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INVESTMENT PROPOSAL

Active Gold Holding PLC

Active Gold Holding PLC Investment Proposal

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Table of Contents

1 EXECUTIVE SUMMARY .......................................................................................................... 4 2 HISTORY, SITUATION AND OBJECTIVES ................................................................................ 5 2.1 HISTORY .................................................................................................................................. 5 2.2 THE PRESENT SITUATION ....................................................................................................... 5 2.3 MINING RESULTS .................................................................................................................... 6 2.4 COMPANY OBJECTIVES .......................................................................................................... 6 2.5 INVESTMENT OFFER ............................................................................................................... 7 3 GOLD MARKET ANALYSIS ...................................................................................................... 8 3.1 DEMAND AND SUPPLY ........................................................................................................... 8 3.2 HOW DOES GOLD WORK? ...................................................................................................... 8 3.3 RELEVANT FACTORS PRODUCTION ................................................................................... 11 3.4 RELEVANT FACTORS - COMMODITY .................................................................................... 12 3.5 RELEVANT FACTORS SAFE HARBOR .................................................................................. 13 3.6 PREDICTIONS ABOUT THE GOLD MARKET PRICE IN THE FUTURE ....................................... 14 4 GOLD MINING ...................................................................................................................... 16 4.1 INTRODUCTION .................................................................................................................... 16 4.2 ALLUVIAL GOLD .................................................................................................................... 16 4.3 HARD ROCK GOLD ................................................................................................................ 17 4.4 GOLD MINING IN RUSSIA ..................................................................................................... 19 4.5 OVERVIEW THE REPUBLIC OF ALTAI ................................................................................. 20 4.6 THE HISTORY OF GOLD MINING IN THE REPUBLIC OF ALTAI ............................................... 21 4.7 CURRENT GOLD MINING IN THE REGION ............................................................................ 21 4.8 CLASSIFICATION IN THE WESTERN WORLD ......................................................................... 22 4.9 CLASSIFICATION IN RUSSIA .................................................................................................. 23 5 ACTIVE GOLD DEPOSITS ...................................................................................................... 25 5.1 ACTIVE GOLDS FOUR DEPOSITS .......................................................................................... 25 5.2 THE CHUIKA AND MIDDLE KAINACH DEPOSIT ..................................................................... 26 5.3 THE ALBAS AND KAURCHAK DEPOSITS ................................................................................ 28 5.4 THE BRECCIA DEPOSIT .......................................................................................................... 29 5.5 PROSPECT MINES ................................................................................................................. 34

a PRAVOBEREZHNY ............................................................................................................ 34 b MAISKO-LEBEDSKY AREA ................................................................................................. 35 c CHOISKAYA AREA............................................................................................................. 35 d SYNZAS ............................................................................................................................. 36 e BOLSHAYA RECHKA ......................................................................................................... 36

6 DEVELOPMENT PLAN ........................................................................................................... 37 6.1 TIME SCHEDULE ................................................................................................................... 37 6.2. INVESTMENT DETAILS .......................................................................................................... 38

a ALREADY PURCHASED ..................................................................................................... 38 b EQUIPMENT TO BE PURCHASED ..................................................................................... 40


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7 PRODUCTION, LOGISTICS AND LOCAL INTEGRATION ........................................................ 43 7.1 PRODUCTION ....................................................................................................................... 43

a ALLUVIAL MINES .............................................................................................................. 43 b HARD ROCK DEPOSIT ....................................................................................................... 45

7.2 LOGISTICS ............................................................................................................................. 46 7.3 CONCESSIONS....................................................................................................................... 48 7.4 GOVERNMENTAL SUPPORT AND LOCAL INTEGRATION ...................................................... 50

a National Agency .............................................................................................................. 50 b Social Responsibilities ..................................................................................................... 50

7.5 ENVIRONMENT ..................................................................................................................... 50 8 SALES .................................................................................................................................... 51 9 COMPANY ............................................................................................................................ 52 9.1 STRUCTURE .......................................................................................................................... 52 9.2 ORGANIZATION .................................................................................................................... 52 9.3 BOARD OF DIRECTORS ......................................................................................................... 53 9.4 MANAGEMENT TEAM GENERAL MANAGEMENT ................................................................ 54 9.5 GEOLOGICAL AND TECHNICHAL EXPERTS - SITE MANAGEMENT ........................................ 55 9.6 SHAREHOLDERS .................................................................................................................... 57 10 FINANCIAL PROJECTIONS .................................................................................................... 58 10.1 Revenues .............................................................................................................................. 58 10.2 Cost ....................................................................................................................................... 59 10.3 Profit and Loss ...................................................................................................................... 60 10.4 Balance Sheet (Pro Forma March 31st 2011) ...................................................................... 61 10.5 Free Cash Flow ..................................................................................................................... 62 10.6 Sources & Uses Of Capital .................................................................................................... 63 10.7 Investment Metrics .............................................................................................................. 64 10.8 Exit multiples ........................................................................................................................ 65 10.9 Return Sensitivities............................................................................................................... 66 11 RISK MANAGEMENT ............................................................................................................ 67 11.1 GOLD PRICE .......................................................................................................................... 67 11.2 DIESEL ................................................................................................................................... 67 11.3 POLITICAL ............................................................................................................................. 67 11.4 OPERATION .......................................................................................................................... 67

a Work force ....................................................................................................................... 67 b Spare part ........................................................................................................................ 67 c Equipment Lead Times .................................................................................................... 68 d Close Circuit Water Supply .............................................................................................. 68 e Vegetation ....................................................................................................................... 68

11.5 RISK & PROBABILITY ESTIMATIONS...................................................................................... 68 11.6 ENVIRONMENT ..................................................................................................................... 68 12 DISCLAIMER ......................................................................................................................... 70


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1 EXECUTIVE SUMMARY

Active Gold Holding PLC (Active Gold) was formed in 2004 and currently holds four gold mining concessions in the Russian Republic of Altai, Siberia. Active Gold has concluded all the preliminary research, license negotiations and initial drilling works. Active Gold started with successful production in summer 2008.

The overall geological reserves and resources of Active Gold exceed 50 tons of gold and 150 tons of silver with an annual gold production of 1.4 ton. At current gold price levels of approx. 1450$/ounce and a silver price level of 40$/ounce, this is estimated to result in revenues of more than US$ 2.5 bn over the lifetime of the investment.

Many trustworthy gold market analysts project the price of gold to rise significantly in the future, thus potentially further increasing revenue. However, after full development of its hard-rock mine, the Company will break even at a gold price of about 600$/ounce.

During 2008, Active Gold has successfully achieved actual production of gold on its first alluvial mining site at an average of 650 to 950 g of raw gold per day. In 2008 63.2 kg have been produced. 2009 yielded 99.1 kg and 2010 79 kg, i.e. a total of 240 kg until 2010, which has generated a positive cash flow.

Active Gold has been controlled by a small group of individual shareholders from Russia and Switzerland ever since its incorporation. They combine investment know-how, local experience and a good understanding of the political network in Russia. All operations are headed by skilled professionals with extensive expert knowledge of the geographical region in which the Company is active.

To expand operations, and to enable work on all four mines in parallel, Active Gold is seeking US$ 16.2m as debt or equity in a first phase investment placement.

The current focus is on the operation of one additional identified hard-rock mine with geological reserves of more than 50 tons of gold. For the acquisition of additional mining concessions (Phase 2), no additional money will be required as it can be financed out of operating cash-flows.

Active Gold strives to become a leading Russian gold producer which applies Western Standards of production and management. Once the envisaged production level of approx. 1.4 ton per annum has been successfully reached, an IPO or trade sale will be targeted within a timeframe of 3-5 years to provide an exit for the investors. According to the business plan, an Internal Rate of Return of 28% per annum can be expected. Phase 2 will certainly provide for additional up-side potential.

The IRR calculation is based on a gold price of 1450 $/ounce. An important calculation element is the exit valuation in 5 years. A conservative EV/EBITDA multiple of 5x has been applied, using South African mining companies as a proxy for the Company. The world average EV/EBITDA multiple is however currently above 8x.

