GUIZHOU JIN CE MINING CO Report - CIC GOLD JIN CE MINING CO_Report_V2.0.pdf · 2014. 2. 13. ·...

Williams Exploration Consulting Pty Ltd Consulting Geologists

135 FOX VALLEY ROAD, WAHROONGA, NSW, AUATRALIA 2076

Telephone (61) (2) 9487-3415 Fax (61) (2) 9487-3415

GUIZHOU JIN CE MINING CO., LTD., P.R. CHINA

A REVIEW OF THE MINERALIZATION AT, AND ON THE EXPLORATION PROGRAM AND PROPOSED BUDGET FOR, THE JIN CE GOLD PROJECT, CEHENG COUNTY, GUIZHOU PROVINCE, PEOPLE’S REPUBLIC OF CHINA

BRIAN WILLIAMS, B.Sc., FAusIMM

DECEMBER, 2009


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TABLE OF CONTENTS

PAGE

1.0 SUMMARY 6

2.0 INTRODUCTION AND TERMS OF REFERENCE 10

3.0 DISCLAIMER 12

4.0 PROPERTY DESCRIPTION AND LOCATION 13 4.1 TITLE TO PROPERTY 14 4.2 ENVIRONMENTAL LIABILITIES 18

5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY 20

6.0 HISTORY 24 6.1 EXPLORATION HISTORY 24 6.2 HISTORIC MINERAL RESOURCE ESTIMATES 25 6.3 HISTORICAL PRODUCTION 28

7.0 GEOLOGICAL SETTING 29 7.1 REGIONAL GEOLOGY 29 7.2. LOCAL GEOLOGY 31

8.0 DEPOSIT TYPES 33

9.0 MINERALIZATION 36

10.0 EXPLORATION 45 10.1 PRE-GJCM EXPLORATION 45 10.2 GJCM EXPLORATION 45 10.2.1 CENTRAL TENEMENTS AERIAL PHOTO INTERPRETATION 46 10.2.2 MAPPING 46 10.2.2 REGIONAL SOIL RIDGE AND SPUR SAMPLING PROGRAM 47 10.2.3 CHANNEL SAMPLING AND TRENCHING 49 10.2.4 GRAB SAMPLING 50 10.2.5 POLE-DIPOLE IP SURVEY 58 10.2.6 GRAB SAMPLING 58 10.3 SURFACE EXPLORATION RESULT AND DISCUSSION 61

11.0 DRILLING 65 11.1 GJCM DRILLING-WEIPAI #8 65 11.2 GJCM DRILLING-WEIPAI #4-6 70


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12.0 SAMPLING METHOD AND APPROACH 77 12.1 ROCK SAMPLING 77 12.2 SOIL SAMPLING 77 12.3 DRILL CORE SAMPLING 78

13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY 80 13.1 GAS SAMPLE PREPARATION 80 13.2 GAS ASSAYING 80 13.3 ALSG ASSAYING 81

14.0 DATA VERIFICATION 82 14.1 QA-QC RESULTS - ROCK SAMPLES THROUGH GAS LABORATORY 82 14.2 QA-QC RESULTS - ROCK SAMPLES THROUGH ALSG LABORATORY 86 14.3 QA-QC RESULTS - SOIL SAMPLES THROUGH GAS LABORATORY 87

15.0 ADJACENT PROPERTIES 91

16.0 MINERAL PROCESSING AND METALLURGICAL TESTING 92

17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 93

18.0 OTHER RELEVANT DATA AND INFORMATION 94

19.0 INTERPRETATION AND CONCLUSIONS 95 19.1 PROPOSED EXPLORATION PROGRAM 96

19.1.1 Jin Ce-Liba Boundary Area Programs 96 19.1.2 Jin Ce Lease Programs 96 19.1.3 Structural Study 97 19.1.4 Topographic Mapping Project 97 19.1.5 Hydrological Drilling 97 19.1.6 Geotechnical-Sterilization 97 19.1.7 Remote Sensing 97 19.1.8 Reference Standard Sample Preparation 97 19.1.9 Drill Rig Mobilization 97

20.0 RECOMMENDATIONS 101


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LIST OF TABLES PAGE

Table 4.1 Jin Ce Mining and Exploration Tenements 11 Table 5.1 Ceheng Area Weather Data 23 Table 6.1 Historic Exploration Statistics 25 Table 6.2 Gz Non-Ferrous #1 Grade Estimates for the Jin Ce project 27 Table 6.3 Gz Non-Ferrous #1 “Resource” Estimates for the Jin Ce project 27 Table 9.1 Central Tenement Area Deposit/Occurrence Summary 25 Table 10.2 Exploration Work Completed by GJCM 43 Table 10.3 Summary of Significant Trench/Channel Samples 50 Table 10.4 Summary of Significant Grab Samples 56 Table 11.1 Collar Table for Weipai #8 Drilling 64 Table 11.2 Significant Results from Weipai #8 Drilling 67 Table 11.3 Collar Table for Weipai #4-6 Drilling 69 Table 11.4 Significant Results form Weipai # 4-6 Drilling 72 Table 19.1 Jin Ce Exploration Program Budget 96


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LIST OF FIGURES PAGE

Figure 4.1 Map of China Showing the Dian-Qian-Gui area ( Golden Triangle) 15 Figure 4.2 Jin Ce project Exploration Lease Map 16 Figure 4.3 Hua Xin Mining Licence Map 17 Figure 5.1 View Looking East Over Hua Xin taken from near Wei Pai #3. 21 Figure 5.2 View of Wei Pai #7 looking west from Wei Pai #6 21 Figure 5.3 View of Wei Pai #6 (Western Pit) and Wei Pai #4 (background) from Wei Pai

#7 20 Figure 7.1 Location of Sedimentary Rock-Hosted Gold Deposits in China (from Perters et

al, 2002) 27 Figure 7.2 Geologic Features of the Golden Triangle (Dian-Qian-Gui) Area China 28 Figure 7.3 Geological Map of the Central Tenement Area (1:50,000) 31 Figure 9.1 Geological and Sampling Result of Weipai #8 (1:1000) 36 Figure 9.2 Geological and Sampling Result of Weipai #7 (1:1000) 37 Figure 9.3 Geological and Sampling Result of Weipai #6 (1:1000) 38 Figure 9.4 Geological and Sampling Result of Weipai #5 (1:1000) 39 Figure 9.5 Geological and Sampling Result of Weipai #4 (1:1000) 40 Figure 9.6 Geological and Sampling Result of Weipai #3 (1:1000) 41 Figure 9.7 Geological and Sampling Result of Gaoshan and NX #2 (1:1000) 42 Figure 10.1a Ridge and Spur Soil Geochem Results for Weipai-Nongying (1:50,000) 46 Figure 10.1b Ridge and Spur Soil Geochem Results for Nongying-Naxin-Pingmai EL

(1:50,000) 47 Figure 10.2 Stacked 2D IP Survey Profiles of Weipai #8 Area 57 Figure 10.3 Stacked 2D IP Survey Profiles of Weipai #8 Area 58 Figure 11.1 Drill Collars Grid of Weipai # 8 Drilling 65 Figure 11.2 Drill Collar and Grid for Weipai #4-6 Drilling 70 Figure 14.1 Assay Results for Gold Standards-GAS 81 Figure 14.2 Pulp Duplicate Variance GAS – Gold 82 Figure 14.3 Pulp Duplicate Variance GAS – Gold > 0.3 g/t 82 Figure 14.4 Pulp Duplicate Variance GAS- Arsenic 83 Figure 14.5 Pulp Duplicate Variance GAS- Antimony 83 Figure 14.6 Pulp Duplicate Variance GAS- Mercury 84 Figure 14.7 Assay Results for Gold Standards – ALSG 84 Figure 14.8 Pulp Duplicate Variance ALSG – Gold 85 Figure 14.9 Field Duplicate Variance – Gold 86 Figure 14.10 Field Duplicate Variance – Gold > 2 ppb 86 Figure 14.11 Field Duplicate Variance – Arsenic 87 Figure 14.12 Field Duplicate Variance – Antimony 87 Figure 14.13 Field Duplicate Variance – Mercury 88


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APPENDICES Appendix A Jin Ce Exploration Lease Documentation 103 Appendix B Gannet Holdings Standard Reference Material Assay Results 135


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1.0 SUMMARY The Jin Ce project consists of a mining licence and four contiguous exploration licences (the Central Tenements), within which Guizhou Jin Ce Mining Co., Ltd. (GJCM) is concentrating its exploration for Carlin-like gold deposits and two further exploration licences and an application for restoration of a third. The Central Tenements are located near the town of Ceheng, Ceheng County, Qianxinan District, Guizhou Province, Peoples Republic of China (China) approximately 1900 km south-west of the capital Beijing. Of the three properties which make up the remainder of the project, the area under application is also in Ceheng County, one licence is in the neighbouring Wangmo County and the other lies several hundred km to the east. The project was acquired by GJCM, a Sino-foreign cooperative joint venture company (the JV) from the Guizhou Tong Fa Mining Company Limited (Tong Fa) subject to a scheduled payment of agreed funds. These payments have since been made. Tong Fa is a Chinese limited liability company and is based in the city of Guiyang, capital of Guizhou Province. Perfect Ally Limited (PAL), a company registered in the Cayman Islands, holds a 95% interest in the JV with the remaining 5% held by Tong Fa. The mining licence, Hua Xin, and the surrounding exploration licence, Wei Pai, are held by Ceheng Huaxin Gold Mine Co. Ltd. (CHGM), a Chinese limited liability company also registered in Ceheng. This company is controlled by GJCM through its 80% share holding. In the other properties, Nong Ying, Na Xin and Ping Mai which, with Hua Xin and Wei Pai, comprise the 126.2 km2 Central Tenement block, and the isolated Moa Zhai and Nan Zhai, GJCM has 100% interest and either holds the licence in its own name or is in the process of having ownership transferred to it. Gold was discovered in the vicinity of the Hua Xin in the late 1980’s by the Guizhou Provincial Bureau of Geology and Mineral Resources (GzBGMR) investigating anomalies from its earlier regional stream sediment geochemical survey but little systematic exploration followed before CHGM obtained the mining licence and the Wei Pai exploration licence in 2002. CHGM commissioned surface exploration, mainly trenching and sampling, sufficient only to establish mining of oxide ore from five small mines at Hua Xin (now known as Weipei #3, #4, #5, #6 and #7) and one (Weipai #8) near the eastern boundary of the Wei Pai licence. These operated as shallow open pit mines and associated heap-leach gold extraction operations till 2006 when the oxide ore was exhausted. There are no available production records but, based on the size of leach heaps, gold produced was of the order of 150 kg. Weipai #6 and Weipai #7 were the larger producers. Following closure of the mines, CHGM commissioned the No 1 General Team of the Guizhou Non-Ferrous Metal Geological Exploration Bureau (Gz Non-Ferrous #1) to assess the further ore potential of the two areas. This group produced a report which highlighted gold potential associated with the existing mines and included resource estimates. WEC has reviewed these historical resources, which are discussed in Section 6.2 of this report, and has found them to not be compliant with the Canadian Securities Regulators’ National Instrument


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43-101 (NI 43-101) or to be consistent with the CIM Standards on Mineral Resources and Reserves.

