may decide in its sole discretion. The Board shall have the authority to prepare and file articles of amendment for the Share Consolidation. The Consolidation Resolution provides that the directors of the Corporation may determine not to implement the Share Consolidation at any time prior to the issuance of the certificate of amendment without further action on the part of the Shareholders. To be effective, the Consolidation Resolution must be passed by at least two-thirds of the votes cast in respect of the Consolidation Resolution at the Meeting. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE SHARE CONSOLIDATION UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER SHARES ARE TO BE VOTED AGAINST SUCH RESOLUTION. In the event that Shareholder approval is not given to the Share Consolidation, the Common Shares will not be consolidated. SPECIAL BUSINESS – APPROVAL OF CHANGE OF NAME Shareholders will be asked at the Meeting to consider and, if deemed advisable, pass with or without variation, a resolution as set forth in Appendix C to this Circular (the "Name Change Resolution") authorizing the Corporation to amend its articles of amalgamation to change the name of the Corporation from "Blue Power Energy Corporation" to "Cadillac Ventures Inc." or such other name as may be approved by the Board and applicable regulatory authorities (the "Name Change"). Should the Name Change Resolution be approved, the effective date of the Name Change shall be the date immediately following the closing of the Acquisition, or such other date that the Board may decide in its sole discretion. The Board shall have the authority to prepare and file articles of amendment for the Name Change. The Name Change Resolution provides that the directors of the Corporation may determine not to implement the Name Change at any time prior to the issuance of the certificate of amendment without further action on the part of the Shareholders. To be effective, the Name Change Resolution must be passed by at least two-thirds of the votes cast in respect of the Name Change Resolution at the Meeting. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE NAME CHANGE UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER SHARES ARE TO BE VOTED AGAINST SUCH RESOLUTION. In the event that Shareholder and/or regulatory approval is not given to Name Change, the name of the Corporation will not be changed. SPECIAL BUSINESS – APPROVAL OF NEW SHARE OPTION PLAN Shareholders will be asked at the Meeting to consider and, if deemed advisable, pass with or without variation, a resolution as set forth in Appendix D to this Circular (the "Share Option Plan Resolution") establishing a share option plan (the "Share Option Plan") for the Corporation. A complete copy of the Share Option Plan is set forth in Appendix E to this Circular. The salient features of the Share Option Plan are as follows:

57741.v11

17

(a)

options may be granted by the Board to directors, officers and employees of the Corporation or a subsidiary of the Corporation and persons or corporations who provide consulting services to the Corporation or a subsidiary of the Corporation on an on-going basis;

(b)

the maximum number of Common Shares reserved for issuance under the Share Option Plan shall not exceed 10% of the aggregate number of Common Shares issued and outstanding (calculated on a nondiluted basis) from time to time;

(c)

the exercise price of each option shall be determined in the discretion of the Board at the time of the granting of the option, provided that the exercise price shall not be lower than the "Market Price". "Market Price" means the last closing price of the Common Shares on any stock exchange or stock exchanges, or other trading facilities on which the Common Shares are then listed or posted for trading, or if more than one, on such one as shall be designated by the Board, and to the extent that the Common Shares are not listed or posted for trading on any exchange or trading facility, the Market Price shall be such price as is determined by the Board in good faith;

(d)

(i) at no time shall the number of Common Shares reserved for issuance pursuant to options granted to any one optionee in a 12-month period under any security based compensation plan exceed 5% of the issued and outstanding Common Shares, (ii) no one optionee may be granted, in any 12 month period, options to purchase a number of Common Shares equal to more than 5% of the outstanding Common Shares, (iii) no one consultant may be granted, in any 12 month period, options to purchase a number of Common Shares equal to more than 2% of the outstanding Common Shares, (iv) persons employed to provide investor relations activities may not be granted, in the aggregate in any 12 month period, options to purchase a number of Common Shares equal to more than 2% of the outstanding Common Shares (v) at no time shall the number of shares reserved for issuance pursuant to options granted to insiders of the Corporation under all security based compensation arrangements of the Corporation exceed 10% of the outstanding Common Shares, and (vi) insiders of the Corporation may not be granted under all security based compensation arrangements of the Corporation, within any 12 month period, in aggregate a number of options exceeding 10% of the issued and outstanding Common Shares ;

(e)

all options shall be for a term determined in the discretion of the Board at the time of the granting of the options, provided that no option shall have a term exceeding five years and, unless the Board at any time makes a specific determination otherwise, an option and all rights to purchase Common Shares pursuant thereto shall expire and terminate immediately upon the optionee who holds such option ceasing to be at least one of a director, officer or employee of, or consultant to, the Corporation or a subsidiary of the Corporation, as the case may be; and

(f)

except in limited circumstances in the case of the death of an optionee, options shall not be assignable or transferable.

The Share Option Plan is subject to the approval of the Shareholders. In order to become effective, the Share Option Plan Resolution must be approved by at least a majority of the votes cast by Shareholders at the Meeting. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED IN FAVOUR OF THE SHARE OPTION PLAN RESOLUTION, UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS, HER OR ITS SHARES ARE TO BE VOTED AGAINST THE RESOLUTION. In the event the Share Option Plan Resolution does not receive the requisite Shareholder approval, the Corporation will not adopt the Share Option Plan.

57741.v11

18

INDICATION OF DIRECTORS AND EXECUTIVE OFFICERS All of the directors and executive officers of the Corporation have indicated that they intend to vote their Common Shares in favour of each of the above resolutions, except where the Common Shares of such directors and officers are Excluded Shares. In addition, unless authority to do so is indicated otherwise, the persons named in the enclosed form of proxy intend to vote the Common Shares represented by such proxies in favour of each of the above resolutions. OTHER BUSINESS Except as otherwise indicated, information contained herein is given as of March 13, 2006. Management knows of no matters to come before the Meeting other than the matters referred to in the Notice. However, if any other matters which are not now known to the Corporation's management should come properly before the Meeting, the proxy will be voted on such matters in accordance with the best judgment of the person voting it. DESCRIPTION OF THE NEW ALGER PROPERTY The following information relating to the Project has been derived, except where noted, and in some cases extracted from a technical report entitled "Technical Report on the New Alger Property Mining Concession CM-0240-PTA, Cadillac Township, Quebec" (the "Technical Report") prepared by Deep Search Exploration Technologies Inc. dated February 1, 2006. Reference is made to the Technical Report for a complete description of the New Alger Property and the maps, photographs and references contained in the Technical Report. Copies of the foregoing may be examined at the offices of Macleod Dixon LLP, 100 Wellington Street West, Suite 500, Toronto, Ontario, M5K 1H1, during normal business hours and is available on the System for Electronic Data Analysis and Retrieval ("SEDAR") at www.sedar.com. The Qualified Person, as such term is defined in National Instrument 43-101 -- Standards of Disclosure for Minerals Projects ("NI 43-101"), who prepared the Technical Report, was Howard Lahti (Ph.D., P.Geo.). Dr. Lahti is independent for the purposes of NI 43-101. Summary Dr. Lahti examined old reports of the previous work history of the New Alger mining concession and assessed the historical work done from its discovery in 1924 to the present. The previous mining companies mined the New Alger Property between 1929-1930, 1935-1939 and 1946-1948. A minimum of 21,740 ounces of gold was extracted from 175,055 tons of mined ore representing an average recovered grade of 0.123 oz/t. The mine only explored and developed the top 300m of the vein system and not the whole E-W strike of the New Alger Property. From a 2005 Quebec Natural Resources publication (PRO 2005-02) titled "The Deep-seated Gold Potential of the Cadillac Mining Camp" it is stated that from recent exploration work i.e. the O'Brien property lying adjacent to the New Alger Property and other producing and past producers along the Cadillac Break, there is a very high potential of finding significant gold mineralization at depth. Note: the past production, grade and other information contained in this circular are from historical records and do not meet the NI 43-101 standards. About 60% of the ore is free milling gold while the rest is bound in an arsenical sulphide concentrate. Only the upper 300 meters of the east half of the vein system has been exploited. To help evaluate the western part of the system 24 A-Series of drill holes were drilled to test the Piché Group south of the Cadillac Break. Erratic gold mineralization was reported over narrow widths. However, few of the drill holes tested the mineralized zone at depth. To further evaluate the gold mineralization potential of the New Alger Property the following recommendations are made for a Phase 1 work plan: 57741.v11

19

(a)

Re-establish the old grid by cutting 27 kilometres of line and

(b)

Drill a combination of 10 shallow (200-250m) and 10 deep (450-600m) holes totalling 7500m.

The estimated budget for this work including supervision of the drilling, reporting, and assaying of samples is $755,000. It is estimated that it would tale about 3 months to complete this phase of work.

New Alger Property Description and Location The New Alger Property consists of a single mining concession (C.M. 240-PTA) immediately east of the BousquetCadillac TWP boundary in the province of Quebec. The concession consists of Blocks 21-35 with an area of 317.2 hectares. Accessibility, Local Infrastructure, Climate, And Physiography The New Alger Property has a very good access with main paved Highway 117 passing just south of the two abandoned shafts. This highway, which runs from the town of Cadillac, 3 km to the east of the New Alger Property, to Rouyn-Noranda about 45km to the west, bisects the New Alger Property. The New Alger Property occurs within a well established mining camp so has an excellent infrastructure with power lines crossing the New Alger Property. The area has a well-trained works for in all aspects of exploration, mine construction and mining. The mineral industry in this area is well provided for by companies located in Rouyn-Noranda, Malarctic and Val D’Or. The New Alger Property is well forested with jack pine, spruce, balsam fir, poplar and birch. The winters are long, November to May and a considerable amount of snowfall can be expected. For short periods the temperature falls to –40 C°. Summers are short, but temperatures in the 5° C to 35° C range can extend well into October and November. Most types of exploration can be done throughout the year. The topography has a well-developed network of streams with good drainage. Much of the land is higher ground with a variable thickness of till. In the immediate area north of the shafts an east-west striking stream that has large beaver dams on it causing an extensive amount of flooding. History Of Exploration A summary of the previous work and development is presented below. The information was obtained from a report written by B. E. Gorman in 1984 for Sulpetro Minerals Limited. No work was done to verify the historical reserves so they cannot be considered as current reserves. The historical reserves cannot be relied upon and are only used as a guide line. 1924-1925 – The present New Alger Property was first staked by E. J. Thompson following the discovery of a wide zone of quartz veining in greywacke 240m south of the present workings. Further exploration led to the discovery of gold mineralization in the Piche Group volcanic rocks in contact with the Pontiac Group greywacke. 1925-1926 – The Huronian Belt Company sank two exploration shafts: #1 (East) to 35 feet and #2 to a depth of 15 feet. 1927 - The Thompson-Cadillac Mining Corporation was formed and continued shaft sinking. The #2 shaft reached 100 feet and the #1 shaft was enlarged to three compartments and deepened to 340 feet.

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1929 - The #1 shaft was deepened to 600 feet, with levels at 150, 300, 450, and 600 feet. On the 150 level, the #1 Vein was drifted on for 275 feet, and the #2 Vein for180 feet. On the 300-foot level both the #1 and #2 Veins were found. A 10-ton Straub mill processed 18 tons of ore with a grade of $9.74 gold. In November of 1928, 22 tons grading $7.43 gold was milled. By the spring of 1929 the lower levels were flooding, and the pumping kept the mine dewatered to the 300-foot level. 1933 - Thompson-Cadillac Mining Corporation resumed operations. The #1 shaft was dewatered and re-examined. Minor underground development and 877 feet of drilling was carried out. 1934-1935 The mine was dewatered to the 300-foot level, and later to the 600-foot level during the construction of a mill. 1936 - Lateral development continued to proceed on the 150, 300, and 600-foot levels. On the 150-foot level a drift extending 1000 feet west of the #1 shaft encountered spectacular visible gold. It is reported that 843 troy ounces were handpicked on the 109E stope. Stopes on the three levels provided enough material for a 75-tpd mill. By late 1936 it is reported that the mill was producing 85 tpd averaging $8.00 gold at the mill-head. Total production for the year was 16,346 tons or $123,740 gold (3,535 oz. @ $35/oz.) of which $68,782 was free-milling (1,965 oz. = 56%), with the remainder as arsenical sulphide concentrates. This represents a recovered grade of 0.216 oz/ton (7.63 g/t). 1937 - Production for the year was 38,081 tons yielding 1,730.4 ounces, for a recoverable grade of 0.045 oz/ton (1.56 g/t). The average mill head for the year was $5.39 (0.154 oz/ton at $35 gold). By October 31 a total of 12,995 feet of lateral work was done including 839 feet of stoping on the 150-foot level, 576 feet on the 300-foot level ands 124 feet on the 600-foot level. During August 9 DDH (2000 feet) were drilled examining a further 100 feet of strike length. Several encouraging section were cut. 1939 - A total of 78,247 tons were milled during the year and $227,004 bullion recovered (6,486 oz. At $35 gold) and 2,017 tons of arsenical concentrates containing another 2,875 oz. of gold was recovered. The recovered gold was 0.120 oz/ton. An important discovery was made south of the Cadillac Break on the 150-foot level. This new zone lies between 700 and 1300 feet west of the main zone. According to old notes taken by A.P. Beavan (the O’Brien Division of Sulpetro Minerals) and quoted by B. E. Gorman “It is apparent that Beavan reckoned better possibilities could be found in the greenstones further west”. 1939 - The mine operated until July, producing $143,752 in bullion from 42,381 tons of milled ore (4,097 oz. at $35 gold). There are no records of any concentrates. The new zone did not persist below the 150-foot level and the only work was done on the 610, and 616 stopes on the 600-foot level. After operations ended in July the mill was leased to Central Cadillac. 1940-1942 - The mine was kept de-watered and the mill treated ore from Central Cadillac. 1943-1944 – Steps were taken to sell the New Alger Property, without success. A report by T. Koulimine recommended additional drilling on the west part of the New Alger Property, concentrating on a system of crossfractures and renewed exploration in the quartz albitites north of the Cadillac Break. 1945 - Attempts in selling the New Alger Property having proved futile, a new company called Alger Gold Mining Limited was formed. Diamond drilling began in June, totaling 20 surface holes (9,451 feet) and 48 underground holes (1,447 feet). During December, 103 feet of drifting was done on the 450-foot level, and 178 feet of crosscutting on the 600-foot level. 1946 - An additional 4 surface holes were drilled on the west zone south of the Cadillac Break. Numerous erratic sections of mineralization were found according to resident geologist W. G. Robinson. The total surface and underground drilling amounted to 9,256 feet. In May the shaft was deepened from 620 feet to 850 feet, with 689 feet of cross-cuts and 2,326 feet of drifting. 1947 - The main (#1) shaft reached 1124 feet, with levels established at the 975 and 1100 feet. Two veins (“B” and “C”) were opened up and found to join on the 1100-foot level but pinched out 225 feet below. Operations ceased in 57741.v11 21

early 1948. 1949-1950 – The mine and the mill remained idle. A deal was made with O’Brien to process 221.75 tons of arsenical concentrates to recover 491.54 ounces of gold. 1951-1962 – The Company, now New Alger Mining Limited, remained idle, as did its operations. 1977-1981 – The New Alger Property was acquired by A. N. Ferris following New Alger bankruptcy and transferred to Darius Gold Mines Inc. The New Alger Property remained idle. Work completed by Sulpetro Minerals Limited Following the acquisition of the New Alger Property as part of the Darius Joint Venture in August 1981 an attempt was made to compile all of the available records of previous work (see above). Between 1982 and 1984 the following work was completed: x

Re-draughting of the New Alger Property boundary based on a 1928 survey by D. R. Lowe at a scale of 1” = 10 chains. The new scale is 1:2,500;

x

Surface compilation of diamond drilling (28 surface holes) totaling 14,735 feet or 4,491.2 meters at a scale of 1:1,000;

x

Preparation of sections (1:200) at 50 meter intervals extending 600 meters east of the BousquetCadillac TWP line;

x

Capping of both shafts.

