China Railway Group Limited (‘‘CRGL’’)

THIS INFORMATION PACK IS IN DRAFT FORM. The information contained in it is incomplete and issubject to change. This Information Pack must be read in conjunction with the section headed‘‘Warning’’ on the cover of this Information Pack.

APPENDIX V INDEPENDENT TECHNICAL REPORT

A1A-9(3)

China Railway Group Limited (‘‘CRGL’’)

Independent Technical ReviewReport

(‘‘ITRR’’)

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A1A-9(3)

The DirectorsChina Railway Group Limited[INSERT ADDRESS]

[date]

RE: INDEPENDENT TECHNICAL REVIEW REPORT

Dear Sirs,

Minarco-MineConsult (‘‘MMC’’) has been engaged by China Railway Group Limited (‘‘CRGL’’ or‘‘the Company’’) to carry out an Independent Technical Review (‘‘ITR’’) of the assets of CREC that are tobe included in the entity proposed for the Global Offering (‘‘Global Offering’’) and listing on the HongKong Stock Exchange (‘‘HKSE’’). The results of the ITR are summarized in the attached IndependentTechnical Review Report (‘‘ITRR’’).

The assets reviewed (‘‘Relevant Assets’’) include two copper projects located in the DemocraticRepublic of Congo, Africa (‘‘DR Congo’’) as well as a gold project located in Inner Mongolia (PeoplesRepublic of China (‘‘China’’)).

The following report (the ITRR) has been prepared by MMC in connection with the ITR conductedby MMC on the Relevant Assets. The report sets out the process and conclusions of MMC’s review andMMC consents to its inclusion as required in CREC’s offer document in relation to its proposed GlobalOffering.

MMC has conducted its review and preparation of the report in accordance with the requirementsof Chapter 18 of the Listing Rules of the Stock Exchange of Hong Kong Limited, with the exception ofthe requirements set out in Listing Rule 18.09 item (8) which relates to the provision of a two-yearworking capital statement. The report is also in compliance with:

( The ‘‘Australasian Code for Reporting Mineral Resources and Ore Reserves’’ (2004 editionpublished by the Joint Ore Reserves Committee (‘‘JORC’’) of the Australasian Institute ofMining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council ofAustralia (the ‘‘JORC Code’’); for determining resources and reserves; and

( The Code and Guidelines for technical assessment and/or valuation of mineral and petroleumassets and mineral and petroleum securities for Independent Expert Reports (the ‘‘ ValminCode’’).

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MMC carried out a detailed review of Mineral Resources as reported under the Chinese MineralReporting Standards and has compared this in broad terms with the reporting requirements the JORCCode.

MMC operates as an independent technical consultant providing resource evaluation, miningengineering and mine valuation services to the resources and financial services industries. This reportwas prepared on behalf of MMC by technical specialists, details of whose qualifications and experienceare set out in Annexure A.

MMC has been paid, and has agreed to be paid, professional fees for its preparation of this report.However, none of MMC or its directors, staff or sub-consultants who contributed to this report has anyinterest in:

( The Company; or

( The Relevant Assets; or

( The outcome of the Global Offering.

Drafts of this report were provided to the Company, but only for the purpose of confirming theaccuracy of factual material and the reasonableness of assumptions relied upon in the report.

The review was based mainly on information provided by CREC, either directly from the data roomor from project sites and other offices. The report is based on information made available to MMCbefore July 17, 2007.

The work undertaken is a technical review of the information provided as well as that obtainedduring such inspections as MMC considered appropriate to prepare the report. It specifically excludes allaspects of legal issues, commercial and financing matters, land titles and agreements, excepting suchaspects as may directly influence technical, operational or cost issues.

In MMC’s opinion, the information provided by CREC was reasonable and nothing discoveredduring the preparation of the report suggested that there was any significant error or misrepresentationin respect of that information.

MMC has independently assessed the Relevant Assets by reviewing pertinent data, includingmineral resources, future exploration plans, development potential, and potential mining issues. Allopinions, findings and conclusions expressed in the report are those of MMC and its specialist advisors.

MMC concludes from this review that:

( The Copper Cobalt Projects in the DR Congo are located in the world famous copper richKatanga belt in the south east region of the DR Congo.

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( The Luishia Copper Cobalt deposit currently has a defined total Mineral Resource of 26.1 Mtwith average copper and cobalt grades of 2.95% and 0.68% respectively.

( The MKM Copper Cobalt deposit currently has a defined total Mineral Resource of 1.45 Mtwith average copper and cobalt grades of 3.74% and 0.54% respectively.

( The Copper Cobalt Projects are both currently in the exploration phase with the currentexploration program expected to be finished for both projects at the end of 2007.

( At this stage a number of high level assessments have been completed on the potentialexploitation of the Copper Cobalt projects, but due to the ongoing exploration, these plans arelikely to be revised in the near future as exploration confirms larger total resources for potentialexploitation. MMC considers however that given the high grade of the deposits, there appearsto be significant potential for them to be exploited using large scale opencut miningtechniques.

( The preliminary mining study for the Luishia deposit considered a daily mining rate of3,000 tpd for a total of 990 kt of ore per annum.

( The preliminary mining study for the MKM deposit considered a daily mining rate of 1,000 tpdfor a total of 330 kt of ore per annum.

( The Changfulong Gold Project in Inner Mongolia is an exploration project which is targeting amedium size ore body to suit a small scale underground gold mining operation.

( Exploration to date at the Changfulong Gold deposit has identified a total Mineral Resource of0.81 Mt with an average gold grade of 5.05 grams per tonne.

Yours faithfully

[Insert Signature]

David MeldrumGeneral ManagerMinarco-MineConsult

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TABLE OF CONTENTS

1 OVERVIEW*********************************************************************** V-71.1 Description of Assets *********************************************************** V-71.2 DR Congo Copper Cobalt Projects************************************************ V-71.3 Inner Mongolia Gold Project ***************************************************** V-71.4 Summary of Resources and Reserves ********************************************** V-7

1.4.1 MKM and Luishia Copper Cobalt Deposits ************************************* V-71.4.2 Changfulong Gold Project *************************************************** V-9

2 DR CONGO COPPER COBALT PROJECTS ******************************************** V-122.1 General Description and Overview ************************************************ V-122.2 Mining Operations ************************************************************* V-12

2.2.1 MKM Conceptual Development Plan ****************************************** V-122.2.2 Luishia Conceptual Development Plan ***************************************** V-13

2.3 Exploration and Mining History ************************************************** V-132.3.1 Exploration of the MKM Deposit ********************************************* V-132.3.2 Historic Open Pit Mining Operations — MKM ********************************** V-142.3.3 Exploration of the Luishia Deposit ******************************************** V-142.3.4 Historic Open Pit Mining Operations — Luishia ********************************* V-14

2.4 Geology ********************************************************************** V-152.5 Mineral Resources Reporting Standards******************************************** V-18

2.5.1 Chinese Resource Reporting Standards **************************************** V-182.5.2 International Standards and the JORC Code for Resources************************ V-20

2.6 Mineral Resources — MKM****************************************************** V-222.6.1 Exploration and Geological Data Review *************************************** V-222.6.2 Drilling Sampling and Analysis************************************************ V-242.6.3 Mineral Resource Statement — MKM ***************************************** V-26

2.7 Mineral Resources — Luishia***************************************************** V-272.7.1 Exploration and Geological Data Review *************************************** V-272.7.2 Drilling Sampling and Analysis************************************************ V-282.7.3 Mineral Resource Statement — Luishia **************************************** V-32

3 INNER MONGOLIA GOLD PROJECT************************************************* V-333.1 General Description and Overview ************************************************ V-333.2 Geology and Exploration ******************************************************** V-33

3.2.1 Regional and Local Geology ************************************************* V-333.2.2 Exploration of the Changfulong Gold Project *********************************** V-353.2.3 Mineralization ************************************************************* V-38

3.3 Mineral Resources************************************************************** V-383.3.1 Exploration and Geological Data Review *************************************** V-393.3.2 Drilling Sampling and Analysis************************************************ V-393.3.3 Resource Calculation Methodology******************************************** V-413.3.4 Mineral Resource Statement ************************************************* V-42

ANNEXURE A — QUALIFICATIONS AND EXPERIENCE *********************************** V-44ANNEXURE B — GLOSSARY OF TERMS ************************************************ V-46

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LIST OF TABLES

Table 1.1 — Description of Key Assets *************************************************** V-7Table 1.2 — Mineral Resource Statement — MKM Copper Cobalt Deposit ******************** V-8Table 1.3 — Mineral Resource Statement — Luishia Copper Cobalt Deposit ******************* V-8Table 1.4 — Mineral Resource Statement — Changfulong Gold Deposit ********************** V-9Table 2.1 — MKM Deposit — Potential Indicative Production Schedule *********************** V-12Table 2.2 — Luishia Deposit — Potential Indicative Production Schedule ********************** V-13Table 2.3 — Production History — Luishia Cu-Co Deposit *********************************** V-15Table 2.4 — Borehole Spacing Comparison (Chinese, UN and JORC Codes) ******************* V-19Table 2.5 — New Chinese Resource/Reserve Categories (1999) ****************************** V-20Table 2.6 — Summary of Various Sample and Assay Techniques Used — MKM Deposit ********* V-24Table 2.7 — Mineral Resource Statement — MKM Copper Cobalt *************************** V-26Table 2.8 — Summary of Various Sample and Assay Techniques Used — Luishia Deposit ******** V-28Table 2.9 — Mineral Resource Statement — Luishia Copper Cobalt Deposit ******************* V-32Table 3.1 — Summary of Various Sample and Assay Techniques Used ************************ V-40Table 3.2 — Mineral Resource Statement — Changfulong Gold Deposit ********************** V-43

LIST OF FIGURES

Figure 1.1 — Luishia and MKM Copper Cobalt Deposits Location**************************** V-10Figure 1.2 — Changfulong Gold Project Location****************************************** V-11Figure 2.1 — MKM Deposit — Kalumbwe and Myunga Existing Open Pits ******************** V-14Figure 2.2 — Existing Luishia Open Pit — NW and SE Sections ****************************** V-15Figure 2.3 — Local Geology of MKM Deposit********************************************* V-17Figure 2.4 — New Chinese Resource/Reserve Classification Matrix (1999) ********************* V-19Figure 2.5 — Potential Repetition of Mineralisation at the MKM Deposit********************** V-23Figure 2.6 — Luishia Drillhole Mineralisation Envelopes************************************* V-31Figure 3.1 — Geology of the Changfulong Gold Project************************************ V-34

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1 OVERVIEW

1.1 DESCRIPTION OF ASSETS

The assets are generally described in Table 1.1.