Since formation of the JV late in 2007, GJCM has undertaken systematic exploration mainly of the Central Tenements using its own employees based at Ceheng. Exploration has had a two pronged approach: 1) application of a range of standard exploration techniques over the known mineralisation to better define the surface extent and the likely sub-surface orientation and extent and to test this through drilling, and 2) grass root exploration aimed at discovering potential zones of mineralisation on which to focus more detailed exploration. The planning and implementation of exploration have been to western specifications but fully comply with minimum Chinese standards and regulation. The project is in the Golden Triangle of China, an area of 500 km by 300 km in western Guizhou and Guangxi and eastern Yunnan provinces marked by numerous gold occurrences and a few large mines of which Eldorado Gold Corporation’s Jinfeng (>5 Moz), 10 km north of GJCM’s Central Tenements, is the largest. Most, if not all, of the gold deposits can be classified as Carlin-like with typical characteristics of very fine gold in arsenical pyrite and arsenopyrite, carbonate leaching (decarbonatisation) and silicification of the host rocks and widespread late-stage deposition of arsenic minerals (orpiment and realgar), stibnite and cinnabar. Host rocks belong to sedimentary rocks of the Youjiang Basin, a Cambrian to Triassic age depression which developed on the south-western margin of the Yangtze Craton. Early sedimentation was mostly of carbonates with clastic sedimentation increasing to become dominant in the Triassic. Deposition was mainly limestones on a wide shelf in the west, separated at shelf edge from slope and deeper water turbidite deposits, by a transition zone containing reefal limestones, bioclastic sediments and breccias. The shelf edge was oriented NNE-SSW and passed through the Laizhishan dome just to the west of Ceheng. Gold deposits occur at a number of levels and in a range of different rock types but one of the most favoured hosts is the mid-Triassic clastic sequence. These are the Jinfeng host rocks and they are present through most of the Central Tenements. Most deposits are on fault structures; a few are stratabound or in ancient karst settings. GJCM has recognised a NW-trending, 1 km wide structural corridor containing a number of shallowly E-dipping (thrust) faults and enclosing its Hua Xin prospects. The Weipai #8 prospect is in the footwall zone of the regional Banchang Thrust Fault. GJCM’s detailed exploration in and around the old mines has involved geological mapping, ridge and spur (R&S) soil geochemistry to better define the extent and orientation of the mineralization at surface, trenching seeking direct contact with mineralization at surface, IP geophysics to assist drill targeting and exploration diamond drilling. At Weipai #8, trenching confirmed earlier records of high grades at the western end of the old mine, geochemistry and IP gave support and drilling in 2008 recorded ore grade intersections (3m averaging 5.4 g/t Au in hole WP8ZKS001and other similar results) in an EW striking, 60o S dipping fault zone. Further drilling, although not completely closing off the mineralization, has shown the lode to be an E plunging shoot of limited size with further definition not considered a priority. A


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strong IP anomaly in the west of this prospect has been tested with several holes and remains unexplained there being negligible sulphide logged in the holes.

At Hua Xin, the geochemistry outlined a strong gold-arsenic (and less coherent antimony-mercury) anomaly much broader than would be expected from the distribution of the old mines. IP showed strong chargeability anomalies some of which were interpreted as strata conformable, some steep and cross-cutting. Channel sampling in the mines and trenching elsewhere gave mixed results. Gold intersections > 2 g/t in the mines were narrow and isolated. Trenching in the C area produced some encouraging results. Initial drilling targeted the “stratabound” IP and located diagenetic pyrite but also intersected thin structures with enhanced levels of pyrite and elevated Au (0.5-2 g/t) and arsenic. Drilling of Weipai #5 Gully targeted below high Au trenches on an interpreted NW trending structure recorded patchy gold up to 4 g/t. The third drilling programme, now almost completed, has produced more surprising and encouraging results. Two holes have intersected Permian limestone against Mid-Triassic clastic rocks, probably representing a depositional high. The bioclastic breccia on the contact would be a favourable host for gold if deep-penetrating structures can be found intersecting it. Drill hole WP4-6ZKS1401, to the north intersected a number of gold-arsenic rich zones within the Mid-Triassic clastic rocks including a 24m intercept which averages 1.07 g/t Au and 0.12% As and includes a 2m interval of 4.4 g/t Au. This hole and the one 300m to the north, just completed, lie along strike of an EW corridor, only recently recognized at Weipai #5 Gully, where surface sampling indicates gold and arsenic anomaly following stratigraphy. This recent drilling has considerably increased the potential for stratabound ore in the area.

Detailed exploration at Na Xin is not nearly as advanced. The broad geochemical anomaly is in antimony and mercury, elements expected to more distal than gold and arsenic. The problem has been finding a way to focus in on gold. Re-sampling of an old gold prospect, Gaoshan, has recorded few significant values but trenching at the newly located NX#2 prospect has recorded an encouraging 3m @ 0.5 g/t Au and 3800 ppm As.

Regional exploration has so far consisted only of r&s geochemistry for Au, As, Sb and Hg on the major ridges and geological mapping to improve the existing 1:10,000 scale maps. Eleven geochemical anomalies have been selected for field follow up. Four are in the footwall zone of the Banchang Fault analogous to Weipai #8 and NX#2. GJCM has proposed a programme for 2009 focused strongly towards finding ore at Hua Xin but also advancing exploration at Na Xin and in the other Central Tenements and for regional assessment with the aim of acquiring further prospective properties. There is a provision in its budget for the start of resource definition drilling if the programme does find ore. A breakdown of the proposed exploration for the project and a budget is presented herein. WEC has reviewed the proposed exploration program for Jin Ce and, in light of the


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observations made in this report, supports the concept. It is WEC’s opinion that the Jin Ce Project’s Central Tenements merit further exploration and that GJCM’s proposed exploration plan is properly conceived and justified.


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2.0 INTRODUCTION AND TERMS OF REFERENCE

Williams Exploration Consulting Pty Ltd (WEC) was retained in 2008 by Guizhou Jin Ce Mining Co., Ltd. (GJCM), a Sino-foreign cooperative joint venture company (the JV),, to plan, initiate and provide technical supervision of exploration within the Jin Ce gold project in the People’s Republic of China (China). In 2009 GJCM employed Guowei Xu to manage and oversee the field program, with WEC continuing to provide technical guidance. That program has now been partially completed and Brian Williams of WEC, assisted by Guowei Xu have prepared this Technical Report to support the disclosure of the results and to opine on further exploration to advance the project. Perfect Ally Limited (PAL), a company registered in the Cayman Islands, holds a 95% interest in the JV, with the remaining 5% interest held by Guizhou Tong Fa Mining Company Limited (Tong Fa). The JV acquired the Jin Ce project from Tong Fa subject to a scheduled payment of agreed funds, which have since been paid. Tong Fa is a Chinese limited liability company and is based in the city of Guiyang in Guizhou Province. The main part of the Jin Ce project is located 15km east of the town of Ceheng in Ceheng County, Guizhou Province, in the south-western part of China and 9km south of Sino Gold Mining’s (now Eldorado Gold Corporation’s) Jinfeng gold mine which, at an annual production or 150,000 oz, is the largest producer in China’s Golden Triangle. The project consists of a mining licence and four contiguous exploration licences near Ceheng plus two exploration licences well removed to the east and north-east. The mining licence, Hua Xin, some 1.65km2 in size, is surrounded by the Wei Pai exploration licence of 31.64 km2. Exploration licences Nong Ying (34.21 km2), Na Xin (7.0 km2) and Ping Mai (49.76 km2) extend this main block 15 km to the south east. Exploration licence Mao Zhai (15.52 km2) in Wangmo county and Nan Zhai (27.63 km2) in Jianhe county complete the project set. A seventh exploration licence, Bada, located 30 km south of Ceheng, initially formed part of the project. Tenure was lost in May 2009 due to the accidental failure of GJCM to renew the licence. Application is being made for reinstatement through issue of a new licence over the same ground. The Hua Xin mining licence contains five worked-out small-scale gold mines, located north-west, west and south-west of the village of Wei Pai and named (by GJCM) Wei Pai #3, #4, #5, #6 and #7. Seven km to east near the village of Yan Jia there is a further small worked-out gold mine, Wei Pai #8. All six mined oxide mineralization from shallow open pits and extracted gold via heap leach operations. Antimony has also been mined in a small way from adits near the village of Nong Nian in the Wei Pai exploration licence and at several localities within the Na Xin property. There is no current mining activity.


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The gold mineralization at Hua Xin and Wei Pai #8 is located within fractured or brecciated zones associated with faulting and in adjacent clastic sedimentary rocks. The host rocks show various levels of decarbonatisation and silicification through hydrothermal alteration. The altered rocks are mineralized with (arsenical) pyrite and rare arsenopyrite which together host the fine grained gold, making the ore refractory. The arsenic minerals orpiment and realgar are common associates both within the gold mineralization and in the country rocks for some distance outward from it. Prior to 2008, there had been several phases of exploration within the project area which had culminated in the discovery of the gold mineralization mined in the oxide zone described above or exposed in trenches and pits at a number of other localities. There had been no systematic sub-surface exploration through either aditing or drilling. Through 2008 and 2009, GJCM has conducted systematic mapping and sampling of the Wei Pai #3 to #8 prospects, trenching at these two localities and in the Na Xin licence, geophysical surveys and diamond drilling at Hua Xin and Wei Pai #8 and soil geochemical sampling over much of the tenement block Wei Pai to Ping Mai, in Mao Zhai and in the lost tenement Bada. Approximately 1 km of trenching, 2 km of channel sampling, 16 line km of IP/resistivity and 5,000 m of diamond drilling have been completed and 8400 soil samples taken WEC made its first visit to the area in March, 2007. WEC Principal Geologist, Brian Williams, B.Sc., visited the mines in Hua Xin and a number of localities in Wei Pai, Nong Ying, Na Xin and Ping Mai on March 6th and 7th, 2007, and again, for the purpose of assisting with planning of GJCM’s 2008 exploration, on December 5th and 6th that year. During 2008 and 2009, he was involved in supervision of the field work and in maintenance of quality control and made a number 2-3 week visits. The most recent visit to Hua Xin, Wei Pai and Nong Ying was between 19th and 30th September 2009 and to Na Xin and Ping Mai during the first week of May, 2009.WEC has visited neither Mao Zhai nor Nan Zhai. Brian Williams is familiar with some aspects of Mao Zhai from maps and the locations of samples recorded in GPS instruments and makes some comments on the results of the sampling in this report. He has no knowledge of any exploration which may have been undertaken by GJCM in Nan Zhai and makes comment only on his understanding of the currency of the licence. In January 2008, Brian Williams inspected the sample preparation facilities and the laboratory of the Guizhou Assay Centre of Geology and Mineral Resources (GAS) in Guiyang through which most of the rock samples and all soil samples from GJCM’s exploration were subsequently assayed. He inspected facilities set up by GJCM in Ceheng in April 2008 to prepare soil samples for assay and visited facilities established by GJCM near Ceheng for drill core logging, sampling and storage on a number of occasions during 2008 and 2009.