Geological Compilation The A-series of diamond drill drilling (24 holes totaling 12,522.5 feet or 3,826 meters) give a complete stratigraphic section of the Piché Group south of the Cadillac Break, extending 600 meters east of the Bousquet-Cadillac TWP boundary. South of the break the Piché Group is 200 meters thick. The rocks strike E-W with a vertical to steeply dipping to the south. The greenstones (Unit V7) are dark green chloritic basalts, fine grained, and variably altered to carbonate. Occasional horizons of “weakly porphyritic” and biotitic zones are reported. Several zones of coarser grained dioritic or gabbroic (3G) are described, as well as agglomerated (Unit V10).Two porphyritic horizons are recognized (Unit V6). The southernmost unit (the South Porphyry) is the more mafic of the two, often described as transitional from greenstone. Its thickness ranges between 15-30meters. The northernmost unit (the North Porphyry) is more siliceous, grey, and strongly porphyritic, marked by sharp contacts. It ranges in thickness from 8 meters (west end) to 60 meters (east end). The North porphyry is generally altered to carbonate, biotite, arsenopyrite + pyrite, and “bleached” zones. The north boundary of the North Porphyry is marked by a layer of black graphitic tuff (Unit V9), followed by greywacke (S3). Approaching the talc-chlorite schist of the Cadillac Break (Mij), a zone of chlorite schist is likely derived from the greenstones. The Cadillac Break is approximately 180m thick as indicated in drill hole B-1. Several zones of intense carbonate alteration are reported at the east end, and in the vicinity of the North Porphyry. The carbonate zones are described as light grey laminated carbonate rocks, visibly mineralized with pyrite, arsenopyrite and pyrrhotite. 1987 - Under the Darius Joint Venture, a magnetometer and VLF geophysical survey (project 2140.21) was done by J.L. Wright and Dr. Barry Gorman. The salient results of the survey were: the magnetic survey traced the 57741.v11

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porphyritic andesite host rock (the mineralized horizon) across the New Alger Property and inferred the existence of a bulge in the Piché volcanic unit. 1989-1990 - The following work was done: x

2 drill holes were completed along section 7+75E with a total 273.56m drilled. They were designed to test the Number 3 Zone at a shallow depth; and

x

2 trenches just to the west of the #2 shaft were re-opened and sampled.

Geological Setting The New Alger Property is located in the southern part of the Abitibi Greenstone Belt, in the Superior Province of the Canadian Shield. In this area, the Belt is composed of Archean age bimodal volcanic complexes, related sediments, granitoid stocks and early Proterozoic diabase dykes. The supercrustal rocks form a series of east-west trending units of metavolcanic and metasediments arranged around a bifurcating synclinal structure, the main arm of which is termed the “Malartic Syncline” and the northwest trending arm termed the “Clericy Syncline”. The fold axes are associated with major fault zones, which define lozenge shaped blocks that are postulated to be stratigraphically independent of each other. The Pontiac Block is extensively capped by clastic sedimentary rocks of the Pontiac Group and includes minor metavolcanic units as well as the Piche Group of volcanic of mafic volcanics. The Blake River and the Malartic blocks are separated from the Pontiac Block by narrow belts of clastic sedimentary rocks termed the Kewagama and Cadillac Groups, respectively. The Cadillac Fault represents the predominant structural feature in this area. This break strikes EW and extends from Kirkland Lake (Ontario) to Val D’Or Quebec, a distance of 250 kilometers. It is a Ramsay type “brittleductile” sinistral shear that exhibits a crustal fracture system of second order Riedel shears and tension gashes. Many interpretations are proposed for the movement that took place along this break: 1) sinistral component; 2) dextral transpression; 3) vertical inverse movement; and 4) vertical component. The Cadillac-Piche contact represents a high strain zone of deformation of the regional extent called the Cadillac Break (Pelchat, 1996). Bherer (1990) states that the trace of the fault is defined by “an uninterrupted band of talc-chlorite-carbonate schist 20 to +200 meters thick”. Meta-volcanic rocks of the Piche, Cadillac and Pontiac Groups underlie the New Alger Property. From old drill logs and surficial mapping it is the Piche Group that hosts the quartz vein gold-sulphide mineralization. The Cadillac break is interpreted cuts the New Alger Property in a slightly ENE-WSW direction just to the north of the mineralized horizon. Cadillac Group: this group is composed of greywacke, siltstone, polymictic conglomerate, and talc-chloritecarbonate schist. Occasional beds of argillite with graphitic mudstone were observed in drill holes at the Decoeur Prospect west of the New Alger Property (possible Pontiac Group rocks). The beds can vary from a few millimeters to a few meters thick. The thick polymictic conglomerates have fragments of felsite, chert, and sediments. The matrix of the conglomerate is formed of siliceous-biotite-sericite material. The greywacke and siltstone are intercalated and exhibit graded bedding and parallel laminations. Pontiac Group: this group is composed of greywacke, interbedded with argillite, massive to pillowed mafic flows and ultramafic flows. This group overlies the south portion of the New Alger Property. The greywacke and the argillite are similar to the sedimentary rocks of the Cadillac group but contain more biotite and sericite. Piche Group: this group is composed of a sequence of mafic rocks, amphibolites, volcanic tuffs and flows. The volcanic sequence is mineralized with gold and minor sulphide mineralization of chalcopyrite, arsenopyrite, and pyrite. The mineralized section was intersected both by diamond drilling and trenching. 57741.v11

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New Alger Property Geology The A-series of diamond drill drilling (24 holes totaling 12,522.5 feet or 3,826 meters) gave a complete stratigraphic section of the Piché Group south of the Cadillac Break, extending 600 meters east of the BousquetCadillac TWP boundary. South of the break the Piché Group is 200 meters thick. The rocks strike E-W with a vertical to steeply dipping to the south. The greenstones (Unit V7) are dark green chloritic basalts, fine grained, and variably altered to carbonate. Occasional horizons of “weakly porphyritic” and biotitic zones are reported. Several zones of coarser grained dioritic or gabbroic (3G) are described, as well as agglomerated (Unit V10). Two porphyritic horizons are recognized (Unit V6). The southernmost unit (the South Porphyry) is the more mafic of the two, often described as transitional from greenstone. Its thickness ranges between 15-30meters. The northernmost unit (the North Porphyry) is more siliceous, grey, and strongly porphyritic, marked by sharp contacts. It ranges in thickness from 8 meters (west end) to 60 meters (east end). The North porphyry is generally altered to carbonate, biotite, arsenopyrite + pyrite, and “bleached” zones. The north boundary of the North Porphyry is marked by a layer of black graphitic tuff (Unit V9), followed by greywacke (S3). Approaching the talc-chlorite schist of the Cadillac Break (Mij), a zone of chlorite schist is likely derived from the greenstones. The Cadillac Break is approximately 180m thick as indicated in drill hole B-1. Several zones of intense carbonate alteration are reported at the east end, and in the vicinity of the North Porphyry. The carbonate zones are described as light grey laminated carbonate rocks, visibly mineralized with pyrite, arsenopyrite and pyrrhotite. Deposit Type Gold mineralization is associated with all types of rocks. Some lithologies are more favourable than others because of their distinctive chemical properties i.e. stronger reducing environment due to carbon (graphite) or sulphides, and their susceptibility to fracturing and shearing. Other favourable lithologies are banded iron formation, pyritic tuffs and ultramafic flows. However, on the New Alger Property gold mineralization is controlled by structures identified as “high deformation zones” within broader shear zones. At the New Alger Property or deposit scale the most important exploration criteria are: xareas of porphyry intrusions/extension, x local “ore controlling “ structures, xgold mineralization (as a lead to finding more gold) and xalteration that maps hydrothermal activity. The general geological criteria for area or target selection can be summarized in the following table taken from Table 1.2, p5 in Bherer, 1990. Feature Rocks Mafic to ultramafic volcanics Sedimentary rock belt (especially if) Temiskaming-type sediments with red chert and porphyry clasts.

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Genetic Sigificance Ultimate source for gold (in contact with) Fundamental fault Broad dilation zone during final oblique-slip stage of movement on fundamental faults, with associated sedimentary, igneous and exhalative-hydrothermal activity. 24

Feature Porphyry intrusion or extrusion

Structures Fundamental faults or “breaks”. Local faults and folds.

Mineralization-alteration. Carbonatized Silicification; pyrotization; K or Na metasomatism; quartz.

Genetic Sigificance Gold mobilizing adjacent or highlevel offshoot of immediate source (via magmatic fluids) of gold.

Magma conduits. Dilatational environment causing fluid degeneration by decompression or “throttling”, in turn causing mineralization and alteration. Gold-related hydrothermal activity Subsurface, gold-depositing hydrothermal activity.

Three types of mineralization related to distinct gold-bearing geological settings characterize the Cadillac mining camp: 1)

gold-bearing massive sulphide lenses (Bousquet 2 and Laronde mines),

2)

gold-rich polymetallic veins (Doyon and Muouska mines), and

3)

auriferous veins associated with regional E-W-trending faults (O’Brien, Thomson-Cadillac (New Alger), Kewagama, Central Cadillac, and Wood Cadillac, Lapa deposit).

Mineralization The mineralization mined at the New Alger Mine consists of auriferous quartzcarbonate veins with a variable amount (trace to 10%) of sulphides. The most common sulphides are arsenopyrite, pyrite, chalcopyrite and pyrrhotite. Also gold can be found in sericite shears with the same sulphides. Most of the mined gold mineralization is found in the South Porphyry that hosts a blue quartz vein associated with arsenopyrite-biotite. Gold concentration varies from trace amounts to 87.8 g/t over 0.2 meters. The vein appears to splay into a stringer zone east of DDH A-17 and may correspond with the #1S Vein at depth. The unexploited North Porphyry contains several wider zones of biotite-arsenopyrite mineralization although quartz veining is minor. The Northern Porphyry may be similar in age to the mineralized porphyry (tonalite found on the Normin property west of the New Alger Property (H.R. Lahti, 2004). Much of the mineralization is associated with carbonate and graphitic zones. The lower assays (of the order of 2 g/t) over wider intersections are reported. The association with carbonate alteration and graphitic tuff suggest a situation similar to the O’Brien “G” Vein further to the east. Evidence from exploration work done on the near by O’Brien property (east side), Agnico-Eagle (west side) and others in the same geological environment that there remains to be found significant gold resources at depth. This is particularly true for the New Alger Property where previous exploration and mining has not explored below the 300m level. Exploration Dr. Lahti is not aware of any unreported work done on the property.

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Drilling There is no new drill data available. Interpretation And Conclusions From the study of old mining drill logs, reports, maps mining records and the Quebec government report PRO 2005-02 Dr. Lahti has reached the following conclusions; x

The New Alger (Thomson-Cadillac) mine operated between 1929-1930, 1935-1939 and 1946-1948. Most of the production was from 1936-1939 when the minimum production was 21,740 oz. of gold from 175, 055 tons of mined rock representing an average grade of 0.123 oz/ton (4.22 g/t).

x

About 60% of the gold was free milling with the remainder bound up in arsenical sulphide concentrates with a grade of 1-2 oz/t.

x

An A-Series of 24 DDH totaling 3,826 meters was completed in 1984. This program gave a complete cross-section of the Piché Group south of the Cadillac Break from the Cadillac-Bousquet TWP 600 meters to the east toward the main mine shaft.

x

The low mining grade (0.123 oz/t) was attributed to using a heavy dilution to sustain a 200 ton per day production, wide stoping widths sometimes 3-4 times wider than used at the adjacent O’Brien Mine, and making an undue effort to mine broad mineralized zones 8-20 feet wide.

x

The New Alger Property has not been thoroughly explored below the 300m level or for the full length along strike of the mined quartz-carbonate-sulphide mineralized structure.

x

Although from the previous mining history only a modest tonnage of ore was extracted and processed, there is still a good potential to find ore grade mineralization at depth.

x

The gold veins “F” and “G” being mined on the O’Brian property, which is located on the eastern boundary of the New Alger Property near the main shaft, should be tested on the New Alger Property to see if they extend on to the New Alger Property.

Recommendations Dr. Lahti recommends that the New Alger Property be systematically explored by deep drilling to test the New Alger Property for an economic size gold deposit at depth and in particular the North Porphyry. In order to do future exploration on the New Alger Property the old grid would first have to be reestablished. The initial exploration work required is summarized below: PHASE 1

57741.v11

x

It is recommended that a re-establish a grid be cut over the prospective part of the New Alger Property with a line spacing of 50 meters and pickets 25 meters surveyed along each line.

x

A drilling program designed to both test the economic potential of the North Porphyry where the historical grades are lower but the widths are larger and the whole length of the Main Mine Vein Structure from the east boundary to the west boundary, a total of 1200 meters. It is recommended that 10 shallow (200-250m) holes be drill to test the economic potential of the North Porphyry and 10 deep holes (450-600m) be drilled to test the down dip extension of the old mine workings an the 26

potential of a new economic gold deposit at depth. approximately 7500 meters.

The total amount of drilling would be

BUDGET The cost of the line cutting 27 kilometers is estimated to cost ................................. The cost of drill is estimated to be $ 80/meter all cost included .............................. Cost for a geologist to supervise, and log core 90 days/$475 ................................... Accommodations 90 days at $150/day ..................................................................... Truck Rental 3 months plus fuel .............................................................................. Assaying 600 samples at $ 25/each .......................................................................... Contingency 10% ..................................................................................................... Estimated Total Budget .........................................................................................

