Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Coverage - Near Term Production, Large Exploration Upside Potential

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1 Siddharth Rajeev, B.Tech, MBA, CFA Analyst Vincent Weber, B.Sc Research Associate-Mining Investment Analysis for Intelligent Investors Randall Hsu, BBA Research Associate October 26, 2010 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Coverage - Near Term Production, Large Exploration Upside Potential Sector/Industry: Junior Exploration/Mining Market Data (as of October 26, 2010) Current Price C$1.43 Fair Value C$1.60 Rating* BUY Risk* 5 (Highly Spec) 52 Week Range C$ C$1.48 Shares O/S mm Market Cap C$ mm Current Yield N/A P/E (forward) N/A P/B 3.69 YoY Return 286.5% YoY TSXV 42.5% *see back of report for rating and risk definitions 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 $1.50 $1.20 $0.90 $0.60 $ $ Oct Feb Jun Oct-10 Investment Highlights Trelawney Mining and Exploration Inc. is a TSX Venture listed junior mining and exploration company focused on bringing the flagship Chester Complex project to production. The Chester Complex is located in north-central Ontario between Sudbury and Timmins. It has historic underground development that the company plans to use to bring the project into production by year end. The company is aiming to produce 30,000 ounces of gold in the first 12 months at a rate of 250 tpd of high grade (~ 0.4 opt or 12 gpt) mesothermal vein type ore. The recently discovered Coté Lake Archean porphyry style deposit also at Chester, renders excellent growth potential with an exploration target that we estimate is currently between 1.5 and 2.0 Moz and growing. The company is in a strong cash position with about $9 million in the treasury. Risks The company does not have NI compliant resource estimates and may encounter ore at grades that vary from expectations. The company does not currently own an operating mine. Key Financial Data (FYE - Dec 31) (C $) 2010 (6 mo) Cash & Cash Equivalents 12,964,381 Working Capital 11,392,161 Mineral Assets & PPE 19,538,966 Total Assets 37,224,342 Net Income (3,537,925) EPS (0.05) Valuation Sensitivity Gold Price (US$/oz) Discount Rate (%) % 10.0% 15.0% $600 $1.26 $1.21 $1.17 $700 $1.41 $1.32 $1.25 $800 $1.56 $1.43 $1.34 $900 $1.70 $1.54 $1.43 $1,000 $1.85 $1.65 $1.51 $1,100 $1.99 $1.77 $1.60 $1,200 $2.14 $1.88 $1.68 $1,300 $2.29 $1.99 $1.77 Note: An FRC analyst has visited TRR s property in the past 12 months; see the back of this report for additional disclosures Trelawney Mining and Exploration Inc. is focused on brining the flagship Chester Complex project located in north-central Ontario to production before year end. The company is planning to produce 30,000 ounces of gold in the first 12 months of production, and reach a production rate of 60,000 ounces of gold per annum by month 24.

2 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 2 Company Overview Trelawney Mining and Exploration Inc. is a TSX Venture listed ( TRR ) junior mining and exploration company focused on the development of the Chester Complex in Ontario. The company is also listed in Germany on the Frankfurt exchange under the symbol RTW. The company is based in Toronto, Ontario. The company has a management team and board of directors with good technical and operations experience in the mining industry. The company s flagship Chester Complex project is located about halfway between Sudbury and Timmins in Ontario, and boasts the potential for near term production. The project is composed of three historic claim groups sharing common boundaries and hosting historic resource estimates in mesothermal vein type mineralized structures. Access and infrastructure are excellent and includes underground development completed by past operators in the 1980 s. Past operators were on the verge of production in the late 1980 s, but commercial operations never commenced. The underground infrastructure is such that the company expects to begin ore production within the next few months, likely toll milling the ore at nearby facilities. In addition to the potential for near term production from high grade structures, the project has long term exploration potential with the exciting new Coté Lake porphyry type deposit discovery. The company holds various exploration properties throughout Ontario; however, the main focus is bringing the Chester Project into production and continuing to explore and expand the Coté Lake Deposit. Figure 1: Property Locations in Ontario (Source: Company)

