RARE EARTH RESERVES OF THORIUM ENERGY, INC., LEMHI PASS IDAHO AND MONTANA

Prepared for: Thorium Energy, Inc.

19 East 200 South, Suite 1080

Salt Lake City, Utah 84111

Prepared by: Rich Reed, P.E., P.G., R.E.M.

EXECUTIVE SUMMARY OF OPINIONS

This report summarizes thorium and rare earth vein deposits of unpatented mining claims of Thorium Energy, Inc. located in the Lemhi Pass Thorium District of Idaho and Montana. It also provides a summary of proven, indicated, and inferred reserves of thorium and rare earths in the Lemhi Pass of Idaho and Montana of Thorium Energy Inc.

Thorium and rare earth deposits in the Lemhi Pass of Idaho and Montana are the largest known in the United States. The United State Geological Survey (USGS), the United States Atomic Energy Commission (AEC), the United States Defense Minerals Exploration Administration (DMEA), the United States Bureau of Mines (USBM), the Idaho Bureau of Mines & Geology (IBM&G) – Idaho Geological Survey (IGS), Montana Bureau of Mines & Geology (MBM&G) have performed a number of investigations throughout the years in greatly contributing to the current understanding of the thorium deposits in the Lemhi Pass.

In addition many private individuals, and a number of companies, including Nuclear Fuels and Rare Metals Corporation, Sawyer Petroleum and Union Pacific Railroad, Dow Chemical, Tenneco Oil Company, and Idaho Power Company to name a few have also actively explored and evaluated the mineral deposits in the Pass over the years and also have greatly contributed to their understanding. Further mapping and evaluation work of the Lemhi Pass Thorium District was done recently by the US Geological Survey and Idaho Geological Survey.

Recent mapping by the US Geological Survey and the Idaho Geological Survey has provided new insight of regional geology and tectonics in and around the Lemhi Pass and relations to the thorium and rare earth deposits. The Idaho Geological Survey conducted detailed mapping and vein sampling in 2006. Results of recent mapping and analytical analysis of the 2006 field work were not available at the time of this report. Additional geologic work by the Idaho Geological Survey including mapping and sampling is scheduled 2007.

The Last Chance thorium vein located in the Lemhi Pass is held under claim by Thorium Energy Inc. The Last Chance vein is reported to be the most significant thorium deposit in the Lemhi Pass and it is also the richest thorium vein deposit in the United States. It has been reported to contain an average concentration of thorium oxide, ThO2 of 0.39 % (7.8 lb. /ton) and rare earth oxide, REO of 0.33 % (6.5 lbs. /ton). It has a measured proven reserve of about 16,425 tons of ore containing 387,120 lbs. (194 tons) of ThO2 and 306,465 lbs. (153 tons) of REO and a combined probable reserve of 582,850 tons or 4,558,860 lbs. (2,279 tons) of ThO2 and 3,793,035 lbs. of REO. It has an additional inferred reserve of 332,329 tons of ore or 2,598,812 lbs. (1,299 tons) of ThO2 and 2,160,138 lbs (1080 tons) of REO. It has a combined probable and inferred reserve of 915,180 tons ore containing 7,157,673 lbs. (3,579 tons) of ThO2 and 5,953,173 lbs. (2,977 tons) of REO. It is estimated that an indicated reserve of about 157,790 tons of ThO2 and an inferred reserve of 115,210 tons of ThO2 or a combined reserve of 273,000 tons of ThO2 at about an average concentration of 0.40 % (8 lbs. /ton) is contained within the claim holdings of Thorium Energy Inc. In addition it is estimated that an indicated reserve of about 212,855 tons of REO and an inferred reserve of 141,745 tons of REO or a combined reserve of 354,600 tons of REO at an average concentration of about 0.52 % (10 lbs. /ton) is also contained within the holdings of Thorium Energy Inc.

A considerable amount of iron ore and other retrievable quantities of commercial grade Rare Earth Deposits were also identified on these properties, including:

Cerium- Used as an oxidation and cracking catalyst, and in the manufacture of glass, paint and ceramic products.

Lanthanium- Utilized as a cracking agent and the production of glass and ceramics.

Neodymium -Cracking catalyst, used in glass, tile magnet and laser manufacturing.

Paseodymium - Cracking catalyst, used in the manufacture of glass, electro-magnets and special lamps.

Samarium-Used in the production of magnets, lighting products and neutron absorbers.

Europium - Utilized in the manufacture of Cathode Ray Tubes (CRT's), and neutron absorbers.

Gadolinium - Used in electronics, and acts as an alloy agent. •  Yttrium - Used in CRT production, lasers and semi conductors.

The abundance of this resource was further supported by a Mineral Report filed by the United States Department of Agriculture Forest Service, issued in January, 2002, which stated that "The Lemhi Pass district has the largest known resource of thorium veins in the United States ". The report went on to state that, "The veins containing the thorium mineralization also have significant associated rare earth element mineralization."