Active Gold is proposing a share capital increase of US$ 16.2m which would provide investors in this placement with 16.8% of its shares (post money). The remaining US$ 4.9m funding requirement would be financed with equipment debt finance at an interest rate of 11% p.a. We are proposing this investment to high net worth individuals with the desire to increase exposure to an attractive gold mining stock. We reserve this opportunity to investors bringing a minimum amount of US$ 1m.


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2 HISTORY, SITUATION AND OBJECTIVES

2.1 HISTORY

7 years ago, in 2004, three entrepreneurs, two Russians and one Swiss decided to leverage a unique opportunity to start a gold mining operation in Siberia.

One of the Russian partners is a mining engineer with relevant know-how and management skills. The Swiss investor is fluent in Russian and has over 15 years of business experience in Russia which goes back to the times of the iron curtain. Together with another Swiss, he successfully manages a fish processing plant near St. Petersburg and is partner in the first quality vinery on the Russian Black Sea coast. The other Russian partner, who joined them later, brings a profound understanding of the political networks to the table.

In 2006 a second Swiss investor joined the team. He is not only the owner and chairman of a Private Bank in Switzerland but also brings a broad network in the financial industry and extensive Private Equity experience to the team.

All four investors financed, out of their own funds, the acquisition of the mining concessions, the drillings to test and prepare the ground, the purchase of equipment and the employment of professionals for the first mine.

In 2009 an investor from Spain and another Swiss investor became shareholders of the company.

To bring this mining operation from the drawing board to operation has, at times, been quite a challenge. Considerable effort has gone into finding the right mining professionals, into obtaining all required mining licenses, and obtaining alignment and support from regional and federal governmental instances.

By 2008, the company had successfully managed to overcome the start-up difficulties, brought the first alluvial mine into operation and even obtained a rare gold export license.

Today, through its company Active Gold Holding PLC, St. Petersburg, the Company holds concessions to exploit three alluvial and one hard rock mine in the Republic of Altai, Siberia, Russia.

2.2 THE PRESENT SITUATION

The first alluvial mine started its operations in summer 2008 and yielded 63.2 kilograms of gold within only 5 months of production. In 2009 the production volume increased by 57% totaling 99.1 kilograms. In 2010 79 kg of gold has been produced. The total amount of gold produced within the period of mining operations since 2008 to 2010 is approximately 240 kg. This relatively small quantity is due to the fact that the financial means have been concentrated on exploration of the hard rock mine during the initial phase.

This first mining site is located near the village Chuika, about a 5 hours drive from Barnaul or a 8 hours drive from Novosibirsk, the capital of Siberia. A second alluvial mine is currently in process of being made operational. All preparatory works have already been finalized. The total


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gold reserves and resources under the current concessions and its extensions exceed 50 tons of gold.

Presently, the gold is being refined in Novosibirsk and sold via Sberbank (Moscow) in the form of 999.9 quality gold bars at London spot price. Active Gold envisions exporting part of the production to a Swiss Bank. The required licenses for export of gold bars and nuggets have already been obtained; based on a contract with a Swiss Private Bank (Bank Frey & Co AG in Zurich) Active Gold was the first company to export gold nuggets from Russia.

2.3 MINING RESULTS

The first months of actual field operations have produced evidence that the gold content at Active Golds first alluvial site is between 50% and 200% higher than that stated in the geological data sheets on which the business plan was originally based.

The data used to establish Active Golds business plans comes from various sources. Some are the results of Active Golds own drillings during recent times, others come from field tests and historical documents that were executed and issued by Russian Governmental Institutions in the 1970s and later.

Based on the first results of Active Golds recent gold production it became obvious that the historical data as found in Russian archives were too conservative. This is partly due to the fact that the techniques utilized today are far more precise and efficient than those put to use during the Soviet era; it is also due to the Soviet authorities who have applied a rather conservative methodology and made their calculations accordingly.

In 2009 and 2010 extensive drillings have been conducted. 54 drill holes and more than 8000 meters of drillings have been conducted to comply with the 43-101 requirements of the Toronto Stock Exchange to confirm the assumed reserves. Alone in the area of 300 x 400 m more than 2.5 tons of gold have been confirmed. Further drillings will be executed in the course of 2011.

2.4 COMPANY OBJECTIVES

Active Gold strives to become a leading Russian Gold Producer applying Western Standards for production and management. It will utilize modern technologies to achieve highest efficiency while preserving the environment and protecting its workforce.

The objective of Active Gold is to exploit all four mines in parallel, acquire new alluvial concessions once the current alluvial mines are depleted and, if possible, to acquire the concession for another hard-rock mine.

Active Gold has already been offered one hard-rock mine with more than 40 tons of gold reserves and a second one with another 30 tons of gold reserves. Active Gold believes that obtaining the opportunity to acquire additional mining concessions would not be a difficult task certainly not after having established itself as a trustworthy counter party with actual and successful production in place.


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As explained in more detail in the financial section, Active Gold only needs bridge financing as it will be cash-flow positive from the beginning. This additional capital helps to operate all mines in parallel within a shorter period of time.

Initially, an amount of US$ 21.1m is sought to purchase equipment and hire the necessary employees to operate mines 2, 3 and 4. In Phase 2, a second hard-rock mine together with the necessary mining equipment will then be acquired.

In 3-5 years Active Gold intends to obtain a listing at an appropriate exchange (IPO) or to sell the business to a large international mining company.

2.5 INVESTMENT OFFER

Active Gold is proposing a share capital increase of US$ 16.2m which would provide investors in this placement with 16.8% of its shares (post money). We are proposing this investment mainly to high net worth individuals with the desire to increase exposure to an attractive gold mining stock. This opportunity is reserved to investors bringing a minimum amount of US$ 1m.


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3 GOLD MARKET ANALYSIS

3.1 DEMAND AND SUPPLY

Gold mine production increased significantly over the 1980s and 1990s from less than 1300 t in 1980 to over 2500 t by 1998. The increase has been fuelled by incremented production from the majority of gold producing nations, offsetting decreasing production from South Africa.

From an industry perspective, gold is predominantly driven by global jewelry demand. The 2006 consumption was 3400 t, 1100 t more than the mine supply. The difference was made up of scrap supply (1100 t) and official sector sales (300 t), offset by producer de-hedging (400 t).

Gold touched an all-time high of $1496/oz in April 2011. Today, China is the world's largest gold producer followed by Australia, USA and South Africa and Russia.

Gold price development 1975 -2011

3.2 HOW DOES GOLD WORK?

According to UBS Investment Research (March 10, 2009), gold is almost unique in a commodity context. It is unique (and from an investor perspective often maligned) because over the past several decades there has been no clear societal need for the metal. It could be (and often is) argued that while other commodities are required to directly support the inner workings and advancement of human civilization, gold is not. Golds primary applications have, throughout history, been consigned to two primary (and often interlinked) uses: as a medium of exchange or currency, and for jewelry.

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Is gold money?

In our view, gold can best be characterized as being mostly money. This is not a perverse way of saying that it both is and is not money; we would instead describe gold as having the most important characteristics of money without having the explicit authority to be money. Golds role as a form of money is largely a function of its physical and geological properties; the more important of these are described below:

Scarcity: Gold is reasonably scarce, so there is not likely to be a loss of confidence from supply growth; and mine-supply growth over time is reasonably predictable.

Utility: Gold is divisible, indestructible and transportable; furthermore, it can be stored indefinitely, all of which makes it unique as a convenient agent of exchange.

Acceptability: Gold has been a widely accepted and used form of currency for much of human history.

Given golds financial links, the usual supply/demand dynamic often does not apply for the metal. Gold prices generally respond quite peripherally and temporarily to the waxing/waning of jewelry demand, or oscillations in mine output or central bank selling. If selling or buying surges, then of course prices will respond; however, this is usually short-lived. The evidence does suggest, that gold meaningfully responds as a financial instrument that competes with other stores of value, i.e. other currencies and other asset classes.

Over time, gold trades like another form of money

As such, over the past several decades, with confidence in paper money having fluctuated (the US dollar in particular, as this is still the default global reserve currency), the performance of gold has responded largely as a response to changing inflationary and deflationary expectations.

Gold and deflation

UBS believes that gold, given the contention that it acts as a currency, will usually outperform other assets in this type of environment. Gold acts as an effective hedge against deflation. The chart below illustrates the performance of silver from 1925, highlighting the 1927-34 deflationary period, a period of out-performance of silver versus other important asset classes. In this instance, we use silver as a proxy for gold given the price controls and restrictions on gold from 1933.