10,000 600,000 42,750 13,500 5,000 15,000 $ 686,250 68,625 $ 754,875

RISK FACTORS Shareholders should carefully consider the following risk factors and all other information contained in this Circular before approving the Acquisition. The risks below are not the only ones facing the Corporation. Additional risks not currently known to the Corporation, or that the Corporation currently deems immaterial, may also impair the Corporation's operations. If any of the following risks actually occur, the Corporation's business, financial condition and operating results could be adversely affected. As a result, the trading price of the Common Shares could decline and investors could lose part or all of their investment. Nature of mineral exploration and mining The New Alger Property is not a mining property in production. The Corporation's viability and potential success lie in its ability to develop, exploit and generate revenue from mineral deposits. The exploration and development of mineral deposits involve significant financial risk over a significant period of time which even a combination of careful evaluation, experience and knowledge may not eliminate. While discovery of a mine may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish reserves by drilling and to construct mining and processing facilities at a site. It is impossible to ensure that the current or proposed exploration programs on the New Alger Property will result in a profitable commercial mining operation. The operations of the Corporation will be subject to all of the hazards and risks normally incident to exploration and development of mineral properties, any of which could result in damage to life and property, environmental damage and possible legal liability for any and all damage. The activities of the Corporation may be subject to prolonged disruptions due to weather conditions. Hazards, such as unusual or unexpected formation, rock bursts, pressure, cave-ins, flooding or other conditions may be encountered in the drilling and removal of material. While the Corporation may obtain insurance against certain risks in such amounts as it considers adequate, the nature of these risks are such that liabilities could exceed policy limits or could be excluded from coverage. There are also risks against which the Corporation cannot insure or against which it may elect not to insure. The potential costs which could be associated with any liabilities not covered by insurance or in excess of insurance coverage or associated with compliance with applicable laws and regulations may cause substantial delays and require significant capital outlays, adversely affecting the future earnings and competitive position of the Corporation and, potentially, its financial position. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are the particular attributes of the deposit, such as size and grade, proximity to infrastructure, financing costs and governmental regulations, including regulations relating to prices, taxes, royalties, infrastructure, land use, 57741.v11

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importing and exporting and environmental protection. The effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Corporation not receiving an adequate return on invested capital. Fluctuating Prices Factors beyond the control of the Corporation may affect the marketability of any minerals discovered on the New Alger Property. Commodity prices have fluctuated widely and are affected by numerous factors beyond the Corporation’s control. The effect of these factors cannot accurately be predicted. Permits and Licenses The operations of the Corporation will require licenses and permits from various governmental authorities. The Corporation believes that Chilly-Bin presently holds all necessary licenses and permits required to carry on with activities it intends to conduct under applicable laws and regulations. However, licenses and permits are subject to change in regulations. There can be no assurance that the Corporation will be able to obtain all necessary licenses and permits required to carry out exploration, development and mining operations at the New Alger Property. Competition The mineral exploration and mining business is competitive in all its phases. The Corporation will compete with numerous other companies and individuals, including competitors with greater financial, technical and other resources than the Corporation, in search for and the acquisition of attractive mineral properties. The ability of the Corporation to acquire properties in the future will depend not only on its ability to develop the New Alger Property, but also on its ability to select and acquire suitable properties or prospects for mineral exploration. There is no assurance that the Corporation will be able to compete successfully with its competitors in acquiring such properties or prospects. Environmental Regulation The operations of the Corporation will be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions or various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and their directors, officers and employees. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of future operations. Dependence on key personnel The Corporation will be dependent on the services of its senior management. The loss of any such individuals could have a material adverse effect on the Corporation’s operations. Limited financial resources The existing financial resources of the Corporation are not sufficient to carry out the recommended work on the New Alger Property. The Corporation will need to obtain additional financing from external sources in order to 57741.v11 28

fund the exploration and development of the New Alger Property. There is no assurance that the Corporation will be able to obtain such financing on favourable terms, or at all. Failure to obtain financing could result in delay or indefinite postponement of further exploration and development of the New Alger Property. Conflicts Certain of the directors and officers of the Corporation are directors or officers of, or have significant holdings in, other mineral resource companies. Such other companies may compete with the Corporation for the acquisition of mineral property rights. ADDITIONAL INFORMATION Additional information relating to the Corporation is available on SEDAR at www.sedar.com. Financial information relating to the Corporation is provided in the Corporation’s comparative financial statements and MD&A for the year ended May 31, 2005. To request copies of the Corporation’s financial statements and related Management’s Discussion and Analysis, please contact the Corporation at: Blue Power Energy Corporation 360 Bay Street, Suite 500, Toronto, Ontario, Canada M5H 2V6 APPROVAL The undersigned hereby certifies that the contents of this Circular and the sending thereof to the Shareholders have been approved by the Board. DATED March 13, 2006 By Order of the Board of Directors, "Jim Voisin" Jim Voisin President

57741.v11

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APPENDIX A RESOLUTION OF THE SHAREHOLDERS OF BLUE POWER ENERGY CORPORATION (the "Corporation") BE IT RESOLVED: 1.

the Corporation be and is hereby authorized to purchase all of the issued and outstanding shares in the capital of Chilly-Bin Inc., being 25,000,000 in the aggregate, in exchange for the issuance of 25,000,000 common shares in the capital of the Corporation in the aggregate pursuant to the share purchase agreement among the Corporation, as Purchaser, and Alfer Inc., Allan Ringler Services Inc., Elen Enterprises (Ontario) Inc., George Duguay Services Inc., Kalwea Financial Corp., Peter Miller, Nominex Ltd., and Jim Voisin, as Vendors, dated February 28, 2006, as described in the Management Information Circular and Proxy Statement dated March 13, 2006;

2.

any one officer or director of the Corporation is hereby authorized and directed for and on behalf of the Corporation to execute and deliver all documents and to do all acts and things necessary or desirable to give effect to this special resolution, the execution of any such document or the doing of any such other act or thing being conclusive evidence of such determination; and

3.

notwithstanding the foregoing, the directors of the Corporation are hereby authorized, without further approval of or notice to the shareholders of the Corporation, to revoke this resolution at any time before the consummation of the transactions contemplated by the Share Purchase Agreement.

57741.v11

A-1

APPENDIX B SPECIAL RESOLUTION OF THE SHAREHOLDERS OF BLUE POWER ENERGY CORPORATION (the "Corporation") BE IT RESOLVED, as a special resolution that: 1.

the Corporation be and is hereby authorized to amend its articles of amalgamation to provide that the authorized capital of the Corporation is altered by consolidating all of the issued and outstanding common shares of the Corporation without par value on the basis of one post-consolidation common share for every five pre-consolidation common shares;

2.

no fractional common shares of the Corporation shall be issued in connection with the consolidation and, in the event that a shareholder would otherwise be entitled to receive a fractional share upon consolidation, the number of common shares of the Corporation to be received by such shareholder will be rounded up to the next highest whole number of common shares;

3.

any one officer or director of the Corporation is hereby authorized and directed for and on behalf of the Corporation to execute and deliver all documents and to do all acts and things necessary or desirable to give effect to this special resolution, including, without limitation, the determination of the effective date of consolidation and the delivery of articles of amendment in the prescribed form to the director appointed under the Business Corporations Act (Ontario), the execution of any such document or the doing of any such other act or thing being conclusive evidence of such determination; and

4.

notwithstanding the foregoing, the directors of the Corporation are hereby authorized, without further approval of or notice to the shareholders of the Corporation, to revoke this special resolution at any time before a certificate of amendment is issued by the director.

57741.v11

B-1

APPENDIX C SPECIAL RESOLUTION OF THE SHAREHOLDERS OF BLUE POWER ENERGY CORPORATION (the "Corporation") BE IT RESOLVED, as a special resolution that: 1.

the Corporation be and is hereby authorized to amend its articles of amalgamation to change the name of the Corporation from "Blue Power Energy Corporation" to "Cadillac Ventures Inc.", or such other name as may be approved by the board of directors of the Corporation and applicable regulatory authorities;

2.

any one officer or director of the Corporation is hereby authorized to execute and deliver all documents and to do all acts and things necessary or desirable to give effect to this special resolution, including, without limitation, the determination of the effective date of the name change and the delivery of articles of amendment in the prescribed form to the director appointed under the Business Corporations Act (Ontario), the execution of any such document or the doing of any such other act or thing being conclusive evidence of such determination; and

3.

notwithstanding the foregoing, the directors of the Corporation are hereby authorized, without further approval of or notice to the shareholders of the Corporation, to revoke this special resolution at any time before a certificate of amendment is issued by the director.

57741.v11

C-1

APPENDIX D RESOLUTION OF THE SHAREHOLDERS OF BLUE POWER ENERGY CORPORATION (the "Corporation") BE IT RESOLVED THAT: 1.

the establishment of a share option plan for the Corporation, substantially in the form annexed as Appendix E to the Management Information Circular and Proxy Statement dated March 13, 2006, and the granting of share options from time to time pursuant thereto, be and are hereby approved; and

2.

any one officer or director of the Corporation be and is hereby authorized for and on behalf of the Corporation to execute and deliver all such instruments and documents and to perform and do all such acts and things as may be deemed advisable in such individual's discretion for the purpose of giving effect to this resolution.

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APPENDIX E BLUE POWER ENERGY CORPORATION 2006 Share Option Plan The board of directors of Blue Power Energy Corporation (the "Corporation") wishes to establish a share option plan (the "Plan") governing the issuance of share options ("Options") to directors, officers and employees of the Corporation or subsidiaries of the Corporation and persons or corporations who provide services to the Corporation or its subsidiaries on an on-going basis, or have provided or are expected to provide a service or services of considerable value to the Corporation or its subsidiaries. Capitalized terms, not otherwise defined herein, have the meanings ascribed thereto in the TSX Venture Exchange Corporate Finance Manual. The terms and conditions of the Plan for the issuance of Options are as follows: 1.

Purposes

The principal purposes of the Plan are:

2.

(a)

to retain and attract the qualified directors, officers, employees and service providers that the Corporation and its subsidiaries requires;

(b)

to promote a proprietary interest in the Corporation and its subsidiaries;

(c)

to provide an incentive element in compensation; and

(d)

to promote the profitability of the Corporation and its subsidiaries.

Reservation of Shares

Subject to Section 10 of the Plan, the number of common shares in the capital of the Corporation (the "Common Shares") reserved from time to time for issuance to Eligible Optionees (as hereinafter defined) pursuant to Options granted under the Plan shall not exceed 10% of the aggregate number of Common Shares issued and outstanding (calculated on a non-diluted basis) from time to time. 3.

Eligibility

Options shall be granted only to persons, firms or corporations ("Eligible Optionees") who are Directors, Employees or Consultants of the Corporation or a subsidiary of the Corporation. Where the Eligible Optionee is an Employee, Consultant or Management Corporation Employee, the board of directors of the Corporation (the "Board") shall confirm that the Eligible Optionee is a bona fide Employee, Consultant or Management Corporation Employee, as the case may be, of the Corporation or a subsidiary of the Corporation prior to any grant of Options. Options may also be granted to a corporation that is wholly-owned by an Eligible Optionee if the corporation agrees not to effect or permit any transfer of ownership or option of shares of the corporation, nor to issue further shares of any class in the corporation, to any other individual or entity as long as any Options granted to the corporation remain outstanding, without the prior written consent of such stock exchange or stock exchanges or other trading facilities, if any, on which the Common Shares are then listed and/or posted for trading (the "Exchange"). Unless the context otherwise requires, the term Eligible Optionee as used herein shall include any such corporation.

57741.v11

E-1

4.

Granting of Options

The Board may from time to time grant Options to Eligible Optionees. At the time an Option is granted, the Board shall determine the number of Common Shares available for purchase under the Option, the date when the Option is to become effective and, subject to the other provisions of the Plan, all other terms and conditions of the Option. An Eligible Optionee may hold more than one Option at any time, however: (a)

at no time shall the number of Common Shares reserved for issuance pursuant to Options granted to any one Eligible Optionee in any 12-month period exceed 5% of the outstanding Common Shares;

(b)

no one Eligible Optionee may be granted, in any 12 month period, Options to purchase a number of Common Shares equal to more than 5% of the outstanding Common Shares;

(c)

no one Consultant may be granted, in any 12 month period, Options to purchase a number of Common Shares equal to more than 2% of the outstanding Common Shares;

(d)

persons employed to provide Investor Relations Activities may not be granted, in the aggregate in any 12 month period, Options to purchase a number of Common Shares equal to more than 2% of the outstanding Common Shares;

(e)

at no time shall the number of shares reserved for issuance pursuant to Options granted to Insiders under all security based compensation arrangements of the Corporation exceed 10% of the outstanding Common Shares; or

(f)

Insiders may not be granted under all security based compensation arrangements of the Corporation, within any 12 month period, in aggregate a number of Options exceeding 10% of the issued and outstanding Common Shares.

Any Options granted to a corporation referred to in Section 3 hereof shall be included in the calculation of the Options held by an Eligible Optionee. 5.

Exercise Price

The exercise price (the "Exercise Price") of each Option shall be determined in the discretion of the Board at the time of the granting of the Option, provided that the exercise price shall not be lower than the "Market Price". "Market Price" shall mean the last closing price of the Common Shares on the Exchange; provided that in the event the Common Shares are listed on more than one Exchange, the foregoing reference to "the Exchange" shall be a reference to such one as shall be designated by the Board, and to the extent that the Common Shares are not listed on any Exchange, the Market Price shall be such price as is determined by the Board in good faith. 6.

57741.v11

Term and Exercise Periods (a)

All Options shall be for a term determined in the discretion of the Board at the time of the granting of the Options, provided that no Option shall have a term exceeding five years and, unless the Board at any time makes a specific determination otherwise, an Option and all rights to purchase Common Shares pursuant thereto shall expire and terminate immediately upon the Eligible Optionee who holds such Option ceasing to be at least one of a Director, Employee or Consultant of the Corporation or a subsidiary of the Corporation.

(b)

By way of example, without limiting the generality of the foregoing or the discretion of the Board, the Board may, at the time of the granting of the Option, determine:

E-2

7.

(i)

that an Option is exercisable only while the Eligible Optionee remains at least one of a Director, Employee or Consultant and for a limited period of time ("Additional Period") after the Eligible Optionee ceases to be at least one of a Director, Employee or Consultant (which Additional Period may not exceed 90 days or, in the case of an Eligible Optionee engaged in Investor Relations Activities, 30 days);

(ii)

that an Option can be exercisable for an Additional Period or for its remaining term (which Additional Period or remaining term may not exceed one year) after the death of an Eligible Optionee;

(iii)

that an Option is subject to a vesting schedule; or

(iv)

that, subject to the approval of the Exchange, if any, an Option may provide for early exercise and/or termination or other adjustment in the event of a death of a person and in other circumstances, such as if the Corporation shall resolve to sell all or substantially all of its assets, to liquidate or dissolve, or to merge, amalgamate, consolidate or be absorbed with or into any other corporation, if a take-over bid is made for the outstanding Common Shares, or if any change of control of the Corporation occurs.