3 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 3 Company History Chester Complex The company has long been in the business of gold exploration having been formed in Ontario on July 4, 1996, as Zenda Gold Corp. through the amalgamation of Galinée Mattagami Mines Limited and Paramount Gold Corporation. The company has undergone a number of name changes but has remained primarily in gold exploration. On November 1, 1999, the company changed its name to Zenda Capital Corp. Effective March 7, 2005, the company continued under the name Terex Resources Inc. and commenced trading publicly on the TSX Venture exchange under the symbol TRR. The company underwent a name change to Trelawney Resources Inc. on November 6, 2006, and again on April 15, 2009, when it changed its name to the current Trelawney Mining and Exploration Inc. Project Overview: Through three separate agreements completed in mid to late 2009, the company consolidated three adjacent properties to form the Chester Complex project located between Sudbury and Timmins, Ontario. The three properties are the former Murgold- Chesbar (renamed Chester 1 by the company), Young-Shannon (Chester 2) and Jack Rabbit (Chester 3). The consolidation of these three properties is key to the company deriving value from the project. The three projects support historic resource estimates in narrow vein structures that the company plans on developing in succession to generate near term cash flow. The project is situated in the Swayze greenstone belt, just south of what is interpreted to be a southwest extension to the Larder Lake Cadillac Break fault. Mineralization includes mesothermal quartz veins (Chester 1, 2 and 3) and also includes the recently discovered Coté Lake zone, a potential Archean porphyry deposit. Figure 2: The consolidated Chester 1, 2 and 3 properties composing the Chester Property. The company recently signed an agreement to acquire 80% of three additional claims in YEO and Chester townships. (Source: Company)

4 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 4 The Chester 1 project hosts underground development in the form of a decline to a vertical depth of 500 feet with over 300 feet of raises on un-mined ore. With minimal rehabilitation, Chester 1 will be ready to begin producing ore which the company plans to commence prior to the end of Check Mine Plan below for additional details. Ownership: The three Chester projects are held through three separate agreements. The properties were all acquired as follows: Chester 1 Through a letter of agreement with Treelawn Investment Corp. (of no relation to the company), signed on June 26, 2009, the company may acquire up to a 70% interest in the Chester 1 property To acquire 50% (First Option) the company must: make cash payments totaling $0.35 million (paid); issue a total of 5 million common shares, 4 million of which have been issued. The remaining 1 million are to be issued six months following the commencement of commercial production; issue one million common share purchase warrants at a price of $0.17 exercisable for five years (completed); An additional 10% (Second Option) may be acquired by the issuance to Treelawn of 1 million common shares after no less than 12 months of continuous commercial production An additional 10% may be acquired by the issuance to Treelawn of 1 million common shares 12 months following the exercise of the Second Option. Chester 2 The company has acquired 100% of the 92.5% interest held by Metallum Resources Inc. (TSXV: MRV) in exchange for 5.0 million common shares of the company (completed). Metallum retains a 1% NSR when the monthly average gold price exceeds US$1,000 per ounce. An additional 3% royalty is payable to the proprietary owners of the 11 patented and 2 of the 18 unpatented mining claims that make up the property. Chester 3 The company may acquire 92.5% of the mining claims composing the Chester 3 property from Treelawn Investment in similar fashion to Chester 1. The First Option to acquire 50% can be completed with the payment of $2.216 million to Treelawn ($1.036 million paid), the issuance of 7.0 million shares (3.0 million issued) and an expenditure of $0.5 million on the property (completed as of June 30, 2010). The Second Option will earn the company an additional 25% in the property for the issuance of an additional 4.0 mm common shares of the company to Treelawn. Twelve months from exercising the Second Option, the company may acquire the final

