Channel Resources

Channel Resources Ltd. is a Canadian exploration Company advancing two primary assets: the Tanlouka Gold Project in Burkina Faso, West Africa and the Fox Creek Lithium/Potash Brine Project in Alberta, Canada.

At Tanlouka, Channel has discovered multiple mineralized zones that are now being explored and expanded through an aggressive exploration strategy.

At Fox Creek, brine sourced from producing natural gas wells is undergoing testing to determine the most efficient method of producing multiple industrial minerals from the brine, including lithium and potash.

The Company is well financed to advance both projects and is actively searching for additional projects.

TANLOUKA GOLD PROJECT

• Multiple New Gold Discoveries

• 15,000 metre definition core drilling program underway

• 2010/11 RC drilling program delivered strong results

• Multiple new gold discoveries

• Real potential to build ounces

• Detailed soil sampling, airborne geophysics and high-definition topographic mapping programs completed for further follow-up

• Great neighbourhood - politically stable, history of discovery

• Significant blue-sky exploration potential

• Channel has fully satisfied its option to earn 90% interest

Burkina Faso is located between Ghana and Mali and is home to about 30% of the Birimian greenstone belts of West Africa. The Birimian greenstone belts of West Africa have long been a focus for gold explorers and they host several world class deposits such as the 40 million ounce Obuasi (Anglogold) deposit and the 20 million ounce Ahafo deposit (Newmont) both located in Ghana.

The Tanlouka Gold Project is a 79 square kilometre property located within a one hour drive east of the capital city of Ouagadougou. The Tanlouka permit area straddles the Markoye Shear Zone, a crustal scale structure that extends from northern Ghana 450 kilometres to northern Burkina Faso. This important structure has some economic significance as it links some of Burkina's largest gold deposits including Essakane (IAMGOLD), Bombore (Orezone Gold), Taparko-Bouroum (High River Gold) and Kiaka (Volta Resources). It is thought that this structure provides the prime plumbing system for gold mineralized fluids in the region.

In recent years Burkina Faso has seen significant investment from international exploration and mining companies. Several mines are now in production and the country currently ranks as Africa's fourth largest gold producer.

Artisanal Workings

Sample from artisanal workings

The mineralized zones in the surveyed area of Tanlouka appear to be related to brittle-ductile deformation associated with an intrusive margin. A 12 kilometre long trend of regional scale (500m grid spacing) gold-in-soil anomalies has been outlined on the property within which three main centres are indicated. The most explored of these centres, known as the Mankarga Zone is located in the southern portion of the permit, and this is where the majority of artisanal workings are located.

A semi-detailed soil geochemistry survey (100 X 50 metre centres), with mapping and trenching and rock chip sampling have also been conducted over parts of the Mankarga Zone. The semi-detailed soil survey gold values ranged from less than 5ppb to a maximum of 1931 ppb gold. Channel sampling in one of the artisanal mining cuts on one of the soil anomalies returned an average grade of 2.33 g/T gold over 11.0 meters.

Also within the Mankarga Zone, a 30 line-kilometer gradient IP and ground magnetic survey identified several strong anomalies including a 1,300 metre long by up to 200 metre wide north-northwest trending zone characterized by high chargeability and high resistivity that also coincides with artisanal workings.

Channel RC drilling rig

Sampling

In the summer of 2010, Channel conducted a reverse circulation (RC) drilling program to targets targets outlined in the Mankarga zone based on the presence of geochemical anomalies, high resistivity and chargeability structures, magnetic anomalies, as well as extensive artisanal workings. This program consisted of eleven holes and successfully indicated the discovery two new mineralized areas approximately 1.3 kilometres apart - Mankarga 1 and Mankarga 5.

Following this initial success, the company commenced a second RC drilling program for an additional 10,000 meters in approximately 65 holes, to include bracketing and follow-up of the initial discoveries, as well as reconnaissance drilling to assess additional targets.

Of the holes drilled and reported thus far in the Phase II program (twelve holes totalling 2,335 metres), two holes drilled in Mankarga 1 confirmed mineralization on either side of the discovery hole where an intersection of high grade gold was encountered. Seven additional holes confirmed extensions to Mankarga 5, a north-east trending structure where two discovery holes intersected multiple discrete mineralized horizons. Holes were also drilled to test targets in Mankarga 2 and Mankarga 1 North area, where a new mineralized structure was discovered coincident with the presence of geochemical and geophysical anomalies, as well as extensive artisanal workings. To date, Channel has completed 90 RC Drill holes with over 7,000 meters of drilling.