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Silver (proxy for gold) performance relative to other assets (from 1900)

Source: UBS estimates

Gold and inflation

Inflation also erodes the value of key asset classes, particularly of equities and debt, given that it generally coincides with greater volatility of inflation, which leads to greater uncertainty and increased risk perceptions. But before making further comments on how gold performs in periods of inflation, it is necessary to clarify that we also believe that one needs to consider the source of inflation, as this may have a bearing as to how gold could perform.

For example, inflation during the 1970-80s was due to a combination of two things: (1) stimulative monetary policy during the 1960s; and (2) a spike in oil prices which occurred as a consequence of supply restraint. These two factors led to a strong performance in commodities as an asset class and a mixed performance by gold versus some of the other commodities.

It is also possible, in our view, for inflation to emerge in another manner, and one which may be more applicable to the current financial environment; that is the potential for currency debasement as governments spend vast quantities of money, and potentially start the printing presses to produce more currency and avoid deflation. In such environment, we would argue that prices rise as a direct consequence of growing availability of money (the velocity of money being key factor). Given the non-fiat characteristics of gold, we would expect that in this macro environment gold could perform in-line with inflation. In summary, gold can well act as a hedge against inflation, particularly if the source of that inflation is a loose monetary policy.

The chart below illustrates the performance of gold from 1975, highlighting the 1972-83 inflationary periods, and the period of inconsistent performance of gold versus other important asset classes. We would note that there was some distortion in the gold market from 1975 to 1980, as the US Treasury and IMF had selling programs during this time.


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Gold performance relative to other assets (from 1975)

Source: UBS estimates

3.3 RELEVANT FACTORS PRODUCTION

The main relevant factors influencing the price of gold is the production capacity, the current need for gold as a commodity, and the use of gold as a safe harbor.

Production has a lesser impact on price of gold than on the price of other commodities. Annual production has now leveled off at approx. 2500 t per annum.

Gold Production 1980-2014 (World Gold Mine Production)

ource GFMS, Company reports and CIBC World Markets Inc.

The total volume of gold ever mined in history is estimated at some 155000t which compares to an annual production of approx. 2.500 tons. The average grade of the mined ore is also declining globally. The higher average mines have been depleted and the market has been forced to turn to mines that deliver a lower grade of ore, which means that the gold exploration expenditures have risen sharply in recent years.

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Global Average Mine Grades Q1 2005 2008

Source: Bloomberg and CIBC World Markets Inc.

3.4 RELEVANT FACTORS - COMMODITY

Gold is subject to hoarding and dishoarding based on financial investors sentiment. This, rather than industrial applications or even jewelers demand, is the key determinant of the gold price. Gold price fluctuations are not really a function of supply and demand fundamentals. Demand Drivers: Above Ground, world gold holdings are concentrated on jewelry

Gold supply failed to grow

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3.5 RELEVANT FACTORS SAFE HARBOR

The price of gold has surged in the past seven years fuelled by political and economic uncertainty, rising oil prices and the decline of US investors investing in gold as soon as the economic climate is worsening - at times viewed as a "recession hedge". As the confidence in the financial market's ability to preserve economic value is being shaken, for example by a weakening US Dollar and rising oil prices, gold is, again, gaining credibility among investors as the ultimate store of value.

The increasing role of gold as the currency of last resort can be seen in the increasing correlation between gold prices and measures of financial distress from the credit-default swap (CDS) markets. Specifically, the recent divergence between gold prices and the fair value currency basket is largely explained by the rising CDS spreads of financials and sovereigns (see illustration 1). Augmenting the fair value currency basket with these measures of financial and sovereign risk suggests that gold is priced consistently with increased sovereign default risks (illustration 2).

(Illustration 1) (Illustration 2)

Source: COMEX, CME and GS Global ECS Research. Source: COMEX, CME and GS Global ECS Research.

lt is also important to emphasize that the recent strong demand for gold has not been irrational but rather in line with the probabilities of financial and sovereign default. Specifically, the strong rise in gold ETF demand is a reflection of default risks as measured by the financial and sovereign CDS spreads (illustration 3). Such strong demand for investment reasons is likely more than offsetting the declines in gold demand for jewelry use.

(Illustration 3)

Financial + Sovereign CDS

Indes

(right axis; bp)

Gold ETF Holdings

(left axis; min oz)

(left axis; min

(


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3.6 PREDICTIONS ABOUT THE GOLD MARKET PRICE IN THE FUTURE

Although it is notoriously difficult to make firm predictions about future geopolitical events, it is clear that stocks and gold work in opposition to each other. Certain analysts make the prediction that the gold price will even reach 4,000 US$ in the not too distant future. Forecast of selected financial institutions (gold price in 2011 in USD per 1 ounce)

Institution Low High

Credit Suisse 1100 1600

UBS 980 1550

Goldmann Sachs* 960 1690

*source Wall Street Journal

Gold is not at extreme values compared to house prices

Gold is not overvalued compared to US equities


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Inflation Adjusted gold price still below the past peak

Production costs justify the rise in the gold price


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4 GOLD MINING

4.1 INTRODUCTION

Alluvial or placer gold comes from eroded hard-rock sources. Rivers and glaciers flowing over gravels have washed and sorted them, concentrating the heavy metal gold in specific layers. This often makes placer gold deposits much richer than their hard-rock sources.

While "hard rock gold is usually mined by means of mining hardware, using explosives and "cyanidation", alluvial gold can be mined by the process of digging it up and washing with special equipment. Therefore, alluvial deposits usually have a lower mining and exploration costs than hard-rock deposits.

4.2 ALLUVIAL GOLD

Typical locations for alluvial deposits are on the inside bends of rivers and creeks, in natural hollows, at the base of a waterfall, within sand dunes, beach profiles or in gravel beds.

Alluvial placers are formed by the deposition of dense particles at sites where water velocity remains below that which is required to transport them further.

To form a placer deposit, the particles sought after must show a marked density contrast with the surrounding material, which is transported away from the trap site. Only if the deposit is winnowed in this way can the minerals be concentrated to economic levels.

All methods of placer deposit mining use gravity as the basic sorting force. The mining process uses a drum which is composed of a slightly-inclined rotating metal tube (the scrubber section) with a screen at its discharge end. Lifter bars, sometimes in the form of bolted-in angle irons, are attached to the interior of the scrubber section. The mineral containing sand that passes through the screen is then further concentrated in smaller devices such as sluices and jigs. The larger pieces of sand that do not pass through the screen are carried to a dump by gravity flow over a discharging chute.

The sand is then further concentrated in smaller devices. The placer gold is finally obtained, containing gold and fine mineral granules. It is sent to the refining plant, where the gold is melted out by using high temperatures.

Gold washing plant, Active Gold Holding Plc,

Chuika mine

Gold-bearing sand being moved to the crushing facility,

Chuika mine


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Placer gold on a shaking table,

Chuika mine Native nugget of 456.2 grammes,

Chuika mine

4.3 HARD ROCK GOLD

Hard-rock gold differs from placer gold in its occurrence. It usually occurs in fissures and fraction zones, where it has been deposited in quartz veins, which are not destroyed by nature and which form pillar massifs. Very often the ores also contain other precious metals like silver and copper.

Gold can be deposited near the earth's surface (epithermal gold) and at greater depths (mesothermal gold). Heavy equipment and thus higher investments are normally required for hard-rock deposit mining.

The first stage of the ore mining is usually the blasting of the rock massif. Then, the ore is crushed. After crushing, the gold (and any other metals that are found) can be recovered in two different ways.

The first recovery method is called cyanidation. It involves using chemicals to separate the gold from its contaminants. In this process, the ground ore is placed in a tank containing a weak solution of cyanide. Zinc is added to the tank, causing a chemical reaction of which the end result is the precipitation (separation) of the gold from its ore. The gold precipitate is then separated from the cyanide solution in a filter press.

The second approach is mechanical extraction through gravitation and flotation. The combination of water and mechanical action frees the valuable minerals from the ore.