5 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page % interest by issuing an additional 4.0 million common shares to Treelawn provided a further $0.5 million has been expended on the property. Following the company exercising the First Option, Treelawn will be granted a 1.5% NSR which the company may purchase 0.5% of for the sum of $1.0 million. The Emerald Isle claims were acquired as part of the agreement for Chester 3. Location/Access/Infrastructure: The project is located between Timmins and Sudbury just off highway 144 which connects the two cities. The town of Gogama is approximately 20 kilometres to the northeast. During the site visit, we noted the strong infrastructure associated with the project. The portal sits approximately 9 kilometres from highway 144 on a grated road providing year round access for a common pick-up truck or SUV. Various other exploration targets throughout the property were also easily accessed along gravel exploration roads. We believe the road providing access from highway 144 will be sufficient for haulage of ore for the toll milling process. A power line directly to the facilities that sit adjacent to the portal was completed in July of this year. Figure 3 below shows an aerial view of the Chester 1 development site. Figure 3: The Chester 1 development site. (Source: Company) Furthermore, all surface and underground mobile equipment required for mining is on-site and has been paid for. Sufficient lodging for both company personnel and contract miners plus additional offices are located a short drive from the portal. History: All three properties have been subject to significant past exploration with prospecting beginning in the early 1900 s. In 1930, the discovery of native gold on the

6 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 6 property area instigated a much greater interest in the area. The most relevant and most advanced development occurred at Chester 1 in the 1980's. Of particular note is the decline driven in 1986 by Chesbar Resources Inc. ( Chesbar ). The decline was developed to a vertical depth of 550 feet including over 2300 feet of lateral drifting on three levels and 300 feet of raises on ore. No commercial production ever occurred but underground workings remain in good condition and are being utilized by the company for mine development. Underground development at Chester 1 was certainly influenced by the adage commonly used in narrow vein mining drill for structure, drift for grade and additional potential at depth was likely assumed during the development of the decline. The majority of work completed on Chester 2 and Chester 3 was focused on surface exploration and bulk sampling. Historic development at Chester 2 did however include the sinking of the Young-Shannon inclined shaft (Figure 4 below) to the 200 level, but it is no longer serviceable. No commercial production from the Young-Shannon mine ever occurred. Figure 4: Inclined shaft on the former Young-Shannon property (Source: Fundamental Research Corp.) Geology and Mineralization: The project area is situated in the Swayze greenstone belt in the southwestern extension of the Abitibi greenstone belt. The properties overlie a narrow section of greenstone belt assemblage which is part of the Ridout syncline and relates to an important local structure called the Ridout deformation zone (RDZ). The RDZ is an eastwest zone of high strain deformation potentially correlated regionally to the Cadillac-Larder

7 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 7 Lake deformation zone. The Cadillac-Larder Lake deformation zone is a well known structure hosting several world-class gold deposits including the Kirkland Lake and Kerr Addison mines. As previously noted, the Chester property hosts two main types of deposits, both of which are related to a syn-volcanic intrusion. The first style of mineralization associates gold mineralization with narrow quartz veins hosted within shear zones and narrow shear fractures related to the RDZ. Mineralization is also commonly associated with sulphides, bleaching and sericite alteration. The structures generally trend northeast or southeast and dip steeply to the north or south (i.e. the structures are near vertical.) These high-grade veins pinch and swell and are found throughout the project area (Figure 5). Figure 5: High grade veins identified throughout the property. (Source: Company) Chester 1 The Chester 1 Zone is the most advanced of the vein deposits having been explored by the underground development completed by Chesbar. Underground sampling was completed twice in the 1980 s with both programs returning very similar grades. The company is confident that the near duplication in results from these earlier programs confirms that an overall grade of 0.43 opt for the Chester 1 zone is appropriate.