Table 1.1 — Description of Key Assets

Project Location Description

Luishia Copper Cobalt Deposit DR Congo, Africa Medium scale, high grade copper cobalt depositMKM Copper Cobalt Deposit DR of Congo, Africa Small scale, high grade copper cobalt depositChangfulong Gold Project Inner Mongolia China Small scale, medium grade greenfields exploration

project

Plans showing the location of the assets in the DR Congo, and in Inner Mongolia are provided inFigures 1.1 and 1.2.

1.2 DR CONGO COPPER COBALT PROJECTS

The MKM open pit mining operation comprises the Kalumbwe and Myunga sections. Limited handmining has occurred in the past on an interrupted basis due to political instability in DR Congo.

The Luishia open pit mine is currently in a mining hiatus, with very limited local activity observedduring the site visit by MMC. Previous mechanised mining has excavated an open pit of approximately1.2 km strike length and maximum vertical depth of 80 m.

1.3 INNER MONGOLIA GOLD PROJECT

The Changfulong Gold Project in the Da Qing Mountains comprises the Changfulong, Tashaowaand Jiaojiegou prospect areas.

The Changfulong prospect area is sub-divided into two mineralized trends, HSPI and HSPII. Themajority of the exploration focus has been on the HSPI zone, where four mineralized zones, AuI-1 toAuI-4, have been delineated. Mineral resources have been calculated for the AuI-1 and AuI-2 zones.

The Tashaowa and Jiaojiegou prospect areas are sub-divided into four mineralized trends, HSbIV toHSbVI and HSPVII. Mineral resources have been calculated for two deposits named Au-5 and Au-6.

1.4 SUMMARY OF RESOURCES AND RESERVES

In relation to the DR Congo copper cobalt projects, MMC was provided with the resourcesestimated under the Chinese Resource Classification Scheme. The preparation of these statements reliedprimarily on technical geology reports completed for China Overseas Engineering Co. Ltd (COVEC) bythe Tianjin Institute of Geology and Mineral Resources on both the MKM and Luishia deposits. MMChas not produced its own resource estimation, but rather validated the process used and assumptionsmade in generation of the resource figures.

1.4.1 MKM and Luishia Copper Cobalt Deposits

The mineral resource estimates as prepared by Tianjin Institute of Geology and Mineral Resourcesare given in Table 1.2 and Table 1.3.

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Table 1.2 — Mineral Resource Statement — MKM Copper Cobalt Deposit

Copper Ore Cobalt OreResource/ Ore Grade Metal Ore Grade Metal

Area Reserve Type (tonnes) (%) (tons) (tonnes) (%) (tonnes)

Kalumbwe *********** 122b 26,900 3 808 52,500 0.55 288(K)****************** 333 874,000 2.86 24,995 967,000 0.56 5,425Myunga ************* 122b — — — — — —(M) ***************** 333 553,600 5.16 28,539 754,100 0.51 3,824Total *************** 122b 26,900 3 808 52,500 0.55 288(K+M)*************** 333 1,427,600 3.75 53,534 1,721,100 0.54 9,249Total (333 + 122b) *** 1,454,500 3.74 54,342 1,773,600 0.54 9,537

Note: as reported under the Chinese Resource Reporting Scheme

Table 1.3 — Mineral Resource Statement — Luishia Copper Cobalt Deposit

Copper Ore Cobalt OreResource/ Ore Grade Metal Ore Grade Metal

Area Reserve Type (tonnes) (%) (tons) (tonnes) (%) (tonnes)

No I orebody************* 122b 21,931,315 2.94 645,520 21,931,315 0.68 149,133333 2,753,858 3.23 89,042 — — —

No II orebody ************ 333 451,775 1.6 7,211 — — —No III-1 orebody ********** 333 366,188 2.15 7,862 — — —No III-2 orebody ********** 333 159,750 2.74 4,377 — — —No III-3 orebody ********** 333 71,625 2.59 1,855 — — —No IV orebody************ 333 264,730 4.35 11,512 — — —No V orebody ************ 333 147,375 3.53 5,202 — — —Total ******************* 122b 21,931,315 2.94 645,520 — — —

333 4,215,300 3.01 127,061 21,931,315 0.68 149,133Total (333 + 122b) ******* 26,146,615 2.95 772,581 21,931,315 0.68 149,133


The resource estimations were completed on a sectional projection basis, as is the standard formost Chinese Resource calculations, rather than as a 3-Dimensional (3D) block model.

The estimate for the MKM deposit is based upon the results of 21 diamond drillholes at Kalumbweand 15 trenches at Myunga. The estimate for the Luishia deposit is based upon the results of119 diamond drillholes.

MMC converted the hard copy information for Luishia and MKM into digital format and uploadedit into Datamine Studio software for interrogation in 3D space in order to validate the resourceinterpretations. In addition, the data from a programme of 9 diamond drillholes for 1,427 m wascompleted by the company as verification of the historical data. MMC also imported the results intoDatamine Studio software for comparison in 3D. The validation drilling completed at Luishia clearlyauthenticated the position and tenor of the historical assay information.

Whilst the actual assay data quality was not closely interrogated, apart from limited validation atthe Gecamines office in Likasi, DR Congo, it is MMC’s opinion that the data employed is of acceptablequality. It is MMC’s opinion that drilling and sampling procedures employed at the MKM and Luishia

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project areas were consistent with accepted practices at the time and in line with the Chinese industrialstandards and practices.

In relation to the Changfulong Gold Project in Inner Mongolia, MMC was provided with theresources estimated under the Chinese Resource Classification Scheme. The preparation of thesestatements relied primarily on technical geology reports completed for Wuchuan Xianguo Gold MiningCo. Ltd by Tianjin Institute of Geology and Mineral Resources on the Changfulong deposits. MMC hasnot produced its own resource estimation, but rather validated the process used and assumptions madein the generation of the resource figures.

1.4.2 Changfulong Gold Project

The mineral resource estimates as prepared by Tianjin Institute of Geology and Mineral Resourcesare given in Table 1.4.

Table 1.4 — Mineral Resource Statement — Changfulong Gold Deposit

MineralElevation Resource Resources

Deposit Lode (m) Type (tons) Au (g/t) Au (oz)

Changfulong************** Aul-1 1902-1545 331 149,049 5.3 25,390332 207,723 5.67 37,866333 408,791 4.9 64,400

Aul-2 1896-1782 331 — — —332 — — —333 14,367 2.21 1,021

Jiaojiegou **************** Au-5 1815-1780 331 — — —332 — — —333 12,929 3.37 1,402

Tashaowa **************** Au-6 1822-1725 331 — — —332 22,295 3.3 2,367333 14,899 3.44 1,617331 149,049 5.3 25,390

Total ******************** 332 230,018 5.44 40,233333 438,057 4.76 67,038

Total ******************** 331+332+333 817,124 5.05 132,661

Note: all references to ounce refer to troy ounces.

The resource estimations were completed on a longitudinal projection basis, as is the norm formany Chinese Resource calculations, rather than as a 3D block model.

The estimate for the Changfulong Aul-1 and Aul-2 deposits is based upon the results of 7,136.9 mof diamond drilling and 15,846 m of trenching. The estimate for the Tashaowa-Jiajiegou deposits isbased upon the results of 183 m of diamond drilling and 1,744 m of trenching.

Whilst the actual assay data quality was not closely interrogated, it is MMC’s opinion that the dataemployed is of acceptable quality. It is MMC’s opinion that drilling, trenching and sampling proceduresemployed at the Changfulong project areas were consistent with accepted practices at the time and inline with the Chinese industrial standards and practices.

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APPENDIX V INDEPENDENT TECHNICAL REPORTFi

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2 DR CONGO COPPER COBALT PROJECTS

2.1 GENERAL DESCRIPTION AND OVERVIEW

The MKM project consisting of the Kalumbwe and Myunga deposits, defined by ExplorationCertificate No. 657, encompasses approximately 2.0 km2 of ground over most of the existing minefootprint and resource development area. The current planned mining pit is constrained by the currentlease. The terrain around the mine is generally relatively flat.

The main Luishia mining permit No. 526 encompasses approximately 1.729 km2 of ground overmost of the mine and resource development area. The current existing and planned mining pit is alsoconstrained by the current lease. The terrain around the mine is generally relatively flat. China OverseasEngineering Co. Ltd (COVEC) holds 72% with the balance of 28% held by a subsidiary of Gecamines.

2.2 MINING OPERATIONS

Both of the deposits have previously been mined. The Luishia deposit has had significant miningcompleted, using medium scale mining equipment to exploit a total of 1.4 Mt of copper cobalt resources.

As part of the assessment of the potential development of each of the projects, a conceptual studyhas been prepared for each of the projects which look at potential mining options.

2.2.1 MKM Conceptual Development Plan

The current life of mine schedule for MKM, as developed by China ENFI Engineering Corporation inthe July 2006 Feasibility Study, was based upon an earlier resource estimate made by MKM in October2004. This earlier estimate is greater than that made in 2006 and is detailed in Table 2.1.

However, confirmatory, extensional and infill diamond drilling is to commence shortly at the MKMdeposit; which will lead to a resource update and a new mining plan. MMC are of the opinion that theadditional drilling will result in an increase in contained metal at the MKM deposit.

The provisional indicative mining schedule based upon the results of the MKM October 2004Feasibility is summarized in Table 2.1.

Table 2.1 — MKM Deposit — Potential Indicative Production Schedule

RecoveryMined Ore (%) Total Material

Period Ore (Kt) Cu % Co% Cu Co Waste (Kt) Total (Kt)

2009 ********************************* 330 3.71 0.64 80 75 1,520 1,8502010 ********************************* 330 3.71 0.64 80 75 1,520 1,8502011 ********************************* 330 3.71 0.64 80 75 1,520 1,8502012 ********************************* 330 3.71 0.64 80 75 1,520 1,850Total********************************* 1,320 3.71 0.64 80 75 6,080 7,400

The planned mining rate of 1,000 tpd of ore is to be achieved using a mining fleet comprising two4m3 excavators, ten 25 tonne self dumping trucks, two production drills (165mm diameter blast holes),and associated support equipment. The MKM October 2004 Feasibility Study suggests that if additionalexploration identified a substantially bigger deposit, the fleet size may be increased to achieve a highermining rate.

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It is planned that ore will be fed to an on-site concentrator facility, with the concentrate being sentto a smelter facility located at the Luishia Mine. MMC understands that the company is still looking atprocessing and smelting options and no decisions have been made as yet.

2.2.2 Luishia Conceptual Development Plan

The current life of mine schedule for Luishia as developed by China ENFI Engineering Corporation inthe July 2006 Feasibility Study was based upon an earlier resource estimate made by Gecamines. Thisearlier estimate is slightly greater than that made in 2007 and detailed in Table 2.2.

However, confirmatory, extensional and infill diamond drilling has commenced at the Luishiadeposit which will lead to a resource update and new mining plan. MMC observed some of the drillcore and assay results for the recent diamond drilling, and are of the opinion that the additional drillingwill result in an increase in contained metal at the Luishia deposit.

