KM61

Mo-Cu-Ag Discovery

KM61 Highlights

· Large “porphyry” system with disseminated and stockwork hosted Mo-Cu-Ag mineralization

· Molybdenum intersected over strike length of 1.6km and 300m width

· Plus 0.05% Mo intersected over 300 m core lengths

· Mineralization open for expansion at depth

· 25,000 metre drill program to delineate deposit nearing completion

· NI 43-101 compliant resource estimate in 2008

Regional Setting

Linear Metals’ KM61 molybdenum-copper project is well located approximately 60 kilometres east of Armstrong, Ontario. Access is by paved highway from Thunder Bay to Armstrong, and then by the “Jackfish” all weather logging road to the project site. However, the most important transportation link long term for the project, should it advance to development, will be its location 11 kilometres north of a siding on the main CN rail line. Lastly, Ontario Power Generation is completing feasibility studies on an 80 megawatt hydro project on the Jackfish river less than 10 kilometres from the KM 61 discovery.

The KM61 property is located in the Caribou Greenstone Belt, which trends ENE along the top of Lake Nipigon, near the northern margin of the Wabigoon Subprovince. A prominent SW-trending portion of the belt wraps around the NW end of a large composite felsic pluton in the property area. The Linear Metals claim group covers a large (1 km x 7 km) lensoid-shaped contact zone between the pluton to the south and metabasalts to the north. Although mineralization has not been dated by isotopic methods, the porphyry bodies and associated mineralization are assumed to be related to the large pluton, indicating a mid to Late Archean age.

Map 1. KM61 Location map showing other regional exploration.

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Map 2. KM61 Claim Location Map showing location of main grid, surrounding Linear Metals claims for KM61 and Seymour Lake.

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History

At various times and in different phases beginning in the early 1950s, the Caribou belt has been prospected for magmatic Cu-Ni sulphide, lode gold, rare element pegmatites, such as at Linear’s adjoining Seymour Lake Project, and volcanogenic massive sulphides. Recent access to the area for prospecting has been greatly enhanced by logging activities.

The KM61 showing was discovered by Linear Gold in 2002 during regional prospecting on the Seymour Lake tantalum property. KM61 was initially evaluated by a limited trenching and sampling program which returned significant values of copper, molybdenum, silver and gold from grab and channel samples. The property was subsequently optioned to Noranda Inc. (later Falconbridge and now Xstrata PLC) which maintained the option from December 2003 to December 2006 when Xstrata returned the project to Linear Metals (Linear Metals had acquired the rights to KM61 from Linear Gold in April 2006).

Noranda conducted exploration programs at KM61 each summer during 2003, 2004, and 2005. In 2003, a grid with 400 metre line spacing was mapped, soil sampled, and an IP survey was conducted. Additionally, channel sampling was undertaken in the Linear trenches. In 2004, Noranda completed a 1,178 metre drill program in the trenched area on the SW end of the porphyry system. In 2005 Falconbridge completed another 2,039 metre drill program stepping out to the NE to more extensively test the remaining IP and soil anomalies. The Noranda-Falconbridge program partially tested an area measuring approximately 1200 by 600 metres (Figure 1).

Linear Metals initiated a Phase I drilling campaign in July, 2007 to verify continuity between the widely spaced Noranda drill holes. This program successfully indicated the continuity of part of the Main Zone, at approximately 100 m drill spacing, completing just over 4,000 m of drilling by the end of October.

Linear initiated a 25,000 metre Phase II drilling program (December, 2007) to delineate the deposit and this program of 100 metre spaced holes is now nearing completion with over 70 holes having been drilled. In an effort to extend mineralization to depth the program is slated to be extended to 27,000 metres to allow completion of 5 to 6 deep holes. This aggressive drill program will allow for the first 43-101 compliant resource estimate on the project to be completed before the end of 2008.

Geology

The disseminated and vein-type molybdenite-chalcopyrite mineralization at KM61 is hosted by two northeast-trending, quartz monzonite porphyry dyke swarms and their flanking mafic metavolcanics. These porphyries and their wall rocks are extensively stock-worked with quartz and quartz-sulphide veins, and host disseminated chalcopyrite and molybdenite over a drill-indicated total width of 350 metres, and over a drill-indicated strike length measuring 1,600 metres. At an arbitrary cut-off of 0.04% molybdenum, the mineralized zone is up to 350 metres wide, flanked by zones of lower grade mineralization (0.01 to 0.04% molybdenum).

Based on age and metal ratios, Moly Mines’ Spinifex Ridge deposit is a potential model for KM61. Spinifex Ridge, located in Western Australia, and KM61 are both hosted by Archean porphyries and metavolcanic rocks and the bulk tonnage zones have similar metal ratios. Spinifex Ridge has a published measured plus indicated resource of 469 million tonnes at 0.058% molybdenum, 0.09% copper and 1.7 grams per tonne silver. The KM61 project does not have a resource estimate completed, but the grades experienced in drilling on the Main Zone thus far are comparable to those reported at Spinifex Ridge, with the KM61 zones carrying 0.04 to 0.08% molybdenum, 0.05 to 0.2% copper, and 2 to 7 grams per tonne silver. The low grade bulk tonnage model for KM61 is clearly an attractive one in the current molybdenum market.