8 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 8 TRR Exploration - Chester 1: The Chester 1 zone was originally drill tested to a depth of approximately 200 metres by previous operators which lead to the driving of the decline. In late 2009 however, the company tested the Chester 1 zone at depth successfully intersecting mineralization in four of five holes the fifth hole was abandoned due to poor ground conditions. The holes successfully extended the mineralized zone an additional 100 vertical metres for a total depth of 300 metres where it remains open both at depth and along strike in both directions (see Figure 6 below). Results were highlighted by CM09-01 which intersected 0.66 metres of g/t gold, and hole CM09-03 which intersected 1.10 metres of 7.8 g/t gold. Figure 6: Exploration drilling completed by TRR has extended a portion of the Chester 1 vein to depth. (Source: Company) These results show the potential to expand these known zones of vein type mineralization to depth and along strike with further exploration. We anticipate this exploration will occur once the company has successfully initiated production from the already developed areas of Chester Zone 1. Chester 2 At Chester 2, two parallel zones of mineralization have been identified, C and C-prime. Chester 2 is situated approximately 1.5 km from Chester 1. Historic drill results indicated high grade potential at Chester 2: opt gold, and; opt gold

9 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 9 Figure 7: Known mineralized structures at Chester 2. (Source: Company) TRR Exploration Chester 2: With the first exploration drilling at Chester 2 results announced August 4, 2010 the company extended high-grade gold mineralization below both the C and the C-Prime Zones by approximately 200 vertical metres below the 150 metre depth originally identified by historic drilling. Drill Hole From (m) To (m) Length (m) Gold (g/t) Gold (oz/t) CL and CL and CL and Table 1: Highlights of exploration drilling testing Chester 2 to depth. Source: Company The extension of mineralization to a depth of 350 metres at Chester 2, and the earlier extension of mineralization to depth at Chester 1, are strong indications that highgrade gold mineralization extends to depth on similar structures throughout the project area. Chester 3 Similar to Chester 1 and Chester 2, Chester 3 hosts mesothermal gold bearing structures. The Chester 3 zone outcrops at the eastern extent and was subject to the removal of a bulk sample in Perhaps of more importance is the Gomak zone located between Chester 1 and Chester 3. The Gomak zone is another shear hosted mesothermal gold deposit running

10 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 10 sub-parallel to the Chester 1 zone. Gomak is important as it lies in close proximity to Chester 1 and is part of the near term production plan. Coté Lake The second type of mineralization found on the property is at the Coté Lake deposit which was discovered to the west of Chester 2 by the company during the winter 2010 drill program in Hole E Coté Lake appears to host a low-grade archean porphyry deposit, which is quite a variance from the mineralization found on the eastern portion of the property. Figure 8 below shows a close up location of the Coté Lake target on the Chester property. The striated circle is the current location subject to ongoing drilling. Figure 8: Coté Lake zone and drill holes. (Source: Company) In core it appears that wide zones of moderate grade gold (and often copper) mineralization are associated with brecciated intrusive rocks. Disseminated and fracture controlled sulphides generally correlate to gold values and visible gold is common. Chloritic and other alterations characteristic of porphyry deposits have also been noted in core. TRR Exploration Coté Lake: Figure 9 below shows the drill holes completed on Section The reader will notice two holes that dip to the right of the image. Following the completion of holes E09-01, and E09-02 (and the lack of significant mineralization in E09-02), the drill rigs were turned approximately 180 degrees (maintaining the near 45 degree drilling angle) resulting in a better angle of approach at the mineralized bodies. The company has since been quite successful in continuously intersecting substantial

11 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 11 mineralization. Here are some highlights: Hole E10-04, was an important discovery hole intersecting metres of 8.20 g/t gold. It is important to note that while there were small sections of extremely high grade mineralization, the entire metres reported is notably mineralized and the grade of 8.20 g/t is not due to a single high grade hit. If the high grade is cut, then the interval still maintains a grade close to the average of the deposit. Hole E10-27, completed as part of the summer 2010 drill program, intersected metres with an average grade of 5.33 g/t gold. Similar to hole E10-04, the full metres has significant mineralization and when cut to 50 g/t gold, still averages 3.94 g/t. This high grade intersection is approximately 100 meters southeast and 50 meters below the key intersection in hole E10-04 opening the high grade zone to the southwest and at depth. Other holes completed to date further our confidence in the discovery with more long intersections grading around 1 g/t. Hole E10-05 for example, returned a grade of 1.45 g/t over metres and recently announced hole E10-29 extended mineralization to Section Line with an intersection of 139 metres at a grade of 1.62 g/t. Figure 9: Cote Lake cross section including drilling results along section line 93+00E. (Source: Company) To date, the company has completed and received assays for 27 of 34 holes drilled along four fences (92E to 95E) with significant mineralization being intersected in several holes at each fence. Mineralization has been traced over a width of 400 metres and to a depth of