The provisional indicative mining schedule based upon the results of the Feasibility Study, as well asupon a previous resource estimate by Gecamines, is summarized in Table 2.2.

Table 2.2 — Luishia Deposit — Potential Indicative Production Schedule

Mined Ore Recovery (%) Total Material

Period Ore (Kt) Cu % Co% Cu Co Waste (Kt) Total (Kt)

Pre-Production********************** — — — — — 2,100 2,100Year 1***************************** 990 4.74 0.62 80 75 1,190 2,180Year 2***************************** 990 4.74 0.62 80 75 1,190 2,180Year 3***************************** 990 4.74 0.62 80 75 1,290 2,280Year 4-5*************************** 1,980 4.41 0.55 80 75 2,970 4,950Year 6-10************************** 4,950 3.44 0.41 80 75 8,910 13,860Year 11-15************************* 4,950 2.68 — 80 — 7,920 12,870Year 16-20************************* 4,950 2.68 — 80 — 6,930 11,880

Total/Average ********************* 19,800 3.35 0.50* 80 75 530,954 37,200

* average is only for the production period from years 1 to 10

The targeted mining rate of 3,000 tpd will similarly be achieved using small scale truck and shovelmethods. Ore is to be fed to a combined concentrator and smelter facility to be located at the LuishiaMine.

2.3 EXPLORATION AND MINING HISTORY

2.3.1 Exploration of the MKM Deposit

From 1958 to 1959, UMHK of Belgium conducted some regional exploration and localizedtrenching over the general area of the current MKM deposit.

In 2001, the DR Congo state mining company, Gecamines, completed a total of 21 diamonddrillholes for a total of 1,241m with inclinations of 45™ and a spacing of 50 m in the western part ofthe deposit known as Kalumbwe. In addition, a total of 15 trenches at spacing’s of 50 m to 25 m werecompleted over a 500 m strike length of the eastern part of the deposit known as Myunga. A total of115 bulk samples were taken from the completed trenches.

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2.3.2 Historic Open Pit Mining Operations — MKM

Mining of the MKM deposit has occurred on a small scale only, using hand mining techniques. Forthis reason, no historical detailed production data is available. The extent of the mining can be observedin Figure 2.1. Further limited mechanised production took place following the cessation of the conflict;but this is currently not active.

Figure 2.1 — MKM Deposit — Kalumbwe and Myunga Existing Open Pits

2.3.3 Exploration of the Luishia Deposit

In the 1940’s, regional geological mapping was conducted the over the Zambia-Congo Copper Beltidentifying the large scale location of mineralization.

Gecamines conducted increasingly more detailed geological mapping traverses, and alsoaeromagnetic and radiometric surveys. Targeted 1:1000 scale geological mapping was then conductedover the Luishia deposit, which enabled design of a diamond drilling programme.

An initial programme of 55 diamond drillholes comprising 8,001 m was completed over a strikeextent of approximately 1 km, and on a 100 m x 100 m to 100 m x 50 m spacing. A secondprogramme of 64 diamond drillholes for 3,917 m was then completed, closing the spacing in someareas to 25 m.

2.3.4 Historic Open Pit Mining Operations — Luishia

Following exploration work conducted by Gecamines from January to May 2001, mechanizedmining commenced extracting 67,300 tons of ore material; but production was abruptly halted as aresult of political instability in the DR Congo. Further limited mechanized production took placefollowing the cessation of the conflict but this is currently in abeyance.

The recorded historical production is summarized in Table 2.3.

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Table 2.3 — Production History — Luishia Cu-Co Deposit

Ore Copper Ore Cobalt Ore

Year Tonnes Grade (%) Metal (t) Grade (%) Metal (t)

Prior to 2001 ************************* 67,300 3 2,023 0.65 4352002 — 2004 ************************ — — — — —2005 — 2006 ************************ 84,000 3.3 2,772 0.5 420

Total ******************************** 151,300 3.17 4,795 0.57 855

The extent of historical mining activities at Luishia can be observed in Figure 2.2

Figure 2.2 — Existing Luishia Open Pit — NW and SE Sections

2.4 GEOLOGY

The MKM and Luishia deposits are located in the Kolwezi District of Katanga Province in thesoutheast of DR Congo. They are located within the Zambia-Congo Copper Belt; which hosts the largestcobalt resources and third largest copper resources in the world. The regional Katanga Cu-Co belt is aneastern section of the Lufilian Arc, formed during the Katanga Orogeny 650 million years ago(Neoproterozoic to Lower Paleozoic). The Katanga sedimentary strata have undergone large scaledeformation and shearing to form the current northwest to southeast Lufilian Arc belt.

The Katanga copper belt is characterized by Middle Precambrian basement rocks (Kibaran and Pre-Kibaran) overlain by rocks of the Katangan Supergroup. The basement rocks comprise metagranitoidsalong with metaquartzite, phyllite and quartzitic phyllite. The Katangan Supergroup is comprised of theRoan Group (900 m to 750 m) sediments, and the Kundelungu Group (750 m to 500 m) sediments.

The unconformable base of the Roan Group is marked by the Basal Conglomerate characterized bypebbles and cobbles. The Roan Group is sub-divided into four sub-groups; R.A.T. (R1), Mines (R2),Dipeta (R3), Mwashya (R4). The Mines (R2) Sub-Group is the host to the main stratiform copper cobaltmineralization, and is locally subdivided into six Members; with the lower five Members hostingmineralization whilst the uppermost Member contains only weak and discontinuous mineralization.

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The Roan Group beds form a synclinal structure where exposed at the MKM deposit, with theMines Sub-Group at the core grading to the Dipeta and Mwashya Sub-Groups to both the north andthe south. The deposit has a westerly trend, with the western section named Kalumbwe and theeastern section named Myunga.

The local geology over the MKM deposit is shown in Figure 2.3.

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The copper and cobalt mineralization at the MKM deposit is stratiform in nature and generallyconfined to the Mines (R2) Subgroup of the Roan Group, and has a westerly trend over a strike lengthof approximately 1.5 km. There are currently eight defined copper lenses and four cobalt lenses with thecopper and cobalt mineralization not always coincident. Mineralization is predominantly within fractured,brecciated and silicified dolomite.

The shallow oxide mineralization is characterized by supergene enrichment and can exhibit elevatedcopper and cobalt grades. The dominant oxide ore minerals are malachite and chrysocolla for copper,and erythrite, heterogenite and asbolite for cobalt. Oxide mineralization extends to a depth ofapproximately 80 vertical m at the MKM deposit.

The primary sulphide mineralization for copper is chalcopyrite, bornite, covellite, and chalcocite; andfor cobalt is carrollite and linnaeite.

The copper and cobalt mineralization at the Luishia deposit is stratiform in nature and generallyconfined to the Mines (R2) Subgroup of the Roan Group, and has a southwest trend over a strikelength of approximately 2 km. There are currently seven defined mineralized lenses with the copper andcobalt mineralization not always coincident. Mineralization is predominantly within fractured, brecciatedand silicified dolomite.

The shallow oxide mineralization is characterized by supergene enrichment and can exhibit elevatedcopper and cobalt grades. The dominant oxide ore minerals are malachite and chrysocolla for copper,and erythrite, heterogenite and asbolite for cobalt. Oxide mineralization extends to a depth ofapproximately 80 vertical m at the MKM deposit.

The primary sulphide mineralization for copper is chalcopyrite, bornite, covellite, and chalcocite; andfor cobalt is carrollite and linnaeite.

2.5 MINERAL RESOURCES REPORTING STANDARDS

2.5.1 Chinese Resource Reporting Standards

In 1999, with a view to creating a standard that was comparable with international resourcereporting standards, The Chinese National Land and Resource Department introduced its own nationalstandard for the Classification of Resources/Reserves for Solid Fuels and Mineral Commodities (GB/T17766-1999).

This code was to replace the previous code (China GB 13908-1992 — General rules for GeologicalExploration of Solid Ore Resources) and was based upon the United Nations international code (UNEconomic and Society Committee, UN document ENERGY/WP.1/R.70). Some elements of the Americanresource reporting standards were included and modifications made to suit Chinese conditions. All newresource estimates are reported under this new code and old estimates either re-estimated or convertedto the new system.

The previous Chinese standard (GB 13908-1992) divided resources into four categories (A, B, C andD) which were loosely comparable to the JORC — (December 2004) classifications of Measured Resource(A-B), Indicated Resource (B-C) and Inferred Resource (D). The standard was more prescriptive than JORCin that it specified minimum borehole spacings (see Table 2.4) for each category, along with impliedlevels of geological understanding.

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Table 2.4 — Borehole Spacing Comparison (Chinese, UN and JORC Codes)

Classification (Chinese Minimum Borehole / Drill(Chinese Reserve Code) Reserve Class) UN Code JORC(Dec 2004) Line Spacing

A *************************** 111 - 121 Measured G100 mB *************************** 121 - 122 331 Measured G=100 m x 100 mC *************************** 122 - 2M22 332 Indicated G=200 m x 100 mD *************************** 122 333 Inferred H200 m

This code was essentially a geological classification, taking little account of the deposits economicsor the level of mining studies that had been carried out on it. The new code (see Figure 2.4) attemptsto address this by using a three component system (EFG) that considers the deposit economics (E), thelevel of mining feasibility studies that have been carried out (F) and the level of geological confidence(G) using a numerical ranking.

This system produces a three digit code for a deposit that reflects these three variables. For examplea deposit classified as a 121 is economically viable (1), has had pre-feasibility studies carried out (2) andis well understood geologically (1). Various suffixes are used to distinguish Basic Reserves — essentiallyJORC Resources — (121b) from Extractable Reserves (121) and to identify the assumed economicviability (S or M). Certain categories are not allowed, for example pre-feasibility or feasibility level studiescannot be conducted on Inferred Resources, so 123 and 113 are invalid classifications. Also ExtractableReserves are not estimated for marginally economic (or lesser) deposits so the (b) suffix is consideredredundant. The term Intrinsically Economic indicates that while the deposit may be economic,insufficient studies have been carried out to clearly determine its status.

Figure 2.4 — New Chinese Resource/Reserve Classification Matrix (1999)

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A tabulation of this concept is shown in Table 2.5.

Table 2.5 — New Chinese Resource/Reserve Categories (1999)

Geological Confidence

UndiscoveredIdentified Mineral Resource Resource

Economic Viability Measured (1) Indicated (2) Inferred (3) Reconnaissance (4)

Basic Reserve[Resource] - 111b

Proved ExtractableReserve - 111

Economic (1) Basic Reserve Basic Reserve[Resource] 121b [Resource] -122b

Probable Extractable Probable ExtractableReserve - 121 Reserve -122

Marginally Economic Resource 2M11 Resource 2M22(2M) Resource 2M21

Sub-marginally Resource 2S11Economic (2S) Resource 2S21 Resource 2S22

Intrinsically Resource 331 Resource 332 Resource 333 Resource 334Economic (3)

Note: First digit reflects Economic viability; 1=Economic; 2M=Marginally Economic; 2S=Sub-marginally Economic; 3=IntrinsicallyEconomic; 4=Economic interest undefined.