Non-Assignability

Other than a limited right of assignment, subject to the terms upon which the Option is granted, in the event of the death of an Eligible Optionee to allow the exercise of Options by the Eligible Optionee's legal representative, Options granted hereunder shall not be assignable or transferable. 8.

Payment of Exercise Price

All Common Shares issued pursuant to the exercise of an Option shall be paid for in full in Canadian funds at the time of exercise of the Option and prior to the issue of the Common Shares. All Common Shares issued in accordance with the foregoing shall be issued as fully paid and non-assessable Common Shares. 9.

Non-Exercise

If any Option is not exercised for any reason whatsoever, upon the expiry of such Option pursuant to the terms of its grant or the terms hereof, the shares reserved and authorized for issuance pursuant to such Option shall revert to the Plan and shall be available for other Options. Notwithstanding the foregoing, at no time shall there be outstanding under the Plan, Options exceeding, in the aggregate, the number of Common Shares reserved for issuance pursuant to Options under the Plan. 10.

Adjustment in Certain Circumstances

In the event:

57741.v11

(a)

of any change in the Common Shares through subdivision, consolidation, reclassification, amalgamation, merger or otherwise; or

(b)

of any stock dividend to holders of Common Shares (other than such stock dividends issued at the option of shareholders of the Corporation in lieu of substantially equivalent cash dividends); or

(c)

that any rights are granted to holders of Common Shares to purchase Common Shares at prices substantially below fair market value; or

E-3

(d)

that as a result of any recapitalization, merger, consolidation or otherwise the Common Shares are converted into or exchangeable for any other shares;

then in any such case the Board may make such adjustment in the Plan and in the Options granted under the Plan as the Board may in its sole discretion deem appropriate to prevent substantial dilution or enlargement of the rights granted to, or available for, holders of Options, and such adjustments may be included in the Options. 11.

Expenses

All expenses in connection with the Plan shall be borne by the Corporation. 12.

Compliance with Laws

The Corporation shall not be obliged to issue any Common Shares upon exercise of Options if the issue would violate any law or regulation or any rule of any governmental authority or stock exchange. The Corporation shall not be required to issue, register or qualify for resale any Common Shares issuable upon exercise of Options pursuant to the provisions of a prospectus or similar document, provided that the Corporation shall notify the Exchange, if any, and any other appropriate regulatory bodies in Canada of the existence of the Plan and the issuance and exercise of Options. In addition to any resale restrictions that may be applicable under applicable securities laws, all Options and any Common Shares issued on the exercise of Options shall be legended with a four month hold period from the date the Options are granted, as required by the rules of the Exchange, if any. 13.

Disinterested Shareholder Approval

Disinterested shareholder approval shall be obtained by the Corporation prior to any reduction in the Exercise Price if the Eligible Optionee is an Insider of the Corporation at the time of a proposed reduction in the Exercise Price. 14.

Form of Option Agreement

All Options shall be issued by the Corporation in a form which meets the general requirements and conditions set forth in the Plan and the requirements of the Exchange, if any. 15.

Amendments and Termination of Plan

The Corporation shall retain the right to amend from time to time or to terminate the terms and conditions of the Plan by resolution of the Board. Any amendments shall be subject to the prior consent of any applicable regulatory bodies, including the Exchange, if any. Amendments and termination shall take effect only with respect to Options issued thereafter, provided that they may apply to any Options previously issued with the mutual consent of the Corporation and the Eligible Optionees holding such Options. 16.

Delegation of Administration of the Plan

Subject to the Business Corporations Act (Ontario) or any other legislation governing the Corporation, the Board may delegate to one or more directors of the Corporation, on such terms as it considers appropriate, all or any part of the powers, duties and functions relating to the granting of Options and the administration of the Plan. 17.

Applicable Law

This Plan shall be governed by and construed in accordance with the laws in force in the Province of Ontario.

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18.

Stock Exchange

To the extent applicable, the issuance of any Common Shares pursuant to Options granted under the Plan is subject to approval of the Plan and the grant of the Options by the Exchange, if any, and the Plan shall be subject to the ongoing requirements of such Exchange, if any.

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E-5

APPENDIX F CHILLY-BIN INC. AUDITED FINANCIAL STATEMENTS

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F-1

Chilly - Bin Inc. (incorporated under the laws of Ontario)

Financial Statements December 31, 2005

February 15, 2006

Auditor's Report To the Shareholders of Chilly - Bin Inc. We have audited the balance sheet of Chilly - Bin Inc. as at December 31, 2005 and the statement of loss and deficit and cash flows for the period from date of incorporation on October 21, 2004 to December 31, 2005. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2005 and the results of its operations and its cash flows for the period from the date of incorporation on October 21, 2004 to December 31, 2005 in accordance with Canadian generally accepted accounting principles.

"McCarney Greenwood LLP" Toronto, Canada

McCarney Greenwood LLP Chartered Accountants

Chilly - Bin Inc. (incorporated under the laws of Ontario)

Balance Sheet

Page 2 December 31, 2005

Assets Current assets Cash

$

23,664

Mining property (Note 2)

91,407 $

115,071

$

19,733

Liabilities Current liabilities Accounts payable and accrued liabilities Shareholders' Equity Unlimited number of common shares 25,000,000 issued and outstanding (Note 3)

103,411

(Deficit) $

Approved by the Sole Director

"Frank Smeenk"

(8,073) 95,338 115,071

Director

Chilly - Bin Inc. Statement of (Loss) and (Deficit)

Page 3 For the period from date of incorporation (October 21, 2004) to December 31, 2005

Expenses Professional fees Bank charges

(Loss) for the period and (deficit) end of period

$

7,993 80 8,073

$

(8,073)

Chilly - Bin Inc. Statement of Cash Flows

Page 4 For the period from date of incorporation (October 21, 2004) to December 31, 2005

Cash flows from operating activities (Loss) for the period Increase (decrease) in non-cash working capital Accounts payable and accrued liabilities Cash flows from operating activities

$

19,733 11,660

Cash flow from financing activity Issue of common shares Cash flows from financing activity

48,000 48,000

Cash flows from investing activities Cash payment for mining property Mining property expenditures Cash flows (used) in investing activities

(19,589) (16,407) (35,996)

Increase in cash during the period

23,664

Cash, beginning of period Cash, end of period

(8,073)

$

23,664

Chilly - Bin Inc. Notes to Financial Statements December 31, 2005 1.

Page 5

Incorporation and nature of business Chilly-Bin Inc. ("the Company") was incorporated on October 21, 2004 under the laws of the province of Ontario. The Company acquired a property known as "The New Alger Property" or ("the property") located in the Township of Cadillac in Quebec, Canada pursuant to an agreement of purchase and sale dated January 31, 2005. The Company acquired the property from Alfer Inc. for $75,000. The purchase price was settled with a cash payment of $19,589 and 5,000,000 shares of the Company. In addition, Alfer Inc. was granted a 1% Net Smelter Returns production royalty in accordance with a Royalty Agreement dated January 31, 2005.

2.

Significant accounting policies The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant accounting policies are as follows: (a)

Mining Property Mining property is recorded at cost. The costs relating to the acquisition and exploration of this property are capitalized until the commencement of commercial activities. If economically profitable ore reserves are developed, the capitalized costs are amortized using units of production. If it is determined that the acquisition and exploration costs are not recoverable over the estimated useful life of the property, or if the project is abandoned, the properties are written down to their net realizable value. The mining property is reviewed for impairment whenever events or circumstances indicate that its carrying amount may not be recoverable.

(b)

Asset retirement obligation The company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the mining property is increased by the same amount as the liability. Changes in the liability due to the passage of time will be recognized as an increase to the liability and a charge to the statement of income and loss. As at December 31, 2005 the Company has determined that it does not have material asset retirement obligations. Accordingly, no such liability has been reflected in these financial statements.

Chilly - Bin Inc. Notes to Financial Statements December 31, 2005 (c)

Page 6

Income taxes The Company follows the asset and liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and measured using the substantially enacted tax rates and laws that will be in effect when the differences are expected to reverse. Changes to these balances are recognized in income in the period in which they occur. The benefit of temporary differences is not recognized unless their recoverability is considered more likely than not.

2. Mining property Mining property is comprised of the following: Acquisition cost Taxes Other

$ $

75,000 10,399 6,008 91,407

3. Share capital 2005 Number of shares Summary of issued capital Common shares

25,000,000

Amount $

103,411

$

103,411 .

During the year, 20,000,000 shares were issued from treasury for cash consideration of $48,000. Also 5,000,000 shares at an effective price of $0.011 per share or ($55,411) were issued to Alfer Inc. as consideration for the property. 4. Income taxes Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes. The Company has one future income tax asset as follows:

Chilly - Bin Inc. Notes to Financial Statements December 31, 2005

Page 7

2005 Future tax asset Non-capital loss carried forward Total future tax asset Valuation allowance for future tax asset Net future tax asset

$ $

1,503 1,503 (1,503) -

The Company has provided a valuation allowance equal to the future tax asset as it is not "more likely than not" that it will be realized. The Company's income tax expense (recovery) for the period ended December 31, 2005 is Nil. The Company's income tax expense (recovery) reconciliation to the statutory tax rates is summarized as follows:

(Loss) before income taxes Income tax (recovery) at the combined federal and provincial tax rate of 18.62% Future income tax benefit not recognized Future income tax (recovery)

2005 $ (8,073) $ $

(1,503) 1,503 -

The Company has approximately $8,000 in non-capital loss carryforwards that can be applied against income in the future. The benefit of these non-capital losses has not been recognized in these financial statements. The non-capital loss will expire as follows: 2015

$

8,000

APPENDIX G BLUE POWER ENERGY CORPORATION AND CHILLY-BIN INC. UNAUDITED PRO FORMA FINANCIAL STATEMENTS

57741.v11

G-1

Blue Power Energy Corporation (incorporated under the laws of Ontario)

Pro forma Financial Statements December 31, 2005

March 13, 2006

Compilation Report on Pro forma Financial Statements To the Directors of Blue Power Energy Corporation We have read the accompanying Unaudited Pro forma balance sheet of Blue Power Energy Corporation as at December 31, 2005, and the Unaudited Pro forma statement of operations and deficit for the period ended December 31, 2005 and have performed the following procedures: 1. Compared the figures in the column caption Unaudited Blue Power Energy Corporation Interim Balance Sheet as at November 30, 2005 and for the six month period ended November 30, 2005 to the Unaudited six months statement of the Company and found them to be in agreement. 2. Compared the figures in the column captioned Audited Chilly-Bin Inc. as at December 31, 2005 and for the period from date of incorporation (October 21, 2004) to December 31, 2005 to the audited financial statements of that company and found them to be in agreement. 3. Recalculated the adjustments for the month of December 2005 and compared such amounts to Note 2 and found the amounts to be arithmetically correct. 4. Recalculated the addition of the column captioned Unaudited Blue Power Energy Corporation Interim Balance Sheet as at November 30, 2005 to the column captioned Adjustment for the month of December 2005 (Note 2) and found the amounts to be the same as those listed in the column captioned Unaudited Blue Power Energy Corporation as at December 31, 2005. 5. Recalculated the addition of the column captioned Unaudited Blue Power energy Corporation for the Six months period ended November 31, 2005 to the column captioned Adjusted for the month of December 2005 (Note 2) and found the amounts to be the same as these listed in the column captioned Unaudited Blue Power Energy Corporation for the Seven months ended December 31, 2005. 6. Made enquiries of certain officials of the Company who have responsibility for financial and accounting matters about: (a) the basis for determination of the Pro forma adjustments;and (b) whether the Pro forma financial statements comply as to form in all material respects with Canadian standards. The officials: (a) described to us the basis for determination of the Pro forma adjustments, and (b) stated that the Pro forma financial statements comply as to form in all material respects with Canadian standards. 7. Read the notes to the Pro forma financial statements and found them to be consistent with the basis described for determination of the Pro forma adjustments. 8. Recalculated the application of the Pro forma adjustments to the column captioned Blue Power Energy Corporation Pro forma as at December 31, 2005 and found the amounts to be arithmetically correct. 9. Recalculated the application of Pro forma adjustments to the column captioned Blue Power Energy Corporation Pro forma for the period ended December 31, 2005 and found the amounts to be arithmetically correct. A Pro forma financial statement is based on management assumptions and adjustments which are inherently subjective. The foregoing procedures are substantially less than either an audit or a review, the objective of which is the expression of assurance with respect to management's assumptions, the Pro forma adjustments, and the application of the adjustments to the historical financial information. Accordingly, we express no such assurance. The foregoing procedures would not necessarily reveal matters of significance to the Pro forma financial statements, and we therefore make no representation about the sufficiency of the procedures for the purpose of a reader of such statements. "McCarney Greenwood LLP" Toronto, Canada

McCarney Greenwood LLP Chartered Accountants

Blue Power Energy Corporation (incorporated under the laws of Ontario) Unaudited Pro forma Balance Sheet

Unaudited Blue Power Energy Corporation Interim Balance Sheet as at November 30, 2005

Page 2

Adjustments for the month of December 2005 (Note 2)

Unaudited Blue Power Energy Corporation as at December 31, 2005

Audited Chilly-Bin Inc. December 31, 2005

Pro forma adjustments (Note 4)

Unaudited Blue Power Energy Corporation Pro forma as at December 31, 2005

Assets Current assets Cash Sundry receivables

$

Mining property $

94 2,927 3,021

(a) $169,500 $

3,021

$

169,594 $ 2,927 172,521

23,664 $ 23,664

172,521 $

91,407 115,071

33,747 $ 33,747

19,733 19,733

$

(a) 154,662 $

193,258 2,927 196,185 246,069 442,254

Liabilities Current liabilities Accounts payable and accrued liabilities

$

$

33,747 33,747

(b)

$35,000 $

88,480 88,480

Shareholders' Equity Share capital (Note 3) Contributed surplus Warrants (Note 3) Deficit

2,062,663 1,035 (2,094,424) $

(b)

57,427

(c) (d)

50,850 61,223

(30,726) 3,021

Approved by the Board "Maurice Stekel"

2,120,090 1,035 50,850 (2,033,201) $

103,411 (c) (8,073) (d)

138,774 172,521 $

Director

95,338 115,071

"Jim Voisin"

146,589

2,370,090 1,035 50,850 (2,068,201)

(26,927) $

353,774 442,254

Director

Blue Power Energy Corporation Unaudited Pro forma Statement of Operations and Deficit For the period ended December 31, 2005

Unaudited Blue Power Energy Corporation for the Six months ended November 30, 2005

Adjustments for the month of December 2005 (Note 2)

Unaudited Blue Power Energy Corporation for the Seven months ended December 31, 2005

Page 3

Audited Chilly-Bin Inc.from date of incorporation (October 21, 2004) to December 31, 2005

Unaudited Blue Power Energy Corporation Pro forma for the period ended December 31, 2005

Pro forma adjustments (Note 4)

Expenses Accounting and corporate services Management fees Professional fees Office and general Shareholder relations (Loss) for the period before income taxes Future income tax (recovery) Net (loss) income for the period Deficit beginning of period Restructuring cost Deficit end of period

Basic and diluted (loss) per share

$

12,073 6,000 850 1,156 11,793

$

(31,872) (d) (31,872) (2,053,112) (9,440) $ (2,094,424)

$

(61,223)

12,073 $ 6,000 850 1,156 11,793

(31,872) (61,223) 29,351 (2,053,112) (9,440) $ 2,033,201 $

$ 7,993 (e) 80 (f) (8,073) (8,073) (8,073)

$ 27,007 (80)

12,073 6,000 35,850 1,156 11,793

(66,872) (61,223) (5,649) (2,053,112) (9,440) $ (2,068,201)

$

(0.00)

Blue Power Energy Corporation Notes to Unaudited Pro forma Financial Statements December 31, 2005 1.

