Headway

The Headway Gold Property is located in Dome and Balmer Townships near the Town of Red Lake, Ontario. The property lies approximately 8 kilometres from the Town of Red Lake, and approximately 2.0 kilometres south of the Town of Balmertown, Ontario where Goldcorp’s Red Lake Mines are located. The claim units are transected by the highway that runs between Red Lake and Balmertown.

7 claims units for 6 patented claim units and one un-patented claim unit for approximately 320 acres. These claims are numbered KRL 8540, KRL 8541, and KRL 20834-20837 (6 patent claims) and KRL 244520 (1 un-patented claim).

Gold

The original property was optioned from Perry English and William McNerney back in 2004 for stock and monetary considerations.

90 % King’s Bay Gold Corporation (“King’s Bay Gold”) and 10 % Palomino Mining & Exploration Ltd. (“Palomino Mining”) – all subject to the Definitive Earn-in Acquisition Agreement dated October 5th, 2009 with Mega Precious Metals Inc. (TSX.V: MGP) (“Mega”) for that company to possibly acquire, at its sole discretion, a 100 % interest in the property. There is a 2.0% Net Smelter Royalty payable to the initial vendors of the property.

At the time of the September 2nd, 2009 news release announcing the Letter of Intent with Mega Precious Metals Inc., the Headway Joint Venture was comprised of King’s Bay Gold Corporation for an 85% interest and Richview Resources Inc. (“Richview”) for a 15% interest of the mineral rights of the Headway Property. Subsequent to the signing of the Letter of Intent, but before entering into a Definitive Earn-in Acquisition Agreement, King’s Bay Gold would have to acquire a 100% interest in the property (the “Richview Condition”). As part of the Definitive Earn-in Acquisition Agreement on the Headway Property, and to fulfill the obligations under the “Richview Condition”, the Corporation transferred on October 5th, 2009 its remaining 25% interest in the Pickle Lake Properties to Richview Resources Inc. in exchange for Richview’s remaining 15% interest in the Headway Project. Mega’s initial payment obligation at the signing of the Definitive Earn-in Acquisition Agreement of October 5th, 2009 between the parties was $340,000, the issuance of 200,000 Mega Silver shares and first year project expenditures of $750,000. Of the $340,000 paid on the signing of the Agreement, $140,000 was paid by Mega to Richview Resources to satisfy the balance of the Richview Condition, and $200,000 was paid by Mega to King’s Bay Gold. Terms of the staged 3 year option agreement between Mega and King’s Bay was to include cash payments totalling $460,000, issuance of 4,425,000 common shares of Mega and project.

On March 31st, 2010, King’s Bay Gold announced in a news release (as filed on www.sedar.com on April 1st, 2010) that it had reached an agreement that recognised Palomino Mining’s formerly disputed 10% interest in the Headway Project and at the same time maintained “as is” the Definitive Earn-in Acquisition Agreement between itself and Mega of October 5th, 2009. Under the terms of the agreement, Palomino Mining would be providing its full consent to the original Definitive Earn-in Acquisition Agreement and affirm that it had no claim against King’s Bay Gold arising out of the manner in which King’s Bay Gold and Mega entered into the Definitive Earn-in Acquisition Agreement. In the event that Mega should exercise its option to acquire the 100% interest in the Headway Property from King’s Bay Gold and Palomino Mining pursuant to the Definitive Earn-in Acquisition Agreement, King’s Bay Gold acknowledges that it will:

(a) assign ten per cent (10%) of the shares in the capital stock issued, or to be issued, of Mega which are due pursuant to the Definitive Earn-in Acquisition Agreement to Palomino Mining or its lawful designate or designates, and
(b) waive any claim that King’s Bay Gold has for remuneration for Palomino Mining’s share of exploration expenses incurred in prior years by King’s Bay Gold with regard to the Headway Property.

In the event that Mega should not elect to exercise its option to acquire the 100 % interest in the Headway Property from King’s Bay Gold and Palomino Mining pursuant to the Definitive Earn-in Acquisition Agreement, it was further agreed that the monies expended by Mega in respect of the Headway Property shall not be considered when calculating Palomino Mining’s share of the expenses for the exploration of the Headway Property.

Mega Precious Metals Inc.

James Rogers P.Geo., CIM is the President & CEO of Mega Precious Metals Inc. and the Chairman of the Board of Directors of King’s Bay Gold Corporation.

The geology for the Headway Property is characterized by a series of intercolated volcanics with quartz-feldpsar porphyries and Archean sediments of both the Balmer and Confederation series rocks. The favourable unit on the property and target for this exploration program is the Balmer series rocks along the mineralized unconformity between the younger Confederation met-conglomerates and the mafic to ultramafic volcanics of the Balmer volcanic package. As such, the property appears to have all of the essential geological elements including a well developed intersection pattern of stratigraphic, shear / deformation zones that are associated with the high grade gold system on the adjacent mine properties. Mega Precious Metal Inc.’s exploration target is postulated to be hosted in Balmer age rocks occurring below the unconformity with the Confederation age rocks at 1,500 to 2500 metres deep. This theoretical target could be a new Bonanza, Replacement Zone, similar to, but south of Goldcorp’s High Grade zone.

The range of historic shallow diamond drill intercepts carried out under National Instrument 43- 101 compliant guidelines by King’s Bay Gold in 2005 included 63.52 grams / tonne (g/t) gold over 0.5 metres (m) and 3.08 g/t over 10.8 m. True widths are unknown. Highlights of historical exploration include; 20.9 g/t gold over 0.94 m in drill core (H-13) and several surface grab samples exceeding 34 g/t gold. Gold is developed within quartz-carbonate +/- tourmaline +/- arsenopyrite veins associated with quartz-feldspar porphyry dykes that intrude altered and sheared mafic volcanics. These quartz-feldspar porphyry dykes appear to be intruded along deep-seated structures during the late stages of ore emplacement. This is evidenced by their structural relationships adjacent to and within the “ESC” and “High Grade” zones of Red Lake Gold Mines. The property appears to contain two east-west trending, gold-bearing structural zones in intersection with the deep-seated extension of the north east trending Madsen deformation zone.

Mega Precious Metals Inc. is now the operator for all work carried out on the property by expending roughly $2.5 million as at February 2011 on drilling and sampling in an effort to find the extension of the Goldcorp’s High-Grade Zone at depth on the company’s property. Mega is providing regular updates on their website at www.megapmi.com as to the progress being made with their diamond drilling program. They have commenced the diamond drilling of a third deep hole. All 3 holes to date are located in strategic areas of the property. Hole #2 (MH1002) was recently abandoned due to technical problems. Holes #1 (MH0901) and #3 (MH1103) are slated to extend to a minimum of 3,000 metres and act as “mother” holes from which a series of wedged holes, called “daughter holes”, will be drilled once the intended target is identified.