Second digit reflects Feasibility assessment stage, 1=Feasibility; 2=Pre-feasibility; 3=Geological study.

Third digit reflects Geological assurance, 1=Measured, 2=Indicated, 3=Inferred, 4=Reconnaissance.

b=Basic Reserve (prior to recovery factors, mining losses and dilution) [JORC Resource].

Unlike the old code, the new code does not specify required borehole spacings for each category.In the case of Copper Cobalt and Gold (and other metals), there is an accompanying ChineseProfessional Standard (DZ/T 0214-2002) that lays out rules for determining the level of geologicalconfidence.

2.5.2 International Standards and the JORC Code for Resources

Two main styles of resource reporting codes exist internationally. These are the American style (USAand much of South America) and the JORC style (Australia, South Africa, Canada, UK). This is furthercomplicated by the listing and reporting requirements of different stock exchanges. It is generally truethat a resource estimation that complies with the JORC code (or one of its sister codes) will meet thestandards of most international investors.

The new Chinese code is a blend of the old Chinese Code and the codes in current use today,including JORC and the current United Nations (UN) standard, with some additional local componentsadded.

JORC is a non-prescriptive code, in that it does not lay out specific limits for resource classificationin terms of such things as borehole spacing. Instead it emphasizes the principles of Transparency,

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Materiality and the role of the Competent Person. Whilst some guidelines do exist (e.g. the AustralianGuidelines for the Estimation of Coal Resources and Reserves) they are not mandatory and classificationis left in the hands of the Competent Person. When combined with its Professional Standards (which areeffectively mandatory), the Chinese code is much more prescriptive but does not include the role of theCompetent Person.

An examination of the details of the Chinese Code suggests that in terms of broad categorization,the levels of geological confidence ascribed to Measured and Indicated resources are quite similar inboth the codes. The ranges of borehole spacings, thickness cut-offs and quality limitations that areenforced by the Chinese system would generally result in the same resource classification under theJORC Code.

The JORC Code uses the following definitions for Mineral Resources and Ore Reserves:

( Measured Mineral Resource is that part of Mineral Resource for which tonnage, densities,shape, physical characteristics, grade and mineral content can be estimated with a high levelof confidence. It is based on detailed and reliable exploration, sampling and testing informationgathered through appropriate techniques from locations such as outcrops, trenches, pits,workings and drill holes. The locations are spaced closely enough to confirm geological andgrade continuity.

( Indicated Mineral Resource is that part of Mineral Resource for which tonnage, densities,shape, physical characteristics, grade and mineral content can be estimated with a reasonablelevel of confidence. It is based on detailed and reliable exploration, sampling and testinginformation gathered through appropriate techniques from locations such as outcrops,trenches, pits, workings and drill holes. The locations are too widely or inappropriately spacedto confirm geological and/or grade continuity but are spaced closely enough for continuity tobe assumed.

( Inferred Mineral Resource is that part of Mineral Resource for which tonnage, densities,shape, physical characteristics, grade and mineral content can be estimated with a low level ofconfidence. It is inferred from geological evidence and assumed but not verified geologicaland/or grade continuity. It is based on information gathered through appropriate techniquesfrom locations such as outcrops, trenches, pits, workings and drill holes which may be limitedor of uncertain quality and reliability.

( A ‘‘Proved Ore Reserve’’ is the economically mineable part of a Measured Mineral Resource.It includes diluting materials and allowances for losses which may occur when the material ismined. Appropriate assessments and studies have been carried out, and include considerationof and modification by realistically assumed mining, metallurgical, economic, marketing, legal,environmental, social and governmental factors. These assessments demonstrate at the time ofreporting that extraction could reasonably be justified

( A Proved Ore Reserve represents the highest confidence category of Ore Reserve estimates.This requires detailed exploration and quality data ‘points of observation‘ to provide highgeological confidence.

( A ‘‘Probable Ore Reserve’’ is the economically mineable part of an Indicated, and in somecircumstances, a Measured Mineral Resource. It includes diluting materials and allowances forlosses which may occur when the material is mined. Appropriate assessments and studies have

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been carried out, and include consideration of and modification by realistic ally assumedmining, metallurgical, economic, marketing, legal, environmental, social and governmentalfactors These assessments demonstrate at the time of reporting that extraction couldreasonably be justified.

( A Probable Ore Reserve has a lower level of confidence than a Proved Ore Reserve but hasadequate reliability as the basis of mining studies.

2.6 MINERAL RESOURCES — MKM

Resources were calculated for the MKM deposit in October 2004 by MKM and were re-estimatedby Tianjin Institute of Geology and Mineral Resources in March 2007. Resources have been estimatedunder the Chinese Resource Classification System using a sectional methodology (with volumecalculations from geologic cross sections).

2.6.1 Exploration and Geological Data Review

The exploration of the copper belt in the DR Congo has been carried out by Belgian and stateentities from the late 1940’s through to the present day. A summary of previous explorationprogrammes for the MKM deposits is shown below:

( 1958 — 1959 UMHK, Belgium: regional geological mapping and minor trenching;

( January — May 2001 Gecamines 21 diamond drillholes for 1,241 m at Kalumbwe;

( January — May 2001 Gecamines completed 15 trenches at Myunga, at 50 m to 25 m linespacings, and collected 115 bulk samples. Trenching at Kalumbwe was also undertaken, with42 bulk samples collected. Total recorded trenching at MKM was 1,539 m.

Analysis of geological and structural mapping shows a synclinal structure with a west trending axisat the MKM deposit. In addition, it appears that Kalumbwe is situated to the south of the fold axis,whilst Myunga is situated to the north of the fold axis. The upper member of the Mines (R2) Sub-Groupis in the core of the synclinal structure with host members to both the north and south. This impliesthat mineralization should be present both to the north and south of the synclinal axis. The repetition ofKalumbwe to the north of the fold axis has not been tested; nor has the repetition to the south of thefold axis as shown in Figure 2.5.

Planned exploration will test for repetitions and extensions of the oxide mineralization, as well astesting the extensive sulphide mineralization below 60 m depth. In addition, the area betweenKalumbwe and Myunga remains untested.

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2.6.2 Drilling Sampling and Analysis

Historical drilling and sampling details are partially documented in the Mine Feasibility Study reportsand Geological Evaluation Reports. The data for the MKM deposit comprises diamond drillhole data andtrench sample data.

Diamond Drilling

Documentation relating to the nature of the diamond drilling equipment used was not available butthe drilling was conducted in 2001 by Gecamines. Collar positions were surveyed by company surveyorsbut the nature and frequency of any down-hole surveys is unknown. A total of 21 drillholes is recordedat Kalumbwe, with no recorded drillholes from Myunga.

The total drilled distance for Luishia is 1,241 m. The drillholes are typically drilled on a 50 × 50 mto 100 × 50 m spacing pattern. All drillholes are recorded as being drilled at a dip of 45™, with aminimum depth of 19.4 m and maximum of 94.6 m and an average depth of 59.1 m. Hence, themajority of the drilling has tested only oxide material.

Sampling Methodology

The importance of the collection of representative samples for any mineral deposit cannot beoverstated and a summary of relevant aspects and risk levels is given in Table 2.6.

Diamond Core Sampling

Limited information was provided on the diamond core sampling techniques Standard cutting bydiamond saw blade or cleaving of softer material was employed.

Trench Sampling

Gecamines cut a total of 15 trenches at Myunga with 900 m total length at Myunga. A total of47 samples for copper and 68 samples for cobalt are recorded. Trenching at Kalumbwe totalling 639 mwas also recorded, with 13 samples for copper and 29 samples for cobalt.

Sample Preparation and Analytical Procedure

Various sample preparation and assaying methods have been used by the historical explorationprogrammes as shown in Table 2.6.

Table 2.6 — Summary of Various Sample and Assay Techniques Used — MKM Deposit

Sampling techniques Diamond core was cut according to lithological intervals and generallysampled over varying intervals based upon geology andmineralization; but with some abnormally long intervals recorded.These samples were then dispatched to one of the companylaboratories. Current verification drilling is in progress.Bulk samples were collected from cut trenches over varying intervalsbased upon geology and mineralization.

LOW RISK-MODERATE RISK

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Drilling techniques The MKM Deposit Resource estimate is based on the results of21 diamond core drillholes. All of the drilling relevant to the currentresource estimation was conducted by Gecamines in 2001.Gecamines is the state mining and exploration entity, and has a longhistory of conducting diamond drilling in the Katanga Copper Belt.

LOW RISK-MODERATE RISKDrill sample recovery MMC viewed some of the relevant diamond drill core at the

Gecamines offices in Likasi, where core recovery was seen to be good.LOW RISK

Logging All diamond core samples were geologically logged recording allsignificant properties, to allow geological maps and sections to beconstructed. Some original logging was viewed by MMC at theGecamines offices in Likasi.

LOW RISKSub-sampling techniques and Most of the historical diamond core was sampled using impact

sample preparation splitting or a diamond saw to provide half core of varying samplelengths.

LOW RISKVerification of sampling and Historical quality assurance and quality control data relating to the

assaying resources is either no longer available or is not consistently reported.MMC viewed some of the original geological logs with correspondingassay data, as well as the unsampled halves of diamond drill core atthe Gecamines offices in Likasi; which were seen to correspond to thevalues used in the resource estimation process. However, it was notpossible for MMC to independently verify the quality of the data inthe short time available for this review. Gecamines has a long historyof exploration and subsequent mining of copper cobalt deposits inKatanga, with long-standing procedures and staff.

MODERATE RISKLocation of data points Historical drillholes and trenches were surveyed by Gecamines or

precursor companies. The exact methods used could not bedetermined; but verification of some available points by handheld GPShas taken place. However, many of the original drillhole collar pointsare no longer accessible due to subsequent mining activities.

LOW-MODERATE RISKData density and distribution Average drillhole density at Kalumbwe ranges from 50 × 25 m to 100

× 50 m; trenches at Myunga at 50 m or 25 m spacing over a 500 mstrike extent.

LOW-MODERATE RISKOrientation of data in relation to The diamond drillholes were perpendicular to the deposit at a dip of

geological structure 45™ and therefore adequately intersect the main mineralized ore zonestructures containing the bulk of the Cu and Co mineralization.Trenches were cut perpendicular to the trend of the mineralization.

LOW RISK

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Audits or reviews MMC has not conducted a thorough review of the sampling andassay techniques for any of the data available as at May, 2007.