Page 4

Basis of Presentation and Acquisition of Chilly - Bin Inc. (a) Basis of Presentation These Unaudited Pro forma financial statements have been prepared in connection with the proposed acquisition of Chilly-Bin Inc. ("Chilly - Bin") by Blue Power Energy Corporation ("Blue Power"). In compiling the Unaudited Pro forma balance sheet and the Pro-forma statement of operations and deficit, the following historical information was used: (i)

the Unaudited balance sheet of Blue Power as at November 30, 2005, and the Unaudited statement of operations and deficit for the period from April 1, 2005 to November 30, 2005.

(ii)

the audited balance sheet of Chilly - Bin as at December 31, 2005 and the audited statements of operations and deficit for the period from date of incorporation (October 21, 2004) to December 31, 2005.

These Unaudited Pro forma financial statements should be read in conjunction with the financial statements of the companies included elsewhere in this information booklet. Acquisition of Chilly - Bin (b) The Unaudited Pro forma balance sheet as at December 31, 2005 and the Unaudited Pro forma statement of operations and deficit for the period ended December 31, 2005 gives effect to the following transactions, all of which will become effective on the acquisition date as if, for illustrative purposes only, the acquisition date was December 31, 2005. (i)

Blue Power will acquire all of the issued and outstanding shares of Chilly-Bin in exchange for the issuance by Blue Power of one common share in the capital of Blue Power for each common share in the capital of Chilly-Bin. The directors of Blue Power have placed a value of $0.01 per share on this transaction for a gross price of $250,000.

(ii)

Blue Power, immediately following the acquisition of Chilly-Bin will consolidate its issued and outstanding common shares on the basis of one post-acquisition common share for every five pre-acquisition common shares issued and outstanding.

The acquisition of Chilly-Bin by Blue Power has been accounted for as a purchase of ChillyBin by Blue Power. Accordingly the assets and liabilities of Chilly-Bin have been brought forward at their fair values and the assets and liabilities of Blue Power are brought forward at their book value. The acquisition can be summarized as follows:

Blue Power Energy Corporation Notes to Unaudited Pro forma Financial Statements December 31, 2005

Page 5

Cash Mining property

Chilly - Bin $ 23,664 250,000 273,664

Accounts payable and accrued liabilities Net assets Consideration Negative goodwill

19,733 $ 253,931 $ 250,000 (3,931)

Since the consideration paid is less than the fair value of the assets received the transaction has resulted in negative goodwill. Negative goodwill is applied against non cash assets. The only non cash asset of the Company is the Mining property hence this will be written down by the negative goodwill. The purchase equation after this adjustment would therefore be as follows:

2.

Cash Mining property

Chilly - Bin $ 23,664 246,069 269,733

Accounts payable and accrued liabilities Net assets Consideration

19,733 $ 250,000 $ 250,000

Transaction between November 30, 2005 and December 31, 2005 On December 30, 2005 Blue Power completed a private placement under which it issued 8,475,000 flow-through units at a price of $0.02 per unit for aggregate gross proceeds of $169,500. Each unit comprised one flow-through common share and one-third of one common share purchase warrant. Each whole common share purchase warrant entitles the holder to acquire one common share at a price of $0.03 per common share until December 30, 2006. The fair value of the warrants was estimated using the Black - Scholes option pricing model. The following assumptions were used: expected divided yield - 0%, expected volatility - 361%, risk free interest rate of 3.85% and expected life of 12 months. The fair value was calculated as $50,850 and is shown as a separate component of shareholders' equity. A future tax liability is recognized upon the renunciation of tax pools and share capital is reduced by the estimated costs of renounced tax deductions which is $61,223. The Company has not expended the amount renounced, however under the "look back rule" it has one year in which to do this.

Blue Power Energy Corporation Notes to Unaudited Pro forma Financial Statements December 31, 2005

Page 6

In accordance with CICA Handbook EIC146, a company is allowed to offset the future tax liability by recognizing non-capital losses carried forward to the extent of the future tax liability even if the company does not feel that it is "more likely than not" that these losses will be utilized. Under EIC 146 this recognition is to occur when the tax forms are filed with the Canada Revenue Agency which may not be the same period as the renunciation of the expenses. In this Company the renunciation took place prior to December 31, 2005 however the forms were not filed with the Canada Revenue Agency until subsequent to this period. Management recognized that this is mostly a timing issue and therefore for the purpose of this Pro-forma financial statement it will treat the recognition of the non-capital losses to offset the future tax liability as if the forms were filed with the Canada Revenue Agency prior to December 31, 2005 The following summarizes the future income taxes of the flow-through shares and the offset by the non-capital losses carried forward: 2005 Future tax liability Renunciation of exploration expenditures Future tax asset Non-capital losses carried forward Net future tax asset Valuation allowance for future tax asset Net future taxes

$

61,223

394,792 333,569 (333,569) $ -

The Company provided a valuation allowance equal to the net future tax assets as it is "not more likely than not" that it will be utilized. (a)

Cash received for the issuance of 8,475,000 flow through units

$ 169,500

(b)

Issuance of 8,475,000 flow through shares Warrant valuation Tax effect of flow - through shares

$ 169,500 (50,850) (61,223) $ 57,427

(c)

Warrant valuation for the 2,825,000 warrants issued

$

50,850

(d)

Future income tax recovery as a result of recognizing non-capital loss carry forwards

$

61,223

Blue Power Energy Corporation Notes to Unaudited Pro forma Financial Statements December 31, 2005 3.

Page 7

Share Capital Unlimited number of non-participating, redeemable, voting Class B preference shares Unlimited number of Class C preference shares issuable in series Unlimited number of common shares 2005 Shares Amount Common shares balance at November 30, 2005 Issued on private placement (i) Warrant valuation (i) Tax effect of flow-through shares (i) Acquisition of Chilly-Bin Inc. (ii) Post acquisition consolidation on the basis of one for five (ii)

4.

32,345,728 8,475,000 25,000,000 (52,656,583) 13,164,145

$

$

2,062,663 169,500 (50,850) (61,223) 250,000 2,370,090

(i)

See Note 2 for a full description of the private placement, the warrant valuation and the tax effect of the flow-through shares.

(ii)

See Note 1 for a full description of the acquisition of Chilly-Bin Inc. and the post acquisition consolidation of the common shares.

Pro forma adjustments The following Pro forma adjustments gives effect to the following: (a)

the fair value of the property the book value of the property

$ 246,069 91,407 $ 154,662

(b)

the accrual of professional fees on the acquisition of Chilly-Bin Inc.

$

(c)

the acquisition of Chilly-Bin Inc. removing the share capital of Chilly-Bin Inc. on consolidation consolidation of post acquisition share capital on a one for five basis

$ 250,000 (103,411) $ 146,589

(d)

the accrual of professional fees on the acquisition of Chilly-Bin Inc. removing the deficit of Chilly-Bin Inc.

$ (35,000) 8,073 $ (26,927)

(e)

the accrual of professional fees on the acquisition of Chilly-Bin Inc. removing the professional fees of Chilly-Bin Inc. prior to it's acquisition

$

(f)

removing the bank charges of Chilly-Bin Inc. prior to it's acquisition

35,000

$

35,000 (7,993) 27,007

$

(80)

APPENDIX H CHANGE OF AUDITOR

57741.v11

H-1

STEWART WRIGHT CHARTERED ACCOUNTANT 538 QUEEN STREET WEST, 2ND FLOOR TORONTO, ONTARIO M5V 2B5 TELEPHONE: 416 214-4379, FAX: 416 214-4378

October 13, 2004 Blue Power Energy Corporation Ontario Securities Commission Alberta Securities Commission British Columbia Securities Commission

Dear Sir/Madam: Re: Notice of Change of Auditors As required by National Instrument 51-102; I have reviewed the information contained in the Notice of Change of Auditor of Blue Power Energy Corporation dated September 20, 2004 (the “Notice”) and, based on my knowledge of such information at this time, I do not disagree with the information contained in the Notice.

Yours truly,

Stewart Wright Chartered Accountant

Alberta Securities Commission British Columbia Securities Commission Ontario Securities Commission

Dear Sir(s)/ Madam(s) Re:

Blue Power Energy Corporation

We have read the notice of Blue Power Energy Corporation dated September 20, 2004 and we are in agreement with the statements contained in such Notice. Yours very truly,

"McCarney Greenwood LLP"

McCarney Greenwood LLP Chartered Accountants

September 20, 2004

APPENDIX I AUDIT COMMITTEE TERMS OF REFERENCE BLUE POWER ENERGY CORPORATION (the “Corporation”) Charter of the Audit Committee of the Board of Directors I

PURPOSE

The Audit Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of the Corporation. The Committee has the authority to conduct any investigation appropriate to its responsibilities, and it may request the external auditors as well as any officer of the Corporation, or outside counsel for the Corporation, to attend a meeting of the Committee or to meet with any members of, or advisors to, the Committee. The Committee shall have unrestricted access to the books and records of the Corporation and has the authority to retain, at the expense of the Corporation, special legal, accounting, or other consultants or experts to assist in the performance of the Committee’s duties. The Committee shall review and assess the adequacy of this Charter annually and submit any proposed revisions to the Board for approval. In fulfilling its responsibilities, the Committee will carry out the specific duties set out in Part III of this Charter. II

AUTHORITY OF THE AUDIT COMMITTEE

The Committee shall have the authority to: (a)

engage independent counsel and other advisors as it determines necessary to carry out its duties;

(b)

set and pay the compensation for advisors employed by the Committee; and

(c)

communicate directly with the external auditors.

III

RESPONSIBILITIES

A

Independent Auditors

1.

The Committee shall recommend to the Board the external auditors to be nominated, shall set the compensation for the external auditors, provide oversight of the external auditors and shall ensure that the external auditors report directly to the Committee.

2.

The Committee shall be directly responsible for overseeing the work of the external auditors, including the resolution of disagreements between management and the external auditors regarding financial reporting.

3.

The Committee shall review the external auditors’ audit plan, including scope, procedures and timing of the audit.

4.

The Committee shall review the results of the annual audit with the external auditors, including matters related to the conduct of the audit.

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5.

The Committee shall obtain timely reports from the external auditors describing critical accounting policies and practices, alternative treatments of information within generally accepted accounting principles that were discussed with management, their ramifications, and the external auditors' preferred treatment and material written communications between the Corporation and the external auditors.

6.

The Committee shall pre-approve all non-audit services not prohibited by law to be provided by the external auditors.

7.

The Committee shall review fees paid by the Corporation to the external auditors and other professionals in respect of audit and non-audit services on an annual basis.

8.

The Committee shall review and approve the Corporation's hiring policies regarding partners, employees and former partners and employees of the present and former auditors of the Corporation.

9.

The Committee shall monitor and assess the relationship between management and the external auditors and monitor and support the independence and objectivity of the external auditors.

B

Financial Accounting and Reporting Process

1.

The Committee shall review the annual audited financial statements to satisfy itself that they are presented in accordance with generally accepted accounting principles and report thereon to the Board and recommend to the Board whether or not same should be approved prior to their being filed with the appropriate regulatory authorities. The Committee shall also review the interim financial statements. With respect to the annual audited financial statements, the Committee shall discuss significant issues regarding accounting principles, practices, and judgments of management with management and the external auditors as and when the Committee deems it appropriate to do so. The Committee shall satisfy itself that the information contained in the annual audited financial statements is not significantly erroneous, misleading or incomplete and that the audit function has been effectively carried out.

2.

The Committee shall review management’s discussion and analysis relating to annual and interim financial statements, earnings press releases, and any other public disclosure documents that are required to be reviewed by the Committee under any applicable laws prior to their being filed with the appropriate regulatory authorities.

3.

The Committee shall meet no less frequently than annually with the external auditors and the Chief Financial Officer or, in the absence of a Chief Financial Officer, with the officer of the Corporation in charge of financial matters, to review accounting practices, internal controls and such other matters as the Committee, Chief Financial Officer or, in the absence of a Chief Financial Officer, with the officer of the Corporation in charge of financial matters, deems appropriate.

4.

The Committee shall be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements other than earnings press releases, and periodically assess the adequacy of these procedures.

5.

The Committee shall establish procedures for:

57741.v11

(a)

the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and

(b)

the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.

I-2

6.

The Committee shall inquire of management and the external auditors about significant risks or exposures, both internal and external, to which the Corporation may be subject, and assess the steps management has taken to minimize such risks.

7.

The Committee shall review the post-audit or management letter containing the recommendations of the external auditors and management’s response and subsequent follow-up to any identified weaknesses.

8.

The Committee shall ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel.

9.

The Committee shall provide oversight to related party transactions entered into by the Corporation.

C

Other Responsibilities

The Committee shall perform any other activities consistent with this Charter and governing law, as the Committee or the Board deems necessary or appropriate. IV

COMPOSITION AND MEETINGS

1.

The Committee and its membership shall meet all applicable legal, regulatory and listing requirements, including, without limitation, securities laws, the listing requirements of any stock exchange or stock exchanges or other trading facilities, if any, on which the common shares in the capital of the Corporation are then listed and/or posted for trading, the Business Corporations Act (Ontario) and all applicable securities regulatory authorities.

2.

The Committee shall be composed of three or more directors as shall be designated by the Board from time to time, one of whom shall be designated by the Board to serve as Chair.

3.

The Committee shall meet at least quarterly, at the discretion of the Chair or a majority of its members, as circumstances dictate or as may be required by applicable legal or listing requirements. A minimum of two and at least 50% of the members of the Committee present either in person or by telephone shall constitute a quorum.

4.

