The results of our indicator mineral sampling gives us great confidence that one or more kimberlite pipes occur within the LA mineral claims. The chemistry of the pyrope garnets is indicative of diamondiferous kimberlites. This conclusion is supported by results from a sample of pyrope garnets submitted to Dr. W.L. Griffin, CSIRO, North Ryde, Australia: his analyses point to the possibility that a commercial pipe may be present. Although none of these results guarantee the presence of a diamond mine, they are more than sufficient to justify detailed exploration efforts.

The geophysical response in the Doyle area is, in technical terms, active or 'noisy', making geophysical target selection difficult. An effort was made to see through this noise, and 40 targets were selected. Twenty-three have been tested to date by drilling, and a further nine have been rejected after ground examination. All of these are land targets. Next, wet targets (those under lakes) will be tested by diamond drilling from the shore. Most of the kimberlite pipes found in the Northwest Territories are under lakes. We hope to begin this diamond drilling program in a couple of weeks.

Meanwhile, additional indicator mineral sampling has been completed and samples sent for treatment. Ground crews continue to examine areas within and up-ice of the indicator mineral trains selecting prospective targets for drilling. Six of these targets have been drilled to date.

A Ministerial Review of the May 10, 1996 decision of the Supervising Mining Recorder that Gerle is entitled to have the Central Claims recorded, has been requested by Golden Rule Resources Ltd. under Section 84 of the Canada Mining Regulations. We believe that the decision of the Supervising Mining Recorder in favour of Gerle Gold Ltd. should be upheld. This review does not affect the present exploration program.

GERLE GOLD LTD.
Raymond A. Hrkac
President