Q&A with Zone Resources (V.ZNR) President & CEO Charles Desjardins (Spring 2011)

Can you describe your company and say what it does?
Zone Resources Inc. (TSX: V.ZNR)(Frankfurt: 7ZR.F) is a tightly-held mineral exploration company with an extensive property portfolio in the Labrador Trough in northern Quebec. The properties amount to approximately 36,000 hectares and have produced significant historical results, such as hitting 42.9% iron over 197 feet on the Moore-Ross property. We are aiming to conduct a drill program in the summer months to prove such data and identify further targets on the properties. We are in the beginning phases of exploration, but it is very exciting to see the area heating up.

What distinguishes your company from others in your space?
Compared to other companies in the Labrador Trough with similar land positions, we have a smaller market cap and limited share dilution. Given the demand for steel in emerging markets such as India and China, we feel like Zone Resources Inc. is positioned to be an attractive opportunity for investors.

Can you explain why you have chosen to work in Quebec?
Quebec, and particular northern Quebec, is alluring simply because much of this area has yet to be properly explored, let alone developed. The Quebec provincial government has recently put together an $80 billion plan (“Plan Nord”) to develop this area with infrastructure and investment in mineral exploration. This makes it extremely appealing for smaller exploration companies, particularly Canadian exploration companies, to invest their money in the province and a region with such amazing untapped potential.

What are your flagship projects?
Our land package consists of three major properties: Girard Iron Ore Property (27,200 hectares), Moore-Ross Iron Ore Property (6,900 hectares, and Knob Hill Iron Ore Property (2,000 hectares).

These are all located in northern Quebec. Moore-Ross contains the most extensive historical work, including the 42.9% iron intercept over 197 feet.

Why are you in the oil and gas business as well as exploring for iron ore?
After searching for an oil and gas deal for well over a year, we were presented with a situation (Labrador Trough) that we believed could create shareholder value.

What are the main challenges that you face in operating your business?
In northern Quebec, one of the major challenges is access to the properties. This is an issue that is currently being addressed through the Quebec provincial government through Plan Nord, an $80 billion infrastructure and investment plan for north Quebec that will unfold over the next 25 years.

Who are your competitors?
The direct competitors for Zone Resources are those established in the Labrador Trough already, namely: New Millennium Capital Corp./Tata Steel Corp.; Adriana Resources/Wuhan Iron and Steel Company; Labrador Iron Mines; and the company that is perhaps most comparable to Zone — Cap-ex Ventures Ltd. The interesting thing about this region is that although Zone is competing with these companies for the resources in the area, we all have a mutual interest in the continued success of the region as a whole. The infrastructure proposed by the provincial government, along with the investment by foreign Multi-National Corporations (Tata, Wuhan etc.) will only increase the value of area and the companies invested in it in the long term.

Who are the major shareholders of Zone Resources?
Pinetree Capital Ltd. is the largest shareholder. As of March 29, they hold a position of approximately two million shares along with rights to acquire an additional 1.5 million common shares of Zone Resources Inc. upon exercise of certain convertible securities. In the event that the convertible securities are fully exercised, the holdings of Pinetree represent a total of 3.5 million common shares of Zone, or approximately 15.1 per cent of all issued and outstanding common shares as at March 29, 2011, calculated on a partially diluted basis assuming the exercise of the convertible securities only.

How much cash do you have on hand and what is your monthly cash burn rate?
Currently our cash position is sufficient for the near-term as well as the early stages of exploration, which includes an airborne survey over the entire property to help identify future drill targets.

Who are the key players on your management team?
The most prominent members of our management team include Mike Magrum, Dr. Colin Bowdidge, and Doug McFaul.

What kind of experience do they bring to the table?
Mr. Magrum has over 30 years of experience in designing and implementing exploration programs worldwide. He is a director of a number of public companies and was an original director of Seabridge Gold, which acquired a major gold property portfolio containing a multi-million ounce gold resource. He is a graduate of the famed Haileybury School of Mines and the University of Alaska.

Dr. Bowdidge has a degree in geology and mineralogy from the University of Cambridge and a Ph.D. in geology from the University of Edinburgh. He has over 35 years of practical experience in mineral exploration, discovery and mine development. Based in Canada, he has also handled projects in Europe, Latin America, Africa and the United States. He has initiated, managed and executed mineral exploration programs for gold, uranium, base metals, ferrous metals and industrial minerals including graphite, wollastonite, calcite, muscovite, tremolite, garnet and kyanite.

Mr. McFaul has 17 years experience with companies involved in the public markets. He has acted as a director and held senior management positions with various public companies. Mr. McFaul completed the Canadian Securities Course in 1994. He also obtained a degree in finance from the University of Alaska in 1989.