Phase I Report, US DOE GRED II Program

Noramex Corporation Inc, a Nevada company, owns a 100% interest in geothermal leases at the Blue Mountain Geothermal Area, Humboldt County, Nevada. The company is exploring the site for a geothermal resource suitable for development for electric power generation or In the spring of 2002, Noramex drilled the first geothermal observation hole at Blue Mountain, under a cost-share program with the U.S Department of Energy (DOE), under the DOE's Geothermal Exploration and Resource Definition (GRED) program, (Cooperative Agreement No. DE-FC04-00AL66972). DEEP BLUE No.1 was drilled to a total depth of 672.1 meters (2205 feet) and recorded a maximum temperature of 144.7 C (292.5 F). Noramex Corporation will now drill a second slim geothermal observation test hole at Blue Mountain, designated DEEP BLUE No.2. The hole will be drilled under a cost-share program with the DOE, under the DOE's Geothermal Exploration and Resource Definition II (GRED II) program, (Cooperative Agreement No. DE-FC04-2002AL68297). This report comprises Phase I of Cooperative Agreement No. DE-FC04-2002AL68297 of the GRED II program. The report provides an update on the status of resource confirmation at the Blue Mountain Geothermal Area, incorporating the results from DEEP BLUE No.1, and provides the technical background for a second test hole. The report also outlines the proposed drilling program for slim geothermal observation test hole DEEP BLUE No.2