Development of deposits of gold in East-Kazakhstan area

«Altyn Dala Mining» LLP

The general data on the companyThe general data on the company

Ownership typeOwnership type - - The Limited Liability PartnershipThe Limited Liability Partnership ««Altyn Dala MiningAltyn Dala Mining».».

Share for saleShare for sale – 50 – 100%.– 50 – 100%.

Registration date – March of 2005.Registration date – March of 2005.

The company holds subsoil use contracts for two gold deposits in Eastern Kazakhstan:The company holds subsoil use contracts for two gold deposits in Eastern Kazakhstan: Uba Contract Area – Contract №410 dated 24.02.2000 Uba Contract Area – Contract №410 dated 24.02.2000 Ashaly Contract Area – Contract №2098 dated 11.07.2006Ashaly Contract Area – Contract №2098 dated 11.07.2006

The company holds license for “Engineering and Operating in Mining Industry”.The company holds license for “Engineering and Operating in Mining Industry”.

The company also provides geological consulting services in mining sector. The company also provides geological consulting services in mining sector.

Headquartered in Almaty. Regional offices are based in Ust-Kamenogorsk and Ridder.Headquartered in Almaty. Regional offices are based in Ust-Kamenogorsk and Ridder.

Employees - 58 people, including 20 geologists.Employees - 58 people, including 20 geologists.

The Company is currently conducting an exploration work on placer gold deposit – “Uba The Company is currently conducting an exploration work on placer gold deposit – “Uba exploration block” in accordance with Subsoil Use Contract No. 410 dated 24.02.2000. exploration block” in accordance with Subsoil Use Contract No. 410 dated 24.02.2000.

Contractual area size is 2172 sq.km.Contractual area size is 2172 sq.km. The area contains number of gold halos and alluvial gold concentrations as well several placer The area contains number of gold halos and alluvial gold concentrations as well several placer

gold deposits and perspective ores. gold deposits and perspective ores. Geological staff in place - 31 people.Geological staff in place - 31 people. Main base is located in Ridder:Main base is located in Ridder:

Land in ownership – 0,187 hectares.Land in ownership – 0,187 hectares. Office and industrial space in ownership – 691 sq.meters.Office and industrial space in ownership – 691 sq.meters. Number of own vehicles – 12 units.Number of own vehicles – 12 units.

In 2006 the company has proven with GKZ (State Committee on Reserves) and put on the state In 2006 the company has proven with GKZ (State Committee on Reserves) and put on the state balance 3 435 kg of gold under Cbalance 3 435 kg of gold under C11+C+C22 categories categories

Uba Contract AreaUba Contract Area

Resources and reserves of Uba Contract AreaResources and reserves of Uba Contract Area

In 2008 the company by using Micromine® program conducted a reserve estimation and In 2008 the company by using Micromine® program conducted a reserve estimation and modeling of Phillipovka and Tikhaya river deposits located within Uba contract territory.modeling of Phillipovka and Tikhaya river deposits located within Uba contract territory.

As of today the company found As of today the company found 47364736 kg of gold falling under C kg of gold falling under C11+C+C22 category with an category with an average grade of 6,43 grams per cubic meter.average grade of 6,43 grams per cubic meter.

The total reserves and resources of Uba contractual area are summarized in a table below :The total reserves and resources of Uba contractual area are summarized in a table below :

C1 C2 P1 P2

total(kg)

In placer gold 4 117 619 12 396 6 247 23 378

In ores 1 500 6 500 11 700 19 700

In technogenic formations 300 300

Total by category (kg) 4 117 2 422 18 896 17 947 43 377

To meet the 2008-2009 minimum work program the company needs to invest at least To meet the 2008-2009 minimum work program the company needs to invest at least 38 million tenge onto Uba contractual area. Anticipated result would be then commercial finding of 38 million tenge onto Uba contractual area. Anticipated result would be then commercial finding of gold on Filippovka and Tikhaya river banks and increase of reserves by at least 3000 kg.gold on Filippovka and Tikhaya river banks and increase of reserves by at least 3000 kg.

Additional investments of $2M into exploration above the minimum work program Additional investments of $2M into exploration above the minimum work program into Uba contractual area can lead up to 20 000 kg increase of reserves under Cinto Uba contractual area can lead up to 20 000 kg increase of reserves under C 11+C+C22 categories categories

within two years.within two years.

The program of extraction The program of extraction UbaUba of a site of a site

To start the gold production on the deposit the following To start the gold production on the deposit the following activities were performed as of today:activities were performed as of today:

The Feasibility Study for development of the field is The Feasibility Study for development of the field is completed in April 2007.completed in April 2007.

Laboratory and semi-production tests were made in 2007. Laboratory and semi-production tests were made in 2007. 3,5 hectare land was acquired and zoned for processing plant 3,5 hectare land was acquired and zoned for processing plant

and tailing.and tailing. The technical study for application of graviton enrichment The technical study for application of graviton enrichment

and tank leaching technology on Phillipovka and Tikhaya and tank leaching technology on Phillipovka and Tikhaya placer deposits was completed in 2008.placer deposits was completed in 2008.

