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United Reef entered into an option agreement on April 14, 2008 to acquire a 50% interest in five unpatented mining claims, consisting of 70 claim units covering approximately 1,120 ha (11.2 km2) in the McFauld’s Lake area of the James Bay Lowlands, northwestern Ontario. The claims were owned by Canstar Resources Inc. (“Canstar”), a public company listed in Canada, and Geocanex Limited (“Geocanex”), a private Ontario company (collectively the “Optionors”).

The Optionors granted United Reef the right and option to acquire a 50% interest in the McFauld’s Lake claims on the following terms and conditions:

• Fund exploration work on the McFauld’s Lake claims in the total amount of $150,000 by December 31, 2008 ($108,266 had been spent at November 30, 2008);
• Issue to Canstar and Geocanex a total of five million (5,000,000) fully-paid and non-assessable common shares of United Reef (issued April 24, 2008);
• Pay Canstar the sum of $50,000 (paid April 24, 2008); and
• URP granted a 0.5% NSR to each of the Optionors subject to URP's right to purchase 1/4 (0.25%) of the NSR from each party for $250,000.
• Grant a 0.5% net smelter royalty on the claims to each of Canstar and Geocanex, subject to United Reef’s right to purchase one-half (0.25%) of the royalty from each party for $250,000.

Effective December 10, 2008 United Reef entered into an amending agreement with the Optionors whereby United Reef acquired a 45% interest in the in consideration for the expenditures incurred. The amendment further provided that the claims would be operated as a joint venture thereafter with United Reef having an initial 45% interest and Canstar having the remaining 55%. Canstar was appointed the initial operator of the joint venture.

The McFauld's Lake claims are located approximately 4 kms east of McFauld's Lake. The property is contiguous to the southeast boundary of the Spider Resources/KWG Resources property where high-grade zinc-copper-silver-lead-gold mineralization was first discovered in 2003. Noront Resources' Eagle One Ni-Cu-PGM discovery is located 20 km to the west where Noront has reported an initial indicated and inferred resource estimate for base and precious metals. Recent chromite discoveries in the area reported by several companies lie approximately 15 kms to the west of the claims.

Previous exploration on the McFauld's Lake claims include an airborne electromagnetic (AEM) and magnetic survey carried out by Spider/KWG in the summer of 2003; ground magnetic and TDEM (time domain electromagnetic) surveys in spring 2004; and an AeroTEM survey commissioned by Canstar in late 2007. There are no known outcrops on the claims.

United Reef commissioned an independent geophysical interpretation of electromagnetic and magnetic data provided by Canstar from the AeroTEM survey flown over the claims. Three geophysically defined targets were drilled by United Reef in July 2008. The drilling program was designed to test the three geophysically defined bedrock targets believed to be possible volcanogenic massive sulphides. The three holes, UR-08-01 (101 m), UR-08-02 (152 m) and UR-08-03 (95.6 m), all terminated in biotite granite below the interpreted depth of the three geophysical anomalies targeted in the program. Overburden cover on the property appears to be quite thick and varied in thickness from 29 m to 69 m (down hole, not true thickness) in the three holes. Hole UR-08-02 intersected a highly magnetic dyke down hole between 127.3 and 129.6 m and again between 141.8 and 143.6 m within the granite. No significant sulphide minerals were observed in the core. A few select representative samples from the three holes were assayed for base and precious metals with no significant values reported. As the drilling program did not confirm the presence of volcanic massive sulphides, the primary objective of the program, management determined to write-down the carrying value of the property to nominal value at year end. United Reef is continuing to evaluate the property.