MODERATE RISK

Data Integrity — Diamond Drillhole and Trench Data

The drilling, trench, sample and assay data was all collected by Gecamines during 2001. The limitedlevels of confirmation conducted by MMC during the site visit suggest that the data is of acceptablequality and consistent with standard practices employed by Gecamines throughout the KatangaProvince. MMC believes the data to be of acceptable quality for estimation of resources to theconfidence levels stated. Imminent confirmatory, extensional and infill diamond drilling will substantiallyincrease both the volume of data and confidence in future resource estimations.

MMC converted the hard copy data from drillhole logs, sections and plans provided into digitaldata, and then imported it into the Datamine Studio mining software for 3D analysis. Review of thedata in 3D confirmed the existing sectional interpretation and the overall continuity of themineralization.

2.6.3 Mineral Resource Statement — MKM

The Mineral Resources at the MKM deposit were estimated under the new Chinese Resource/Reserve Categories and Classification system, rather than the The Australasian Code for theReporting of Identified Mineral Resources and Ore Reserves (JORC) (2004).

The Mineral Resource summary given in Table 2.7 is reported from the Technical Geological Reportcompleted in March 2007. Estimates were made utilizing a sectional methodology and the assumptionand calculations used have been examined by MMC and found to be acceptable in relation to the MKMCu-Co deposit.

Lower cut-offs of 1.0% for copper and 0.1% for cobalt were used, along with a bulk density of2.5tm–3. No indications of the use of any upper cut off values are given in the documentation.

Table 2.7 — Mineral Resource Statement — MKM Copper Cobalt

Copper Ore Cobalt Ore

Ore Grade Metal Ore Grade MetalArea Resource / Reserve Type (tonnes) (%) (tonnes) (tonnes) (%) (tonnes)

Kalumbwe*********** 122b 26,900 3 808 52,500 0.55 288(K) ***************** 333 874,000 2.86 24,995 967,000 0.56 5,425Myunga ************* 122b — — — — — —(M) ***************** 333 553,600 5.16 28,539 754,100 0.51 3,824

Total *************** 122b 26,900 3 808 52,500 0.55 288

(K+M)*************** 333 1,427,600 3.75 53,534 1,721,100 0.54 9,249

Total (333 + 122b) *** 1,454,500 3.74 54,342 1,773,600 0.54 9,537

As a general rule, the following rough equivalences may be made between the Chinese code andthe JORC — Dec 2004 Code (assuming all considered ‘‘modifying factors’’ are fair and reasonable).

( 111b and 121b Resources may possibly be viewed and treated as Measured Resources;

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( 122b Resources may be viewed as Indicated Resources;

( 331, 332, and 333 Resources may be viewed as Inferred Resources; and

( Material considered as from a low confidence estimation or being marginally or sub-marginallyeconomic (i.e. categories 334 or 2M22 and 2S22) are not classifiable as ‘‘reportable’’ Resourcesunder the JORC — Dec 2004 Code. (or NI43-101 and SAMREC)

With this in mind, it is probably sufficient to view the resources stated as category 333 in Table 2.7as being close to Inferred Resource category only; whilst those stated as category 122b may beequivalent to Indicated Resource. This is assuming all data collection quality and associated ‘‘modifyingfactors’’ are verifiable and accurate. This being stated, the Indicated Resource at the MKM deposit, astaken from Table 2.7, may be in the order of 26,900 tons @ 3.0% Cu and 52,500 tons @ 0.55% Co;whilst the Inferred Resource may be in the order of 1,427,600 tons @ 3.75% Cu and 1,721,100 tons @0.54% Co.

Note: This must not be deemed to be a formal ‘‘JORC Compliant’’ Mineral Resourcestatement from MMC.

MMC has not amended any Mineral Resource tonnages as reported for the MKM deposit. WhilstMMC has conducted initial 3D analysis, interpretation of mineralization and broad volumetriccomparison which confirms the size and nature of the stated resource, a JORC compliant resourceestimation has not been completed.

2.7 MINERAL RESOURCES — LUISHIA

Resources at Luishia have been estimated under the Chinese Resource Classification System using asectional methodology.


The exploration of the copper belt in the DR Congo has been carried out by Belgian and stateentities from the late 1940’s through to the late 1990’s. A summary of previous explorationprogrammes for the Luishia deposits is shown below:

( 1940’s regional geological mapping of the Zambia-Congo copper belt;

( Gecamines 1:200,000 scale regional geological mapping; 1:100,000 aeromagnetic andradiometric surveys;

( Gecamines 1:20,000 scale regional geological mapping; and then 1:1000 scale targetedgeological mapping;

( Luishia — 55 diamond drillholes over a 1 km strike extent from Section 100 to Section 1100on a 100 m by 50 m spacing to a maximum depth of 250 m;

( Luishia — a programme of 64 infill diamond drillholes on Section 25 to 300 and Section 800to 1100 to a 25 m spacing;

( Luishia — open pit mining to shallow depths, mining suspended due to low copper and cobaltprices and low levels of finance available to Gecamines.

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Historical drilling and sampling details are partially documented in the Mine Feasibility Study reportsand Geological Evaluation Reports.

Diamond Drilling

Documentation relating to the nature of the diamond drilling equipment used was not available.Collar positions were surveyed by company surveyors but the nature and frequency of any down-holesurveys is unknown. A total of 119 diamond drillholes has been completed at Luishia.

The total drilled distance for Luishia is 11,918 m during previous exploration. The drillholes aretypically drilled on a 100 × 100 m or a 100 × 50 m spacing pattern. Most drillholes are predominantlydrilled vertically with depths averaging 150 m. The deepest drill hole recorded reached a maximumdepth of 450 m from surface. A large number of short small diameter diamond drillholes were alsocompleted for grade control purposes during the previous mining phase by Gecamines; but this data isnot used in the resource estimate as it relates to material already mined.

The company completed a programme of 9 diamond drillholes for a total of 1,426.71 m forvalidation purposes at the Luishia deposit during 2007.


The importance of the collection of representative samples for any mineral deposit being developedor exploited cannot be overstated. Table 2.8 outlines the various aspects and associated risk levels ofthe sampling procedures employed.


Limited information was provided on the historical diamond core sampling techniques but standardcutting by diamond saw blade or cleaving of softer material was employed. This method was employedby the company for the recent validation drilling programme, and was observed by MMC during the sitevisit.


Various sample preparation and assaying methods have been used by the previous explorationprogrammes as shown in Table 2.8.

Table 2.8 — Summary of Various Sample and Assay Techniques Used — Luishia Deposit

Sampling techniques Diamond core was cut according to lithological intervals and generallysampled on average at 2 m intervals; but with some abnormally longintervals recorded from historical drilling. These samples were thendispatched to one of the company laboratories, or to the on-site laboratoryin the case of the recent validation drilling.


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Drilling techniques The Luishia Deposit Resource estimate is based on the results of 119diamond core drillholes. All of the drilling relevant to the current resourceestimation was conducted by Gecamines or precursor companies. The datafrom the recent programme of 9 validation diamond drillholes has not yetbeen incorporated into a resource estimation.

LOW RISK

Drill sample recovery MMC viewed some of the relevant diamond drill core at the Gecaminesoffice in Likasi, where core recovery was seen to be good. Currentverification diamond drilling was viewed by MMC at the Luishia depositwhich exhibited generally good core recovery in the drillholes viewed.

LOW RISK

Logging All diamond core samples were geologically logged recording all significantproperties, to allow geological maps and sections to be constructed.

LOW RISK

Sub-sampling techniques Most of the historical diamond core was sampled using impact splitting orand sample a diamond saw to provide half core of varying sample lengths.preparation

LOW RISK

Verification of sampling Historical quality assurance and quality control data relating to theand assaying resources is either no longer available or is not consistently reported. MMC

viewed some of the original geological logs with corresponding assay data,as well as the unsampled halves of diamond drill core at the Gecaminesoffice in Likasi; which were seen to correspond to the values used in theresource estimation process. However, it was not possible for MMC toindependently verify the quality of the data in the short time available forthis review. However, the results of the recent validation drilling confirmthe tenor and location of historical assay data and suggest the historicaldata to be generally of acceptable quality.

LOW-MODERATE RISK

Location of data points Historical drillholes and trenches were surveyed by Gecamines or precursorcompanies. The exact methods used could not be determined; butverification of some available points by handheld GPS has taken place.However, many of the original drillhole collar points are no longeraccessible due to mining activities. Survey of recent drillholes and validationin 3D against historical data has provided an increased level of confidencein the historical survey information.

LOW RISK

Data density and Average drillhole density at Luishia ranges from 100 × 100 m to 50 × 25 mdistribution in the main delineated area of the deposit.

LOW-MODERATE RISK

Orientation of data in The diamond drillholes were vertically orientated or perpendicular to therelation to geological deposit and therefore adequately intersect the main mineralized ore zonestructure structures containing the bulk of the Cu and Co mineralization.

LOW RISK

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Audits or reviews MMC has conducted only a partial high level review of the sampling andassay techniques for the data available as at May, 2007.

MODERATE RISK

Data Integrity — Diamond Drill-Hole and Block Model Data

The drilling, trench, sample and assay data was all collected by Gecamines during 2001. Theconfirmation by means of 3D analysis and validation against the recent diamond drillhole programmeconducted by MMC suggest that the data is of acceptable quality and consistent with standard practicesemployed by Gecamines throughout the Katanga Province. MMC believes the data to be of acceptablequality for estimation of resources to the confidence levels stated. Imminent confirmatory, extensionaland infill diamond drilling will substantially increase both the volume of data and confidence in futureresource estimations (Figure 2.6)

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Figure 2.6 — Luishia Drillhole Mineralisation Envelopes

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2.7.3 Mineral Resource Statement — Luishia

The Mineral Resources at the Luishia deposit were estimated under the new Chinese Resource/Reserve Categories and Classification system.

The Mineral Resource summary given in Table 2.9 is reported from the Technical Geological Reportcompleted in February 2007 by Tianjin Institute of Geology and Mineral Resources. Estimates were madeutilizing sectional methodology, and the assumption and calculations used have been examined byMMC and found to be acceptable in relation to the Luishia Cu-Co deposit.

Lower cut-offs of 1.0% for copper and 0.1% for cobalt were used, along with a bulk density of2.5tm3. No indications of the application of any upper cut off values are given in the documentation.

