Operating Gold Mine

Summary

District is a part of the famous Ural gold belt and hosts 18 known gold deposits with estimated total gold reserves of over 3M oz. The district has improved gravel and paved roads. Power supply is carried out via 500kV power line, 200kV power line and a 10kV power line connected to the Mine. Total gold reserves of the deposit are estimated as 711.5 thousand oz as of beginning 2008. Mineable gold reserves (7.2 mln tonnes @ 4 g/t) are based on the results of core drilling (316 drill holes), shallow pitting, and trenching. The deposit was explored below the mine workings to the depth of 500m by inclination core drilling from the surface. Continuity and distribution of mineralization was explored by drifts from the vertical mine shaft constructed by the previous owner from reinforced concrete. The morphology, mode of occurrence, and type of mineralization in between the mine workings were explored by underground horizontal drill holes. The C1+C2 gold reserves of 13.5 tonnes were approved by the Kazakhstan Committee of Mineral Reserves (GKZ) in 2006. Reserve estimation was carried out using MICROMINE software. It's a medium size hydrothermal gold-sulfide deposit. The main ore minerals are pyrite and arsenopyrite. Currently, oxide ores of the deposit are being mined with further heap leaching. The gold output in 2008 is over 4,000 oz.

We are expecting significant reserve increase based on 2008 exploration work. The modeling is in progress and should be completed by March 2009. It is planned to mine sulfide ores both by open pit and underground methods. The processing technology for sulfide ore has been developed by Eastern R&D Institute of Non-Ferrous Metals, Ust’-Kamenogorsk, Kazakhstan in cooperation with Bateman Engineering Inc. 77% recovery, South Africa and Outotec Engineering, Finland 82% recovery. Selling flotation concentrate to the near by BIOX processing plant in Kazakhstan is considered as an interim solution. Complete staff is available. All permits and licenses are in place. Financial model is available. Possibility of acquiring neighboring property and enlarging the reserves to 2 mln oz.