On October 16, 2006, the Company’s President assigned to the Company, at cost, an option to acquire a copper/gold Volcanogenic Massive Sulfide (“VMS”) project in the Sachigo greenstone belt in the northwest quadrant of the James Bay Lowlands, Red Lake Mining District, Ontario.  The option was acquired from Shoreham Resources Ltd., a Company at arm’s length to both the Company and its President.  Under the agreement, the Company can acquire a 60% interest in the property by making cash payments totaling $50,000 (paid) by January 31, 2008, incurring $1,000,000 in exploration expenditures ($411,768 incurred to date) prior to January 31, 2010, and issuing 500,000 common shares (500,000 issued) at a deemed price of $0.15 per share over a four year period.
 
In early October 2008, Escape signed an option agreement with MacDonald Mines Exploration Ltd. (“MacDonald”) whereby MacDonald can earn a 40% interest in Escape’s copper/gold VMS project in the Sachigo greenstone belt. MacDonald was chosen as an exploration partner due to their positive history of working co-operatively with First Nations communities in other part of Northern Ontario. MacDonald actively engaged the local First Nations through the Consultation process and was unsuccessful in negotiating a memorandum of understanding related to their proposed exploration program.

Escape considers this project to be a significant strategic asset considering the successful developments of Noront Resources Ltd. and other companies operating in the “Ring of Fire” in the James Bay Lowlands, also part of the Sachigo Geological Sub province. Noront Resources Ltd. at McFauld Lake, has made a significant nickel-copper-platinum-palladium-chromium discovery at its Double Eagle project at McFauld Lake.

New agreement with Shoreham and MacDonald

Escape Gold Inc. (“Escape”) has consolidated a 100% interest in the VMS exploration project, in the Sachigo Lake Red Lake Mining District, from Shoreham Resources Ltd. (Shoreham). Pursuant to an agreement with Shoreham dated January 8, 2007, Escape had the option to earn a 60% interest by incurring exploration expenditures of $1,000,000 and certain additional share issuances and option payments pursuant to the January 2007 Agreement. In a subsequent agreement with MacDonald Mines Exploration Ltd. (MacDonald), Escape had granted MacDonald the option to earn a total of 50% interest in these claims and several surrounding claims owned 100% by Escape by incurring certain exploration expenditures, share issuances and cash payments (see EGT news release, October 14, 2008).

Terms of this new Letter Agreement between Escape, Shoreham and MacDonald will see Escape vest a 100% interest in the Shoreham mineral claims by paying $50,000 in cash, issue 400,000 shares of Escape and 400,000 share purchase warrants of Escape exercisable at $0.40 per share for a period of two years, within 30 days from receiving regulatory approval for this transaction. Shoreham will retain a 2.5% net smelter royalty on the original Shoreham mineral claims with Escape having the right to buy back 1% of the Royalty for the sum of one million dollars pursuant to the agreement between MacDonald and Shoreham. 

MacDonald will have no further rights or obligations in respect to this property upon Shoreham issuing 250,000 shares of Shoreham to MacDonald in reimbursement of $50,000 paid by MacDonald to Shoreham and with Escape issuing 100,000 shares of Escape to MacDonald for reimbursement of $10,000 paid to Escape pursuant to the MacDonald option agreement.

The Sachigo Lake VMS project is located in the Sachigo Greenstone Belt where a major mining company reportedly identified several prospective airborne geophysical targets with characteristics for nickel and copper sulphides, during reconnaissance surveys in the early 1970’s. A current NI 43-101 Technical (Geological) Report is filed at www.sedar.com

Geological Setting:
Location of the Sachigo Lake Project in the North Caribou Terrane ("NCT") of the Superior Province. Map shows Archean Superior Province subdivisions in the Province of Ontario – data modified after Ontario Geological Survey maps and Percival (2006). It is currently thought by some regional-geology analysts that the Superior Province in Ontario grew by the assemblage of disparate gneiss-greenstone-granitoid and turbidite assemblages in a sequence from north to south as part of the Composite Superior Superterrane (“CSS”).