Drilling within the Mankarga 5 Zone of the Tanlouka Project is continuing, with a 15,000 meter definition core drilling program that was announced on June 16, 2011. The definition drilling program advances and readies the Mankarga 5 gold deposit for its first NI43-101 resource estimate, expected to be completed in the first quarter of 2012.

In addition, Channel has completed surveys to expand exploration through the entire Tanlouka permit area:

• Airborne geophysics survey: A fixed-wing high resolution gradiometric magnetic and radiometric survey on 50m spaced lines was completed in February 2011. This survey involved the flying of almost 2,000 line kilometers over the entire permit and the resulting data will greatly assist in focusing exploration efforts in identifying additional mineralized structures.

• High definition elevation model: Highly detailed topographical mapping using stereoscopic satellite imagery has been completed by Channel for the entire Tanlouka permit area. This survey has allowed for the accurate drafting of one metre spaced contours and, along with the airborne magnetic survey, serves as a basis for a detailed structural analysis of the property. The magnetic survey shows that the Mankarga 5 mineralized trend correlates well with a linear transition zone

FOX CREEK LITHIUM / POTASH PROJECT

Oilfield lithium / potash brine project

Aquifer identified - assessing economic potential

Option to acquire 100% interest

• Extensive drilling by the oil and gas industry has encountered two major mineralized brine-bearing aquifer systems in west-central Alberta.

• Targeting the Beaverhill Lake and Leduc aquifer formations - 369 square kilometre permit area encompasses zone with most prospective reservoir characteristics.

• Brine already extracted as a by-product of gas production - currently re-injected back into aquifer formations.

• Gas well operators in area are highly cooperative - attracted by potential reduction in brine handling and disposal costs.

• Extensive infrastructure already in place - power, roads, rail, water, pipelines.

• Low cost energy availability - natural gas field, grid connected electricity, waste heat from natural gas plant, geothermal potential of hot brines.

• Multi-product advantages with lithium, potash, borates & bromine.

• Process testing and selection program underway.

The Fox Creek project is comprised of mineral rights over a 369 square kilometre area 24 kilometres south of the town of Fox Creek in west central Alberta.

It is situated over oil and gas pools hosted in the Devonian age Beaverhill Lake and the southern Woodbend (Leduc) carbonate reef complexes. Aquifers composed of formation water brines are spatially associated with these oil and gas pools and contain high concentrations of sodium and calcium chloride and anomalous concentrations of lithium, potassium, boron and bromine.

Lithium in Formation Waters

The concept of developing a lithium brine deposit in Alberta originates from information found in the ARC Bulletin No. 62, Industrial Mineral Potential of Alberta Formation Waters authored by Brian Hitchon, Stephan Bachu, J.R. Underschultz and L.P. Yuan and published in 1995 (the "Bulletin"). Source data was gleaned from well logs, drill stem tests and drill core analyses and was then paired with the geochemistry data, identifying aquifers that not only met the detailed geochemical exploration thresholds but also minimum reservoir characteristics for thickness (10m), porosity (>5%) and permeability (>10 millidarcies). Content estimates were then compiled for the aquifers that met all of these criteria for economic potential.

The Bulletin indicated that formation waters with lithium concentrations are contained in two aquifers (the Leduc-Beaverhill Lake aquifers) in three locations in west central Alberta. Based on data contained in the Bulletin, the Company believes that it has established the Fox Creek permit area over the most prospective zones for lithium recovery. The Beaverhill Lake aquifer is considered to have the best blend of lithium concentration and reservoir characteristics (derived from 183 wells, over 18,000 core analyses and 32 permeability measurements in drill stem tests)

NI43-101 Technical Report Available

In May of 2009, Channel Resources filed a National Instrument 43-101 standard technical report (the "Technical Report") on the Fox Creek project. The Report, prepared for the Company by APEX Geoscience Ltd. of Edmonton, provides a comprehensive description of the geology and compilation of available information pertaining to a potential lithium deposit for the project. The Report is available through the link at the top of this page.