Table 2.9 — Mineral Resource Statement — Luishia Copper Cobalt Deposit

Copper Ore Cobalt OreGrade Metal Ore Grade Metal

Area Resource / Reserve Type Ore (tonnes) (%) (tonnes) (tonnes) (%) (tonnes)

No I orebody ******* 122b 21,931,315 2.94 645,520 21,931,315 0.68 149,133333 2,753,858 3.23 89,042 — — —

No II orebody ****** 333 451,775 1.6 7,211 — — —No III-1 orebody **** 333 366,188 2.15 7,862 — — —No III-2 orebody **** 333 159,750 2.74 4,377 — — —No III-3 orebody **** 333 71,625 2.59 1,855 — — —No IV orebody****** 333 264,730 4.35 11,512 — — —No V orebody ****** 333 147,375 3.53 5,202 — — —

Total ************* 122b 21,931,315 2.94 645,520 — — —

333 4,215,300 3.01 127,061 21,931,315 0.68 149,133

Total (333 + 122b) 26,146,615 2.95 772,581 21,931,315 0.68 149,133

Note: As reported under the Chinese Resource Reporting Scheme

Using the general equivalences with the JORC Code previously discussed, it is probably sufficient toview the resources stated as category 333 in Table 2.9 as being close to Inferred Resource categoryonly; whilst those stated as category 122b may be equivalent to Indicated Resource. This is assuming alldata collection quality and associated ‘‘modifying factors’’ are verifiable and accurate. This being stated,the Indicated Resource at the Luishia deposit, as taken from Table 2.9, may be in the order of21,931,300 tons @ 2.9% Cu; whilst the Inferred Resource may be in the order of 4,215,300 tons@ 3.0% Cu and 21,931,300 tons @ 0.68% Co.


MMC has not amended any Resource tonnages as reported (apart from some rounding) for theLuishia deposit, but taken them at face value, having found no material errors when compared to thereports that documented the reported Resources. Whilst MMC has conducted initial 3D analysis,interpretation of mineralization and broad volumetric comparison which confirms the size and tenor ofthe stated resource, a JORC compliant resource estimation has not been completed.

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3 INNER MONGOLIA GOLD PROJECT

3.1 GENERAL DESCRIPTION AND OVERVIEW

The Changfulong Gold Project is situated within the Daqing Mountain region of central InnerMongolia, and covers a total area of 11.855 km2. The southern extent of the work area isapproximately 37 km from Haoteshi, the northern extent is approximately 20 km from Ala Town and thewestern extent is approximately 27 km from Wuchuan County.

The mining area is located in the Daqing Mountains and borders on a plateau. The highestelevation is 2,039.4 m above mean sea level, ranging down to 300 m elevation.

The project is a greenfields exploration project which has driven a number of adits to assist withexploration.

3.2 GEOLOGY AND EXPLORATION

3.2.1 Regional and Local Geology

Three principal formations characterize the Precambrian in Inner Mongolia; which are theProterozoic Zhaertai Group, the Erdaowa Group and the Archaean Wulashan Group. The Zhulazaga golddeposit occurs in the Zhaertai Group. The exploration area is located in the Daqingshan district whereseveral gold deposits have been defined along an east trending shear zone within a metallogenic belt,predominantly composed of the Archaean Wulashan Group.

A northwest trending fracture system with en-echelon offset indicates structural control over themineralization and the alteration zones. The existence of diverse veins of quartz, carbonate and pyriteindicate that the orebody was characterized by a number of hydrothermal events controlled by theexisting structures. The mineralization is estimated to be of Middle Proterozoic age. There is compellingevidence for strong structural control over the mineralization with associated alteration of the hostlithology. The alteration styles include silicification, pyritization, sericitization and chloritization.Geochemical sampling was the principal method of exploration to delineate gold anomalies.

The regional and local geology is shown in Figure 3.1.

Analysis of mineralized samples shows a simple mineralogy with low sulphur values, althoughdeleterious elements such as mercury and arsenic have been noted in low concentrations. There appearsto be association of Hg, As, Sb, and Cu with the gold mineralization. Bulk samples of the ore have beensubject to a limited series of metallurgical tests which included simulated heap leaching. Both oxidizedand fresh ore types have been tested. Recoveries exceeding 95% were obtained with fine milling andcyanidation of pulps, whilst heap leach tests indicate lower recoveries, but at this stage, no details onthe recoveries from these tests are available.

The mineralization is characterized by brecciation, extensive veining and a number of alterationevents with different alteration styles. Gold is predominantly present as native gold or electrum.

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3.2.2 Exploration of the Changfulong Gold Project

Exploration history of the area dates back to 1972. Since then much work has been undertaken byChinese Government institutes. This includes topographic mapping, geological mapping andgeochemical sampling — the latter of which appears to be the exploration method by which most ofthe anomalies were identified. Several identified anomalies were tested by trenching followed byselective diamond drilling. The Changfulong Gold Project has been subject to in excess of 7,000 m ofdiamond drilling.

The following work was undertaken by the Geological Survey Institute of Inner Mongolia:

( 1972, a 1:200,000 geological map of the entire area was produced.

( 1979, a gold anomaly was delineated in the project area.

( 1989, the 1:50,000 maps were updated by adding a structural and tectonic details. Igneouslithological units were also documented.

Additional activities at Changfulong and within the region were:

( In 1985, the area was predominantly a marble and lead producer. Small gold resources such asMotianling, Jubaozhuang, Dalaigou and Mengbulaigou were discovered.

( During the period 1996 — 1998, the Tianjin Institute of Geology and Mineral Resourcestogether with the Geological Survey Institute of Inner Mongolia discovered the Luchang goldresource, the Zhongdiyaozi gold resource and the Pailou gold resource. Owing to limitedfunding, only a small volume of geological work was completed. Additional work wasdiscontinued.

( From 1998 — 2002, the Geological Survey Institute of Inner Mongolia discovered, amongstother gold resources, the Maoduqing gold resource and the Monkey Mountain gold resource.

( In 2002, the Geological Survey Institute of Inner Mongolia discovered the Wuchuan CountyChangfulong gold resource and Hohhot Buhuangou gold resource. The initial work undertakenwas aimed at determining the scope and scale of the resource, establishing the prospectivemining area and the estimated cost of mining. This work was extended to the other resourcesin the area during 2001 to 2003.

( From 2001 — 2003, the Geological Survey Institute of Inner Mongolia evaluated the oreresources of Maoduqing Youlougou. It was noted that the Maoduqing resource wasmetamorphosed to greenschist facies.

( From 2000 — 2005, the Geological Survey Institute of Inner Mongolia and the Tianjin Instituteof Geology and Mineral Resources (TIGMR) undertook preliminary work and estimated MineralResources at several of the deposits.

The Changfulong Gold Project is divided into the Changfulong Prospect, Tashaowa Prospect andJiaojiegou Prospect.

Changfulong Prospect

The Changfulong Prospect has been subdivided into three mineralized zones, of which the HSPI andHSPII zones have been investigated and evaluated in some detail. A total of 95% of the calculated

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Mineral Resources are contained in the HSP1 zone. The HSP1 zone is 2,000 m long and 100 to 400 mwide. It is characterized by brecciation and contains a diverse assemblage of altered mineralized rocks.Structural control over the mineralization is high.

Two ore bodies have been identified associated with the HSP1 belt. These are the Aul-1 and Aul-2ore bodies. Other mineralized bodies have been designated Aul-3 and Aul-4.

Aul-1 Orebody

The degree of structural control of the mineralization is high. The Aul1 orebody trends 290ƒ to300ƒ, and dips to the southwest at an angle of 49ƒ to 80ƒ. The average gold grade is 5.14 g/t,ranging from 0.15 g/t to 68 g/t. There is a positive correlation between the thickness and grade of theorebody. Extensive brecciation with silicification and pyritization is evident, and correlates strongly withgold mineralization. Recently completed underground development has shown the mineralized zone tobe of the order of 400 m long and up to 150 m wide, with a northwest strike. A series of subparallelquartz veins are seen within this envelope, with widths ranging from 1 m to 15 m.

Aul-2 Orebody

The Aul-1 and Aul-2 ore-bodies are sub-parallel, with the Aul-1 orebody being approximately200 m to the west of the Aul-2 orebody. The Aul-2 orebody has a width of 40 m, with a thicknessranging from 0.64 m to 3.04 m. The mineralization trends 290ƒ to 300ƒ and dips south west at anangle of 70ƒ. Silicification and pyritization of the breccia is evident. Arenaceous lithological units havealso undergone pyritization. The presence of cinnabar was noted in Aul-2. The gold grades range from1.32 g/t to 3.66 g/t with a mean value of 2.21 g/t. There is a positive correlation between gold and thedegree of silicification.

Aul-3 Mineral Body

The Aul-3 mineral body is sub-parallel to AuI-1 and AuI-2. The mineralization is locatedapproximately 45 m below the surface and is comprised of a vein, 320 m long, 1.2 m wide with a truethickness of 0.77 m which is relatively constant. Silicification as well as pyrite is present in the mineralbody. The average gold grade is 1.94 g/t.

Aul-4 Mineral Body

A portion of the mineral body crops out at surface and extends to a known depth of 160 m. It iscomprised of a vein with near constant thickness of approximately 0.86 m and uniform mineralization.The mineralization trends 290ƒ to 300ƒ and dips at an angle of 60ƒ to the southwest. The strike lengthof the orebody is approximately 90 m with a width of 0.86 m. The average gold grade is 1.48 g/t.

The HPSII zone is located to the north of HSPI, is sub-parallel to HSPI and can be subdivided intotwo parts. HPSII is 1,250 m long with a width of 2 m to 100 m. It has undergone limited exploration inthe form of controlled trench digging. No resource calculations have been undertaken.

Tashaowa — Jiaojiegou Mineral Belt

The Tashaowa — Jiaojiegou mineral belt consists of four fractured, altered mineralized zones whichhave been designated IV, V, VI and VII. The belt trends northwest and zones IV and VII contain

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identified gold mineralization. Zones IV, V and VI are near the village of Jiaojiegou; whilst zone VII isnear the village of Tashaowa.

IV Altered Gold bearing fragmented zone (HSbIV)

This belt is located east of the Jiaojiegou village and is hosted in the Paleozoic CarboniferousShuanmazhuang Group. The belt is approximately 900 m in length, 15 m to 35 m wide and trends290ƒ to 300ƒ. It is truncated in the east by a northeast trending fault which dips at an angle of 50ƒ to65�. The belt is comprised predominantly of slate and metamorphosed sandstone. Limonite alteration,silicification and carbonatization of the breccia and quartz veins occur in places. Diorite is commonwithin the belt.

The mineralized zone Au-5 is located in the western section of this mineral belt. Veins are presentin places The mineralization trends 290ƒ to 300ƒ, dipping southwest at an angle of 50ƒ to 65ƒ with alength of 180 m. The thickness of the orebody is 2.55 to 3.18 m with a grade range of 2.48 g/t 4.77g/t and average grade of 3.55 g/t.

V Altered fragmented zone (HSbV)

This belt is located east of the Jiaojiegou village and south of the IV altered gold-bearingfragmented belt (HSbIV). It is also parallel to (HSbIV). It has a length of approximately 900 m, width of 5to 10 m and trends 290� to 300�. The eastern extent is truncated by a north east trending fault. Goldbearing ore deposits have not yet been found within this belt. The belt is comprised of mainly slate,metamorphosed sandstone with evidence of limonitic alteration, silicification and carbonatization of thebreccia and quartz veins. Sulphur grades are low.