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3.0 DISCLAIMER WEC has reviewed and analyzed data provided by the JV, its consultants and partners, and has drawn its own conclusions therefrom, augmented by its direct field examination. WEC has not carried out any independent exploration work or drilled any holes. While exercising all reasonable diligence in checking, confirming and testing it, WEC has relied upon the data presented by these parties in formulating its opinion. The various agreements under which the JV may hold title to the mineral lands for this project have not been investigated or confirmed by WEC. While it has seen copies of the supporting Chinese legal documentation for the exploration and mining leases, WEC offers no opinion as to the validity of the mineral title claimed. A description of the property, and ownership thereof, is provided here for general information purposes only, as required by National Instrument 43-101 (NI43-101). WEC has relied upon information provided by GJCM and title opinion memos by Mr. Ren Wu & Mr. Wei Xi, Partners, Xinhai Law Firm. The geological, mineralization and exploration descriptions used in this report are taken from reports prepared by the JV, the JV’s partners or their contracted consultants, or from publicly available scientific literature. All currency amounts are stated in Renminbi (RMB, also known as Yuan) or US dollars (US$), as specified. Quantities are generally stated in SI units, the Canadian and international practice, including metric tons (tonnes, t), kilograms (kg) and grams (g) for weight, kilometres (km) or metres (m) for distance, hectares (ha) or square kilometres (km2) for area, and grams per metric tonne (g/t) for gold grades (g/t Au). Precious metal grades may be expressed in parts per billion (ppb) or parts per million (ppm) and their quantities may also be reported in troy ounces (ounces, oz), a common practice in the western mining industry. Chinese practice is to report mineral resources in terms of kilograms or tonnes of global contained metal. These numbers have been converted as necessary. WEC is pleased to acknowledge the helpful cooperation of the JV’s management and field staff, and, in particular, Guowei Xu, all of whom made any and all data requested available and responded openly and helpfully to all questions, queries and requests for material.


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4.0 PROPERTY DESCRIPTION AND LOCATION The main tenement block of the Jin Ce project (Central Tenements) is centred at 105º 58’ E and 25º 00’N (using the WGS84 datum) in the central part of the Golden Triangle (Dian-Qian-Gui Area) (see Figures 4.1, 4.2 and 4.3). The block is located in Ceheng County, Qianxinan District, Guiyang Province, China. Its eastern border is the Bei Pan river and it extends from 12 km north-east of the county capital of Ceheng to 26 km east of this town. It is traversed by the paved road linking Ceheng with Wangmo to the northeast. A network of internal roads provides access to most of the 40 or so villages within the block. Ceheng is an approximate 6-hour road journey from Guiyang, the Provincial Capital, via 116 km of motorway and 230 km of paved road. The other two properties within the project are Mao Zhai (106º 23’ E, 25º 21’ N) and Nan Zhai (108º 46’ E, 26º 39’ N) (see Figure 4.3). There is no road access to Mao Zhai, the nearest road being to the village of Tian Wan, 3 km to the north. Nan Zhai lies 200 km east of Guiyang in Jianhe County, Qiandongnan District. Ba Da, the licence lost in May 2009 and being re-applied for as a new licence, is 30 km south of Ceheng. The Central Tenements consists of a granted Mining License, number 52000007521827 and four (4) granted Exploration Licences - Wei Pai, Nong Ying, Na Xin and Ping Mai. Table 4.1 lists tenement names and numbers and shows their respective areas and current status. Total area of the Central Tenements is 124.26 km2. Similar details for the other two areas, Mao Zhai and Nan Zhai, are also provided in Table 4.1. Copies of the tenement documents and English translations comprise Appendix A. The exploration lease boundaries and corners are defined geographically; corners of the mining licence use UTM coordinates and the local Beijing 54 datum.

Table 4.1 Jin Ce mining and exploration tenements Name Number Area Holder Term Status Location km2 Expires County Central Tenements Hua Xin

5200000721827 1.65 CHXGM 01/10/14 Current Ceheng

Wei Pai T52120080202002272 31.5 CHXGM 31/12/09 Renewal application lodged

Ceheng

Nong Ying

T52120090502028975 34.21 Tong Fa 15/05/10 Transfer to GJCM pending

Ceheng

Na Xin T52120090302026855 7.0 Tong Fa 31/12/10 Transfer to GJCM pending

Ceheng

Ping Mai

T52120090302026083 49.76 GJCM 02/02/10 Current Ceheng


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Other Mao Zhai

T52120080102000927 15.52 GJCM 01/02/10 Current Wangmo

Nan Zhai

T52120080102001554 27.63 GJCM 01/02/10 Current Jianhe

Ba Da 50.06 GJCM Being re-applied for.

Ceheng

Except for Hua Xin, the Jin Ce properties are exploration licenses. They give the right to explore but do not convey the right to mine minerals on the property. Hua Xin is a mining licence which requires the demonstration of a three-dimensional ore body by drilling and drifting and the completion of a “Chinese feasibility study” before mining is approved. 4.1 Title to Property The Na Xin, Ping Mai, Nong Ying, Ba Da, Mao Zhai and Nan Zhai were acquired by Tong Fa over the period 2006 to 2008. Tong Fa acquired also a 70% interest in CHGM in 2006, increased to an 80% interest in 2008, giving it 80% equity in the Hua Xin and Wei Pai properties.


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Figure 4.1

Map of China Showing the Dian-Qian-Gui area (Golden Triangle)


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Figure 4.2

Jin Ce project - Exploration Licence Map


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Figure 4.3 Hua Xin Mining Licence Map


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PAL negotiated a joint venture agreement for the Jin Ce properties with Tong Fa. Under the terms of the JV agreement, Tong Fa’s equity in CHGM passes to the joint venture company, GJCM, and all other properties are to be held by the JV. This provides PAL with a 76% indirect interest in Hua Xin and Wei Pai, and a 95% indirect interest, in the other properties, and Tong Fa with 4% and 5% indirect interests respectively in the two sets of properties. Tong Fa transferred ownership of Ba Da to GJCM in June 2008, Nan Zhai in November 2008 and Ping Mai and Mao Zhai in March 2009. It proposes to transfer title to the other two properties Nong Ying and Na Xin to GJCM in January 2010. Both the 20% interest of the minority shareholders in CHGM in Hua Xin and Wei Pai and the Chinese Joint Venture Partner, Tong Fa’s 5% portion of the JV are carried interests through to feasibility earned in consideration for transferring the Jin Ce project to the JV. The Hua Xin mining licence in its current shape does not adequately cover the Wei Pai #4, #5 and #6 mines or prospective ground immediately adjacent to them. The JV has made a formal application to the Ceheng Land & Resources Bureau for extension of the licence to cover these areas. In a report titled “Instruction Manual for Gold Mine/Deposit Consolidation, Production Framework Adjustment and Reasonable Tenements Setup & Adjustment Scheme, Ceheng County, Qianxinan District/Prefecture, Guizhou Province´, commissioned by the Ceheng Land & Resources Bureau, the No.117 Team of the Guizhou Geologicial Exploration & Development Bureau recommended consolidation of the Hua Xin Gold Mine to the expanded area of 2.711 km2 shown in Figure 4.3 and an expansion of the mine production rate to 30,000 tpa. This recommendation was presented to the Qianxinan Land & Resources Bureau in May 2008. The JV anticipates consolidation in about March 2010. To keep the exploration licences current the licence holder must spend RMB 10,000 per km2, per year, submit an annual report and conduct exploration work continuously. 4.2 Environmental Liabilities As discussed previously, the Jin Ce project area has been the site of recent mining in surface oxide ores on several zones including Wei Pai #3, #4, #5, #6, #7 and #8. Surface disturbance and waste piles from the small-scale open pit mining as well as several old heap leach pads exist on the Hua Xin licence and adjacent to it within its proposed extension. The JV accepts that it has a responsibility to undertake appropriate environmental remediation. In November2008, the No 1 General Team of the Guizhou Non-Ferrous Metal Geological Exploration Bureau (Gz Non-Ferrous #1) completed for CHGM a report called “Mine Environment Protection and Integrated Treatment Scheme for the Ceheng Huaxin Gold Mine Co., Ltd., Guizhou Province”, which provided a summary description on the environmental status of the mine and guidelines for and layout of a protection and treatment


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scheme. This report was approved at the prefecture level in October 2009 by the Qianxinan Land & Resource Bureau. The scheme involves waste water treatment, construction of retaining walls for heaps and dumps, re-vegetation of mining areas, heaps and dumps and environmental monitoring. Potential cost to the project to 2013 is RMB2.8 million.


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5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

Most of the Jin Ce project is located in a hilly area of south-western Guizhou province. Topography varies from rugged karst topography commencing a few km west of Ceheng and extending north-west through the Laizhishan Anticline (see Figure 7.2) to dissected topography east of the town with steep-sided hills and sharp gullies forming in the harder sandy rock units, more rounded topography on the fine grained clastic rocks. Ceheng lies on the east-flowing Wei Pai river. To the east, the Hau Xin, Wei Pai and Nong Ying properties straddle this river, follow it to its junction with the major, south-flowing Bei Pan river and lie mostly within the Wei Pai drainage basin. Local topographic relief ranges up to 600m. The Na Xin and Ping Mai properties occupy smaller drainage basins of streams flowing directly into the Bei Pan river. Topography at Maozhai is typical of limestone dome margins in the region with steep karst generated hills in the east giving way to more subdued parallel ridges on clastic sedimentary rocks to the west. Valley floors and lower slopes are extensively farmed with terraced fields growing principally vegetables, chilli and melons. Higher on the hillsides, where slopes permit, the main annual crop is corn. In places there are plantations merging into the native vegetation producing nuts for tung oil. Native vegetation, shrubs and sparsely distributed trees, occupy most of the upper slopes and hilltops. Figure 5.1 below is a view looking south over the valley occupied by the Hua Xin mining licence. It shows the typical topography, farmland and vegetation and several of the mines. The Wei Pai #6 mine occupies the hill in the centre ground within the loop in the Wei Pai River. Wei Pai #7 is to the right, Wei Pai #4 to the left. Wei Pai #5 is to the right of Wei Pai #4 hidden beneath the brow of the hill. Weipai village is just beyond the eastern edge of the photograph a short distance from Wei Pai #4.


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Figure 5.1 View Looking East Over the Hua Xin valley from near Weipai #3

Figure 5.2 View of Weipai #7 Looking west from Weipai #6


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Figure 5.3 View of Weipai #6 (Western Pit) and Weipai #4 (background) from Weipai #7

The Jin Ce project can be accessed via regular daily flights from Beijing or Hong Kong to Guiyang, the capital of Guizhou Province. From Guiyang, vehicle access can be gained along a mixture of modern limited access highways and paved primary roads to Zhenfeng and south a distance of 65 km to Ceheng. Ceheng is an approximate 6-hour road journey from Guiyang. The Central Tenements are traversed by the paved road linking Ceheng with Wangmo to the north east. A network of internal roads provide access to most of the 40 or so villages within the block. There is no road access into the Maozhai property, the nearest road being to the village of Tian Wan, from the Wangmo-Luodian road. Ceheng is the capital city of Ceheng County. The county reportedly has a population of around 280,000, 80% belonging to minority groups, dominated, at 75%, by Bu Yi people. The climate in the Ceheng area is temperate, typically with moderate amounts of rain. Being in the northern hemisphere the winter months are November to March with a rainy season occurring between May and August which accounts for 60% of the annual rainfall. Early Spring rains are also common. Winter temperatures are rarely cold enough for snow to accumulate except on the highest hills. Some weather statistics for the area are provided in Table 5.1 below.


