LAIZHOU GOLD

Exploration is focussed on two areas: Fengmaozhai and Xucunyuan. The Fengmaozhai property is on a northeast-trending fault zone (similar and parallel to the altered fracture Sanshandao Zone which controls the Sanshandao and Cangshang Gold Mines) and the Jiaojia Fault Zone (with six large and medium size gold deposits). The property contains eight altered fracture zones, with a maximum length of 2 km and a maximum width of 100 m. The auriferous mineralized zone revealed in the limited trenching can be up to 15 m wide and contains 0.2 to 0.5 g/t gold. One area where the local villagers have illegally mined in the past was reported to yield 4.5 g/t gold. The goal of the exploration program on Fengmaozhai will be to further delineate the surface showings of these structures and then to diamond drill the best targets to test the depth of higher grade mineralization. The Xucunyuan property is located on the southern extension of the northeast-trending Jiaojia Fault Zone. It has hosted six large and medium size gold deposits of the altered fracture zone type, such as Jiaojia, Jincheng and Hexi. The Shizhuang Gold Mine is 1 km to the north of the property and it has a gold reserve of about 20.19 tonnes (650,000 ounces) of gold at an average grade of 4.0 g/t. Previous work carried out on the Xuncunyuan property has revealed one 2,000 m long section of an auriferous altered fracture zone. Three of six test diamond drill holes intersected significant mineralization, with grades of 1.2 g/t, 3.2 g/t and 4.3 g/t, respectively, over a 1 m intersection. Planned exploration of the Xucunyuan area includes additional shallow drilling to locate the fault zone, followed by geophysics induced polarization (“IP”) and lithogeochemistry to prioritize the structure and, finally, further diamond drilling to test the structure at depth. This project is at an early stage but the geology and structure accord with known mineralization associated with the Jiaojia fault zone structure to the north.

Exploration is focussed on two areas: Fengmaozhai and Xucunyuan. The Fengmaozhai property is on a northeast-trending fault zone (similar and parallel to the altered fracture Sanshandao Zone which controls the Sanshandao and Cangshang Gold Mines) and the Jiaojia Fault Zone (with six large and medium size gold deposits). The property contains eight altered fracture zones, with a maximum length of 2 km and a maximum width of 100 m. The auriferous mineralized zone revealed in the limited trenching can be up to 15 m wide and contains 0.2 to 0.5 g/t gold. One area where the local villagers have illegally mined in the past was reported to yield 4.5 g/t gold. The goal of the exploration program on Fengmaozhai will be to further delineate the surface showings of these structures and then to diamond drill the best targets to test the depth of higher grade mineralization. The Xucunyuan property is located on the southern extension of the northeast-trending Jiaojia Fault Zone. It has hosted six large and medium size gold deposits of the altered fracture zone type, such as Jiaojia, Jincheng and Hexi. The Shizhuang Gold Mine is 1 km to the north of the property and it has a gold reserve of about 20.19 tonnes (650,000 ounces) of gold at an average grade of 4.0 g/t. Previous work carried out on the Xuncunyuan property has revealed one 2,000 m long section of an auriferous altered fracture zone. Three of six test diamond drill holes intersected significant mineralization, with grades of 1.2 g/t, 3.2 g/t and 4.3 g/t, respectively, over a 1 m intersection. Planned exploration of the Xucunyuan area includes additional shallow drilling to locate the fault zone, followed by geophysics induced polarization (“IP”) and lithogeochemistry to prioritize the structure and, finally, further diamond drilling to test the structure at depth. This project is at an early stage but the geology and structure accord with known mineralization associated with the Jiaojia fault zone structure to the north.