VI Altered fragmented zone (HSbVI)

This belt is located east of the Jiaojiegou village and south of the V altered gold-bearingfragmented belt (HSbV). It is also parallel to (HSbV). The belt is approximately 900 m long, with a widthof 5 to 10 m and trends 295� to 310�. The eastern extent of the belt has been truncated by a northeast trending fault. A small gold bearing orebody occurs in this belt but no reserve estimation beenmade. As with HSbV, this belt is comprised of slate and metamorphosed sandstone, with evidence oflimonization, silicification and carbonatization of the breccia with quartz veins in places. Sulphur gradesare low.

VII Altered fragmented zone (HPSVII)

This belt is located west of the Tashaowa Village. The belt contains two granite bodies of theMiddle Proterozoic Majiadan Group and strata that have undergone contact metamorphism. The rockswithin the belt are metamorphosed sandstone of the Majiadian Group, slate, diorite veins and quartzveins. The length of the belt is 750 m, with a width of 30 m — 50 m and trends 270� to 310� with adip of 70� to 80�. The eastern portion of the belt exhibits alteration in the form of carbonatization andpyritization whereas in the central and western parts of the belt little alteration was noted. Owing tocompression, there is fragmentation and the mineral belt is folded to form an S curve type fold. Wherealteration is at a maximum, gold ore deposits are present. These were discovered by trenching anddrilling. Both extremities of the belt have been truncated by north east and north trending faults.

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The Au-6 gold orebody is present in the HPSVII belt having been delineated by five trenches andone drill hole. In the west veining is present in places. Owing to the paucity of assays, the extent of theorebody has not been thoroughly defined. Au-6 trends 270� to 290�, dips northeast at an angle of 70�to 75� and has a strike length of 250 m. The thickness ranges from 1.87 to 3.24 m whereas the graderanges from 1.15 g/t to 8.05 g/t with an average of 3.34 g/t.

3.2.3 Mineralization

Two stages of mineralization are evident. These characterized are by a pyritization and limoniticalteration. The hydrothermal event can be divided into three phases:

( Silicification Pyritization Phase: This resulted in dispersed cryptocrystalline quartz veins in aquartz vein framework. Pyritization is extensive with brecciated altered rock. The pyrite ispresent as idiomorphic cubes. This phase is not associated with gold mineralization.

( Quartz Pyritization Phase: This phase is associated with gold mineralization and ischaracterized by silicification and pyritization of the veins.

( Carbonate Quartz Phase: The association of mineralization with this phase is tenuous.

The control of structure on gold mineralization in the Zhaertai Group is evident and this in itselfwould constitute a strong indication of potential gold mineralization. Many of the mineralized zonesmanifested themselves as gold anomalies in geochemical surveys. Alteration associated with themineralization is another important indicator.

Gold occurs as native gold and electrum. The native gold is granular, coarse and foliated with agrain size mostly between 0.1 and 100 mm. Electrum is found in fractures in the vein quartz, pyrite andlimonite. This mineral is granular and irregularly distributed. Where analyzed, silver mineralization is alsoseen to be often coincident with gold mineralization.

Pyrite is one of the principal minerals associated with the gold occurrences. The pyrite exists in twoforms; as large cubic crystals commonly 1 mm to 5 mm in diameter, and as a very fine form associatedwith fine veins. Chalcopyrite is another mineral found in the deposit. It is generally very fine grained,idiomorphic and occurs as aggregates in places.

Quartz grains vary in size and occur as euhedral crystals. A significant amount of limonite andpyrite are found distributed in the matrix. Sericite is present on the quartz grain boundaries. In placesquartz, orthoclase and other silicate minerals are intergrown. Most of the gold is hosted in quartzveining, with more weakly mineralized alteration haloes around the veins.

Depth of weathering and oxidation varies from 5 m to 79 m as recorded in diamond drilling, withan average depth of 35 m below surface.

3.3 MINERAL RESOURCES

Resources were calculated for the Changfulong Gold Project by the Tianjin Institute of Geology andMineral Resources. Resources have been estimated under the Chinese Resource Classification Systemusing a longitudinal projection methodology. MMC considers this method to be appropriate.

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As previously detailed, exploration in the local area has taken place since 1975 but the bulk of thedata was collected by the Tianjin Institute of Geology and Mineral Resources in the period 2004 to2005. There has also been recent and ongoing underground development at the Changfulong AuI-1Lode totalling 2.2 km as of May 2007.


Historical drilling and sampling details are partially documented in the Geological Evaluation Reportby Tianjin Institute of Geology and Mineral Resources, and in associated documents and plans. The datafor the Changfulong Gold Project comprises geophysical data, geochemical data, trench sample dataand diamond drillhole data. Resource calculations were based upon the latter two data types.

Diamond Drilling

Documentation relating to the nature of the diamond drilling equipment used was not available;but the drilling was conducted predominantly under the supervision of Tianjin Institute of Geology andMineral Resources. Collar positions were surveyed by group surveyors; but the nature and frequency ofany down-hole surveys is unknown. A total of 31 drillholes at Changfulong and 2 drillholes atTashaowa — Jiaojiegou have been completed.

The total drilled distance for Changfulong is 15,846 m, and 1,744 m for Tashaowa — Jiaojiegou.


The importance of the collection of representative samples for any mineral deposit cannot beoverstated and a summary of relevant aspects and risk levels is given in Table 3.1.


Limited information was provided on the diamond core sampling techniques but standard cuttingby diamond saw blade or cleaving of softer material was employed.

Trench Sampling

Trenching at Changfulong totalled 15,846 m total length. Completed trenching at Tashaowa —Jiaojiegou is 1,744 m.

Underground Development Face Sampling

Underground development totalling 2.2 km has been completed at the Changfulong AuI-1 Lode;with the majority in the mineralized envelope. Face samples have been taken over 1 m sample intervalscontinuously along the walls of cross-cut drives, and every 3 m advance along strike drives.


Various sample preparation and assaying methods have been used by the historical explorationprograms as shown in Table 3.1.

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Table 3.1 — Summary of Various Sample and Assay Techniques Used

Sampling techniques Diamond core was cut according to lithological intervals (particularly quartzveining) and generally sampled over 1 m intervals based upon geology andmineralization. Bulk samples were collected from cut trenches over varyingintervals based upon geology and mineralization; but nominally of 1 mlength. At May 2007, 2.2 km of underground development was completedinvolving strike driving and cross-cut development through the mineralizedzone, with rock chip samples collected from development faces at nominal1 m width intervals. These samples were then dispatched to thelaboratories of the Geological Survey or Tianjin Institute of Geology andMineral Resource.


Drilling techniques The Changfulong Gold Project estimates are based on the results of7,500 m of diamond core, 2.2 km of underground development and17,589 m of trenching. The majority of the trenching and drilling relevantto the current resource estimation was conducted under the supervision ofTianjin Institute of Geology and Mineral Resources.


Drill sample recovery MMC has not viewed any of the diamond drill core, and recoveries areuncertain. Some of the completed underground development wasinspected by MMC during the site visit.

MODERATE RISK

Logging All diamond core samples and trenches were geologically logged recordingall significant properties, to allow geological maps and sections to beconstructed. The majority of the drill core was produced in the latestexploration phase, and consistent geological procedures were applied.Underground development was geologically mapped.

LOW RISK

Sub-sampling techniques Most of the historical and recent diamond core was sampled using impactand sample splitting or a diamond saw to provide half core of varying sample lengths,preparation but generally approximating to 1 m. Underground face samples were

collected over nominal 1 m intervals.LOW RISK-MODERATE RISK

Verification of sampling Historical quality assurance and quality control data relating to theand assaying resources is either no longer available or is not consistently reported. It was

not possible for MMC to independently verify the quality of the data in theshort time available for this review.

MODERATE RISK

Location of data points Historical drillholes and trenches were surveyed but the exact methods usedcould not be determined. Underground development has been surveyed,with location of sample points fixed by measurements from known surveypoints.

LOW-MODERATE RISK

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Data density and Average drillhole and trench density is variable; with closest spacing overdistribution the AuI-1 deposit at Changfulong. Ongoing underground development on

the AuI-1 Lode since the resource estimate is providing much greaterunderstanding of the mineralization, with cross-cut drives through themineralized zone at approximately 50 m spacing.

LOW-MODERATE RISK

Orientation of data in The diamond drillholes were generally inclined to be perpendicular to therelation to geological strike of the deposit and therefore adequately intersect the mainstructure mineralized ore zone structures containing the bulk of the

Au mineralization. Trenches were cut perpendicular to the trend of themineralization. Underground development includes strike driving at cross-cut driving perpendicular to the mineralized quartz veining.

LOW RISK

Audits or reviews MMC has not conducted a thorough review of the sampling and assaytechniques for the data available as at May, 2007.

MODERATE RISK

Data Integrity — Diamond Drillhole, Trench and Underground Development Data

The drilling, trench, sample and assay data was collected predominantly by the Tianjin Institute ofGeology and Mineral Resources during 2000 to 2005. The limited levels of confirmation conducted byMMC suggest that the data is of acceptable quality and consistent with standard practices employed inChina. The recent and ongoing underground development data has been collected in a controlled andsystematic fashion, with the fixing of sample data points in 3D. MMC believes the data to be ofacceptable quality for estimation of resources to the lower levels of confidence, with the ongoingincorporation of the underground sample data being able to significantly increase the confidence offuture resource updates for the main AuI-1 Lode. Analysis of the spatial relation of data in 3D was onlypossible from the examination of sectional and plan data provided; but confirms the presence of amineralized envelope containing a series of sub-parallel mineralized quartz veins at the AuI-1 Lode.

3.3.3 Resource Calculation Methodology

Mineral Resource calculations were undertaken for four separate mineral deposits; AuI-1, AuI-2, Au-5 and Au-6, with the largest being the AuI-1 deposit.

A longitudinal projection polygonal approach was adopted for the calculations.

Changfulong AuI-1 Lode

Trenching and diamond drilling was completed over 19 section lines along the deposit. Lodethickness ranged from 0.57 m to 6.98 m, and gold grade from 0.15 g/t to 68.0 g/t.

A total of approximately 2.2 km of underground development and associated sampling had beencompleted by May 2007. On the 1858 m elevation level, development has confirmed the presence of anorthwest to southeast oriented mineralized system with a strike length of approximately 400 m andwidth of 50 m to 150 m. Within this envelope are a series of subparallel mineralized quartz veinsvarying in width from 1 m to 15 m. Elevated gold values appear to be associated with the quartz

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veining; but the tenor of the mineralization as shown from existing assay data is variable along theveins.

Changfulong AuI-2 Lode

This is a small mineralized zone of approximately 40 m strike length, currently constrained by twosurface trenches and a single diamond drillhole. Vein width varies from 0.64 to 3.4 m, with an averageof 2.05 m; whilst gold grade ranges from 1.32 g/t to 3.66 g/t with an average of 2.21 g/t.