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Table 5.1 Ceheng Area Weather Data

Average annual rainfall 1300 mm Mid-Summer Average daily max 22º C to 26º C; Max 39 º C (July) Mid-Winter Average daily max 4º C to 10º C: Min -2 º C (January) Prevailing wind direction Predominantly from the NE in January and SW

in July Wind Speed 1.5 to 11 km/h

The local power grid is part of the 35 kilovolt (kV) Guizhou Power grid system. Adequate water supply for a mining operation is potentially available from the Bei Pan River. Mining operations having ceased in the area in 2006, there is no ready pool of local miners. Unskilled labour is readily available except at planting time in Spring and harvest in late Autumn. The current local wage structure for such labour, as provided by GJCM, is RMB1000/month.


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6.0 HISTORY The Wei Pai deposits (collectively the gold deposits within or adjacent to Hua Xin and the Wei Pai #8 deposit) were discovered as a result of a regional exploration program consisting principally of geochemical work conducted from 1983 to 1990. After 1984 the resultant geochemical anomalies from the program were subject to more detailed field exploration work between 1984 and 1987, during which period the deposits were discovered, in 2001-2002, in 2004 and in 2006 before commencement of the current exploration by GJCM in 2008. A mining licence was granted in April 2002 to the Ceheng Huaxin Gold Mine, later to become Ceheng Huaxin Gold Mine Co. Ltd. (CHGM), for the purposes of mining oxide gold ore and extracting gold by heap leaching. These operations commenced in 2002 at the six mines previously named and finished in 2006. Guizhou Tongfa Mining Co. Ltd. (Tong Fa) was established in 2004 and acquired Exploration Licences Na Xin, Ping Mai, Nong Ying, Nan Zhai and Mao Zhai, over the period 2006 to 2008. Late in 2006, Tong Fa acquired a 70% interest in CHGM, increasing this to 80% equity in July 2008. The Joint Venture between Tong Fa and PAL was negotiated in 2007 and came into being with the registration of GJCM on December 14, 2007. Initial equities in GJCM were PAL 80%, Tong Fa 20%. This has subsequently been adjusted to the current equities of PAL 95%, Tong Fa 5%. As part of its commitment to the Joint Venture, Tong Fa transferred its 80% equity in CHGM to GJCM in July 2008 and ownership of the Na Xin, Ping Mai, Nong Ying, Nan Zhai and Mao Zhai Exploration Licences is progressively being transferred to GJCM. 6.1 Exploration History The formal exploration work conducted on the main block of the Jin Ce project, principally Hua Xin and Wei Pai, to date has been performed by teams belonging to three separate groups. Teams belonging to the Guizhou Provincial Bureau of Geology and Mineral Resources (GzBGMR) undertook early geological mapping and stream sediment geochemical surveys in the area. The latter resulted in the discovery of gold at Wei Pai. On behalf of CHGM, No 5 General Team of the Guizhou Non-Ferrous Metal Geological Exploration Bureau (Gz Non-Ferrous #5) conducted reconnaissance exploration, which included trenching and sampling but no subsurface sampling, and produced a report titled Geological Report on Guizhou Ceheng Weipai Gold Mine Reconnaissance. No 1 team of this same group (Gz Non-Ferrous #1) was commissioned by Tong Fa to further investigate the gold occurrences and to produce a report outlining the mining potential. A team set up in 2007 by GJCM commenced systematic exploration, ranging from regional reconnaissance geology and geochemistry to prospect definition and drilling, early in 2008 and continues with this program. WEC has been provided with a copy of the report produced by Gz Non-Ferrous #1 (Zhang and Luo, 2006) but has not been able to gain access to sampling and assay records from this


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phase of the exploration or reports or any field records from previous phases. A summary chronology of the exploration history is set out in Table 6.1 below.

Table 6.1 Historic Exploration Statistics

Year Company Activity Description Pre 1983 GzBGMR,

Regional Survey Team

Geological mapping 1:200,000 geological and mineral resource survey

1983 to1990 GzBGMR, Geochemical Prospecting Team

Geochemical sampling

Regional stream sediment samples with follow up prospecting of Au, Hg, Sb, As anomalies.

1984 to 1987 GzBGMR, Regional Survey Team

Geological mapping 1:50,000 geological investigation, resulted in discovery of gold at Wei Pai

Geological mapping 4 km2. 2001 to 2002 Gz Non-Ferrous #5

Trench sampling 200 m trenching (80 samples).

Geological mapping 10 km2 2004 Gz Non-Ferrous #5

Trench sampling 400 m (no samples)

Geological mapping 19.3 km2 2006 Gz Non-Ferrous #1

Trench sampling (112 samples)

2008 to Nov 2009

GJCM Soil geochemistry, channel and trench sampling, IP geophysics, diamond drilling

See Section 11 below.

At Wei Pai trench sampling was used to define near surface oxide mineralization trends based on the gold anomalies defined by geochemical sampling. The trenches were hand dug, usually 0.2m to 1 m in depth, and sampled every metre in areas of interest. 6.2 Historic Mineral Resource Estimates In 2006, Tong Fa commissioned an exploration report compiled to standard Chinese requirements but which was not filed with the state and subsequently used only internally. This report contained “reserve” estimates for several deposits on the Hua Xin and Wei Pai tenements. These “reserve” estimate for the prospects Wei Pai #3, #4, #5, #6, #7 and #8 were


26

prepared by Gz Non-Ferrous #1in November, 2007. WEC reviewed the sampling, assaying and estimation methodology used during its February, 2008 site visit. The estimation was performed using a conventional polygonal technique after interpretation, on paper section or plan, of available channel sampling. Estimation is performed at two cut off grades 0.5 g/t and 0.8 g/t. This is a Chinese state-imposed practice of considering 0.8g/t Au as the arbitrary economic cut off grade for this type of oxide ore deposit and 0.5 g/t being the reporting cut off for sub-economic or “intrinsic ore”. Envelopes are hand drawn around contiguous areas of 0.8 g/t mineralization and a surrounding envelope of 0.5 to 0.8g/t material is also drawn where present. There appear to have been none in this particular case. Grade intercepts are calculated for sampled intersection of the orebody by weight averaging all samples within the envelope’s constraints. There being no aditing or drilling, trench sampling provided the only grade intercepts. Surface exposure or interpreted surface extent of the mineral bodes, assumed to be tabular in shape, was interpreted to extend 60m down-dip at the same geometry and grade as at surface. Each of these shapes was considered a separate polygon whose area could be calculated by a simple formula using the measured strike length multiplied by the 60m down-dip extent and whose grade was assigned from the nearest trench or a weighted average, if there were more than one. Areas were converted to volumes by multiplying by grade intercept thickness or the average of thicknesses within the block. Volumes were converted to tonnes using a specific gravity (SG) of 1.8, the average of a number of determinations reportd as being undertaken by an independent test facility. The resulting “reserves” were classified “333” under the Chinese system in use since 2002. A further calculation based on polygons extended a further 60m along strike and 60m down dip for each original polygon, in compliance with Chinese regulations, used the same thicknesses and same block grade as the original to produce a “reserve” classified “334?”. The most recent Chinese system of classification uses 3 figure numbers ranging from 111 to 334 to rank “reserves”. The first figure is an indication of economic viability – 1 means economic, 2 marginally economic, 3 intrinsically economic and a question mark indicates “economics uncertain”. The second figure represents the level to which assessment has been taken – 1 is Feasibility Study, 2 Preliminary Feasibility Study and 3 Sketched Feasibility Study. The third figure indicates “geological” reliability or confidence in the resource with 1 roughly equivalent to Measured Resource of the CIM Definition Standards, 2 Indicated Resource and 3 Inferred Resource. Category 4 has no equivalence to standard Western resource reporting and can best be considered as representing largely conceptual resource. The “reserves” from the Jin Ce properties at a 0.8 g/t Au cut off, as determined by Gz Non-Ferrous #1 and presented in their exploration report, are set out in Tables 6.2 and 6.3 below.


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Table 6.2 Gz Non-Ferrous #1 Grade Estimates for the Jin Ce project

Table 6.3

Gz Non-Ferrous #1 “Resource” Estimates for the Jin Ce project

Resource quantity Orebody No. : Wei Pai

Block No.

Horizontal projected area（㎡）

Orebody dip angle

Real area （㎡）

Orebody thickness （m）

SG

Ore tenor g/t Au

Resource Classific-ation

Ore quantity （t）

Gold quantity （㎏）

3-1 93,23.6 38° 11274 5.50 1.8 1.60 333 111,613 179.70 3 3-2 21,237.3 38° 36131 5.50 1.8 1.61 334? 357,698 575.89 4-1 53,688.9 40° 66363 3.75 1.8 0.87 333 447,950 389.72 4 4-2 68,087.4 40° 84161 3.75 1.8 0.87 334? 568,087 494.24 5-1 5,757.6 41° 7200 2.50 1.8 2.38 333 32,400 77.11 5 5-2 17,272.8 41° 21600 2.50 1.8 2.38 334? 97,198 231.33 6-1 6,514.7 28° 7200 3.68 1.8 0.82 333 47,693 39.11 6 6-2 19,544.2 28° 21600 3.68 1.8 0.82 334? 14,3078 173.23 7-1 17,282.3 38° 20896 4.23 1.8 0.87 333 15,9099 138.42 7 7-2 23,237.8 38° 28096 4.23 1.8 0.87 334? 21,3924 186.11 8-1 55,47.6 44° 7200 5.20 1.8 6.38 333 67,392 429.96 8 8-2 14,706.1 44° 19086 5.20 1.8 6.38 334? 178,645 1139.76

333 866,147 1,254.02 334? 1,558,630 2,800.56 Totals 333 + 334?

2,424,777 4,054.58

WEC has had the opportunity to see plans with the actual polygons on them and has been able to spot check the calculations but was not presented with sample and assay details to enable any checks of intersection thicknesses or average grades. While the interpreted strike length of mineralization classified “333” for most of the “orebodies” was conservative, an

Orebody Name : Wei Pai

Trench No.