12 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page metres where it remains open. Resource Estimate: Various past operators of Chester 1, 2 and 3 have calculated (non compliant) resource estimates for all three properties. The historical estimates are in the measured, indicated and inferred categories and have been summarized by the company as displayed below. Figure 10: Historic resources at the Chester Complex. (Source: Company) Historic exploration on the property followed the adage drill for structure, drift for grade. As a result, the deposits were only drill tested to the depth required to justify underground development as further exploration. This left the deposits open for further expansion once underground development and production was underway. With development on the projects being prematurely halted we believe that there is outstanding opportunity to greatly improve the above estimates, particularly at Chester 1 and Chester 2, where TRR drill programs have doubled the known vertical extent of gold mineralization. The drilling has also shown that these deposits remain open to depth. We also believe that underground development, particularly the 1.5 km drift that will eventually connect Chester 2 to Chester 1, will uncover mineralized structures previously not identified at surface. As a result, we have doubled the above historic resources for Chester 1 and Chester 2, but utilizing a conservative grade of 0.35 oz/t. We have left Chester 3 and inferred resources as is. Our use of the historic resources in our valuation is further explained under Valuation. In a recent press release dated October 18, 2010, the company discusses the exploration potential for the Coté Lake deposit. The company believes that the current estimate for the Coté Lake deposit ranges between 3.5 and 6.0 million ounces of gold. Readers should note that this estimate is not a resource category and is not NI compliant. However, due to our confidence that this deposit has high potential, we will utilize (for valuation) the lower end estimate of million ounces for the deposit treating it as an inferred resource. Mine Plan: Despite a relatively low mineral resource for the Chester project, we are confident in the company s proposed development plan. Management has experience with narrow vein mining projects. Due to the historical work completed on the property,

13 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 13 particularly the underground development by Chesbar, the company is confident in the mineralized structures on the property. Also, as we have previously noted, the company is confident in the grade estimate for the Chester 1 deposit. The company has a staged plan to reach production levels of up to 500 tpd by month 24 of production. The plan begins with dewatering and accessing the underground workings at Chester 1 (ongoing). The underground workings are expected to be complete to the point that mining can begin within weeks of dewatering and any minor rehabilitation that is required. This first step will allow for the production of 250 tpd prior to the end of The ore will be shipped to a nearby facility for toll processing. Figure 11: The decline completed in 1986 at Chester 1. The company is currently dewatering and accessing the underground workings in preparation for production. (Source: Company) Mineralized zones at Chester 1 are relatively narrow which will necessitate the use of shrinkage stope mining. Miners will be paid on tonnage of ore and will be penalized for dilution.

14 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 14 Figure 12: Working on the decline in preparation for entry, July 13, The company can now access the decline and the ventilation fan on the right is in operation. (Source: Fundamental Research Corp.) Following the start of production at Chester 1, a drift will be driven to Chester 2 in order to exploit the parallel C and C-prime zones. This will add a further 250 tpd of production. Subsequent to this event, the company will deviate the original drift between Chester 1 and Chester 2 to access the Gomak Vein. This and several other known mineralized structures along the exploration drift to Chester 2 may enable the company to increase production by an additional 250 tpd above the current plan. Figure 13: Mine development model. (Source: Company)