If within one-half of an hour of the time appointed for a meeting of the Committee, a quorum is not present, the meeting shall stand adjourned to the same time on the next business day following the date of such meeting at the same place. If at the adjourned meeting a quorum as hereinbefore specified is not present within one-half of an hour of the time appointed for such adjourned meeting, such meeting shall stand adjourned to the same time on the next business day following the date of such meeting at the same place. If at the second adjourned meeting a quorum as hereinbefore specified is not present, the quorum for the adjourned meeting shall consist of the members then present.

5.

If and whenever a vacancy shall exist, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.

6.

The time and place at which meetings of the Committee shall be held, and procedures at such meetings, shall be determined from time to time by, the Committee. A meeting of the Committee may be called by letter, telephone, facsimile, email or other communication equipment, by giving at least 48 hours notice, provided that no notice of a meeting shall be necessary if all of the members are present either in person or by means of conference telephone or if those absent have waived notice or otherwise signified their consent to the holding of such meeting.

57741.v11

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7.

Any member of the Committee may participate in a meeting of the Committee by means of conference telephone or other communication equipment, and the member participating in a meeting pursuant to this paragraph shall be deemed, for purposes hereof, to be present in person at the meeting.

8.

The Committee shall keep minutes of its meetings which shall be submitted to the Board. The Committee may, from time to time, appoint any person who need not be a member, to act as a secretary at any meeting.

9.

The Committee may invite such officers, directors and employees of the Corporation and its subsidiaries as it may see fit, from time to time, to attend meetings of the Committee.

10.

Any matters to be determined by the Committee shall be decided by a majority of votes cast at a meeting of the Committee called for such purpose. Actions of the Committee may be taken by an instrument or instruments in writing signed by all members of the Committee, and such actions shall be effective as though they had been decided by a majority of votes cast at a meeting of the Committee called for such purpose. All decisions or recommendations of the Committee shall require the approval of the Board prior to implementation.

57741.v11

I-4

BLUE POWER ENERGY CORPORATION (the "Corporation") Procedures for Receipt of Complaints and Submissions Relating to Accounting Matters 1.

The Corporation shall inform employees on the Corporation’s intranet if there is one, or via a newsletter or e-mail that is disseminated to all employees at least annually, of the officer (the “Complaints Officer”) designated from time to time by the Audit Committee to whom complaints and submissions can be made regarding accounting, internal accounting controls or auditing matters or issues of concern regarding questionable accounting or auditing matters.

2.

The Complaints Officer shall be informed that any complaints or submissions so received must be kept confidential and that the identity of employees making complaints or submissions shall be kept confidential and shall only be communicated to the Audit Committee or the Chair of the Audit Committee.

3.

The Complaints Officer shall be informed that he or she must report to the Audit Committee as frequently as such Complaints Officer deems appropriate, but in any event no less frequently than on a quarterly basis prior to the quarterly meeting of the Audit Committee called to approve interim and annual financial statements of the Corporation.

4.

Upon receipt of a report from the Complaints Officer, the Audit Committee shall discuss the report and take such steps as the Audit Committee may deem appropriate.

5.

The Complaints Officer shall retain a record of a complaint or submission received for a period of six years following resolution of the complaint or submission.

57741.v11

I-5

BLUE POWER ENERGY CORPORATION (the "Corporation") Procedures for Approval of Non-Audit Services 1.

The Corporation’s external auditors shall be prohibited from performing for the Corporation the following categories of non-audit services: (a)

bookkeeping or other services related to the Corporation’s accounting records or financial statements;

(b)

financial information systems design and implementation;

(c)

appraisal or valuation services, fairness opinion or contributions-in-kind reports;

(d)

actuarial services;

(e)

internal audit outsourcing services;

(f)

management functions;

(g)

human resources;

(h)

broker or dealer, investment adviser or investment banking services;

(i)

legal services;

(j)

expert services unrelated to the audit; and

(k)

any other service that the Canadian Public Accountability Board determines is impermissible.

2.

In the event that the Corporation wishes to retain the services of the Corporation’s external auditors for tax compliance, tax advice or tax planning, the Chief Financial Officer of the Corporation or officer of the Corporation in charge of financial matters shall consult with the Chair of the Audit Committee, who shall have the authority to approve or disapprove on behalf of the Audit Committee, such non-audit services. All other non-audit services shall be approved or disapproved by the Audit Committee as a whole.

3.

The Chief Financial Officer of the Corporation or officer of the Corporation in charge of financial matters shall maintain a record of non-audit services approved by the Chair of the Audit Committee or the Audit Committee for each fiscal year and provide a report to the Audit Committee no less frequently than on a quarterly basis.

57741.v11

I-6

APPENDIX J AUDITED FINANCIAL STATEMENTS OF BLUE POWER ENERGY CORPORATION FOR THE FINANCIAL YEARS ENDED MAY 31, 2005, 2004, 2003, 2002 AND 2001

57741.v11

J-1

Blue Power Energy Corporation (Incorporated under the laws of Ontario)

Financial Statements May 31, 2005 and 2004

August 17, 2005

Auditors' Report To the Shareholders of Blue Power Energy Corporation We have audited the balance sheets of Blue Power Energy Corporation as at May 31, 2005 and 2004 and the statements of operations and deficit and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at May 31, 2005 and 2004 and the results of its operations and its cash flows for each of the years then ended in accordance with Canadian generally accepted accounting principles.

"McCarney Greenwood LLP" Toronto, Canada

McCarney Greenwood LLP Chartered Accountants

Blue Power Energy Corporation (Incorporated under the laws of Ontario)

Balance Sheets

Page 2 May 31, 2005

2004

Assets Current assets Cash Sundry receivables

$ $

2,989 $ 1,051 4,040 $

397 4,535 4,932

152,491 $ 12,082 164,573

96,585 7,100 103,685

Liabilities Current liabilities Accounts payable and accrued liabilities Due to a related party (Note 5)

$

Shareholders' Deficit Share capital (Note 3) Contributed surplus (Deficit)

Approved by the Board

1,891,544 1,891,544 1,035 1,035 (2,053,112) (1,991,332) (160,533) (98,753) $ 4,040 $ 4,932

"Gordon Wilton"

Director

"Gerald Iscove"

Director

Blue Power Energy Corporation Statements of Operations and Deficit

Page 3 Year ended May 31, 2005 2004

Expenses Accounting and corporate services Legal and audit Management fees Office and general Shareholder relations Write-down of amount due from a related company

$

Less: Interest and other income Net (loss) for the year (Deficit), beginning of year (Deficit), end of year

26,663 $ 5,482 24,000 664 7,417 64,226

17,400 6,275 24,000 42 11,986 31,554 91,257

(2,446)

(1,257)

(61,780)

(90,000)

(1,991,332)

(1,901,332)

$ (2,053,112) $ (1,991,332)

___________________________________________________________________________

Basic and diluted (loss) per share (Note 3(c))

$

(0.02) $

(0.02)

Blue Power Energy Corporation Statements of Cash Flows

Page 4 Year ended May 31, 2005 2004

Cash flows from operating activities Net (loss) for the year Adjustment for: Write-down of amount due from a related party Changes in non-cash working capital: Sundry receivables Accounts payable and accrued liabilities Due to a related party Cash flows from (used in) operating activities

$

-

Increase (Decrease) in cash during the year Cash, beginning of year Cash, end of year

(61,780) $

31,554

3,484 55,906 4,982 2,592

(4,360) 51,895 7,100 (3,811)

2,592

(3,811)

397 $

(90,000)

2,989 $

4,208 397

Blue Power Energy Corporation Notes to Financial Statements May 31, 2005 and 2004 1.

Page 5

Going concern assumption These financial statements are prepared using Canadian generally accepted accounting principles that are applicable to a going concern which assumes the Company will continue to operate throughout its next fiscal period subsequent to May 31, 2005. The use of these principles may be inappropriate since there is significant doubt regarding the appropriateness of this assumption. Significant doubt exists because the Company is in a net liability position, there is and there has been substantial operating losses in the current and prior years and the Company has no operating assets. The future of the Company is currently dependent upon its ability to obtain sufficient cash from external financing, and/or related parties to pay the Company's liabilities as they become due. These statements do not include any adjustments which would be necessary if the going concern assumption was not used.

2.

Summary of significant accounting policies The preparation of these financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant accounting policies are as follows: (a)

Income taxes The company follows the asset and liability method of accounting for income taxes. Under this method, income taxes are recognized for the future income tax consequences attributed to differences between the financial statement carrying values and their respective income tax bases. Future income tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the period that includes the enactment date. Future income tax assets are evaluated and if realization is not considered "more likely than not", a valuation allowance is provided.

(b)

Stock based compensation The CICA Handbook Section 3870, Stock-based Compensation and Other Stockbased Payments, requires that compensation for option awards to employees be recognized in the financial statements at fair value for options granted in fiscal years beginning on or after January 1, 2004. The Company, as permitted by CICA

Blue Power Energy Corporation Notes to Financial Statements May 31, 2005 and 2004 2.

Page 6

Summary of significant accounting policies (continued) Handbook Section 3870, has adopted this section prospectively for new option awards granted on or after June 1, 2003. Accordingly, a fair value compensation expense would be reported if any options were granted and vested during the current year.

3.

Share capital (a)

Authorized Unlimited number of non-participating, redeemable, voting Class B preference shares Unlimited number of Class C preference shares issuable in series Unlimited number of common shares Issued Common shares Balance, beginning and end of year

2005 Shares 3,825,873

Amount $ 1,891,544

2004 Shares 3,825,873

Amount $ 1,891,544

(b)

Stock options There were no stock options granted, expired, cancelled or exercised during the current or prior year. In addition there were no stock options outstanding at May 31, 2005 or May 31, 2004.

(c)

Basic and diluted (loss) per share The following table sets forth the computation of basic and diluted (loss) per share: 2005 Numerator: (Loss) for the year $ (61,780) Numerator for basic and diluted (loss) per share $ (61,780) Denominator: Weighted average number of common shares 3,825,873 Denominator for basic (loss) per share 3,825,873 Dilutive securities (i) Denominator for diluted (loss) per share 3,825,873

2004 $

(90,000)

$

(90,000) 3,825,873 3,825,873 3,825,873

Basic (loss) per share

$

(0.02)

$

(0.02)

Diluted (loss) per share

$

(0.02)

$

(0.02)

Blue Power Energy Corporation Notes to Financial Statements May 31, 2005 and 2004 3.

Share capital (continued) (i)

4.

Page 7

Diluted (loss) per share is the same as basic (loss) per share as the Company did not have any dilutive securities outstanding for either of the 2 years.

Income taxes Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes. There are no future tax liabilities. The Company has 2 future tax assets as follows: 2004

2005 Future tax assets Non-capital losses carried forward Exploration expenditures Total future tax assets Valuation allowance for future tax assets Net future tax assets

$

$

383,269 22,321 405,590 (405,590) -

$

$

505,824 22,321 528,145 (528,145) -

The Company provided a valuation allowance equal to the future tax asset because it is not more likely than not that the future tax asset will be realized. The Company's income tax expense for each of the years ended is $Nil. The Company's actual income tax expense for each of the years ended is made up as follows: 2005 (Loss) before income taxes

$

(61,780)

Income taxes recovery at combined federal and provincial rate of 36.12% and 36.12% respectively Taxable benefit not recognized Actual income tax expense $

22,315 (22,315) -

2004 $

(90,000)

$

32,508 (32,508) -

As at May 31, 2005 the Company has non-capital losses available for carry forward of approximately $1,061,100 and Canadian exploration expenditures of approximately $61,800 available to be applied against taxable income in future years. No benefit from these amounts has been recorded in these financial statements.

Blue Power Energy Corporation Notes to Financial Statements May 31, 2005 and 2004 4.

Page 8

Income taxes (continued) The non-capital losses expire as follows: Year of Expiry 2006 2007 2008 2009 2010 2014 2015

5.

Amount $

25,900 48,500 90,700 603,400 140,800 90,000 61,800 $ 1,061,100

Related Party Transactions The Company is paying $2,000 per month to Harper Capital Inc. (a company owned by the promoters of the Company) for managing and supervising the Company's activities. During the year ended May 31, 2005 the Company was charged the sum of $24,000 as management fees (2004 - $24,000). As at May 31, 2005 the Company was indebted to the Harper Capital Inc. in the amount of $51,360 (2004 - $21,980) for unpaid management fees. In addition, the Company also owed $12,082 (2004 - $7,100) for funds advanced by Harper Capital Inc. As at May 31, 2005, the Company was also indebted to Northern Mining Properties (in which one of the Company's directors owns an interest) in the amount of $22,980 (2004 $22,980) for unpaid management fees from prior years. Amount due to a related party is unsecured, non-interest bearing and has no fixed terms of repayment.

6.

Financial Instruments The Company's financial instruments include cash, sundry receivables, accounts payable and accrued liabilities and due to a related party. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest rate, currency or credit risks arising from these financial instruments. The fair value of the financial instruments approximates their market value due to the short term nature of these instruments.

Blue Power Energy Corporation Notes to Financial Statements May 31, 2005 and 2004 7.

Page 9

Segmented information The Company's operations comprise a single reporting operating segment engaged in resource exploration. As the operations comprise a single reporting segment, amounts disclosed in the financial statements for loss for the year and loss per share also represent segment amounts. All of the Company's operations and assets are located in Canada.

Blue Power Energy Corporation (incorporated under the laws of Ontario)

Financial Statements May 31, 2004 and 2003

September 14, 2004

Auditors' Report To the Shareholders of Blue Power Energy Corporation We have audited the balance sheet of Blue Power Energy Corporation as at May 31, 2004 and the statements of operations and deficit and cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at May 31, 2004 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. The financial statements as at May 31, 2003 and for the year then ended were audited by another auditor who expressed an opinion without reservation on those financial statements in his report dated June 6, 2003.