Orebody thickness （m）

Grade

g/t Au

Average thickness of orebody （m）

Average grade of orebody g/t Au

3 TC3 5.50 1.60 5.5 1.60

TC32 3.76 0.89

TC2 1.50 1.03 4

TC1 6.00 0.83

3.75 0.87

5 D40 2.50 2.38 2.50 2.38

6 TC4 3.68 0.82 3.68 0.82

TC5 4.60 0.89 7

TC6 3.86 0.85 1.23 0.87

8 BT7 5.20 6.38 5.20 6.38


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800m extrapolation westward from Wei Pai #4 to include an isolated trench has so little geological support as to negate two thirds of the calculated “resource” for this orebody. A further criticism is of the use of the 0.8 g/t Au cut-off grade to the depth of 60m down dip. The presence of sulphides at shallow depths in most of the mine workings should have suggested that ore amenable to heap leach would not be present to such a depth and that the classification of intrinsically economic should not apply to much of the estimated resource. Essentially the “reserves” presented above are likely to fall largely outside the inferred mineral resource category in terms of reasonable prospects for economic extraction, the possible exception being that of Wei Pai #8. However, due to the arbitrary application of certain estimation factors, WEC believes that none these resources should be considered to be compliant with the Canadian Securities Regulators’ National Instrument 43-101 (NI 43-101) or to be consistent with the CIM Standards on Mineral Resources and Reserves. 6.3 Historical Production There are no official records of production for the mining activities that took place between 2002 and 2006. However, verbal reports from the GJCM indicate that the average grade of ore treated was about 2 g/t Au. The shapes of the various heaps have been mapped, at accuracies of +/- 1m, during GJCM’s geological mapping of the mine areas allowing rough estimates to be made of the tonnes of leached ore in each heap. Multiplying these by the suggested average grade gives an “order of magnitude” estimate of 150 kg Au total production.


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7.0 GEOLOGICAL SETTING 7.1 Regional Geology

The western portion of the Qinling Fold Belt and the Golden Triangle area are two well known mineral provinces for sediment-hosted gold deposits (Figure 7.1). The Golden Triangle area, also known as Dian-Qian-Gui (straddling Yunnan-Guizhou-Guangxi Provinces), has been widely reported in the literature as a type locality for Carlin-Type or Carlin-Like gold deposits in China (e.g., Peters et al, 2002 and numerous Chinese publications). This is in contrast to the Qinling Fold Belt whose sediment-hosted gold deposits exhibits a wider range of mineralisation characteristics, and more importantly, metallurgical properties.

Figure 7.1

Location of Sedimentary Rock-Hosted Gold Deposits in China (from Peters et al, 2002).

The rocks which comprise the Golden Triangle are a Cambrian through to Triassic sedimentary succession deposited within the Youjian basin (Figure 7.2). This depression is developed on the south western margin of the Yangtze Craton through crustal extension and rifting at the end of the Caledonian tectonic cycle. Thick sequences of carbonate and clastic rocks were deposited, with carbonates dominating early in the basin cycle and grading into clastic sediment-dominated sequence. Deposition of marine clastic sediments began in the south east and its locus migrated north-west through time. This trend resulted in the greatest development of marine clastic sediments in middle Triassic times, then a gradual change to continental dominated sedimentation and basin closure by the Early Jurassic.

Throughout the basin development there was simple architecture of western shelf and eastern deeper water with the shelf margin oriented NNE-SSW and passing through the now


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Laizishan Dome area, just to the west of Ceheng. This gave rise to a shelf facies succession, dominantly carbonates but including silts and channel sands, a transitional facies along the shelf margin with reefal limestones, bioclastics, breccias and calcareous rudites, and a basin facies of mainly turbidite-deposited clastic sediments and calc-arenites, and deeper water argillites and micritic carbonates.

Figure 7.2 Geologic Features of the Golden Triangle (Dian-Qian-Gui) Area, China

Compressional tectonics of the Indosinian-Yanshanian movements (220-67Ma) gave rise to E-W folding and N-S folding producing the elongate domes so characteristic of the region (Figure 7.2) and to thrusting to both the north-west and south-west.

Magmatism is restricted to mid-Permian E’meishan tholeiitic volcanic extensively developed in the western part of Guizhou near the Sichuan border, diabase sills and dykes related to the same stage of rifting and sub-alkaline ultramafic rocks intruded into Permian to mid-Triassic rocks.

The diabase occurs widely in western Guizhou and south-easterly through central Guangxi but has little expression in south-western Guizhou. A related basaltic tuffaceous layers (Dachang Layer) is also present in parts of the shelf but is not recognized in the deeper water sediments. The ultramafic rocks occur as isolated small intrusive bodies that show regional linear distribution that coincides with what is believed to be deep-seated structures. Two principal ultramafic linears, one EW-trending and one NS-trending intersect near the northern tip of the Laizhishan Dome, therefore the greatest density in these ultramafic bodies in the


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Zhenfeng-Wangmo area. These deep-seated structures are believed to be a favourable factor in the formation of gold deposits.

A thin glassy tuff horizon, deposited at the top of the Lower Triassic, has widespread distribution through the Golden Triangle. It represents an excellent time stratigraphic marker.

Metamorphism is low greenschist facies and the rocks in general show very few effects. Slaty cleavage can occasionally be recognized.

Several hundred gold mines or showings all with Carlin-like characteristics are scattered throughout the Golden triangle (Figure 7.2). Most deposits are on fault structures; a few stratabound or in ancient karst settings. Of the fault hosts, north-west to north-south structures are most commonly mineralized followed by those oriented north-east.

Four deposits are reported to contain over 1Moz (30t) gold. Lannigou (Jinfeng) with its 5.3Moz resource is the largest. The others, Zimudang and Shuiyindong 50-60km north-west of Jinfeng and Yata 50km south, are all in south-western Guizhou province.

7.2. Local Geology

In discussions on local geology and exploration activities, the main focus is on Wei Pai (including Huaxin ML), Nong Ying, Na Xin and Ping Mai ELs, henceforth referred to as the Central Tenements.

The dominant geological feature of the project area is the Laizhishan Anticline which lies 20km west of Wei Pai. This north-south domal structure exposes Carboniferous limestones in its core. These are conformably overlain by the Lower Permian cherty limestone, bedded limestone and bioclastic limestone and locally, a basaltic tuffaceous layer. Late Permian limestone and reefal limestone follow and then Lower Triassic units of argillite, limestone and dolomite.

In the western limb of the anticline the Permian limestones are overlain by Triassic shelf carbonate sequences including argillite, limestone and dolomite. In contrast, the Triassic sediments to the east, north and south of the Laizhishan Anticline are a thick sequence of calcareous flysch and turbidite clastic sediments formed in the deeper water part of the Youjiang Basin. Lower Triassic carbonates and local conglomerates near the dome, are capped by tuff interbeds. These Lower Triassic units are overlain by the Mid-Triassic clastic sediment sequence which occupies the Wei Pai, Nong Yin and Na Xin EL’s and probably the Ping Mai EL (Figure 7.3).

Lowest of this Mid-Triassic sequence is the Xuman Formation made up of 4 members, only the upper 3 of which are exposed east of the dome. Xuman Fm Member 2, T2xm2, claystone with siltstone interbeds, and Xuman Fm Member 3, T2mx3, micritic bioclastic limestone and marl, are mapped in the eastern end of the Nong Ying and Naxin ELs on the hanging wall side of a major north-south thrust fault (Banchang Fault) and may well occupy much of the unmapped Ping Mai EL to the south-east. Xuman Fm Member 4 is further subdivided into 2 units – T2xm4a, a lower, dominantly claystone unit, and T2xm4b, dominated by a thick-bedded


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sandstone. As T2xm4b is only approximately 30m thick in the Central Tenement area, no distinction is made between the Xuman Fm Member 4 units in Figure 7.3.

Conformably overlying the Xuman Fm is a thin (±40m), thin-bedded claystone, minor sandstone and muddy micrite unit, the Nilou Formation. The nodular calcareous beds form a good marker horizon. The uppermost Mid-Triassic is the Bianyang Formation, a thick unit of dominantly sandstone and siltstone.

The structure of the Central Tenement area is dominated by two zones of thrust faulting. One, running through Na Xin and the eastern end of Nong Ying and passing through within 1km east of the north-east corner of Wei Pai, is the Banchang Fault (Figure 7.3). The Banchang Fault trends generally NNW, dips shallowly-moderately to the east, and is recognised as a regional thrust, where Xuman Fm 4 overlies the stratigraphically higher Bianyang Fm rocks.

The other zone has a NNW to NW strike and passes through Hua Xin and the western part of the Wei Pai EL. It consists of a set of shallowly to steeply dipping, NW-striking smaller thrust faults distributed along the boundary between Bianyang and Xuman Fms, and also within the latter (Figure 7.3), the most prominent one is named the Guofan Fault (10-15m wide locally). The western boundary of this thrust zone is likely defined by a prominent structure that pass through the south-west corner of Nong Ying to the south-west boundary of Hua Xin ML then continues in the north-west direction. (The main evidence for its existence comes from aerial photo interpretation).

A prominent set of EW- and NE- trending structures are also recognised, particularly on aerial photos in the Wei Pai EL and locally from IP geophysics data (Wei Pai #4-6) and mapped mineralised structures of this orientation at Wei Pai #8. There is also widespread occurrence of north-south oriented structures, including two faults at Na Xin that seem to control Sb and Au mineralisation in the area. However, these structures appear to be late and postdate structures of other orientations.

Folding locally near the thrust zones can be tight, is commonly overturned or recumbent but is small scaled. Elsewhere, the rocks are folded into broad, open synclines and anticlines oriented east-west to north-east and plunging shallowly mostly to the east or north-east.

No igneous rocks have been recognised in the Central Tenement Area.

A number of prospects and deposits occur within the Central Tenements. Extensive oxide mining (6 main pits) occurred between 2002 and 2006 in Hua Xin ML and Wei Pai EL. Weipai #4-7 pits occur in Xuman Fm rocks (Weipai #3 in Bianyang), and are located within the above mentioned western structural corridor. Weipai #8 and Au and Sb occurrences at Na Xin are hosted in Bianyang Fm close to the Banchang Fault. Jin Ce’s channel samples in these pits revealed predominantly low-grade oxide mineralisation in the order of 0.5-2 g/t Au, with locally higher grade samples in Weipai #6 and Weipai #8. The host rock lithology and structural setting of these deposits/occurrences are comparable to that of the Lannigou deposit 8 km to the north-west of the Central Tenement area.


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Figure 7.3 Geological Map of the Central Tenement Area (1:50,000).


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8.0 DEPOSIT TYPES

Gold mineralization in the Golden Triangle shows many features in common with gold deposits of the Carlin and Battle Mountain-Eureka Trends and a number of smaller mining districts in eastern Nevada and extending into Utah. The characteristics of these Carlin-like Class of gold deposits, drawn from Li and Peters, 1998, Peters et al, 2002, Hofstra and Cline, 2000, and others, are:

• Ultra-fine gold principally within disseminated grains of arsenical pyrite or within overgrowths of arsenical pyrite on older (commonly diagenetic) pyrite.

• Ores refractory except where weathering has released the gold into oxidised host rocks.

• Associated orpiment and/or realgar and lesser stibnite and cinnabar deposited after the gold and mainly in vugs and veins. Their occurrence ranges from proximal to distal with stibnite and cinnabar more likely to be distal.

• Associated fault structures which have acted as ore fluid conduits and deposition sites for some to all of the ore.

