10MA Y 200801194856 Metres Drilled in Canada 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 000s Meter s Drilled Exploration Drilling In Meters Deposit Drilling In Meters Source: Natural R esources Canada. In 2007, total exploration expenditures in Canada reached $2.6 billion, up 34% from $1.9 billion in 2006. NR C suggests that an even higher level of spending is indicated for 2008, which would then become the eighth straight year of the current upward trend. T otal exploration expenditures have now surpassed $1.0 billion for five consecutive years and the 2007 level broke the previous expenditure record of $2.4 billion established in 1987. Management believes that outside of developed regions, a greater proportion of exploration expenditures is focused on logistical, early stage survey work and other non-drilling related activities. Commodity Prices A key factor in the growth of global mineral exploration, development and production expenditures and (including drilling services) mineral drilling services is the significant increase in commodity prices since 2002. The increased price and continued strong demand for raw materials including base and precious metals have been driven largely by the industrialization and urbanization of emerging BRIC economies. Increased commodity prices have also been driven by shortfalls in anticipated supply and increasing production costs. L ow levels of exploration spending from 1998 to 2002 resulted in a decline in the rate of new large-scale discoveries in recent years. Metal inventories continue to be low and supply is slow to respond due to the extensive amount of time required to move from the discovery of a mineral deposit to the production phase. As a result, the ability of supply to meet increasing demand has been constrained. P roduction costs have been impacted by rising fuel, equipment and labour costs, as well as increased royalty and tax payments in certain jurisdictions. A ccording to Global Insight Inc., continued strong economic growth and infrastructure development is expected in the BRIC economies. Compound annual growth rates in real Gross Domestic P roduct for the period from 2007 to 2015 are forecast to be 3.8% for Brazil, 4.3% for R ussia, 8.1% for India and 8.0% for China. This expected growth coupled with the increasing need to upgrade and replace aging infrastructure in many established economies should keep demand robust, thereby keeping markets relatively tight in the near term and, in turn, supporting metals prices above their long-term averages. Lack of New Discoveries There has been a general decrease in the discovery of new mineral deposits over the last several years. This scarcity of accessible new reserves is a further factor driving the demand for drilling services, thereby forcing mining companies to explore for deeper and more remote ore bodies. These deposits typically have more complex geology and thus mine planning and extraction techniques require more detailed information before 24