Depending on what recovery scheme is chosen, the plant (crusher, mill, and centrifugal concentrator and flotation cell) and metallurgical department (pumps, adsorbing devices) have to be constructed at the location of the deposit.

Hard-rock deposits are much larger than alluvial ones and, accordingly, also have longer mine lives which justifies the more extensive and costly mining and exploration.

The main product is the concentrate containing the gold. This concentrate is being sent to the refining plant where it is cleaned and shaped into bullions by using high temperature to melt the gold.


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Ore breccia from the Breccia site

Visible gold in core, quartz-hematite veinlet,

Breccia site

Visible disseminated gold,

core sample from the Breccia site


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4.4 GOLD MINING IN RUSSIA

In the last few years, Russia took the 5th place in the world gold mining rankings. The world leaders in gold-mining are China, The Republic of South Africa and Australia. In 2010 Russia produced 175.2 tons, i.e. 1.7% less than in 2009.

Gold is mined in 23 regions of the Russian Federation. Krasnoyarsky Krai is the leader in gold-mining among the Russian regions. In each one of the regions, situated in the Eastern part of the country, more than 10 tons of gold are mined per annum. The total volume of mining in these regions is approximately 80% of the entire production in Russia.

Gold mining in the main gold-mining regions (in tons)

Federal Subjects 2010, ton 2009, ton

Krasnoyarsk Krai 36,0 33,8

Chukotka Autonomous Okrug 25,0 31,2

Amur Oblast 19,8 22,0

Sakha (Yakutia) Republic 18,6 18,6

Irkutsk Oblast 16,0 15,0

Magadan Oblast 15,4 13,7

Khabarovsk Krai 15,2 14,7 Source: Gold Mining Union of Russia

Gold mining in the Republic of Altai has started only recently and already exceeds a level of 1 ton of gold per annum. It is believed to have a great future potential.

Gold mining in Russia in 2010 (tons)

Source: Gold Mining Union of Russia

43.1

19.6

18.3

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Polyus Gold

Chukotskaya GGK

Severstal

Petropavlovsk

Polymetal

Uzhuralzoloto

Highland Gold Mining

Vysochaishy

Susumanzoloto

Other companies


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The leader among Russian gold-mining companies is Polyus Gold Mining Company ZAO.

International mining companies are present in Russian gold mining, with the following companies invested in the sector: Kinross Gold Corporation (USA), Petropavlovsk Plc (UK), Highland Gold Mining Ltd (UK), Leviev Group (Israel), Angara Mining Plc (UK), Central Asia Gold AB (Sweden), High River Gold Mines Ltd (Canada) and Bema Gold Corporation (Canada).

4.5 OVERVIEW THE REPUBLIC OF ALTAI

The Republic of Altai is a federal subject of Russia and covers 92'600 Km2, which is roughly twice the size of Switzerland, and has 203'000 inhabitants.

The Republic is situated at the very center of Asia at the junction of Siberian taiga, the steppes of Kazachstan and the semi-deserts of Mongolia. The most striking geographical aspect of the Republic of Altai is its mountainous terrain which is rich in mineral resources.

The Republic of Altai is one of the Russian Federations many subsidized regions. Federal grants account for 90% of its budget. The main industrial sectors in the Altai Republic are non-ferrous metallurgy, food processing and timber.

The name Altay means Golden in Turkic and Mongolic languages, and this area was always referred to as Golden Mountains in the Chinese language.


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4.6 THE HISTORY OF GOLD MINING IN THE REPUBLIC OF ALTAI

Gold has been mined in the mountains of Altai since the first half of 3,000 BC, and in modern history, since the first half of the 18th century (Koluvano Voskresensky, Demidov plant). The area is located between two world-unique mining regions the polymetallic South-West Rudno-Altaisky region and the ferrum-and-coal dominated North Kuznetsky region.

Based on the state of gold exploration in the region, and also taking into account the prospecting experience from Active Golds site at the Chuika River, it is clear that, compared to other gold-mining regions in Russia, except maybe for the Kemerovo region, the territory is at the initial stage of exploration both regarding hard-rock and placer gold.

The search and proper assessment of the deep gold placers (8-10 m and deeper), including more productive buried ones, in these more complex mining and geological conditions, is performed with the help of modern technical and technological equipment.

Searches for hard-rock gold deposits have been performed mainly for two industrial and genetic types vein gold-quartz and scarified gold. Geological surveys on the 1:50 000 scale have been carried out by all exploration companies in the region, except for those that have specialized in coal, ferrum and poly-metals. In the 1960s- 1980s, thousands of places with native mineralization were found in the area but their potential in terms of industrial hard-rock gold reserves has not yet been fully estimated.

Regular surveys for gold deposits in modern times were started as late as in 2003 by Gorno-Altaiskaya Ekspeditsiya PLC. Active Gold performed geochemical prospecting on the 1:200 000 scale within the North-Altai gold-bearing belt and obtained very positive results in the Novofirsovskaya and Kuriinskaya areas during the second year.

4.7 CURRENT GOLD MINING IN THE REGION

30-35% of the hard-rock gold mining in the region is performed by a single enterprise (Rudnik Vesyoly PLC). This company performs surface and underground mining of ore, which is processed at a gold recovery plant. Rudnik Vesyoly PLC has doubled its sales volume over the last 15 years without attraction of external investments.

The peculiarities of the geological structures in the region, and the occurrence of direct and indirect criteria and features of gold deposits, confirm definite possibilities to identify industrial gold deposits of all genetic types, including large and very large deposits (like Kupol, Karlin and Bukurchik). This fact is mentioned by all leading Russian specialists of gold metallogeny, who have performed research in the region for the last 15 years (Borisenko A.S., 1995-1999 and Scherbakov U.G., 1997-2004, IG SO RAN [Institute of Geology, Siberian Department, Russian Academy of Science]; Schepotiev U.M., 2003, CNIGRI [Central Scientific and research Geological Prospecting Institute of Non-ferrous and Precious Metals]). It has also been confirmed by Altai Golds own drilling for the 43-101 application.

Hence, the identification and exploration of industrial reserves of hard-rock gold in the area is only a matter of time. A conservative estimate of the regions total potential made by Active Golds specialists is 2,750 tons of hard-rock gold, including the most prospective metallogenic taxons:


22

North-Altai gold-bearing belt: 2 000 tons

Salair Range: 500 tons.

On February 1, 2006, the Head of the Russian Administration for the Geology of Hard Minerals, B.K. Mikhailov, named the surveying of the North-Altai gold-bearing belt as one of the eight major achievements of the Russian Geological Survey during the last 3 years and said it was going to totally change all traditional views on the poly-metallic specialization of this region.

For alluvial placer gold, the situation is somewhat different. In the three constituent territories of the Federation, only 18% of the resource potential is at the present disposal of subsurface users. The open acreage includes the placer grading 500-600 mg/m3 and lower. According to calculations, the use of proper technical means, technologies of extraction and processing of sands at the present gold price will make the operation of placers with this grade quite profitable. More than half of the subsurface users that have obtained mining licenses do not produce more than 20 kg of gold per annum - or do not start operations at all. Since 2008, the managers of Active Gold Holding PLC were approached seven times with the suggestion to acquire various rights of subsurface usage.

The main causes of failure of the enterprises in the region are on the one hand the obsolete equipment, requiring expenditures for their repair and maintenance as well as an insufficient professional approach. On the other hand, there is also an application of traditional power- and material intensive technological schemes of overburdening, extraction and processing of sands, which ignores certain mining and geological peculiarities of deposits which lead to unduly excessive gold losses.

Finally, the low attention to the mineral base, conditioning instable work, additional costs and excessive gold losses take place, mostly due to the absence of qualified engineers, technicians and employees, who can determine and eliminate the above drawbacks.

4.8 CLASSIFICATION IN THE WESTERN WORLD

Australia's Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ("JORC") has been widely adopted by the global mining industry. Other Western World Standards exist and are broadly comparable to JORC. The JORC classification is based on geological knowledge and confidence; it uses Resources versus Reserves as a function of "availability" vs. "commercial viability".

Measured Resources Tonnage, density, shape, physical characteristics, grade and mineral content can be estimated with a high level of accuracy. Supported by extensive drilling and sampling, shape and characteristics of the ore body can be firmly established.

Indicated Resources Where the estimates can be provided with a low level of confidence.