Historical Lithium Resource

The Technical Report reviewed the total resource distribution estimate contained in the 1995 Bulletin for lithium in aquifers that are partly captured within the boundaries of the Fox Creek property. This historical scoping type estimate is not NI43-101 compliant and should not be relied upon. However, the estimate does provide an order of magnitude level of a resource that could be present and therefore is considered useful information in guiding future work. This historical estimate is partly based on porosity and permeability data obtained from regulatory submissions from the petroleum industry operating in the area. These indicate an average thickness for the Beaverhill Lake aquifer of 46 metres, an average porosity of 7% and an average permeability of 43 millidarcies, and an average thickness for the Woodbend (Leduc) aquifer of 25 metres, an average porosity of 6% and an average permeability of 20 millidarcies. At least 25 wells drilled in the region have yielded anomalous concentrations of lithium (to a maximum of 140 parts per million) in formation water samples from the Beaverhill Lake and/or Woodbend (Leduc) aquifers.

Based on this data, the aggregate historical lithium resource contained within the Beaverhill Lake and Woodbend (Leduc) aquifers was estimated to be 515,000 tonnes of lithium (approximately 2.7 million tonnes of lithium carbonate equivalent - LCE) over an area of 3,980 square kilometres.

Referencing the characteristics of the targeted aquifers, including thickness, porosity and permeability, the Technical Report indicates that "a large portion of this potential resource would be contained within the Beaverhill Lake aquifer and the southern Woodbend (Leduc) aquifer that underlie Channel's Fox Creek Lithium Property."

Brine Extraction and Processing

The Technical Report details information on 113 oil and gas wells that have been drilled on the property and that penetrate the Beaverhill Lake carbonate reef complex at a depth of approximately 3,200 metres, 44 of which are currently active. Active wells are producing substantial volumes of brines along with the petroleum products from the Beaverhill Lake and Woodbend (Leduc) aquifers. The brine is separated from the petroleum products before being injected back into the aquifers. No lithium production from these brines has taken place to-date at Fox Creek.

The processing of lithium from brine has been recognized as having much lower capital and operating costs than that from hard-rock sources, as well as a shorter lead-time to production. In assessing the producibility of commercial minerals from the Fox Creek brine, Channel will assess various processing techniques that are used by the producers in Chile and Argentina and various new processing technologies that may obviate the need for evaporation ponds that are used in these established operations. Some of these closed-circuit techniques have been already applied in a new brine processing plant in China and by CalEnergy Company, which uses a combination of ion exchange and solvent extraction processes to extract zinc metal from Salton Sea geothermal brines, in the Imperial Valley, California.

The composition of the brine indicates that significant quantities of potash (KCl), sodium, magnesium and boric acid are potential commercial products from the Fox Creek brine with lithium.

Advancing Fox Creek

Recommendations in the Technical Report for further work at Fox Creek include additional formation water geochemistry data searches, formation water sampling and analysis, potential re-entry of strategically located abandoned or suspended wells for the purpose of direct formation water sampling, land-use permitting and consultation, bench scale process testing for the recovery of lithium and co-products and water reservoir modeling.

Channel is following up on these recommendations further data searches and a brine sampling program, and is working towards the preparation of a National Instrument 43-101 compliant mineral resource estimate for the Fox Creek project.

Ownership

The Fox Creek project is governed by an option agreement with Polaris Capital Ltd. that Channel entered into in February of 2009, for the acquisition of a 100% interest, subject to a 2% purchasable gross sales proceeds royalty, with the following major terms:

Payment of $10,000 and 1,000,000 common shares of Channel to Polaris upon execution of the Agreement (Paid);

Payment of $10,000 and 1,000,000 common shares of Channel to Polaris on each of the first four anniversary dates of the Agreement;

Following full exercise of the purchase option, the 2% gross sales proceeds royalty may be purchased at Channel's discretion at any time for consideration of $2,000,000.

Outlook

The Fox Creek Project presents a unique opportunity for Channel to capitalize on an high rate of market growth for lithium carbonate, potash and other contained minerals, as well as to benefit from several project-specific advantages such as substantial existing infrastructure and easy access to energy sources.

Rising demand for lithium in industrial applications and new battery technologies, coupled with limited new supply growth expected in the next decade, is forecasted to continue driving the price for lithium carbonate upwards.

Channel's objective at Fox Creek is to take advantage of increasing prices and market demand for lithium carbonate, potash and borates as well as the lower costs associated with production from brines. In addition to the 'green' application of lithium in the automotive sector, the development of the Fox Creek project is expected to have a much smaller environmental impact than a hard-rock mining project, simplifying the approval process and lowering permitting costs. The project's location in Alberta offers a very pro-development and business oriented environment, and a substantial resource of technical expertise.