15 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 15 Metallurgy: Gold is often found in native form and is commonly accompanied by sulphides such as pyrite and chalcopyrite. However, the gold is rarely directly associated with the sulphides and we expect percentage recoveries will be typical for mesothermal deposits in the region, reaching into the mid to high 90 s. The company has completed metallurgical testing on Chester 1 and we will be watching for updated results from the company. Current Status: The company has accessed the underground workings and is preparing for production of 250 tpd of ore from Chester 1 which will be toll milled at a nearby facility. Figure 14: Three and a half yard (3 1/2) scoop exiting portal (Source: Company) Figure 15: Surface Development at Chester 1 in preparation for production. (Source: Company)

16 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 16 Figure 16: Fundamental Research Corp associate Vincent Weber (center) reviewing Coté Lake geology with VP Exploration David Beilhartz (Right) and Jay Jackson, Senior Project Geologist. (Source: Fundamental Research Corp) Development Timeline: The development timeline for Chester 1, 2 and 3 aims for production of 250 tpd of ore for the first 12 months, ramping up to 500 tpd after 24 months, and additional zones possibly adding another 250 tpd potentially hitting 750 tpd of ore production by month 36. The company intends on producing approximately 30,000 ounces per year for each 250 tpd of production and is aiming to begin production prior to the end of As for Coté Lake, this is still a grass roots type deposit and much exploration remains to be completed. A development timeline for Coté Lake outside of advancing through exploration has yet to be established. Other Projects Benneweis-Yeo Properties: The Benneweis and Yeo properties are both situated very close to the Chester Complex with the Benneweis property sitting just a few kilometres east, and the Yeo property a few kilometres to the west. The company staked these properties in early On June 2, 2010, it granted Crown Minerals Inc. ( Crown ) the option to earn a 50% interest in exchange for 1.6 million common shares of Crown, and Crown completing a minimum of $2.5 million in exploration expenditures over a five-year period. Also on June 2, 2010, the company signed an agreement with Crown to purchase 80% interest in three contiguous claims in Yeo and Chester township for a one-time payment of $0.12 million (paid). Crown retains a 20% carried interest to the completion of a positive pre-feasibility study on the claims.

17 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 17 Property Summary Massey: The company holds 100% interest in the Massey property located approximately 85 km west of Sudbury, Ontario. Approximately 18,535 tonnes of ore grading approximately 2.82% Cu were intermittently mined from the Hermina deposits between 1901 and Property Summary Dorset: Trelawney is the manager of a joint venture on the Dorset property with MetalCORP Limited (TSXV: MTC) and currently holds a 53% interest. This property is within the Mishibishu greenstone belt and sits approximately six kilometres north of the Wesdome Gold Mine s Eagle River Mine (TSX: WDO). The Dorset B zone has a NI resource estimate completed in October 2007, that states an indicated resource of 0.78 million tonnes at 1.42 g/t Au and an inferred resource of 4.76 million tonnes at 1.19 g/t Au. Management Greg Gibson President and Chief Executive Officer, Director Greg Gibson is a 30 year veteran of the mining industry having worked as a mine manager in gold and copper mines in Australia, a nickel mine in Timmins, Ontario and a gold mine in British Columbia. Mr. Gibson has worked for JS Redpath in Canada and the USA, Dynatec Mining Ltd. in Canada and the USA, Yilgarn Star Gold Mine in Australia and Copper Mines of Tasmania in Australia. Andres Tinajero Chief Financial Officer, VP Finance Andres has over 15 years of business experience, having supported a broad range of industries, including not for profit, manufacturing, mining, and retail; establishing a strong accounting and business skill set, transitioning into the public sector serving in leadership roles for small and medium sized companies in extractive industries. During this same period, he has served as Controller and CFO of a number of start-ups and medium sized Public companies across Canada. He holds degrees in Business Administration and an MBA, and is also a Member of the Canadian Institute of Certified Management Accountants, and a member of the Certified Practicing Accountants of Australia. David Beilhartz, B.Sc. VP Exploration David Beilhartz, B.Sc. P.Geo. is a Professional Geologist with more than 25 years experience in mineral exploration throughout Canada. He graduated in 1984 from Laurentian University with an Honors Bachelors of Science degree in Geology and is a member of the APGO (Association of Professional Geoscientists of Ontario). He has been involved with several senior and junior mining companies as an employee and consultant conducting and supervising exploration activities for gold, nickel-copper-pge's and base metals, most recently as Vice President, Exploration for Lake Shore Gold Corp. and Chief Geologist for Holmer Gold Mines. During his career, he has been associated with the discovery, definition and development of two significant gold deposits including the discovery and definition of the Timmins West gold deposit.