Map 3. Drill hole locations and mineralized zones at KM61

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Map 4. Geologic cross section

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Noranda-Falconbridge Drill Results

Noranda-Falconbridge’s two drill programs intersected encouraging Mo-Cu mineralization in two large porphyry dominated bodies termed the North and South Zones (as these have now been shown to merge the combined mineralized body is called the Main Zone). In addition, two holes drilled into the metavolcanic rocks between the porphyries produced short but impressive intersections of plus 1% molybdenum highlighted by 3 metres of 1.78% molybdenum in K-05-08. The drill assays obtained by Noranda-Falconbridge were mostly partial results because the company’s focus on copper left considerable core unsampled. This includes some zones which were logged as having disseminated or vein-controlled molybdenite.

Click here for drill hole results from the 2004-5 exploration program and 2007 assay results from the previously unsampled 2004-5 core.

The first stage of Linear’s 2007 exploration program consisted of splitting and assaying unsampled drill core that was generated by the Noranda and Falconbridge programs of 2004 and 2005. The historic core sampling program was successful and produced results that indicate that what was previously thought to be two distinct, and relatively narrow zones, may instead be one broad stockwork zone. Assay results on previously unsampled core from the Noranda - Falconbridge 2004-5 exploration program have increased the width of molybdenum minearlization to over 300 metres of similar grade. 2007 results for hole K-05-06 include 143.2 metres of 0.068% Mo, compared to the 2005 result of 61.2 metres of 0.076% Mo. New results for hole K-05-07 include 193.6 metres of 0.052% Mo, compared to the 2005 result of 128.8 metres of 0.058% Mo. High-grade vein mineralization was intercepted in the old core in K-05-08 and K-05-12 yielding grades of 1.78% Mo over 3.0 metres and 1.41% Mo over 2.9 metres, respectively.

The historical sampling program increased total width of mineralization which has increased the size potential of KM61 at economic grades.

Linear Metals 2007 Drill Results

In 2007, Linear Metals also completed a 4,000 metre Phase I drill program at KM61 that returned significant Mo-Cu-Ag mineralization and confirmed the results coming out of the fully sampled Noranda-Falconbridge holes. That is the North and South Zones were shown to have merged into what is now termed the Main Zone. This zone is composed of primarily a northern flank of metavolcanic hosted mineralization transitioning to a southern flank of porphyry hosted mineralization. The 2007 drill program, as with earlier drill programs was comprised of shallow angle holes that tested the system to a depth of approximately 250 metres. However, the last hole of the program, K-07-29, was programmed to cross the full width to the Main Zone eventually testing below 500 metres vertical depth on the south side of the Main Zone. Based on results from current drilling it is clear that hole 29 was sited too far to the west to test the best part of the Main Zone but it was successful in showing that mineralization extends below 500 metres vertical depth.

Upon completion of the 4,000 metre program, the extent of mineralization remained open on strike and at depth, and significantly, all of the holes intersect significant Mo mineralization. Many of the drilled holes showed increasing molybdenum grade with depth. There was clear justification for returning with a more aggressive drill program to fully delineate the deposit and the 25,000 metre drill program to accomplish this was begun in December 2007.

Click here - 2007 drill hole highlights

IP Survey

In 2007 Linear completed a 26-line kilometre IP survey which offers further evidence of the large scale of the KM61 mineralized system, with IP chargeability highs on drilled sections coinciding with excellent Mo-Cu mineralization. The chargeability anomaly extends over 3 kilometres.. Trenching of the SW and NE extensions of the chargeability anomaly beyond the drilled area prior to 2008 was successful in revealing geology and mineralization similar to that of the known deposit although over narrower intervals.

Map 5. IP chargeability survey at KM61 main grid.

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Current Drill Program

Complete results from the 25,000 metre program initiated in December 2007 will not all be available until September 2008 but results for over 75% of the program have now been released. This program has been successfully delineating the Main Zone and extensions to the east and west now termed the NE Extension and the SW Zone respectively. On a composite basis the strike of the 3 zones has now reached 1600 metres and is still not completely closed off to the northeast. Additionally, the eastern half of the Main Zone and the entirety of the NE Extension are open at depth. In the centre of the Main Zone individual drill holes have intersections totaling 300 metres at an average grade in excess of 0.05% molybdenum confirming previous estimates on the mineralized widths and grades in the heart of the deposit. A prime example is hole K-08-85, which returned, in a series of intercepts, a composite total of 297.4 metres at 0.061% molybdenum, 0.10% copper and 2.5 grams per tonne silver.

In addition to the long 0.05 to 0.07% molybdenum intercepts typical of the Main Zone there have been a number of holes in 4 areas that have short high grade intercepts with individual assays exceeding 1% molybdenum. More closely spaced drilling has failed to show any of these plus 1% zones to have continuity over more than a few metres. However, these zones do offer the potential, based on intercepts hosting 10 to 50 metres of plus 0.1% molybdenum, for “starter pit” material.

Click here - 2008 drill hole highlights

Ownership

Linear holds a 100% interest in the KM61 property subject to a 0.5% NSR over the area where the previous drilling was conducted. The neighbouring Seymour Lake property is subject to a 3% NSR. Linear Metals can repurchase 50% of the 0.5% NSR for $250,000, and/or 50% of the 3% NSR for $1,000,000.

Image 1. High-grade moly mineralization in drill hole K-05-08.

Image 2. High-grade moly uncovered during recent exploration.