Inferred Resources Where the estimates can only be provided with an even lower level of confidence. They cannot be converted directly to reserves.


23

Proven Reserves Normally the economically mineable part of a Measured Resource.

Probable Reserves Normally the economically mineable part of an Indicated and in some cases Measured Resources where there are uncertainties over some of the Modifying Factors.

===========

4.9 CLASSIFICATION IN RUSSIA

In Russia, an alternative system (GKZ) is used to classify reserves and resources which is not directly comparable with Western World Standards.

Mining companies in Russia report reserves and resources to the State Authority (GKZ) under the Russian code of reporting in a Russian Gold context; the terminology is also not always applied consistently. What is technically a resource is often referred to as a reserve. Thus, the comparison of GKZ reserves and resources with JORC is, at times, an art - and not a science.

C1 Good understanding of the mineralized zone, including geometry, grade continuity, physical and metallurgical properties.

C2 Preliminary assessment of the mineralized zone's properties. Tonnage, grade, geometry and grade continuity are not always certain. In general suitable to use in mine plans, but often requires more drilling to be proven.

Resources (Availability)

Measured

Estimated with high level of accuracy, supported by extensive

sampling, leading to firm establishment of characteristics

Indicated

Estimated with a low level of confidence

Inferred

Estimated with lowest level of confidence need to be upgraded first to be converted to reserves

Reserves (Commercial Viability)

Proven

Normally the economically mineable part of a Measured Resource

Probable

The economically minable part of and Indicated Resource with some

unclear modifying factors

Increasing level of

geological knowledge

and confidence

Consideration of modifying factors: Mining, metallurgical, economic, marketing, legal, environmental, social and governmental


24

P1 Little understanding of the geometry of the mineralized zone exists. Not suitable for use in mine plans. Market experience suggests that, in practice, 70-80% of P1 resources normally get converted into a "C" category.

P2 Based on very limited drill hole and/or sampling data. The results are considered to be a highly unreliable measure of the potential upside of the relevant deposit.

P3 Based purely on geophysical and geochemical data and is a purely speculative and subjective measure.

Importantly, the standards for P1 Resources can vary considerably. Thus, it is important to understand which and how much data was used to generate the P1 resource assessment. Generally, drilling and underground channel sampling is obviously favorable compared to surface sampling.

Unclassified Inferred Indicated Measured

After Feasibility Study

+

Normally after Pre-feasibility Study

1

2 Varying confidence

level

P1

No drilling

P2 + P3

C1 Good understanding of mineralized zone properties. C2 Preliminary assessment of properties. Can require more drilling. P1 Little understanding of properties. 70-80% normally converted C. P2 Based on very limited data. Highly unreliable measure of potential. P3 Based purely on geophysical and geochemical data. Speculative and

subjective.

Resources

Increasing level of geological knowledge and confidence


25

5 ACTIVE GOLD DEPOSITS

5.1 ACTIVE GOLDS FOUR DEPOSITS

The deposit of alluvial gold in the Turochack region at the Chuika and Middle Kainach rivers are currently the focus of the activities of Active Gold. In 2011-2012 production at the alluvial deposits of Kaurchack and Albas is scheduled to be started. The forth and most important mine the hard-rock deposit of Breccia - will be prepared during 2011. It is intended to start procution in 2012 with actual mining operations producing finished products in 2013.

This territory is covered with taiga vegetation and abundant forests and the river valleys are waterlogged. Logistically, all 4 mines are close to main roads. Tashtagol and Barnaul offer resources for the workforce, including an airport and all the necessary infrastructure.

Active Gold PLC (Holding). Total expected gold (Reserves and Resources)

Category of reserves

(resources)

Alluvial Gold Hard-rock

gold Total

Silver

Chuika Albas Kaurchack Total Breccia Total Breccia

1+2 200 198 126 523 2850 3373 8900

1 200 550 200 950 2000 2950 10000

2 0 0 0 0 5000 5000 15000

P3 0 0 0 0 40000 40000 120000

Total 400 748 326 1473 49850 51323 153900


26

5.2 THE CHUIKA AND MIDDLE KAINACH DEPOSIT

This locality is characterized by mid mountain relief with sea-level marks of 500-1200m and a local difference in elevation of 200-600m. The Chuika River is the left inflow of the Kluk River, flowing in the Lebed River of the Biya River system. The valley of the Chuika River is of trapezoid shape with the well-marked flood plain, with depth changes from 200-1000m. The River depth is near 1.5m and its width is 10m. The water level depends on the amount of precipitation; season fluctuations do occur.


27

Drilling Scheme

To prospect for gold reserves and define gold grades in the placer by the Chuika river, 112 drillholes totaling 1109 line metres were completed in 2009-2010. Prospecting operations resulted in the increase of reserves equal to 121 kilograms of gold. After the 2008-2010 production period there is sufficient evidence to increase the total reserves at the Chuika mine to 196 kilograms.


28

5.3 THE ALBAS AND KAURCHAK DEPOSITS

The Albas deposit is located by Albas River, which is the left inflow of the Lebed River, located five kilometers below the mouth of the Kaurchak River. The extent of the valley is 12 km.

Drilling Scheme

To estimate the production sites and gold potential of the deposit along the Shirokyi brook, the left inflow of the Albas river, 65 drillholes totaling 346 line metres were completed. Total reserves at the Albas river are 198 kg, including 36 kg in the C1 category.


29

The Kaurchak deposit is situated in the area of the Small Kaurchak basin. It has a rather complex geological structure, conditioned by its location at the joint of Gorny Altai, Gornaya Shriya and Western Sayan.

The main reason for the high perspectives of the area is its location in the Western part of the North-Altai gold belt characterized by high gold productivity. Approximately 16 tons of placer gold and 18 tons of hard-rock gold have been mined here in the past.

The valley of the Small Kaurchak River has a trapezoid profile, its width varies from 100 to 300 m. Along the river extension, there is an erosive and accumulative socle terrace at the level of 20-30 m, predominantly along the right slope. The terrace bedrock is covered by alluvium, which is overlaid by eluvial trains of brown loam close to the valley slopes.

In the mouths of the side inflows, there are distinct detrital cones which significantly increase the thickness of the sediments. The terrace declines from the slope to the brow. The alluvial placer has a distinct productive stratum, lying at the basement of river sediments. The reserves are explored both in the flood plain (a flood plain deposit) and terrace (terrace deposit) valley parts.

5.4 THE BRECCIA DEPOSIT

The Breccia mine is located in the Turochack region of the Altai Republic, some 13 km from the Artubash settlement. It is well connected by a highway and is close to the Biysk railway station.

As of February 2011, the drilling programme and laboratory work at the Breccia site have been completed. Rock mechanics of ores and hosting rocks as well as technological properties of ores are being currently studied. Fifty-two drill holes have been completed totalling 7682.5 meters.


30

Twenty trenches totalling 7178 cubic meters and 150 line meters of pits have been dug, and laboratory work has been completed in preparation of a 43-101 application.

The central part of the site, which is 300x400m, has been explored by drilling operations. On some prospecting lines the ore bodies have been traced to the depth of 200-300 m.

The ore bodies are formed by silicified volcanic explosive breccias intersected by veins and stockworks of quartz veins, disseminated with limonite, pyrite and free gold. Visible free gold was observed in core from five drill holes. It became clear from the results of the assay tests that the ore bodies are in the column shape. The gold occurs in pockets. Maximum gold values range from 78 to 145 g/t. Within the mineralized zone of higher gold grades (0.1-0.9 g/t) six ore bodies have been delineated at 1 g/t cut-off grade.

The thicknesses of the ore bodies range from 1.0m to 35m. The strike extension is 35 to 134 m. The ore bodies were traced to a depth of 75-350m. Gold grades in ore vary from 1.0 g/t to 145 g/t; silver grades ranges between 1.0 g/t and 675 g/t. The average grades in the ore bodies are 1.81 to 4.26 g/t of gold and 1.7 to 27.7 g/t of silver.

Micromine geostatistical modelling of the Breccia site has shown the following preliminary estimate of ore, gold and silver reserves: 1199944 tons of ore; 2849 kilograms of gold grading 2.37 g/t; 8924 kg of silver grading 7.44 g/t. The major portion of ore and metal reserves (74%) are hosted by ore body 1.