Summarized financial model of development of Uba contractual areaSummarized financial model of development of Uba contractual area

Forecast period 0 1 2 3 Total

Gross Revenue 24 628 921 24 628 921 22 326 237 71 584 080

EBITDA 19 229 789 19 239 780 17 039 194 55 508 764

Net Profit 12 761 482 12 768 475 11 228 065 36 758 023

CAPEX 8 991 908 8 991 908

Net Cash Flow -8 991 908 13 760 583 13 767 576 12 227 166 30 763 417

The company carries out exploration of placer gold at Ashaly exploration block in accordance The company carries out exploration of placer gold at Ashaly exploration block in accordance with Subsoil Use Contract No.2098 dated 24.02.2000.with Subsoil Use Contract No.2098 dated 24.02.2000.

Contractual territory - 206,3 sq.km.Contractual territory - 206,3 sq.km. There are linear volcano-tectonic arc-like structures on the Ashaly Area formed of effusive and There are linear volcano-tectonic arc-like structures on the Ashaly Area formed of effusive and

explosive products (mainly dacit) of volcanic activity. Today, Yuzhny Ashaly deposit is estimated explosive products (mainly dacit) of volcanic activity. Today, Yuzhny Ashaly deposit is estimated as a deposit with substantial reserves, and it might be classified as large-scale type of deposits.as a deposit with substantial reserves, and it might be classified as large-scale type of deposits.

Geological staff in place - 31 people.Geological staff in place - 31 people. Office and industrial space –375 sq.m (rented). Office and industrial space –375 sq.m (rented). Number of own vehicles – 3 units.Number of own vehicles – 3 units. Volume of drilling made – more than 5000 m.Volume of drilling made – more than 5000 m. Volume of mine work made – more than 15000 cub.m.Volume of mine work made – more than 15000 cub.m.

Ashaly Contract AreaAshaly Contract Area

Resources and reserves of Ashaly Contractual AreaResources and reserves of Ashaly Contractual Area

• Data about reconnoitered and probable reserves Data about reconnoitered and probable reserves AshalyAshaly of a site are resulted in the of a site are resulted in the table: table:

C1 C2 Р1 Р2 Total (kg)

Yuzhny Ashaly 6 574,7 18 838,7 8 616,0 34 029,4

Teninsky 5 172,0 5 172,0

Daubaysky 2 660,0 2 660,0

Krasnaya Yurta 120,0 120,0

Byukuysky 1 400,0 1 400,0

Total by category (kg) 6 574,7 24 010,7 12 796,0 43 381,4

It requires 77 million tenge to meet the It requires 77 million tenge to meet the minimum work program at Ashaly contractual area. minimum work program at Ashaly contractual area. Expected result - the announcement of commercial Expected result - the announcement of commercial finding at Yuzny Ashaly deposit and net increase of finding at Yuzny Ashaly deposit and net increase of reserves by 15 000 kg.reserves by 15 000 kg.

Additional investments into exploration of Additional investments into exploration of Ashaly Contractual Area in the amount $2M may Ashaly Contractual Area in the amount $2M may increase the gold reserves under C1+C2 of categories increase the gold reserves under C1+C2 of categories roughly by 20 000 kg within two years.roughly by 20 000 kg within two years.

Geological consulting servicesGeological consulting services Number of employees - 12 people.Number of employees - 12 people. Services rendered:Services rendered:

studying the deposit geological structure; studying the deposit geological structure; characterizing ore bodies; studying mining characterizing ore bodies; studying mining and geological, geotechnical and and geological, geotechnical and hydrogeological characteristics; hydrogeological characteristics;

developing surface process complexes, developing surface process complexes, local projects and general layouts local projects and general layouts including non-utilizable waste sites, mine including non-utilizable waste sites, mine vehicles, open pit drainage areas, repair vehicles, open pit drainage areas, repair and storage facilities, electrical facilities, and storage facilities, electrical facilities, etc.;etc.;

developing the feasibility study, developing the feasibility study, occupational and fire safety programs, and occupational and fire safety programs, and cost estimates.cost estimates.

Licenese No 004978 on design and operation Licenese No 004978 on design and operation of mine manufactures dated 27.02.2006.of mine manufactures dated 27.02.2006.

Completed projects – more than 30.Completed projects – more than 30.

«Altyn Dala Mining» Ltd Valuation«Altyn Dala Mining» Ltd Valuation

Wardell Armstrong International (WAI) was contracted by Altyn Wardell Armstrong International (WAI) was contracted by Altyn Dala Mining to prepare a Competent Person’s Report of the assets Dala Mining to prepare a Competent Person’s Report of the assets held by the ADM.held by the ADM.

Results of study of other areas within the licensed territory were Results of study of other areas within the licensed territory were delineated to have more potential for placer gold mineralization delineated to have more potential for placer gold mineralization and recommended for further exploration for large ore body gold and recommended for further exploration for large ore body gold occurrences.occurrences.

Estimation and modeling of reserves by using Micromine® Estimation and modeling of reserves by using Micromine® program conducted a in 2008 program conducted a in 2008