Jiaojiegou Au-5 Lode

Trenching has defined a strike extent of 180 m, with no diamond drilling so far conducted.Thickness ranges from 2.55 m to 3.18 m, with an average of 3.13 m. Gold grades from 2.48 g/t to4.77 g/t have been returned, with an average of 3.55 g/t.

Tashaowa Au-6 Lode

This lode is currently defined by five trenches and one diamond drillhole. Lode thickness is from1.87 to 3.24 m. Gold grade ranges from 1.15 g/t to 8.05 g/t, with an average of 3.34 g/t.

3.3.4 Mineral Resource Statement

The Mineral Resources at the Changfulong deposit were estimated under the new ChineseResource/Reserve Categories and Classification system, rather than the The Australasian Code for theReporting of Identified Mineral Resources and Ore Reserves (JORC) (2004).

The Mineral Resource summary given in Table 3.2 is reported from the Technical Geological Reportcompleted by the Tianjin Institute of Geology and Mineral Resources. Estimates were made utilizinglongitudinal projection methodology, and the assumption and calculations used have been examined byMMC and found to be acceptable in relation to the Changfulong Gold Project and method employed.

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Table 3.2 — Mineral Resource Statement — Changfulong Gold Deposit

Resource GoldElevation / Reserve Metal

Area Lode (m) Type Tons Gold Grade (g/t) (oz)

1902-Changfulong********** Aul-1 1545 331 149,049 5.3 25,390

332 207,723 5.67 37,866333 408,791 4.9 64,400

1896-Aul-2 1782 331 — — —

332 — — —333 14,367 2.21 1,021

1815-Jiaojiegou ************ Au-5 1780 331 — — —

332 — — —333 12,929 3.37 1,402

1822-Tashaowa************* Au-6 1725 331 — — —

332 22,295 3.3 2,367333 14,899 3.44 1,617331 149,049 5.3 25,390

Total **************** 332 230,018 5.44 40,233333 438,057 4.76 67,038

Total **************** 331+332+333 — — 817,124 5.05 132,661


Note 2: the total contained metal of 132,661 ounces is approximately equal to 4.126 tonnes of gold

Using the general equivalences with the JORC Code previously discussed, it is probably sufficient toview the resources stated as category 333 in Table 3.2 as being close to Inferred Resource categoryonly; whilst those stated as category 332 may be equivalent to Indicated Resource. However, the currentlevel of data is such that it is highly unlikely that any material could be classified as Measured Resourceunder the JORC code; and thus the material classified as 331, would be broadly equivalent to IndicatedResource under the JORC code. This is assuming all data collection quality and associated ‘‘modifyingfactors’’ are verifiable and accurate. This being stated, the Indicated Resource at the Changfulong GoldProject, as taken from Table 3.2, may be in the order of 379,100 tons @ 5.38 g/t for 65,620 oz Au;whilst the Inferred Resource may be in the order of 438,100 tons @ 4.76 g/t for 67,040 oz Au.


MMC has not amended any Resource tonnages as reported for the Changfulong Gold Deposit, buttaken them at face value, with consideration of the above limitations. While MMC has notindependently validated these resources in detail, it did examine the data underlying them, and themethods used to estimate them, and found no material errors when compared to the reports thatdocumented the reported Resources.

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ANNEXURE A — QUALIFICATIONS AND EXPERIENCE

David Meldrum — General Manager Minarco-MineConsult — Bachelor of Engineering (MiningHons) — Graduate Diploma in Applied Finance — First Class Mine Managers Certificate ofCompetency — Member of Australasian Institute of Mining and Metallurgy (CharteredProfessional) — Fellow of Financial Services Institute of Australasia

David has a First Class Mine Managers Certificate of Competency with over 25 years experienceassociated with the mining industry within Australia and overseas. During this period he has undertakenall levels of technical studies and audits of current and prospective operations in Australia, China, NewZealand, South Africa and Indonesia. Apart from providing advice to numerous financiers, David hasfinance industry experience having been an Investment Banker and having carried out studies for bothlenders and investors.

David concentrates on providing technical and commercial advice to both the mining and financeindustries. This work includes advising clients on the sale and/or purchase of mining projects and hasinvolved development of business strategies to maximize the value of the opportunities. David also hasextensive experience in reserve estimation.

Andrew Ryan — Minarco — MineConsult China Consulting Manager — Consulting — Bachelorof Engineering, Mining — University of New South Wales, Master of Applied Finance andInvestment — Member of Australasian Institute of Mining and Metallurgy — Associate ofFinancial Services Institute of Australasia

Andrew has worked with MMC over the past six years and has been actively involved in all areas ofmining consulting. Most recently, in 2005 Andrew moved to Beijing as MMC’s Chinese ConsultingManager responsible for the establishment and growth of MMC’s China business. During managednumerous mining related assignments in China. This work has included the project management of duediligence studies, valuation reports, opportunity assessments, conceptual development studies, andfeasibility assessments for both domestic and international clients. The projects that these studies havefocused on have covered a variety of minerals including coal, iron ore, gold and molybdenum.

John Haywood — Minarco-MineConsult Associate — BSc Geology, Member of AustralasianInstitute of Mining and Metallurgy

John Haywood has over 17 years experience in mining and exploration geology and resourcemodelling, and has worked in Australia, West Africa, and Southern Africa in gold and base metals. Johnhas held production positions up to and including Chief Geologist prior to entering a consulting role.John specializes in geological and resource modelling, primarily using the internationally acceptedDatamine Studio software, as well as in producing technical expert reports and providing operationalassistance. John holds the relevant qualifications and professional associations required by the ASX,JORC and ValMin Codes in Australia.

Ron Siwinski — BSc. Minarco — MineConsult Senior Mining Engineer, Engineering(Massachusetts), Water Resources (MIT)

Ron was born and educated in the USA and came to Australia in 1974. After a 6 year career as acivil engineer, he worked as Senior Mining Engineer, Operations at Cliffs Robe River Iron Ore in Western

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Australia in the 1970’s. From 1980 to 2000 he was Mining Engineer, Project Management Engineer andGeneral Manager, Engineering for Southern Pacific Petroleum NL and was heavily involved in theirQueensland shale oil projects. Ron has considerable experience in mine planning, feasibility studies,economic analysis and mine development. His main area of expertise is project management. Ron hasbeen a mining consultant since 2000.

Peter Goodman — Minarco Associate — Bachelor of Applied Science (Process Engineering) —Graduate Diploma in Mineral Processing — Quarry Managers Certificate of Competency —Metallurgy Certificate — Member Australian Coal Preparation Society

Peter has managed, designed and constructed mineral processing plants in both Australia andSouth East Asia with over 30 years experience associated with the mining industry. During this periodhe has undertaken all levels of technical studies and audits of current and prospective operations inQueensland, NSW, China, New Zealand, India, South Africa and Indonesia. Peter has designed and builtnumerous mineral processing plants located around the world, including China, Australia, New Zealand,and Africa.

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ANNEXURE B — GLOSSARY OF TERMS

The key terms used in this report include:

( assets means any or all of the three exploration projects, MKM, Luishia or Changfulong

( associated minerals are minerals which are found with the primary mineral of interest, andform in similar environments, irrespective of the location

( catalyst is a substance which increases the rate of a chemical reaction without beingconsumed in the process

( CIF (Cost Insurance and Freight) is a trade term requiring the seller to arrange for the carriageof goods by sea to a port of destination, and to provide the buyer with the necessarydocumentation to receive the goods from the carrier

( Company means CRGL

( concentrates are the products of ore processing plants which contain higher concentrations ofthe target minerals and are usually suitable for smelting

( COVEC means China Overseas Engineering Co. Ltd

( CRGL means China Railway Construction Group Limited

( crush means to break, pound, or grind (stone or ore, for example) into small fragments orpowder

( current means as at July 2007

( DR Congo means the Democratic Republic of the Congo

( flotation is a selection method for to the recovery of minerals using reagents to create afroth that collects target minerals

( GECAMINES is a 100% Congolese State owned company.

( grade is the percentage of useful elements or their components, in ores

( grind means to crush, pulverize, or reduce to powder by friction, especially by rubbingbetween two hard surfaces

( HKSE stands for Hong Kong Stock Exchange

( JORC stands for Joint Ore Reserves Committee

( JORC Code refers to the Australasian Code for Reporting of Exploration Results, MineralResources and Ore Reserves 2004 edition, which is used to determine resources and reserves,and is published by the JORC of the Australasian Institute of Mining and Metallurgy, theAustralian Institute of Geoscientists and the Minerals Council of Australia

( ITRR stands for Independent Technical Review Report

( ITR stands for Independent Technical Review

( lb stands for pound, a unit of weight equal to 453.592 grams

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( km stands for kilometer

( kt stands for thousand tons

( m stands for meters

( Marketable Reserves means saleable reserves as defined under the JORC Code

( MMC refers to Minarco-MineConsult

( mine production is the total raw production from any particular mine

( mining rights means the rights to mine mineral resources and obtain mineral products inareas where mining activities are licensed

( Mt stands for million tons

( Mtpa means million tons per annum

( open pit is a method of surface mining in which massive mineral deposits are removed bycutting benches in the walls of a broad, deep funnel-shaped excavation

( ore is a naturally occurring solid material from which a metal or valuable mineral can beextracted profitably

( ore processing is the process through which physical or chemical properties, such as density,surface reactivity, magnetism and color, are utilized to separate the useful components of oresfrom useless stones, which are then concentrated or purified by means of flotation, magneticselection, electric selection, physical selection, chemical selection, reselection, and combinedmethods

( ounce or oz refers to troy ounce which is equal to 31.1034768 grams

( primary mineral deposits are mineral deposits formed directly from magmas, which may besubsequently altered through weathering, both chemical and mechanical, to give rise tosecondary deposits

( raw ore is ore that has been mined and crushed, but has not been processed further

( RC stands for Reverse Circulation drilling which is a method of exploratory drilling used toevaluate and test drill targets

( RMB stands for Chinese Renminbi Currency Unit; 103 RMB means 1,000 RMB

( roast means to heat ores in a furnace to dehydrate, purify, or oxidize before smelting

( ROM stands for run-of-mine, being material as mined before beneficiation

( Secondary deposits see primary mineral deposits

( smelt means to fuse or melt ore in order to separate the metal contained

( TIGMR means the Tianjin Institute of Geology and Mineral Resources

( tonne refers to metric tonne

( tpa stands for tons per annum

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( tpd stands for tons per day

( VALMIN Code refers to the code and guidelines for technical assessment and or valuation ofmineral and petroleum assets and mineral and petroleum securities for independent expertreports

( ¥ is the symbol for the Chinese Renminbi Currency Unit

Note: Where the terms Competent Person, Inferred Resources and Measured and IndicatedResources are used in this report, they have the same meaning as in the JORC Code.

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