Environment

Vermilion has established a reclamation fund for the ultimate payment of environmental and site restoration costs on its asset base.  The reclamation fund is funded by Vermilion Resources Ltd. and its operating subsidiaries.  Contribution levels to the reclamation fund are reviewed on a regular basis and are adjusted when necessary to ensure that reclamation obligations associated with the Trust’s assets will be substantially funded when the costs are expected to be incurred.

As at September 30, 2009, the fair value of the reclamation fund was $69.3 million and the fund was comprised of $22.0 million in cash and short term investments and $47.4 million in equity and debt securities.  A portion of the cash and short term investments and all of the equity and debt securities are professionally managed by third parties.