18 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 18 Management Rating We believe that one of the most important aspects of a junior mining company is its management. Therefore, we have developed a management rating system as a quantitative way to rate management based on a number of factors, including technical experience, the ability to raise financing, and management s time commitment to the company. We also analyzed trading records to identify for evidence of unusual trading by management. Our net rating for Trelawney Mining and Exploration (see below) is 4.1 out of 5.0. Management Rating Technical Experience Experience in putting mines to production/generating prospects Track record in raising capital/working for public companies Experience in projects similar to the current project Team's focus on the company Any unusual insider trading in the past 12 months Net Rating NO % 20% 40% 60% 80% 100% Strength of Board The company s board of directors is composed of the following individuals. Greg Gibson President CEO, Director James Fairbairn CA, ICD.D Tony Makuch, P.Eng Current President of Lake Shore Gold George Cole Chris Irwin Patrick Mohan Four out of Six directors are independent None of the directors have filed for personal bankruptcy Four of the directors hold shares in the company The Audit committee is composed of three board members, two of which are independent The Compensation committee is composed of three board members, two of which are independent Poor Good Excellent X X X X X Financials At the end of June 2010, the company had $12.96 million in cash and cash equivalents. Working capital was $11.39 million. The company reported a net loss of $3.54 million

19 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 19 (EPS: -$0.05) in the first six months of FY2010 (ended June 2010). We estimate the company had a burn rate (spending on operating activities) of $0.28 million per month in the first six months of FY2010, compared to $0.04 million in FY2009 (12 month period ended December 2009). In addition, the company spent about $10.94 million in the first six months of FY2010 on additions to capital assets and mineral properties. The following table shows the company s cash and liquidity position at the end of Q (in C$) 2010 (6 mo) Working Capital 11,392,161 Current Ratio 6.6 LT Debts/ Assets - Burn Rate/month (281,998) Cash from financing activities 14,952,463 Subsequently, in August 2010, 0.25 million options and 3.60 million warrants were exercised for proceeds of $1.34 million. Stock options and warrants: The company currently has about million warrants (weighted average exercise price - $0.66) and 7.26 million options (weighted average exercise price - $0.70) outstanding. All the options and warrants are currently in the money. Conclusion: The company is in a sound financial position with about $9 million in the treasury. Our discussions with management indicated the company has no plans to pursue any financings in the near future. Valuation We used a Discounted Cash Flow (DCF) model to evaluate the Chester 1, 2 and 3 projects. As mentioned earlier in this report, we have doubled the historic resources for Chester 1 and Chester 2, but utilizing a conservative grade of 0.35 oz/t. We have left Chester 3 and inferred resources as is. The following table shows the resource estimates used in our valuation models (calculated based on 100% of measured and indicated plus 50% of inferred). Tons Grade (opt) Ounces Chester 1 438, ,700 Chester 2 806, ,800 Chester 3 392, ,000 Total 1,636, ,500 Our fair value estimate on Chester 1, 2 and 3 based on the above resource estimates is $0.53 per share. The following table shows a summary of the inputs/assumptions we used in our model.