• Alteration consisting of

o Decarbonatisation best seen affecting calcareous siltstones and arenites where porosity so created allows penetration of ore fluids into the sedimentary units and pore spaces become sites for deposition of ore pyrite.

o Silicification as pervasive silicification (known as jasperoid in Nevada) best developed in limestone, to a lesser extent in calcareous shale, siltstone and arenite. Occurs proximal to the ore on structures and distal as stratabound bodies.

o Argillic alteration (kaolinite, illite and smectite) affecting ferromagnesian minerals of host intrusives, feldspars in these rocks and arenites and to a lesser extent clay matrix to the finer clastic rocks.

• Gold deposits, which can be very large, occupying sites which range between end points of hosts structurally prepared through faulting and brecciation and structurally undisturbed (decarbonated) sedimentary hosts.

Research has shown the ore fluids to be acid, of low salinity and to be H2S rich. Gold is considered to have been carried as HS complexes and deposited through sulphidation. Temperature of deposition was in the range 220OC – 180OC. Reactive iron present in the host rock (eg Fe oxide in the sedimentary rocks) or released by alteration (eg argillic alteration of ferromagnesian minerals) facilitates sulphidation to produce the ore bearing pyrite. Source of the gold and, to a lesser extent, the H2S is still subject to conjecture with the relative contribution of gold from basin fluids and from the mantle still debated. Most researchers settle on thermochemical reduction of sulphates in basin sediments as the principal source of H2S. Carbon seen in many of the deposits is considered as derived from migrating petroleum. It does not seem to have been involved in the deposition of gold.


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In the Golden Triangle where intrusive rocks are generally absent except for diabase sills in the west, the most common settings for Carlin-like gold deposits are in fault structures or in calcareous siltstones or arenites units adjacent to these faults. Older, deeply penetrating structures and their splay faults, both with a history of rejuvenation and enhanced fracturing, represent the best structural targets. Intersection of these with the calcareous members within the (mostly mid-Triassic) clastic sedimentary sequence are the mostly likely sites of gold deposition extending away from structure into the host rocks. The presence of reactive iron on the host rocks is important but is often difficult to detect. Diagenetic pyrite can be useful in providing active surfaces on which arsenical pyrite can deposit.

Gold mineralization, although exhibiting strong structure control, occurs dominantly in two stratigraphic horizons, i.e., the Upper Permian shale-siltstone±tuff±limestone in the central and western region of the Golden Triangle; and Middle Triassic turbidites±limestone in the Laizishan Dome area. The former is represented by Shuiyindong, Nibao, and Zimudang deposits, and Lannigou is the best example of the latter.

The two best examples of Carlin-like deposits near the Jin Ce Central Tenement area are Shuiyindong deposit operated by Zijin Mining and the Lannigou deposit (Jinfeng mine) by Sino Gold Mining (now Eldorado Gold Corporation). The combined resource of the two deposits is in excess of 8 Moz. The Shuiyindong deposits consists of numerous stratabound ore lenses hosted in impure (basaltic material) Late Permian carbonates, whereas the Lannigou deposit is mainly controlled by north-west and north-east trending fault zones. The refractory nature of the two deposits is reflected in the processing methodology employed by the two operations, i.e., pressure oxidation and patented Biox technology for Shuiyindong and Lannigou, respectively.

These features, the presence of gold as geochemical indicator and the arsenic, antimony and mercury halo around the deposits constitute the main components of the Exploration Model being used by GJCM.


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9.0 MINERALIZATION

Although gold mineralisation in the Central Tenements falls into the broad classification of Carlin-like deposits, there is considerable variation in their structural control, host rock lithology and even metal association. The most significant deposits are Weipai #8 (Wei Pai EL), Weipai #3 (Hua Xin ML), Weipai #6 (under GJCM application) and Weipai #7 (Hua Xin ML). These four deposits, and particularly the last two, saw most of the oxide mining activities in the past. Oxide mining was also attempted at Weipai #4 (under GJCM application), and Weipai #5. These pits are quite small and were unsuccessful according to personal communication with local residents. Weipai #1, #2 and #9 (Wei Pai EL), Gaoshan and NX #2 (Na Xin EL) are showings/prospects based on either or a combination of trenching and soil geochemical result. Table 9.1 provides a brief description on the nature of these deposits/prospects.

The deposits/prospects in the Central Tenement area exhibit a strong structural control, with considerable variation in the nature of these controlling structures. Both Weipai #8 and Gaoshan/NX #2 are located in Bianyang Fm in the footwall and at a distance of less than a kilometre to the Banchang Fault. Gold mineralisation at Weipai#8 is hosted by a EW-trending (and on the intersection with a east-north-east) structure, whereas Gaoshan and NX#2 are controlled by NS- and NNW- trending structures, respectively. In the Hua Xin area, deposits/prospects occur in a range of stratigraphic horizons, with Weipai #7 and #6 being the lowest in T2xm4a, Weipai #5 and #4 higher up in T2xm4a and in places T2xm4b, and Weipai #3 hosted entirely in Bianyang Fm. North-north-west trending, steeply to moderately east-dipping faults are the main control of mineralisation at Weipai #7 and #6. At Weipai #5 (including the Weipai #5 Gully) and Weipai #4, mineralisation seems to be controlled by NW- to EW-trending intraformational faults. Hinge zones of mesoscopic folds have also been identified as favourable sites of localised high-grade mineralisation in this area. The dominant structure at Weipai #3 is a series of EW-trending faults that pass through the hinge zone of an EW-trending anticline.

Other features that are recognised as favourable for localising gold mineralisation include: the presence of abundant diagenetic pyrite such as observed in the Weipai #6 pit and the occurrence of abundant orpiment and realgar.


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Table 9.1 Central Tenement Area Deposit/Occurrence Summary

Deposit Strike Length

Dip Width Comments

Weipai #8 60 m Steeply S 10m on surface, 1.4-3.5m at depth

Open below 150m depth

Weipai #7 160 m Shallow-moderate NE

1-6m in oxide zone

Controlled by Steep-moderate ENE-dipping structure and sub-vertical EW structure; significant oxide mining

Weipai #6 200 m Shallow NE 2-10m in oxide zone

Likely controlled by shallow ENE-dipping structure and moderate E-dipping structure; significant oxide mining

Weipai #5 40 m Moderate N 1m Limited oxide mining; open to E; depth extension unknown

Weipai #4 50 m Moderate NE 1-2m in upper pit Limited oxide mining; open at depth

Weipai #3 130 m Sub vertical 1-6m in oxide zone

Controlled by EW-trending structure; moderate oxide mining

Gaoshan 35 m Moderate NE 1m Soil anomaly and channel sample up to 0.36g/t Au

NX#2 Unknown Moderate E 1m Channel sample up to 2.36g/t Au

Figures 9.1 through to 9.7 show the mapped geology and GJCM’s sampling result of all deposits/occurrences listed in Table 9.1 at 1:1000 scale. Details on the deposit scale mapping, trench/channeling and drilling are discussed in the exploration and drilling sections of this report. It should be noted that the trench/channel sample result shown in these figures represent ‘significant intersections’ of Au, As, Sb and Hg, rather than sample by sample assay results. The significant intersections correspond to those tabulated in Table 10.3. Summarizing the results in this way is necessary to 1) highlight key intersections that are used to define mineralization, and 2) un-clutter these figures for readability.


38

Figure 9.1 Geology and Sampling Result of Weipai #8 (1:1000)


39



40



41



42



43



44

Figure 9.7 Geology and Sampling Result of Gaoshan and NX #2 (1:1000)


45

10.0 EXPLORATION

10.1 Pre-GJCM Exploration

Pre-GJCM exploration has been discussed in detail in section 6.0. Discussion here will therefore concentrate on GJCM exploration activities.

10.2 GJCM Exploration

From January 2008 to the time of this report, GJCM has conducted systematic exploration in the Central Tenement area with a two pronged approach: 1) application of a range of standard exploration techniques over the known mineralisation to better define the surface extent and the likely sub-surface orientation and extent, and 2) grass root exploration aimed at discovering potential zones of mineralisation on which to focus more detailed exploration. The planning and implementation of exploration were to be to western specifications, and, at the same time, comply with minimum Chinese standards and regulation.

The range of techniques used at the prospects were: • Geological mapping seeking extent of mineralization and gold grade, relationship of

mineralization to structure, rock types and alteration and an overall better understanding or the nature of the mineralization and its controls district wide.

• Ridge and spur (R&S) soil geochemistry to better define the extent and orientation of the mineralization at surface.

• Trenching across the projected strike of the mineralization indicated from mapping and/or geochemistry.

• IP Geophysics to provide further constraints in defining drilling targets.

• Diamond core drilling to define the nature and geometry of mineralization at depth, and test for its continuity.

For the regional reconnaissance work, the techniques employed were: • R&S soil geochemical sampling confined to the main ridges and spurs with the aim of

getting an indication of the presence of mineralized structures where they cross these features.

• Geological reconnaissance and rock sampling (grab samples) in association with the R&S sampling with an emphasis in locating potentially mineralized fault structures, alteration or mineralization which outcrops at or near the ridge tops

• Follow up mapping and sampling depending on the nature of the geochemical anomaly or results of rock sampling.

Table 10.2 summarises main exploration activities, not in chronological order, that have been carried out by GJCM during this period.

Table 10.2 Exploration Work Completed by GJCM


46

Exploration Work Location Period Unit Total Completed Airphoto Interpretation

Wei Pai EL and parts of Na Xin EL

June-July09 km2 100 (77+33)

Traverse Mapping (400m spacing)

Wei Pai EL Jan-March09 km2 line-km

18.00 36.40

Regional Mapping (1:10,000)

Wei Pai, Nong Ying and Na Xin ELs

Feb-June08 km2 48.80

Prospect Mapping (1:1000 scale)

Weipai #3, 4, 5, 6, 7 and 8

Feb-June08 Oct-Nov09

km2 0.55

Soil Sampling Ba Da, Mao Zhai & Central Tenements

Jan08-Sept09 Samples 8424

Channel/Trenching Wei Pai EL, Hua Xin ML & Na Xin EL

Feb09-Nov09 Samples 3026

Grab Sampling Various Jan08-Sept09 Samples 405 Pole-Dipole IP Survey

Wei pai #4-6 & Weipai #8

April-May08 May-June09

Line-km 25.30 (12.5+12.8)

Drilling Weipai #4-6 & Weipai #8

Sept08-Jan09 March09-May09 Aug-Dec09 (in progress)

Holes (m) 11(1675.80) 8(1548.57) 5(1286.97) Total 24(4511.34)

10.2.1 Central Tenements Aerial Photo Interpretation

This work was carried out in Guiyang over a two week period by Mr Cheng Guofan, an experienced GJCM geologist. Initial technical supervision and training was provided by Brian Williams. The work was conducted on black and white aerial photos of approximately 1:15,000 scale, and covers the entire Wei Pai EL and key parts of Nong Ying and Na Xin ELs.

Key results of this work include:

• The verification of position of the Banchang Fault and many of the regional faults and linears that have formed part of Figure 7.3.

• The identification of a series curved east-west and north-east trending linears in pre-oxide mining Hua Xin area.

• The identification of the prominent north-west trending structure that probably defines the western boundary of Hua Xin mineralisation.