"McCarney Greenwood LLP" Toronto, Canada

McCarney Greenwood LLP Chartered Accountants

Blue Power Energy Corporation (incorporated under the laws of Ontario)

Balance Sheets

Page 2 May 31 2004

2003

Assets Current assets Cash Due from a related company Sundry receivables

$ $

397 $ 4,535 4,932 $

4,208 31,554 175 35,937

96,585 $ 7,100 103,685

44,690 44,690

Liabilities Current liabilities Accounts payable and accrued liabilities Due to a related party (Note 5)

$

Shareholders' Equity Common stock (Note 3) Contributed surplus

1,891,544

1,035

1,035

(1,991,332) (1,901,332) (98,753) (8,753) $ 4,932 $ 35,937

(Deficit)

Approved by the Board

1,891,544

"Gordon Wilton"

Director

"Gerald Iscove"

Director

Blue Power Energy Corporation Statements of Operations and Deficit

Page 3 Year ended May 31 2004 2003

Expenses Accounting and corporate services Legal and audit Management fees Office and general Shareholder relations Writedown of due from a related company

$

Less: Interest and other income Net (loss) for the year (Deficit), beginning of year (Deficit), end of year

17,400 $ 6,275 24,000 42 11,986 31,554 91,257

5,289 3,750 24,000 519 4,177 37,735

(1,257)

(26,182)

(90,000)

(11,553)

(1,901,332)

(1,889,779)

$ (1,991,332) $ (1,901,332)

___________________________________________________________________________

Basic and diluted (loss) per share (Note 3(c))

$

(0.02) $

(0.00)

Blue Power Energy Corporation Statements of Cash Flows

Page 4 Year ended May 31 2004 2003

Cash flows from operating activities Net (loss) for the year Adjustment for Writedown of due from a related party Changes in non-cash working capital (Increase) in amounts due from related parties (Increase) decrease in sundry receivables Increase in accounts payable and accrued liabilities Increase in due to a related party Cash flows (used in) operating activities

$

31,554

(Decrease) in cash during the year Cash, beginning of year Cash, end of year

(90,000) $

$

(11,553) -

(4,360) 51,895 7,100 (3,811)

(31,554) 6,664 35,420 (1,023)

(3,811)

(1,023)

4,208

5,231

397 $

4,208

Blue Power Energy Corporation Notes to Financial Statements May 31, 2004 and 2003 1.

Page 5

Going concern assumption These financial statements are prepared using Canadian generally accepted accounting principles that are applicable to a going concern which assumes the Company will continue to operate throughout its next fiscal period subsequent to May 31, 2004. The use of these principles may be inappropriate since there is significant doubt about the appropriateness of this assumption. Significant doubt exists because the Company is in a net liability position, there is and there has been substantial operating losses in the current and prior years and the Company has no operating assets. The future of the Company is currently dependent upon the Company's ability to obtain sufficient cash from external financing, and or related parties to pay the Company's liabilities as they become due. These statements do not include any adjustments which would be necessary if the going concern assumption was not used.

2.

Summary of significant accounting policies The preparation of these financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The more significant accounting policies are as follows: (a)

Income taxes The company follows the liability method of accounting for income taxes. Under this method, income taxes are recognized for the future income tax consequences attributed to differences between the financial statement carrying values and their respective income tax basis. Future income tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the period that includes the enactment date. Future income tax assets are evaluated and if realization is not considered "more likely than not", a valuation allowance is provided.

(b)

Stock based compensation The CICA Handbook Section 3870, Stock-based Compensation and Other Stockbased Payments, requires that compensation for option awards to employees be recognized in the financial statements at fair value for options granted in fiscal years beginning on or after January 1, 2004. The Company, as permitted by CICA

Blue Power Energy Corporation Notes to Financial Statements May 31, 2004 and 2003

Page 6

Handbook Section 3870, has adopted this section prospectively for new option awards granted on or after June 1, 2003. Accordingly, a fair value compensation expense would be reported if any options were granted and vested during the current year. 3.

Capital stock (a)

Authorized Unlimited number of non-participating, redeemable, voting Class B preference shares Unlimited number of Class C preference shares issuable in series Unlimited number of common shares Issued Common shares Balance, beginning and end of year

2004 Shares 3,825,873

2003 Shares

Amount

$ 1,891,544

3,825,873

Amount

$ 1,891,544

(b)

Stock options There were no stock options granted, expired, cancelled or exercised during the current or prior year. In addition there were no stock options outstanding at May 31, 2003 or May 31, 2004.

(c)

Basic and diluted (loss) per share The following table sets forth the computation of basic and diluted (loss) per share: 2004 Numerator: (Loss) for the year Numerator for basic and diluted (loss) per share

2003

$

(90,000)

$

(11,553)

$

(90,000)

$

(11,553)

Denominator: Weighted average number of common shares Denominator for basic (loss) per share Dilutive securities (1) Denominator for diluted (loss) per share

3,825,873 3,825,873 3,825,873

3,825,873 3,825,873 3,825,873

Basic (loss) per share

$

(0.02)

$

(0.00)

Diluted (loss) per share

$

(0.02)

$

(0.00)

Blue Power Energy Corporation Notes to Financial Statements May 31, 2004 and 2003 (1)

4.

Page 7

Diluted (loss) per share is the same as basic (loss) per share as the Company did not have any dilutive securities outstanding for either of the 2 years.

Income taxes Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes. There are no future tax liabilities. The Company has 2 future tax assets as follows: 2003

2004 Future tax assets Non-capital losses carried forward Exploration expenditures Total future tax assets Valuation allowance for future tax assets Net future tax assets

$

$

505,824 15,097 520,921 (520,921) -

$

$

528,060 24,898 552,958 (552,958) -

The Company provided a valuation allowance equal to the future tax asset because it is not more likely than not that the future tax asset will be realized. The Company's income tax expense for each of the years ended is Nil. The Company's actual income tax expense for each of the years ended is made up as follows: 2004 (Loss) before income taxes Income taxes recovery at combined federal and provincial rate of 36.12% and 40.29% respectively Taxable benefit not recognized Actual income tax expense

$

(90,000)

$

42,152 (42,152) -

2003 $

(11,553)

$

4,655 (4,655) -

As at May 31, 2004 the Company has non-capital losses available for carry forward of approximately $ 1,400,400 and Canadian exploration expenditures of approximately $61,800 available to be applied against taxable income in future years. No benefit from these amounts has been recorded in these financial statements.

Blue Power Energy Corporation Notes to Financial Statements May 31, 2004 and 2003

Page 8

The non-capital losses expire as follows: Year of Expiry 2005 2006 2007 2008 2009 2010 2014 5.

Amount $

401,100 25,900 48,500 90,700 603,400 140,800 90,000 $ 1,400,400

Related Party Transactions Pursuant to an agreement dated December 15, 1988, as amended, the Company is paying $2,000 per month to Northern Mining Properties (a partnership of the promoters of the Company) for managing and supervising the Company's exploration activities. This agreement may be terminated by either party by giving 60 days notice. During the year ended May 31, 2004 the Company paid the sum of $24,000 as management fees (2003 - $24,000). As at May 31, 2004 the Company was indebted to the promoters in the amount of $21,980 (2003 - $NIL) for unpaid management fees. Amount due to a related party is unsecured, non-interest bearing and has no fixed terms of repayment.

6.

Financial Instruments The Company's financial instruments include cash, amounts due to and from related parties, sundry receivables, and accounts payable and accrued liabilities. Unless otherwise noted it is management's opinion that the Company is not exposed to significant interest rate, currency and credit risks arising from these financial instruments. The fair value of the financial instruments approximates their market value due to the short term nature of these instruments.

7.

Segmented information The Company's operations comprise a single reporting operating segment engaged in resource exploration. As the operations comprise a single reporting segment amounts disclosed in the financial statements for loss for the year and loss per share also represent segment amounts.

Blue Power Energy Corporation Notes to Financial Statements May 31, 2004 and 2003

Page 9

All of the Company's operations and assets are located in Canada. 8.

Comparative figures Certain of the prior year's figures have been reclassified to conform to the current year's financial statement presentation.

BLUE POWER ENERGY CORPORATION FINANCIAL STATEMENTS AND REPORT AS AT MAY 31, 2003

AUDITOR’S REPORT

June 6, 2003 Toronto, Ontario

To the Shareholders of Blue Power Energy Corporation

I have audited the balance sheets of Blue Power Energy Corporation as at May 31, 2003 and 2002 and the statements of operations and deficit, and changes in cash flows for the years then ended. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audits in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In my opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at May 31, 2003 and 2002 and the results of its operations and cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Stewart Wright Chartered Accountant

BLUE POWER ENERGY CORPORATION BALANCE SHEET AS AT MAY 31, 2003 ASSETS Current Cash

$

4,208

2002

$

5,231

Due from related company

31,554

Accounts receivable 175 $

6,839 $

35,937

LIABILITIES Current Accounts payable

$

44,690

12,070

$

9,270

SHAREHOLDERS' EQUITY Capital stock (Note 5) 1,891,544

1,891,544

1,035

1,035

(1,901,332)

(1,889,779)

Contributed surplus Deficit

(8,753) $ 35,937 See Notes To Financial Statements

On Behalf Of The Board:

“Gordon Wilton”

Director

Gordon Wilton

“Milton Klyman” Milton Klyman

2,800 $

Director

12,070

BLUE POWER ENERGY CORPORATION STATEMENTS OF OPERATIONS AND DEFICIT FOR THE YEARS ENDED MAY 31, 2003 Administrative Expenses Corporate services

$

Shareholder relations Legal and audit

2002

$

5,289

14,000

4,177

8,874

3,750

3,950

24,000

24,000

519

2,549

37,735

53,373

(26,182) -

(6,230)

Management fees Miscellaneous

Less: interest income and other income gain on sale of oil and gas property

(1,152) Net loss for the year

11,553

45,991

Deficit at the beginning of the year 1,889,779 Deficit at the end of the year

$

1,843,788 $

1,901,332

Loss per share Weighted Average Number of Shares Outstanding See Notes To Financial Statements

$

0.02 3,825,873

1,889,779

$

0.02 3,826,998

BLUE POWER ENERGY CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MAY 31, 2003

2002

Cash flows from operations Net loss for the year

$

(11,553)

$

(45,991)

Adjustments for: Gain on sale of oil and gas property

(1,152)

Net change in working capital excluding cash Increase in amounts due to related parties (31,554) Decrease (increase) in accounts receivable 6,664

(5,855)

35,420

(15,032)

(1,023)

(68,030)

Increase (decrease) in accounts payable

Cash flows from investment activities Proceeds from the sale of oil and gas property

57,152

Recovery of security deposit

9,800 66,952

Cash flows from financing activities Redemption of common shares

(90)

Increase in cash

(1,023)

(1,168)

Cash at the beginning of the year 5,231 Cash at the end of the year

$ 4,208

See Notes To Financial Statements

6,399 $ 5,231

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2003 AND 2002

Note 1 Continued Operations The financial statements have been prepared on a going concern basis which assumes the Company will continue to operate throughout its next fiscal period subsequent to May 31, 2003. Adverse conditions cast doubt upon the validity of this assumption. The future of the Company is dependent upon the Company’s ability to obtain sufficient cash from external financing and generate future revenues. If the going concern assumption was not appropriate, then adjustments would be necessary in the carrying values of the assets and liabilities, expenses and balance sheet classifications used.

Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies Financial Instruments The Company’s financial instruments include cash, advances, accounts receivable, and accounts payable. Unless otherwise noted it is management’s opinion that the Company is not exposed to significant interest rate, currency and credit risks arising from these financial instruments. The fair value of the short-term financial instruments approximates their market value. Administrative Expenditures Administrative expenditures are charged to operations in the current year. Loss per Share The loss per share figure has been calculated using the weighted average number of shares outstanding during the year. Effective January 1, 2001, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants with respect to earnings per share. Under this method, fully diluted earnings per share are calculated using the “treasury stock” method, replacing the previous method of “imputed earnings per share”. The new recommendations have been applied on a retroactive basis. Income Taxes The Company follows the asset and liability method of accounting for income taxes.

Note 2 Adoption of New Accounting Standard for Income Taxes Effective June 1, 2001 the Company adopted the new Canadian Institute of Chartered Accountants‘ (“CICA”) recommendations for the accounting for income taxes. The new standard requires the use of the asset and liability method of accounting for income taxes. Under this method, income taxes are recognized for the future income tax consequences attributed to the difference between the financial statement carrying values and their respective income tax basis (temporary differences). Future income tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect on the future income tax assets and liabilities of a change in tax rates is included in income in the period that includes the enactment date.

Future income tax assets are evaluated and if realization is not considered “more likely than not”, a valuation allowance is provided. Previously the Company followed the deferral method of accounting for income taxes. The change in accounting policy has no effect in the current or prior period’s financial statements.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2003 AND 2002

Note 3 Income Taxes The Company’s income tax expense for the year is nil. There are no future income tax assets or liabilities that have been recognized. The Company’s actual income tax expense for the year after the change in the accounting policy is made up as follows:

Loss before income taxes Adjustments for gain on sale of oil and gas property Income taxes recovery at combined federal and provincial rate of 21.12% Taxable benefit not recognized Actual income tax expense

$

$

2003 (11,553) (9,104) 2,426 (2,426)

2002 (45,991) (1,152) (47,143) 9,900 (9,900)

-

-

As at May 31, 2003 the Company has losses carried forward which are deductible from future income for tax purposes and the losses expire as follows: Year of Expiry 2004 2005 2006 2007 2008 2009 2010

$

$

1,000 401,000 25,000 48,000 91,000 603,000 141,000 1,310,000

The Company has available various types of exploration expenses in the amount of $61,000 that can be deducted from future income for tax purposes.

Note 4 Oil and Gas Interest, Lambton and Kent Counties, Ontario During 2000 the Company entered into an agreement to sell its oil and gas interests for proceeds of $56,000 net of estimated costs to complete the sale. During 2001the shareholders approved the transaction and in 2002 the transaction was completed resulting in a gain of $1,152.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2003 AND 2002

Note 5 Capital Stock Authorized: Unlimited number of non-participating, redeemable, voting Class B preference shares Unlimited number of Class C preference shares, issuable in series Unlimited number of common shares

Issued:

2003 Shares 3,825,873 3,825,873

Balance at the beginning of the year Shares redeemed Balance at the end of the year Loss per share Numerator: Net earnings (loss) for the year Denominator: Weighted average number of shares Basic and diluted earnings (loss) per share

$

$ $

2002 Amount 1,891,544 1,891,544

Shares 3,828,123 (2,250) 3,825,873

(11,553)

(45,991)

3,825,873

3,826,998

(0.01)

$

$ $

Amount 1,892,669 (1,125) 1,891,544

(0.01)

During 2002 the Company redeemed 2,250 common shares for $90, the discount has been credited to contributed surplus. No options were granted, exercised or expired during the year. No options were outstanding as at May 31, 2003 and 2002.

Note 6 Commitments Commencing July 1, 1998 the Company is required to make ten annual installments of $4,900 each until July 1, 2007 as security deposit to the Ontario Ministry of Natural Resources. To the year end 2001 the Company has made the first two deposits. The obligation to make further payments ceased with the sale of the oil and gas properties and the security deposit was subsequently recovered in 2002.

Note 7 Related Party Transactions Pursuant to an agreement dated December 15, 1988, as amended, the Company is paying $2,000 per month to Northern Mining Properties (a partnership of the promoters of the company) for managing and supervising the Company's exploration activities. During the year ended May 31, 2003 the Company paid the sum of $24,000 as

management fees (2002 – 24,000). As at May 31, 2003 the Company was indebted to the promoters in the amount of $21,980 (nil-2002) for unpaid management fees.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2003 AND 2002

Note 8 Segmented Information The Company has no reporting operating segments. Amounts disclosed in the financial statements for assets and liabilities, revenue, and loss for the year relate to administrative activities only.

