Melkior Resources Inc. has recently completed an airborne time-domain electromagnetic and magnetometer survey over its claims located east of McFauld's Lake in the James Bay region of Ontario . A total of 1700 line kilometres were surveyed using Fugro MEGATEM system. MEGATEM is specifically suited for locating large massive sulphide bodies at depths of several hundred metres. Melkior anticipates that potentially economic targets in this area must be of considerable size hence MEGATEM is the ideal airborne system.

The results of the MEGATEM survey are expected soon. If massive sulphide targets are detected, these will be followed up by detailed ground geophysics in preparation for drilling, if warranted.

In April, Melkior agreed to acquire a 50% interest in approximately 100 claims (1500 claim units) or 24000 hectares in the McFauld's Lake "Ring Of Fire" area of Northern Ontario. The property is located approximately 33 kilometres north east of the Double Eagle (Cu, Ni, PGE) discovery by Noront Resources Ltd.

The property has been staked over the largest gravity anomaly in the McFauld's Lake area. This anomaly is of sufficiently large size and amplitude to suggest that it is a mafic/ultramafic body that could be the central intrusive source for the massive nickel/copper mineralization recently found by Noront. This interpretation would be consistent with the Noront mineralization occurring as an offset dyke from the main intrusive center similar to offset dyke deposits in the Sudbury basin.

It is believed that the gravity anomaly could host world class Ni/Cu magmatic orebodies similar to those found in the Sudbury Intrusive Complex or Norilsk or Voisey's Bay. Supporting this interpretation of possible giant magmatic Ni/Cu deposits are the following points:

1. Presence of significant gravity anomalies suggesting a large volume of mafic/ultramafic rocks
2. Presence of magmatic sulfides in this area based on Noront's recent discoveries
3. Presence of major crustal scale structures
4. Proximity to the margin of the Archean Craton.

Melkior will pay the owners $350,000 upon approval and undertake geophysical surveys of $250,000 during the first year. Melkior will be the operator and will have a first right of refusal to acquire the 50% retained by the owners.

Two of the six owners are insiders of Melkior namely Jens Hansen President of Melkior and Norman Farrell a director of Melkior. Jens Hansen via his 75% ownership in Geotest Corp. will receive 34% of the $350,000 purchase price and Norman Farrell will receive 10% of the $350,000 purchase price. These percentages represent the contribution of the insiders to the claim acquisition costs. The share ownership by the insiders of the 50% retained by the owners is 21.25% for Geotest Corp. and 6.25% for Norman Farrell.

The McFauld's area is fast becoming the most exciting exploration area in Canada . Melkior will own a 50% interest in one of the largest most prospective areas within the new McFauld's nickel-copper exploration camp.