Ore body 1 extends along the strike for 210m. It has been traced to a depth of 300m. The ore body has not been delineated to the west and to the depth. The thickness of the ore body ranges from 2.0m to 35.1m averaging 8.4m. The average gold grade in the ore body is 3.30 g/t and the silver grade is 22.1 g/t.

The other ore bodies are smaller but similar to ore body 1.

In 2011, it is scheduled to continue geological exploration of the Breccia site and the Churinskaya gold area. The following scope of work is planned to be carried out: core drilling 5000 line metres; mechanical trenching (excavator and bulldozer) 20000m3 and geological traversing 50km.

In the report on scientific research the Feasibility Study of the Provisional Exploratory Parameters for Estimation of Reserves at the Hard-rock Gold Breccia site, a method of open-pit mining was placed under consideration. The stripping ratio is optimized. At 1 g/t Au cut-off it varies greatly from 2.7 to 12.6. The average strip ratio is quite high - 7. As practice shows, the estimated volume of stripping increases 15-20% while mining. The open-pit mining at such deposits reduces the base ore quality control. Shallow ore bodies occurring at a depth of more than 30m are characterized by a high ore dilution factor, lower grades and high yield of dradges if mined by open-pits. Economic calculations of gold production in the report show that the open-pit mining method is not profitable for this type of deposit. If the open-pit mining method is used, dumping, blasting operations on the surface, industrial noise of mining machinery and exhaust fumes of internal combustion engines (ICE) affect negatively the environment of the ecologically clean area of the Teletskoye Lake.

The business plan considers the possibility of underground production at the deposit. This method allows effective monitoring of base ore quality and excludes negative factors affecting the ecological environment. The terrain of the area determines the adit stripping for accessing the underground ore and the chosen method determines locations for the major openings, surface constructions and size of the mine site.


31

Due to high strength of rocks blasting will be carried out and drilling equipment with downhole hammers is required to be used as its efficiency in strong rocks is very high in comparison with rock bit drilling.

30m level interval between benches was determined by the following factors: geological dimensions (thickness, strike length and depth down the dip), shapes and slope angles of ore bodies; geotechnical - mining methods, order of production, maintenance conditions of mine openings, conditions and safety of mining operations, terms of preparation and development of a level; technical and economic - ore reserves in a level, value and grade of metal in ore; scope, terms and costs of development and production mining; costs of maintenance of mine workings transport, drainage, staff transportation and equipment.

The business-plan provides for a simple method of digging adits in a level at +740; +710, +680, +650, +620 and +590. Down the dip the level is limited by an airway and an air-out adit and along the strike - by the boundaries of the mine site. Opposite the adits, there are 30m air raises which are also used as an emergency exit.

Based on recommendation of IRGIREDMET (2006), gold will be recovered from ores by heap leaching. A heap leaching system includes the following facilities and devices: crushing facility; heap leaching facility with drainage and spraying systems; service and emergency capacities for gold-bearing and barren solutions; pump station; hydrometallurgical department; storehouses; administrative and household facilities, including bar melting department and laboratory; processing facility for cyanide solutions; power and heat supply equipment as well as drinking and technical water supply.

After the major preparation work is completed, the cash cost of one ounce produced at the Breccia site is expected to be approximately US$515.

Drilling Results


32


33

LOCATION OF ORE BODIES AT THE BRECCIA SITE (3D MODELLING)

Ore body 1 red Ore body 2 violet Ore body 3 light blue Ore bodies 4,5 and 6 green, gray and orange correspondingly Surface - gray

Au reserves C2 2850 kg P1 2000 kg P2 5000 kg P3 40000kg


34

5.5 PROSPECT MINES

Several hard-rock mines have been offered to Active Gold to expand its operation during Phase 2.

a PRAVOBEREZHNY

The site is located in the central part of the Kaurchackskaya paleocaldera formed by a volcanogenic sedimentary stratum of the Sadrinskaya suite. Gold mineralization is confined to linear lenticular steeply dipping mineralized zones of metasomatites composed of quartz, albite, chlorite and sericite which were altered by sulfidization. The depth of estimation is 210m; total length of blocks is 3.7 km.

Gold resources in the P1 category are 25 tons. The average grade of gold is 3.43 g/t and the average thickness is 4.7 metres. The resources were assayed by the TNIGRI commission (Central Scientific and Research Exploration Institute of Non-ferrous and Precious Metals, Moscow) - Minutes No.5 dated 10.06.2008 . as well as by GornoAltaisknedra.


35

b MAISKO-LEBEDSKY AREA

A 50 km2 area located in Turochack region at the upstream of the river Lebed hosts a complex

iron copper gold ore mineralization. Besides the iron gold Maisky deposit, promising iron-

copper-molybdenum-gold ores of the Andobinskoye deposit are found there. Five ore-bearing

zones are defined and estimated in the area - Andobinskaya, Maisko-Lebedskaya, Magalaksko-

Semenovskaya, Perspectivnaya zones and the zone of Talonsky thrust.

In the Andobinskaya zone, the Andobinskoye deposit hosting complex iron-copper-

molybdenum gold-bearing ores was estimated. Thickness of ore bodies is as follows: iron

(magnetite) ores 20 to 33m; copper and molybdenum ores 4.0 to 15.0 (up to 50) m and

gold-bearing ores 2 to 15.0m. Average contents are as follows: 36.6 % of iron, 0.57 % of

copper (0.37 to 0.92 %), molybdenum -0.031 % (up to 0.51 %) and gold 0.6 to 6.2 g/t.

Inferred resources of metals in the Andobinskoye area including the Andobinskoye deposit are

the following:

2+1 categories: gold - 40 tons, iron 20.5 million tons, copper 357.4 thousand tons,

molybdenum 18.8 thousand tons;

2 category: iron 107.1 million tons, copper 151.7 thousand tonnes /Platonov,

2004f/.

At the flanks of the Maisky gold hard-rock deposit inferred resources of hard-rock gold in the P1

category total 2.5 tons grading 8.82 g/t, copper -350 thousand tons grading 0.5%, iron 25

million tons grading 36%; thickness of gold-bearing ore bodies is 8.7m and copper-iron ore

bodies 2 to 12m.

Resource potention of the Maisko-Lebedsky area is estimated at 50 tons of hard-rock gold, 0.82

ton of crustal gold and 138 million tons of magnetite ores in the P2 category (Minutes No. 07-

11/0347-pr of the Ministry of Natural Resources dated 12.08.2003).

c CHOISKAYA AREA

The Choiskaya area is located in the Turochack region of the Altai Republic 5km north-west

from Verkh-Byika village. It is confined to the south wing and west closure of the Ainskaya

syncline. An unconformable contact of Cambrian terrigenous-carbonate and Ordovician

terrigenous strata with slightly eroded intrusives of the Yugalinsky and Kyzyltashsky complexes

influences the location of the mineralization.

Inferred resources of gold, bismuth and tellurium in the Central part of the area were estimated

in the 2 category /Nikolenko, 2003f/ applying the method of direct calculations based on the

results of previous operations at the Choiskoye deposit. The ore zone in the Central part is

2200 metres along the strike and 300 metres down the dip. 2 inferred resources in the Central

part are as follows: 3.8 million tons of ore, 10.6 tons of gold, 2.8 thousand tons of bismuth and

1 thousand tons of tellurium.


36

Given the value per length in the Central part of the ore zone (10.6 tons : 2.2 kilometre = 4.8

t/km), P3 inferred resources were estimated in the 800m Western part and 1600m Northern

part. P3 Inferred resources hosted by the Choiskaya area total 12 tons.

d SYNZAS

A placer by the Synzas river - the right tributary of the river Kabyrza - is located in the basin of

the river Mrassu, Gornaya Shoria, Kemerovo Oblast. Reserves of placer gold in the 1+ 2

categories are 254 kg at the average grade of 593 mg/m3. Thickness of overburden is 2.6m and

thickness of sands is 0.53m. P1 inferred resources at the river Synzas are 1500kg.

e BOLSHAYA RECHKA

A placer is located by the Bolshaya Recka river the left tributary of the river Mrassu, Gornaya

Shoria, Kemerovo Oblast. Reserves of placer gold in the 1+ 2 categories are 392 kg at the

average grade of 650 mg/m3 and thickness of sands of 0.52m. P1 inferred resources in the basin

of the river Bolshaya Rechka are 900 kg.