• A prominent set of north-south structures that need further ground verification.

10.2.2 Mapping

Geological mapping has been undertaken at various scales. The 6 mined prospects, Wei Pai #3, #4, #5, #6, #7 and #8, were geologically mapped at 1:1000 scale to gain information on which to base interpretation of the nature and controls of the mineralization. Mapping at


47

scales of 1:10,000 down to about 1:2000 locally were used to produce geological maps of the previously unmapped Nong Ying and Na Xin EL’s, to upgrade Wei Pai 1:10,000 scale map and to aid interpretation of structure and mineralization controls at prospect level. The 1:10,000 mapping was initially conducted by contract geologists in the first half of 2008, and the result has been much improved by GJCM’s subsequent exploration activities. The Ping Mai EL has yet to be mapped.

Traverse mapping was conducted along north-east oriented traverses for the eastern half of the Wei Pai EL.

10.2.3 Regional Soil Ridge and Spur Sampling Program Geochemical sampling consisted of R&S soil sampling and analysis for Au, As, Sb and Hg. Two areas, Hua Xin and the western half of Na Xin, were sampled on a detailed pattern, the remainder on a ridge and more widely spaced spur pattern (Figures 10.1a and b). Some infill sampling to detailed level was undertaken in Wei Pai EL around prospects Wei Pai #8 and Wei Pai #9.

Only a brief discussion on the result of the R&S soil geochemical sampling is afforded due to the scope of this report. Of significance is the number and widespread distribution of Au, Au-As, Sb and Hg soil geochemical anomalies and the relationship being revealed between some of these and zones of faulting. It is also worth noting that apart from those associated with known mineral occurrences, many of the geochemical targets have been poorly examined in the field to date or not examined at all.

There is a strong correlation between Au and As anomalism with known mineral occurrences. The most intense parts of the Au and As anomalies lie in the Hua Xin area (Figure 10.1a), and the next significant anomaly, but much reduced in areal extent and intensity, occurs at Weipai#8. There are strong but less extensive Sb and Hg anomalies coincident with the intense part of the Hua Xin Au anomaly. In arsenic and in the weakly anomalous gold values, there appears to be a definite east-west trend extending 3km west of Hua Xin. There has been no trenching and sampling of this feature as yet.

Although showing weak Au anomaly, the Na Xin area is characterised by strong Sb anomaly (Figure 10.1b) and localised Hg and As anomalies. Stibnite occurs in near commercial quantities locally in the area, which warranted attempts at Sb mining in the past. This area has a similar geological/structural setting to the Weipai #8 deposit (closer to the Banchang Fault), the Au mineralisation potential is considered high based on the highest Au value of 2.36 g/t from NX#2.

There are a number of less intense, relatively isolated geochemical targets in Central Tenement area, the most significant of these are those occurring in the immediate footwall of the Banchang Fault, particularly in the south-west corner of the Ping Mai EL (Figure 10.1b). Due to the demand on resource by the drilling programs, GJCM has only briefly examined a few of the regional geochemical targets and leaving most un-checked.


48

Figure 10. 1a Ridge and Spur Soil Geochem Result for Weipai-Nongying EL (1:50,000)


49

Figure 10.1b Ridge and Spur Soil Geochem Result for Nongying-Naxin-Pingmai EL (1:50,000)


50

10.2.4 Channel Sampling and Trenching

Channel sampling was principally associated with the prospect mapping aimed at understanding the tenor and control of mineralisation in the surface pits, but extended to mineralisation and structure exposed in road cuttings (e.g., Na Xin area). Trenching was mostly used in the Hua Xin and Weipai #8 area to constrain the extent of surface mineralisation in the vicinity of known mineralisation.

Table 10.3 lists all significant intersections from GJCM’s channel and trench samples, and these were plotted in Figures 9.1-7. In picking significant intersections, the data was analysed in four passes:

1. Gold intersections with values greater than 0.5 g/t are first composited to produce a set of average grade for Au, As, Sb and Hg, being weighted average using sample length. This gives rise to Au intersections that were labelled in capital letters, A, B, C… along each channel in Table 10.3.

2. Arsenic, Antimony and Mercury intersections are calculated in a similar fashion, and using cut off values of 1500 ppm, 180 ppm and 24 ppm, respectively. The rationale for highlighting As, Sb and Hg intersections is that these elements provide important constraints on structure (As), alteration (As, Sb and Hg), and metal association. These are labelled sequentially 1, 2, 3… for each element along each channel.

3. Au intersections may partially overlap other intersections and other intersections may partially overlap Au or each other but where a Au intersection coincides with another intersection, it is labelled a Au intersection.

4. A maximum internal dilution width of 1m is allowed for these calculations.

In addition to significant intersections occurring in the known prospects that are discussed in detail in the following section, there are a number of other results worth noting.

• In an area 870m north-west of Weipai #3 pit, intervals averaging 3m @ 0.66 g/t Au and 2m @ 0.34 g/t Au were obtained from trenches TCWP3T13 and 18. These two intersections occur 22m apart along a north-west trending structure in Xuman4 Member about 200m west of the interpreted Niluo Fm contact.

• Between Weipai #5 and Weipai #4 trench TCWP3T17 contains 7m @ 0.27g/t Au and 2139ppm As (including 1m @ 0.62g/t Au). This location is Xuman4b, immediately below the Niluo Fm contact.

• Weipai #1 and #2 occur along a NW-trending ridge 1.6km due west of Weipai#3. This area is characterised by moderate anomalous Au, As and Hg values. Trenching in this area produced no significant Au intersections but there were 3 narrow (0.8-1.5m) intersections with highly elevated As values (KCWP1C02, 04 and 05).

• At the Antimony adit near Pingwai Village in Na Xin, sampling along a north-west trending structure gave extremely anomalous values of Sb in the range of 726-7495ppm (KCNX1C40, 40-1, 40-2 and 40-3; Table 10.3). The Au values in these samples, however, are negligible. This pattern was repeated in the Antimony adit in


51

the south on the south-west corner of the Na Xin EL (KCNX2C01, 02, 04, 06, 07 and KCNX1C45-1, 45A-1 and 45A-2). Moderate Sb anomalism is also shown by chip sampling of the strongly silicified north-south trending structure 170m west of the Naxin Village (KCNX1C02 and 03).


52

Table 10.3 Summary of Significant Trench/Channel Samples

Colour Key: [email protected]: intersection defined by Au cut off 0.5g/t 5m@1500: intersection defined by As cut off 1500ppm 4m@180: intersection defined by Sb cut off 180ppm

6m@24: intersection defined by Hg cut off 24ppm

Hole_ID Inter-section

m From

m To m Width av Au (g/t)

av As (ppm)

av Sb (ppm)

av Hg (ppm)

Weipai#8 Area Channel/Trench Result

KCWP8C01 A 0.00 8.00 8.00 2.63 2254 18.24 22.60

KCWP8C02 A 3.00 4.00 1.00 0.69 1650 11.70 10.41

KCWP8C03 A 0.00 3.00 3.00 7.19 4287 6.90 7.62

A 1.00 7.00 6.00 6.39 4048 9.15 8.01

1As 1.00 18.00 17.00 2.58 3702 12.19 19.35

B 13.00 14.00 1.00 1.83 5980 19.30 16.48

C 16.00 20.00 4.00 0.66 1575 15.80 65.86

KCWP8C04

1Hg 20.00 22.00 2.00 0.33 570 7.05 95.37

1Hg 5.00 7.00 2.00 0.48 1059 14.24 216.00 KCWP8C05

A 6.00 7.00 1.00 0.76 1330 16.28 137.00

1Hg 0.00 7.00 7.00 0.39 623 11.38 42.76

A 1.00 2.00 1.00 0.69 346 19.89 130.00 KCWP8C06

B 7.00 8.00 1.00 0.81 636 6.72 22.80

KCWP8C07 1Hg 3.00 7.00 4.00 0.11 532 5.50 38.13

KCWP8C08 1As 0.00 6.00 6.00 0.09 2608 9.59 15.33

1As 0.00 12.00 12.00 0.07 5200 14.07 3.48 KCWP8C09

2As 16.00 18.00 2.00 0.07 2730 13.22 4.41

1As 5.00 6.00 1.00 0.00 1860 8.40 1.59

2As 9.00 10.00 1.00 0.07 1780 8.40 1.35 KCWP8C11

3As 13.00 16.00 3.00 0.04 1860 13.53 2.15

KCWP8C12 1As 1.00 10.00 9.00 0.07 2575 8.22 0.83

1As 114.00 122.00 8.00 0.07 1788 14.05 2.48

2As 131.00 137.00 6.00 0.03 1712 12.72 1.88 TCWP8T02

3As 142.00 143.00 1.00 0.07 1980 7.72 0.68

1As 3.00 4.00 1.00 0.08 1690 10.86 1.38 TCWP8T03

2As 9.00 15.00 6.00 0.05 4192 22.72 4.77 Weipai#7 Area Channel/Trench Result

KCWP7C01 A 0.00 6.00 6.00 1.16 715 38.52 3.48

KCWP7C01-1 A 0.00 1.00 1.00 0.54 600 18.98 2.86

KCWP7C02 A 0.00 3.00 3.00 1.41 999 22.43 2.83

KCWP7C03 A 1.00 2.00 1.00 2.34 1490 16.80 2.35

KCWP7C03-1 A 0.00 2.00 2.00 1.13 804 21.89 2.37


53


m From


av As (ppm)

av Sb (ppm)

av Hg (ppm)

KCWP7C04 A 0.00 7.00 7.00 0.88 826 19.24 3.72

1As 12.00 13.00 1.00 0.15 1760 3.40 0.64

2As 15.00 19.00 4.00 0.09 1788 3.28 0.87 KCWP7C05

A 21.00 22.00 1.00 0.53 2050 6.30 1.62

KCWP7C06 1Hg 1.00 2.00 1.00 0.35 257 9.40 26.60

1As 0.00 1.00 1.00 0.07 1680 4.49 0.46 KCWP7C07

A 3.00 4.00 1.00 0.50 2040 6.01 1.43

KCWP7C08 A 0.00 1.00 1.00 1.64 550 6.30 2.37

KCWP7C10 1As 10.00 11.00 1.00 0.10 1950 2.50 0.38

1As 2.00 3.00 1.00 0.26 2260 4.70 0.45 KCWP7C11

A 4.00 5.00 1.00 0.88 1100 7.30 0.55

KCWP7C15 1As 8.00 9.00 1.00 0.07 1590 8.60 0.75

1As 0.00 9.00 9.00 0.32 1866 10.63 2.53 KCWP7C17

A 2.00 3.00 1.00 0.77 1750 13.90 4.37

A 1.00 4.00 3.00 0.98 946 11.23 2.37 KCWP7C18

1As 10.00 11.00 1.00 0.38 2010 10.40 0.82

KCWP7C20 1As 0.00 1.00 1.00 0.10 3270 9.90 0.79

KCWP7C22 A 0.00 1.00 1.00 0.72 838 9.30 1.44

KCWP7C25 A 0.00 3.00 3.00 2.16 1537 8.10 1.17

1As 2.00 7.00 5.00 0.03 2296 6.25 0.48 KCWP7C25-1

2As 9.00 23.00 14.00 0.08 2012 7.16 0.57

TCWP9T07 1Sb 0.00 8.00 8.00 0.04 670 361.13 0.27 Weipai#6 Area Channel/Trench Result