BLUE POWER ENERGY CORPORATION FINANCIAL STATEMENTS AND REPORT AS AT MAY 31, 2002

AUDITOR’S REPORT

October 9, 2002 Toronto, Ontario

To the Shareholders of Blue Power Energy Corporation

I have audited the balance sheets of Blue Power Energy Corporation as at May 31, 2002 and 2001 and the statements of operations and deficit, and changes in cash flows for the years then ended. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audits in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In my opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at May 31, 2002 and 2001 and the results of its operations and cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Stewart Wright Chartered Accountant

BLUE POWER ENERGY CORPORATION BALANCE SHEET AS AT MAY 31, 2002 ASSETS Current Cash Accounts receivable

$

Oil and gas interests and equipment (Note 4) Security deposit (Note 4)

5,231 6,839 12,070

2001

$

6,399 984 7,383

$

12,070

$

56,000 9,800 73,183

$

9,270

$

24,302

$

1,891,544 1,035 (1,889,779) 2,800 12,070 $

LIABILITIES Current Accounts payable

SHAREHOLDERS' EQUITY Capital stock (Note 5) Contributed surplus Deficit

1,892,669 (1,843,788) 48,881 73,183

See Notes To Financial Statements

On Behalf Of The Board:

"Gordon R. Wilton" Director

"Milton Klyman" Director

BLUE POWER ENERGY CORPORATION STATEMENTS OF OPERATIONS AND DEFICIT FOR THE YEARS ENDED MAY 31, 2002

2001

Administrative Expenses Corporate services Shareholder relations Legal and audit Management fees Directors' fees Miscellaneous

$

2,549 53,373

$

Loss per share

$

See Notes To Financial Statements

$

-

Operating costs Less: interest income and other income gain on sale of oil and gas property Net loss for the year Deficit at the beginning of the year Deficit at the end of the year

Weighted Average Number of Sharees Outstanding

14,000 8,874 3,950 24,000

(6,230) (1,152) 45,991 1,843,788 1,889,779 $

0.02 3,826,998

$

16,800 20,822 12,435 24,000 3,450 6,478 83,985 7,525 (821) 90,689 1,753,099 1,843,788

0.02 3,828,123

BLUE POWER ENERGY CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MAY 31, 2002 Cash flows from operations Net loss for the year Adjustments for:

$

Gain on sale of oil and gas property Net change in working capital excluding cash Decrease (increase) in accounts receivable Increase (decrease) in accounts payable

(45,991) $ (1,152) (5,855) (15,032) (68,030)

Cash flows from investment activities Proceeds from the sale of oil and gas property Recovery of security deposit

57,152 9,800 66,952

2001 (90,689) (938) (15,058) (106,685)

-

Cash flows from financing activities Redemption of common shares

Increase in cash Cash at the beginning of the year Cash at the end of the year

See Notes To Financial Statements

(90)

$

(1,168) 6,399 5,231 $

-

(106,685) 113,084 6,399

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2002 AND 2001

Note 1 Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies Financial Instruments The Company’s financial instruments include cash, advances, accounts receivable, and accounts payable. Unless otherwise noted it is management’s opinion that the Company is not exposed to significant interest rate, currency and credit risks arising from these financial instruments. The fair value of the short-term financial instruments approximates their market value. Administrative Expenditures Administrative expenditures are charged to operations in the current year. Loss per Share The loss per share figure has been calculated using the weighted average number of shares outstanding during the year. Effective January 1, 2001, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants with respect to earnings per share. Under this method, fully diluted earnings per share are calculated using the “treasury stock” method, replacing the previous method of “imputed earnings per share”. The new recommendations have been applied on a retroactive basis. Income Taxes The Company follows the asset and liability method of accounting for income taxes. Note 2 Adoption of New Accounting Standard for Income Taxes Effective June 1, 2001 the Company adopted the new Canadian Institute of Chartered Accountants‘ (“CICA”) recommendations for the accounting for income taxes. The new standard requires the use of the asset and liability method of accounting for income taxes. Under this method, income taxes are recognized for the future income tax consequences attributed to the difference between the financial statement carrying values and their respective income tax basis (temporary differences). Future income tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect on the future income tax assets and liabilities of a change in tax rates is included in income in the period that includes the enactment date. Future income tax assets are evaluated and if realization is not considered “more likely than not”, a valuation allowance is provided. Previously the Company followed the deferral method of accounting for income taxes. The change in accounting policy has no effect in the current or prior period’s financial statements.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2002 AND 2001

Note 3 Income Taxes The Company’s income tax expense for the year is nil. There are no future income tax assets or liabilities that have been recognized. The Company’s actual income tax expense for the year after the change in the accounting policy is made up as follows:

$

Loss before income taxes Adjustments for gain on sale of oil and gas property Income taxes recovery at combined federal and provincial rate of 21.12% Taxable benefit not recognized Actual income tax expense

$

2002 (45,991) (1,152) (47,143) 9,900 (9,900) -

As at May 31, 2002 the Company has losses carried forward which are deductible from future income for tax purposes and the losses expire as follows: Year of Expiry 2003 2004 2005 2006 2007 2008 2009

$

$

1,000 401,000 25,000 48,000 91,000 1,000 47,000 614,000

The Company has available various types of exploration expenses in the amount of $521,000 that can be deducted from future income for tax purposes. Note 4 Oil and Gas Interest, Lambton and Kent Counties, Ontario During 2000 the Company entered into an agreement to sell its oil and gas interests for proceeds of $56,000 net of estimated costs to complete the sale. During 2001the shareholders approved the transaction and in 2002 the transaction was completed resulting in a gain of $1,152.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2002 AND 2001

Note 5 Capital Stock Authorized: Unlimited number of non-participating, redeemable, voting Class B preference shares Unlimited number of Class C preference shares, issuable in series Unlimited number of common shares

Issued:

2002 Shares 3,828,123 (2,250) 3,825,873

Balance at the beginning of the year Shares redeemed Balance at the end of the year Loss per share Numerator: Net earnings (loss) for the year Denominator: Weighted average number of shares Basic and diluted earnings (loss) per share

$

$ $

2001 Amount 1,892,669 (1,125) 1,891,544

Shares 3,828,123 3,828,123

(45,991)

(90,689)

3,826,998

3,828,123

(0.01)

$

$ $

Amount 1,892,669 1,892,689

(0.02)

During the year the Company redeemed 2,250 common shares for $90, the discount has been credited to contributed surplus. Note 6 Commitments Commencing July 1, 1998 the Company is required to make ten annual installments of $4,900 each until July 1, 2007 as security deposit to the Ontario Ministry of Natural Resources. To the year end 2001 the Company has made the first two deposits. The obligation to make further payments ceased with the sale of the oil and gas properties and the security deposit was subsequently recovered in the current year. Note 7 Related Party Transactions Pursuant to an agreement dated December 15, 1988, as amended, the Company is paying $2,000 per month to Northern Mining Properties (a partnership of the promoters of the company) for managing and supervising the Company's exploration activities. During the year ended May 31, 2002 the Company paid the sum of $24,000 as management fees (2001 - $24,000). As at May 31, 2002 the Company was indebted to the promoters in the amount of nil ($6,420-2001) for unpaid management fees. Note 8

Segmented Information The Company has no reporting operating segments. Amounts disclosed in the financial statements for assets and liabilities, revenue, and loss for the year relate to administrative activities only.

BLUE POWER ENERGY CORPORATION FINANCIAL STATEMENTS AND REPORT AS AT MAY 31, 2001

AUDITOR’S REPORT

July 16, 2001 Toronto, Ontario

To the Shareholders of Blue Power Energy Corporation I have audited the balance sheets of Blue Power Energy Corporation as at May 31, 2001 and 2000 and the statements of operations and deficit, and changes in cash flows for the years then ended. These financial statements are the responsibility of the company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audits in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In my opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at May 31, 2001 and 2000 and the results of its operations and cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Stewart Wright Chartered Accountant

BLUE POWER ENERGY CORPORATION BALANCE SHEET AS AT MAY 31, 2001

2000

ASSETS Current Cash

$

6,399

Accounts receivable

Oil and gas interests and equipment (Note 2) Security deposit (Note 4)

984

$

113,084 46

7,383

113,130

56,000 9,800

56,000 9,800

$

73,183

$

178,930

$

24,302

$

39,360

LIABILITIES Current Accounts payable

SHAREHOLDERS' EQUITY Capital stock (Note 3) Deficit

1,892,669 (1,843,788)

1,892,669 (1,753,099)

48,881

139,570

$

73,183

See Notes To Financial Statements

On Behalf Of The Board:

“Gordon R. Wilton”

Director

“Milton Klyman”

Director

$

178,930

BLUE POWER ENERGY INC. STATEMENTS OF OPERATIONS AND DEFICIT FOR THE YEARS ENDED MAY 31, 2001

2000

Oil and Gas Income from sale of oil and gas Pipeline, flowline and connection fees

$

-

$

Operating costs Revaluation of oil and gas properties Depreciation and depletion

123,851 123,851

7,525 -

93,334 63,338 31,486

7,525

188,158

7,525

64,307

Corporate services

16,800

Shareholder relations Legal and audit Management fees Directors' fees Miscellaneous

20,822 12,435 24,000 3,450 6,478

16,813 18,836 14,166 24,211 3,300 5,056

Less: interest income

83,985 (821)

82,382 (3,373)

Loss from oil and gas operations Administrative Expenses

Net loss for the year Deficit at the beginning of the year

83,164

79,009

90,689

143,316

1,753,099

1,609,783

Deficit at the end of the year

$

1,843,788

$

1,753,099

Loss per share

$

0.02

$

0.03

See Notes To Financial Statements

BLUE POWER ENERGY CORPORATION STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED MAY 31, 2001

2000

Cash flows from operations Net loss for the year

$

Adjustments for: Revaluation of oil and gas properties Depreciation and depletion

(90,689.0)

$

-

(143,316) 63,338 31,486

(90,689.0)

(48,492)

(938.0) (15,058.0)

13,731 24,319

(106,685.0)

(10,442)

Security deposits

-

(4,900)

Increase in cash

(106,685.0) 113,084.0

(15,342) 128,426

Net change in working capital excluding cash Decrease (increase) in accounts receivable Increase (decrease) in accounts payable

Cash flows from investment activities

Cash at the beginning of the year Cash at the end of the year

See Notes To Financial Statements

$

6,399.0

$

113,084

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2001 AND 2000

Note 1 Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant Accounting Policies Financial Instruments The Company’s financial instruments include cash and short-term investments, advances, accounts receivable, and accounts payable. Unless otherwise noted it is management’s opinion that the Company is not exposed to significant interest rate, currency and credit risks arising from these financial instruments. The fair value of the short-term financial instruments approximates their market value. The short-term investments consist of a GIC in the amount of $ 56,000 with an interest rate of 2.85% maturing on June 14, 2000. Loss Per Share The loss per share figures have been calculated using the weighted average number of common shares outstanding during the respective fiscal periods. Administrative Expenditures Administrative expenditures are charged to operations in the current year. Oil and Gas Interests The Company follows the successful efforts method of accounting for its oil and gas operations. The costs of acquiring interests in oil and gas properties are capitalized. Should a property be subsequently abandoned, its costs are written off to operations in the year of abandonment. The costs of drilling and equipping wells, both exploratory and development are capitalized as incurred. Should a well be determined to be unsuccessful (a dry hole or not capable of commercial production), its costs are written off in the year so determined. All other exploration costs, including geological and geophysical costs are expensed as incurred. Depletion of capitalized costs is calculated on the unit-of-production method based on estimated recoverable proven oil and gas reserves. Gas transmission and gathering facilities are depreciated over their estimated useful life at a rate of 20% per annum on a declining balance basis. Income Taxes The Company uses the deferral method of accounting for income taxes. Under this method the amount by which the provision for income taxes differs from the income taxes currently payable is considered to represent the deferring to future periods the benefits obtained or expenditures incurred in the current period and accordingly was computed at the current income tax rates. Also, under the deferral method, tax benefits related to accounting losses could only be recognized in the period the loss was incurred if there was virtual certainty of realizing these benefits.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2001 AND 2000

Note 2 Oil and Gas Interest, Lambton and Kent Counties, Ontario The Company holds a 100% interest in 7 producing oil wells and a 67% interest in 1 producing well. Income from these wells is subject to 12.5% royalties and overriding royalties. Lambton and Kent Counties, Ontario Balance at the beginning of the year Proceeds of disposition

2000 2000 56,000 $ 1,144,982 (56,000) 1,144,982 Less: accumulated depletion (1,088,982) 56,000 During 2000 the Company entered into an agreement to sell its oil and gas interests for proceeds of $56,000 net of estimated costs to complete the sale. During the year the shareholders approved the transaction and subsequent to the year end the sale was completed. $

Note 3 Capital Stock Authorized Unlimited number of non-participating, redeemable, voting Class B preference shares Unlimited number of Class C preference shares, issuable in series Unlimited number of common shares

Issued:

2001 Shares 3,828,123

Balance May 31, Loss per share Numerator: Net earnings (loss) for the year Denominator: Weighted average number of shares Basic and diluted earnings (loss) per share

$

$

2000 Amount 1,892,668

Shares 3,828,123

(90,689)

(143,316)

3,828,123

3,828,123

(0.02)

$

$

Amount 1,892,668

(0.03)

Stock Options As at May 31, 2000 options were outstanding to officers and directors to purchase up to 300,000 common shares at $0.35 per share until March 18, 2001.

BLUE POWER ENERGY CORPORATION NOTES TO FINANCIAL STATEMENTS MAY 31, 2001 AND 2000

Note 4 Commitments Commencing July 1, 1998 the Company is required to make ten annual installments of $4,900 each until July 1, 2007 as security deposit to the Ontario Ministry of Natural Resources. To the year end the Company has made the first two deposits. The obligation to make further payments ceased with the sale of the oil and gas properties. Note 5 Related Party Transactions Pursuant to an agreement dated December 15, 1988, as amended, the Company is paying $2,000 per month to Northern Mining Properties (a partnership of the promoters of the company) for managing and supervising the Company's exploration activities. During the year ended May 31, 2001 the Company paid the sum of $24,000 as management fees (2000 - $24,000). As at May 31, 2001 the Company was indebted to the promoters in the amount of $6,420 (nil-2000) for unpaid management fees. Note 6 Income Taxes The Company has losses carried forward that can be deducted from income for tax purposes that expire as follows: Year of Expiry 2002 2003 2004 2005 2006 2007 2007

5,000 10,000 1,000 401,000 25,000 48,000 91,000 $581,000

The Company has available various types of exploration expenses in the amount of $573,000 that can be deducted from future income for tax purposes. Note 7 Segmented Information The Company has no reporting operating segments. Amounts disclosed in the financial statements for assets and liabilities, revenue, and loss for the year relate to administrative activities only.