37

6 DEVELOPMENT PLAN

6.1 TIME SCHEDULE

Deposit 2011 2012 2013 2014 2015 2016

Chuika

Albas

Kaurchack

Breccia

New alluvial deposit

New hard-rock deposit

In 2008, Active Gold Holding started its operations with Chuika mine and during 2009-2010 prepared the sites at Albas, Kaurchak and Breccia. As of spring 2011, Kaurchack will be operational. In parallel, Breccia will be further prepared so that operation can start in 2012. As Chuika will be depleted in 2012, preparation work at Albas will start in 2011 with full operation scheduled for 2012.

In order to make the best use of the already purchased heavy equipment, new alluvial concessions will be acquired which allow the start of additional mining operations from 2014 onward. At the moment, it is rather easy to obtain such additional licenses at favorable conditions.

In the course of Phase 1, a concession for a second hard rock mine will be acquired. It is intended to start the operation of such a mine in 2014.

MINING

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38

6.2. INVESTMENT DETAILS

The following equipment has been already acquired or is planned to be purchased.

a ALREADY PURCHASED

Equipment and hardware as of 01.01.2011

Items Amount, rub

1 2

Office equipment 1 185964,00

Equipment for land surveying GPS TRIMBLE 1750000,00

Communication and video equipment 2191529,98

Dwelling trailers 5734484,99

Dwelling trailers for staff ( with heating system) - 8 trailers per 8 persons each 1200000,00

Office dwelling trailer ( with heating system) for management 200000,00

2 dwelling trailers (with undercarriage) 878500,00

Dwelling trailer ( with heating system) for engineers and technicians 150000,00

Car wash facility 65984,99

Gas filling station 300000,00

Banya/sauna 480000,00

Kitchen-canteen (tent-wooden) 200000,00

Gold room 700000,00

House-office-canteen 730000,00

5 storehouses for inventories 600000,00

Hangar for hardware storage 160000,00

4 tanks for fuel and lubricants,10 m3 70000,00

Bulldozers 48400904.38

Tractor with bulldozing devices B 10 MB 0121-2V4 2'907070,00

Tractor with bulldozing and ripper devices B10M.0111-EN 2'938000,00

Bulldozer B10M.0111-1E 3350359,50

Bulldozer -130 300000,00

Bulldozer CAT D9R (serial number WDM01162) 15'962825.92

Bulldozer CAT D6R 22942649.96

Trucks 4 405000.00

2 dump trucks Ural 55571 3190000,00

2 cargo high-sided trucks KIA FRONTIER 865000,00

Automobile URAL-4320, high-sided 350000,00

Cars 5476627.00

Land Cruiser 150 Prado 3.0 2526627.00

Toyota Avensis 950000.00

Mitsubishi Pajero 2 000 000,00

Special Hardware and Facilities 14833200.00

Autocrane MKT-25.5 t, chassis URAL 4320 5250000,00

Excavator HITACHI ZX330L-3 HCM1V700L0003288 5725600,00

Fuel-servicing truck - 11,5 t, chassis URAL 4320-1912-40 1830000,12

Tanker trailer8602 169000.00

Automobile GAS66 150000,00

Automobile UAZ-396254 305300.00

2 automobiles UAZ-390944 810300.00

Automobile Kamaz 740u31-240 2300741 728000,00

Gold-mining complex 31494872.92


39

Items Amount, rub

1 2

Hoist 3 LS 55 450000,00

Gold-washing plant OZK-70M "Zolotoy Poloz" 12'411338.00

Hydro-gold-washing facility PPG-30 1000000,00

Washing complex S-1 2600000,00

Portable processing equipment POY-4-3m 757000,00

Shaking table SKO-1 355000,00

Sand pump 45000,00

Concentrator KCP-1000, stainless steel 1140000,00

2 concentrators KCP -1000 1 083000,00

3 concentrators KCP-6 1893000,00

Laboratory POY-1 997500,00

2 Ainlay bowls 180000,00

8 magnetic starters 148000,00

Gold washing facility GGM 3 3827663.32

Pump station 8NDV 1449957,00

Drill rig UBR-2M 2500000.00

UPI-120-2 (set) (furnace) 89680.00

Double-roll crusher DVG 200125 294019.90

Jaw crusher ShD10 151217.70

Rail saw K960 (for channel samples) 59697.00

Stone-cutting machine Volga-130 62800.00

Other machines and equipment 3691203,57

3 pump stations 550000,00

Pump with counter 39000,00

Generator AIRMAN SDG 400S 2010800,00

Generator AIRMAN SDG 100S 589500,00

Diesel generator 41939,56

Diesel generator 30 (DES) 30000,00

Generator United Power DG 3600 E 25011,00

Electric motor 110kW1500 revolution per minute 42151,41

Aggregate 1D800/56B with electric motor 157848,60

Separator SWK 2000/40 35000,00

Hammer H 1801/Makita 64606,00

Hammer drillHR 5211 c/Makita 34018,00

Heat gun Sial 28 kW 19499,00

2 chain saws ECHO CS-680 51830, 00

Total machines and equipment in rouble 120'613743.84

Total machines and equipment in dollar 4020458.128

Dollar rate 30


40

b EQUIPMENT TO BE PURCHASED

Equipment for the alluvial mines

No. Item Number

Price, $/unit Amount, $

1 2 3 4 5

I Washing and processing facility 288000.00

Hydromechanical screen GGM-3 2 120000.00 240000.00

Pump station 2 24000.00 48000.00

II Mining hardware 4030246.88

1 Scraper ramp with scraper hoist 3LS55S 1 40246.9 40246.88 2 Excavator 336 DL ME, Caterpillar 2 376000 752000.00 3 Dump truck 4 500000 2000000.00 4 AT-D6R Caterpillar 1 418000 418000.00 5 AT-D9 Caterpillar 1 820000 820000

III Power supply equipment 107880.94

1 Diesel generator station (DGS) 1 90000 90000.00 2 Distribution substation 1 8750 8750.00 3 Reserve while washing DGS - Honda 5 kW 1 3593.75 3593.75 4 ADD-4004+VG diesel welding set 1 5537.19 5537.19

IV Auxiliary equipment 105625.00

1 Modular portable camp for 40 people 12 5312.5 63750.00

2 Portable storehouse for fuel and lubricants (capacity - 50 m

3) 2 3125 6250.00

3 Storehouse for inventory, 40t container 2 2656.25 5312.50 4 UAZ 452 1 13125 13125.00 5 Servicing vehicle for wheeled and tracked machinery 1 17187.5 17187.50

V Computers and digital equipment, communications 26390.63

VI Life necessities 26906.25

VII Exploration and laboratory equipment 38281.25

Total 4623330.95

Contingency reserve 4% 184933.24 Total with VAT 4808264.19 Transport expenses 5% 240413.21