20 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 20 DCF Valuation Summary Resource (in tons) - M+Ind.+50% Inf 1,636,500 Average Au Grade (opt) 0.31 Contained Gold (in troy oz) 512,500 Gold Recovery 95% Production Commencement 2011 Mine Life (in years) 8 Gold Price (in US$/oz) US$1,200, US$1,100, US$1,000, US$900 Average Operating Costs ($/ton) $147 Total Capital Costs ($) - for TRR $30,305,000 Discount Rate 10% Net Present Value $61,182,650 No. of shares 115,109,789 Value per share $0.53 We valued the Coté Lake deposit assuming the project has a resource of mm oz in the inferred category (as mentioned earlier in this report). We typically discount inferred resources by 50% for valuation. Therefore, our valuation on the Coté Lake deposit, based on a resource of 2 mm oz, is $0.93 per share as shown below using comparables valuation. Note that this valuation also includes the value of the relatively small NI compliant inferred resource on the company's Dorset project (which is the only other project in TRR's portfolio with resource estimates). Company SYM EV / Resources 1 Golden Band Resources Inc. TSXV: GBN $ Sona Resources Corporation TSXV: SYS $ Silverado Gold Mines Ltd. OTCBB: SLGLF $ Sutter Gold Mining Inc. TSXV: SGM $ NioGold Mining Corporation TSXV: NOX $ Crown Gold Coporation TSXV: CWM $17.0 Average EV / Resources ($/oz) $56.1 Fair value of Cote Lake + Dorset $0.93 * Resources include all measured and indicated, and half of inferred and historical resources Adding our valuation on the Chester 1, 2 & 3, Coté Lake and Dorset projects to the company's working capital, we arrived at a fair value of $1.54 per share on TRR.

21 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 21 Valuation Summary Chester 1, 2 & 3 $0.53 Cote Lake + Dorset $0.93 Working Capital $0.08 Fair Value $1.54 The following table shows the sensitivity of our valuation to our log-term (2014+) gold price and discount rate assumptions. Valuation Sensitivity Gold Price (US$/oz) Discount Rate (%) % 10.0% 15.0% $600 $1.26 $1.21 $1.17 $700 $1.41 $1.32 $1.25 $800 $1.56 $1.43 $1.34 $900 $1.70 $1.54 $1.43 $1,000 $1.85 $1.65 $1.51 $1,100 $1.99 $1.77 $1.60 $1,200 $2.14 $1.88 $1.68 $1,300 $2.29 $1.99 $1.77 Rating Risks We initiate coverage on TRR with a BUY rating and a fair value of $1.60 per share. The following risks, though not exhaustive, may cause our estimates to differ from actual results: The value of the company is dependent on commodity prices. The company does not currently have any operating mines. Mining widths are narrow and the success of mining can be greatly influenced by dilution from lower grade or barren surrounding rock. The success of drilling, project development and resource expansion are important longterm success factors for these early projects. We rate the company s shares a RISK of 5 (Highly Speculative).

22 Trelawney Mining and Exploration Inc. (TSXV: TRR, Frankfurt: RTW) Initiating Page 22 Fundamental Research Corp. Equity Rating Scale: Buy Annual expected rate of return exceeds 12% or the expected return is commensurate with risk Hold Annual expected rate of return is between 5% and 12% Sell Annual expected rate of return is below 5% or the expected return is not commensurate with risk Suspended or Rating N/A Coverage and ratings suspended until more information can be obtained from the company regarding recent events. Fundamental Research Corp. Risk Rating Scale: 1 (Low Risk) - The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry. The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure is conservative with little or no debt. 2 (Below Average Risk) - The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive to systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash flows (though current free cash flow may be negative due to capital investment). The company s capital structure is conservative with little to modest use of debt. 3 (Average Risk) - The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and coverage ratios are sufficient. 4 (Speculative) - The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a turnaround situation. These companies should be considered speculative. 5 (Highly Speculative) - The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products. Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues, and may rely on external funding. These stocks are considered highly speculative. Disclaimers and Disclosure The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any forward looking statements are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary. The analyst and Fundamental Research Corp. FRC does not own any shares of the subject company, does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company. Fees of less than $30,000 have been paid by TRR to FRC. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. 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