River Valley PGM Project

Location and Accessibility: The River valley project is located in the Dana and Pardo townships of Northern Ontario, approximately 60km east of Sudbury, Ontario. The project is road accessible in Canada's premier Ni-Cu-PGM mining and smelting district which boasts perfect infrastructure and community support for mining activities.

Claims:

The River Valley Property claim group consists of 410 mining claims in 38 claim units that cover approximately 6,600 hectares. 5402 hectares of mineral claims are under lease application (December 31, 2010). 100% surface rights will be owned by PFN upon granting of the lease.

History:

The River Valley project mineral claims were optioned by PFN in 1998 following the discovery of highly anomalous PGM values in grab samples. The property was subsequently optioned by PFN to Anglo Platinum in 1999. Initial exploration was guided by geochemical and induced polarization surveys with subsequent drilling proving up significant mineralization at Dana Lake and Lismer's Ridge. A mineral resource estimate in accordance with the guidelines set out by NI 43-101 was published in 2006. Anglo Platinum continued to fund exploration under the terms of the option and joint venture agreement and invested over $20M in the exploration of the property for a 50% stake in the joint venture.

In 2008 Anglo Platinum Ltd. and parent company Anglo American plc announced that due to the financial crisis and the steep decline in commodity prices, Anglo American ("AA"), will reduce capital expenditures by 50% in 2009 that would constitute a restructuring of the organization and many of their divisions (AA PR 17 December, 2008). As a result Anglo Platinum was required to delay expenditures across several of its major projects and numerous smaller projects (AP PR 17 December, 2008). In order for AP to retain their interest in the JV they are required to fund all exploration to completion of a feasibility study, but under the AA-AP restructuring no new funds above and beyond the minimal holding costs were allocated to the project. PFN began negotiating with Anglo Platinum in 2008 to acquire Anglo's 50% of the joint venture. In Jan 2011 Anglo Platinum and PFN signed a binding agreement granting PFN 100% interest in the River Valley Project.

Ownership:

The River Valley Project is 100% owned by PFN (Purchase agreement signed on Jan 6th, 2011).

PFN and Anglo Platinum were able to come to terms whereby PFN could acquire AP's 50% stake in the River Valley JV giving PFN 100% of the River Valley project by offering 12% of its current outstanding shares to AP. There are no other encumbrances on the RV project associated with the terms of the sale to AP after an 18 month early disposition period lapses. There are currently no back-in rights or off-take agreements between the two parties. Details of this agreement are outlined in PFN Press Release January 25th 2011.

Geology

The River Valley project is hosted within the River Valley Intrusion (RVI), a Paleoproterozoic (~2.56-2.47 Ga) mafic layered intrusion located 60 kilometres (100 road km) northeast of the City of Greater Sudbury, Ontario, Canada. Work by Pacific North West Capital Corp. has revealed the presence of base-metal sulphide associated platinum group metal (PGM) deposits along the north eastern contact of the intrusion. The River Valley Intrusion is one of seven similar complexes in the area, collectively known as the East Bull Lake suite. The East Bull Lake suite of intrusions are Paleoproterozoic (2.56-2.47 Ga) in age and occur along the Superior-Southern Province boundary in central Ontario, emplaced at the interface between Archean basement rocks and overlying Huronian sedimentary-volcanic-intrusive sequences. Intrusions of the East Bull Lake suite generally contain anomalous Pd-Pt-Rh-Au-Cu-Ni sulphide mineralization along or proximal to the contact of the intrusion; the mineralization is usually hosted within heterolithic; inclusion-bearing (brecciated) gabbroic rocks.

1999-2008 Exploration Programs:

Between 1999 and 2008, Pacific North West Capital Corp as operator of the project, in conjunction with joint venture partner Anglo American Platinum Corporation Limited, carried out several phases of trenching, surface sampling and mapping, and completed 8 diamond-drilling programs. During this period of time $ 22 MM exploration programs were financed by Anglo Platinum.

These programs have resulted in:

• 110,924 total metres drilled in 550 diamond drill holes
• 6000 grab samples taken
• 4157 samples taken from detailed grid sampling
• 879 channel samples taken
• As well as numerous grids cut and geophysical surveys conducted.

Most of the work completed during this time focussed on assessing the PGE-Cu-Ni mineral potential of the western portion of the north RVI-Archean contact in Dana Township. Seven main areas of contact-type PGE-Cu-Ni sulphide mineralization were outlined: Dana Lake Area, Banshee Lake, Lismer's Ridge, MacDonald, Varley, Azen Creek and Jackson's Flats -- Razor areas.

Resource (NI 43-101 compliant):

Several resource calculations have been completed on some areas of the contact namely parts of Dana North, Dana South, Lismer Extension, Lismer's Ridge and Varley.
 

The most up to date numbers reported are, 30.5 million tonnes grading 1.4 g/t 3E at a cut-off grade of 0.7 g/t 3E. Later work concentrated on the interior of the RVI targeting areas of possible reef style mineralization. Current measured resource is 8.53 million tonnes containing 353,200 ounces of palladium (1.29 g/t), 116,800 ounces of platinum (0.43 g/t) and 20,400 ounces of gold (0.07 g/t) and an indicated resources of 22.02 million tonnes containing 600,700 ounces of palladium (0.85 g/t), 212,800 ounces of platinum (0.30g/t) and 39,000 ounces of gold (0.06 g/t) with an additional inferred resource of 2.39 million tones containing 67,000 ounces of palladium (0.87g/t), 23,800 ounces of platinum (0.31g/t) and 4,000 ounces of gold (0.05 g/t) using a 0.7 g/t cut off (pt/pd) (PFN press release March 2006) . The objective of the 2006 $1.1 million Phase 9A budget was to extend the new Platinum Group Metal mineralized horizons discovered during the 2005 fieldwork and to better understand the structural controls on the mineralization.

2009-2010 Exploration Programs: In order to develop a genetic model of mineralization and define an exploration strategy for high grade ore a $250,000 budget was allocated during 2009/10 work programs that included a geochemical study. The study incorporated an evaluation of the full suite of PGMs (including Rhodium) with the intention of improving economic modelling of the project.

Future objectives:

• Re-evaluation of previous drill results.
• Expansion & condemnation drilling
• Deep drilling
• Airborne Gravity, ZTEM and ground 3D IP surveys to advance new discoveries and continue resource expansion
• Re-evaluation of project economics
• Pre-feasibility study and Preliminary Economic Assessment for currently defined resources.