TOTAL 5048677.40


41

Equipment for the hard-rock deposit

No. Hardware and equipment Number Price, $/unit Amount, $

1 2 3 4 5

I Mining hardware

1 Mobile drilling rig, Boomer 104 1 705566.00 705566.00

2 Hydraulic mobile drilling rig Simba 1254 with hydroperforator SOR 1838 ME 1 995372.00

995372.00

3 Load haul dump truck Scooptram ST3,5 2 631056.00 1262112.00

4 Fan, VME-6 9 7'042.00 63378.00

5 Main fan system 1 211268.00 211268.00

6 Portable electrical air compressor Airman-SDV 1 15845.00 15845.00

7 Shotcrete equipment CB-67B2 (for shafts) 1 21127.00 21127.00

8 Roof supporting facility Secoma-060 1 32211.00 32211.00

9 Lightning deviceAOSh-4 1 2641.00 2641.00

10 Batch charging device ZP-12 1 8803.00 8803.00

11 Grinding machine for drill bits 1 56338.00 56338.00

12 Wireless communications system 1 31690.00 31690.00

Total 3409351.00

II Ore preparation equipment

1 Jaw crusher SMD110A 1 176056.00 176056.00

2 Jaw crusher SMD109A 1 123239.00 123239.00

3 Cone crusher KMD1200T 1 352113.00 352113.00

4 Haulage conveyor, 600m 1 528169.00 528169.00

5 Stacker 1 528169.00 528169.00

Total 1707746

III Power supply equipment

1 Diesel generator station CAT 3508B TA 2 198900.00 397800.00

2 Diesel generator station CAT GEP380 1 113101.00 113101.00

3 Distribution substation 4 12676.00 12676.00

4 ADD-4004P+VG diesel welding set 1 7'852.00 7'852.00

Total 531429.00

IV Auxiliary equipment

1 Modular camp 80 1'585.00 126800.00

2 Fuel storehouse, 50 m3

capacity 1 3521.00 3521.00

3 Storehouse for explosives 6 4049.00 24294.00

3 Storehouse for inventory, 40t container 2 4049.00 8098.00

4 UAZ452 1 14789.00 14789.00

5 Bulldozer CAT D6R 1 415250.00 415250.00

6 Portable double-detector gas analyzer KOLION-1V-04 1 2289.00 2289.00

7 Portable station for air control, ALMAZ 1 5000.00 5000.00

8 Mine rescue equipment 1 98592.00 98592.00

Total 698633.00

VI Office furniture and equipment, communications

1 Computers

1.1. Geological department 1 1831.00 1831.00

1.2. Land surveying department 1 1831.00 1831.00

1.3. Production department 1 1831.00 1831.00

1.4. Accounting department 1 1831.00 1831.00

1.0. Scanner 1 229.00 229.00

1.0. Plotter 1 2958.00 2958.00

1.0. Printer 1 1708.00 1708.00

2 Desk 12 106.00 1272.00

3 Chair 36 18.00 648.00


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No. Hardware and equipment Number Price, $/unit Amount, $

1 2 3 4 5

4 Bookcase 15 352.00 5280.00

5 Set for shaft and surface communications 1 32062.00 32062.00

6 Surface station of satellite communications LinkStar DVG-2004S 1 13556.00 13556.00

7 Land surveying equipment 1 52817.00 52817.00

Total 117854.00

VII Miscellaneous

1 Fridge 2 775.00 1550.00

2 Freezer 1 4366.00 4366.00

3 Kitchen stove with four burners 1 1972.00 1972.00

4 Oven 1 880.00 880.00

5 Washing machine (20 kg of linen) 1 7923.00 7923.00

6 Dishes and cookware 80 113.00 9040.00

7 Kitchen table 3 141.00 423.00

8 Dining table 5 106.00 530.00

9 Chair 20 18.00 360.00

10 Wardrobe 40 141.00 5640.00

11 Beds 80 70.00 5600.00

12 Special clothes 80 528.00 42240.00

13 Night stand 80 35.00 2800.00

14 Bed set (blanket and pillow) 87 183.00 15921.00

15 Bed linen 160 16.00 2560.00

VIII Hydrometallurgical department 5200000.00

Total 11766818.00

Contingency reserve 4% 470673.00 Transport expenses 5% 588341.00

Total with contingency reserve and transport expenses + VAT 12825832.00

Equipment for logging department

I Processing equipment

4770,00

1 Corner rotary disc sawmill PDPU-550 1 4770,00

4770,00

II Power supply equipment

16500,00

1 Diesel electric station, 30 kW 1 16500,00

16500,00

III Auxiliary equipment 700,00

1 Modular camp 1 700,00 700,00

Total 21970,00

Contingency reserve 4% 878,80 Transport expenses 5% 1142,44

Total with contingency reserve and transport expenses + VAT 23991,24


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7 PRODUCTION, LOGISTICS AND LOCAL

INTEGRATION

7.1 PRODUCTION

a ALLUVIAL MINES

Currently, the Chuika and Middle Kainach deposits are developed using a surface mining method. Firstly, overburden is removed by earthmoving machinery. Sands are washed and processed in a portable gold washing plant GGM-3.

OZK-70 processing equipment will be used at the Albas and Kaurchack mines. It has excellent characteristics as to recovery of fine gold. It disintegrates sands with high content of clay easily. It is ideal for defining sand and gold characteristics at the beginning of a production process.

Technological scheme of the GGM-3 gold washing plant

3

5

4

1 Water spray 2 Plate conveyor 3 Hydraulic screen 4 Sluice 5 Oil station

1

2

Technical Characteristics of GGM-3 facility

1. Washing productivity, mid-washable sands (m3/h) 70

2. Sieving dimensions of the screen (mm) 50x3000

40x3000

30x3000

3. Maximal boulder size under irrigator (mm) 1200

4. Necessary water consumption (m3/h) 500-700

5. Necessary water pressure of irrigator (mmAq) 20

6. Engine of the oil station:

- type 41804

- capacity (kW) 30

- revolutions per minute 1500

7. Screen size:


44

Gold washing facility GGM-3, Chuika mine

The order of mining operations assumes simultaneous production of no less than two blocks, which are at the different production stages. These stages make the single technological complex of works (STCW), which moves up along the river valley, consistently producing gold reserves of the overlying blocks and making reclamation of the already worked territory of the underlying ones, see picture below.

The order of mining operations:

laying out a geological block contour;

drainage of a polygon; the pump station is placed at the lowest point of the block on the drain sump board (10106.0=120 m3), then starting from the sump, trenching is carried out: width 2m, depth 4 m, length - along the block perimeter; pumped out water is discharged to the channel divert;

an entry trench is developed: depth - 3,5 m, length block length, along the perimeter of the block 30-90 m, width of the trench is 15 m;

an overburden wall is formed by an excavator from the beginning of a ramp to the opposite side of the block; space for transport is provided turnarounds and waiting areas;

the first auto dump is formed of top soils at the last geological block not far away from the river head;

the first dump is located at the open-pit (polygon) sides;

- length (m) 6,5

- width with a switch (m) 3,55

- height with the installed irrigator (m) 3,0

8. Sluice dimensions (m)

- length 6,0

- width 1,6

9. Oil-station dimensions

- length (mm) 2240

- width (mm) 940

- height (mm) 1380

10. Total weight (t) 21


45

waste rocks of the following blocks are placed on the worked out areas;

extraction of sands is carried out with the help of an overburden excavator. Excavating provides advanced stripping and extraction of sands along the bench.

Production at the Albas placer mines is shown as an example.

Scheme of the Albas placer mine production

b HARD ROCK DEPOSIT

The project provides for application of heap leaching. The process consists of three stages: firstly, blocked-out ore is stockpiled; secondly, the pile is irrigated by the sodium cyanide solution, dissolving gold and silver and; finally, gold and silver are recovered from this solution in the hydrometallurgical department.

Laying of protective film Preparation of a pile


46

Hydrometallurgical department

As an alternative to the technology mentioned above, Active Gold is currently evaluating the most modern methods to eliminate any adverse environmental effects of the leaching process (developed in Finland). The technology with the most promising features is called Bioheapleaching and is a process, whereby metals are leached from ore as a result of bacterial action.

7.2 LOGISTICS

a) Work process

Since production has been commenced at the Chuika mine a 15 in 15 shift scheme will be applied. This means that an employee works 15 days and then has a rest for 15 days. Active Gold produces 24-hours a day 2 shifts, each lasting 12 hours per day. Depending on the performed activities, the number of employees at the mine varies from 23 to 33. Two person usually perform works at one position.

b) Energy

The producer of qualitative fuel in the Western Siberia region is the Omsk Oil-refining Plant. The official dealer of the plant is the Sibneft Group. Active Gold has concluded a contract with the dealer for fuel supply. The purchase period depends on the volume of production. In spring and autumn, when there are no washing operations, fuel consumption is less than one petrol tanker per week, equal to approximately 10000 liters. In summer, consumption requires about 3 petrol tankers per week.


47

For custody of fuel and lubricants in Tashtagol, Active Gold has 2 cisterns of 60 m3 each, and has 2 tanks of 25 l3 at the Chuika mine.

Fuel and lubricants is delivered to the Chuika mine from Tashtagol (180 km) by an URAL-4320 fuel tanker truck. Fuel consumption for each equipment item is controlled on a permanent basis.

As the mines are located too far from industrial and power-supply centers, the company has to use electri

Download - Business Plan AGH

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