KCWP6C04 A 1.00 6.00 5.00 1.04 631 6.08 9.33

KCWP6C05 1As 1.00 2.00 1.00 0.03 1580 1.90 1.46

1As 5.00 6.00 1.00 0.07 1840 5.10 1.03

2As 11.00 12.00 1.00 0.23 1640 7.50 5.30

3As 18.00 22.00 4.00 0.07 8788 154.73 6.34

1Hg 37.00 38.00 1.00 0.09 1060 42.80 34.13

4As 40.00 45.00 5.00 3.29 6774 70.64 9.21

KCWP6C06

A 41.00 45.00 4.00 4.03 7945 81.55 9.69

KCWP6C07 A 0.00 2.00 2.00 1.58 16700 225.50 25.31

KCWP6C08 A 0.00 1.00 1.00 4.66 7780 210.00 17.71

KCWP6C10 1As 1.00 2.00 1.00 0.07 2520 4.30 1.75

KCWP6C15 1Hg 0.00 1.00 1.00 0.14 1070 10.70 25.45

KCWP6C15 1As 1.00 2.00 1.00 0.12 4590 15.30 13.01

KCWP6C20 1As 8.00 10.00 2.00 0.05 1975 3.86 0.69

1As 5.00 10.00 5.00 1.81 3196 39.81 9.95 KCWP6C25

A 6.00 10.00 4.00 2.22 3578 44.03 11.20


54


m From


av As (ppm)

av Sb (ppm)

av Hg (ppm)

A 1.00 3.00 2.00 0.79 997 9.17 6.66 KCWP6C26

1As 3.00 5.00 2.00 0.12 2568 2.59 1.51

KCWP6C28 A 1.00 2.00 1.00 2.07 737 7.04 4.22

KCWP6C30 1As 1.50 3.50 2.00 0.16 2795 15.05 18.80

1As 1.50 3.00 1.50 0.11 1860 23.32 3.61 KCWP6C32

A 6.00 8.50 2.50 0.90 1310 8.50 15.14

KCWP6C33 A 3.00 4.50 1.50 1.55 426 13.49 3.63

KCWP6C34 1As 1.50 3.00 1.50 0.09 1600 2.59 2.03

KCWP6C35 A 0.00 1.00 1.00 0.80 309 16.86 11.80

KCWP6C36 1As 0.00 4.00 4.00 0.13 7828 14.07 3.58

1As 0.00 6.00 6.00 0.10 3108 9.67 2.20

A 10.00 12.00 2.00 0.66 0 0.00 0.00

B 15.00 16.00 1.00 1.97 0 0.00 0.00 KCWP6C37

C 20.00 23.00 3.00 0.91

1As 7.00 30.00 23.00 0.41 13806 62.19 10.25

A 19.00 22.00 3.00 1.21 13532 57.43 7.52

B 25.00 30.00 5.00 0.66 23238 135.04 16.78 KCWP6C38

1Hg 31.00 33.00 2.00 0.16 483 7.54 26.50

KCWP6C39 A 0.00 3.00 3.00 1.03

KCWP6C40 A 2.00 3.00 1.00 1.16 0 0.00 0.00

KCWP6C43 A 0.00 2.00 1.00 0.87 0 0.00 0.00


KCWP5C01 1As 0.00 1.00 1.00 0.07 1880 1.80 1.43 1As 1.00 2.00 1.00 0.04 1590 1.20 0.80

KCWP5C02 A 8.00 10.00 2.00 0.62 1345 3.10 1.57 A 0.00 1.00 1.00 0.72 3500 2.80 3.08

KCWP5C03 1As 0.00 4.00 4.00 0.28 3210 1.88 2.38 A 5.00 1.00 1.00 0.89 689 2.90 1.61

KCWP5C04 1As 7.00 8.00 1.00 0.04 1790 2.40 0.99

KCWP5C06 1As 3.00 5.00 2.00 0.05 1595 2.15 0.55

KCWP5C09 A 1.00 3.00 2.00 1.60 1572 4.35 2.09

KCWP5C10 A 1.00 6.00 5.00 4.17 2846 4.46 0.94

A 0.00 5.00 5.00 2.43 2782 7.62 5.77

1As 0.00 9.00 9.00 1.56 2288 6.02 4.43 KCWP5C14

B 8.00 9.00 1.00 0.73 1630 3.54 4.40

KCWP5C15 1As 1.00 2.00 1.00 0.42 1610 3.67 0.34

KCWP5C17 A 5.00 7.00 2.00 0.89 2240 4.48 0.69

1As 1.00 3.00 2.00 0.97 2230 9.82 4.96 KCWP5C19

A 2.00 3.00 1.00 1.76 2420 15.85 7.63


55


m From


av As (ppm)

av Sb (ppm)

av Hg (ppm)

KCWP5C20 1As 0.00 2.00 2.00 0.20 2590 6.81 5.62

KCWP5C32 A 0.00 2.00 1.00 0.94 2510 4.39 3.34

KCWP5C34 A 1.00 3.10 2.10 4.35 2959 7.37 7.13

KCWP5C49 1As 0.00 1.50 1.50 0.23 1620 2.39 0.92

1As 0.00 4.00 4.00 0.68 7170 2.34 2.81 KCWP5C50

A 1.50 2.50 1.00 1.83 13500 3.54 5.42

KCWP5C52 A 0.00 0.80 0.80 1.26 1990 6.00 4.79

1As 27.00 28.00 1.00 0.05 1870 2.56 0.67

2As 31.00 38.00 7.00 0.18 1907 4.50 2.01

A 33.00 34.00 1.00 0.56 2010 5.64 4.03

3As 40.00 46.00 6.00 1.06 2535 7.02 6.04

B 42.00 43.00 1.00 2.97 4230 8.30 5.63

TCWP5T04

C 45.00 46.00 1.00 2.81 2350 18.28 15.33

1As 0.00 3.00 3.00 0.29 3417 4.53 3.17

2As 21.00 22.00 1.00 0.14 1910 4.01 0.55 TCWP5T05

3As 42.00 43.00 1.00 0.06 2540 2.31 1.11


KCWP4C03 1As 0.00 8.00 8.00 0.06 3036 6.73 9.04

KCWP4C04 1As 0.00 3.00 3.00 0.06 2863 13.63 5.30

KCWP4C05 1As 0.00 1.00 1.00 0.06 1950 20.60 5.71

KCWP4C06 1As 0.00 3.00 3.00 0.04 3987 9.80 2.86

KCWP4C07 1As 0.00 3.00 3.00 0.05 3150 8.93 4.84

KCWP4C08 A 7.00 8.00 1.00 1.05 959 9.03 2.48

KCWP4C09 A 2.00 4.00 2.00 1.45 1130 7.48 1.80

KCWP4C09 1As 5.00 6.00 1.00 0.05 1800 6.57 0.56

KCWP4C11 A 6.00 8.00 2.00 0.93 594 7.45 3.26

KCWP4C12 1As 7.00 8.00 1.00 0.05 1840 4.46 3.44

KCWP4C13 1As 1.00 2.00 1.00 0.05 3070 7.23 1.22

TCWP4T12 1As 6.00 11.00 5.00 0.10 3148 3.55 0.52

1As 0.00 19.00 19.00 0.25 9535 39.94 13.19

A 9.00 10.00 1.00 0.84 9050 36.50 13.92 TCWP4T13

B 16.00 17.00 1.00 0.55 7490 47.00 18.46

1As 1.00 2.00 1.00 0.44 2130 7.23 9.56

A 5.00 6.00 1.00 0.68 1620 3.76 7.31 TCWP4T14

B 14.00 16.00 2.00 1.69 1220 5.56 8.12

A 3.00 4.00 1.00 0.50 5660 9.36 10.10

1As 3.00 11.00 8.00 0.32 5029 8.29 7.87

B 7.00 8.00 1.00 0.62 8060 7.81 9.82

TCWP4T15

2As 14.00 20.00 6.00 0.25 3348 52.33 4.15


56


m From


av As (ppm)

av Sb (ppm)

av Hg (ppm)

C 16.00 17.00 1.00 0.73 5670 20.35 4.70


KCWP3C03 A 1.00 3.00 1.00 0.68 394 1.80 1.66

KCWP3C07 A 0.00 4.00 4.00 1.26 467 1.38 2.20

KCWP3C14 A 3.00 4.00 1.00 1.10 745 0.90 2.13

KCWP3C15 A 0.00 2.00 2.00 2.39 1087 1.60 4.99

A 46.00 51.00 5.00 1.50 391 1.84 1.21 TCWP3T02

1As 52.00 53.00 1.00 0.17 1530 1.03 1.47

1As 12.00 13.00 1.00 0.13 1600 1.28 1.42

2As 36.00 37.00 1.00 0.08 1640 1.57 2.13 TCWP3T07

A 40.00 41.00 1.00 0.55 1470 3.41 2.74

TCWP3T07-1 1As 5.00 12.00 7.00 0.08 2383 1.36 0.72

1As 6.00 7.00 1.00 0.17 2240 1.65 1.13

A 26.00 28.00 2.00 0.77 726 1.68 2.79

2As 33.00 37.00 4.00 0.74 1683 3.11 5.25

B 35.00 42.00 7.00 1.24 1584 3.22 8.38

3As 39.00 41.00 2.00 0.51 1910 2.79 8.80

3As 43.00 51.00 8.00 0.11 2585 2.27 7.41

TCWP3T10

C 55.00 56.00 1.00 0.57 1230 2.34 7.73

TCWP3T10-1 A 1.00 4.00 3.00 0.95 1302 4.63 4.69

A 17.00 18.00 1.00 0.60 318 1.20 1.39 TCWP3T11

B 21.00 23.00 2.00 1.48 774 2.05 2.26

TCWP3T12 1As 8.00 9.00 1.00 0.08 1790 1.20 0.25

1As 35.70 41.90 6.20 0.47 2332 2.35 8.36 TCWP3T13

A 38.90 41.90 3.00 0.66 2447 2.22 9.16

1As 8.00 15.00 7.00 0.27 2139 7.78 5.18 TCWP3T17

A 12.00 13.00 1.00 0.62 2120 7.60 14.10

TCWP3T18 1As 4.00 6.00 2.00 0.34 1816 2.06 7.01


KCWP1C02 1As 0.00 1.00 1.00 0.07 1610 0.92 1.14

KCWP1C04 1As 0.00 1.50 1.50 0.28 2255 1.64 0.51

KCWP1C05 1As 0.00 0.80 0.80 0.34 2370 2.03 0.80

Naxin Area Channel/Trench Result

KCNX1C02 1Sb 0.00 4.00 4.00 0.02 26 268.50 0.12

KCNX1C03 1Sb 2.00 6.00 4.00 0.04 91 337.00 2.64

KCNX1C12 1As 3.00 1.00 1.00 0.19 4330 31.10 0.22 1As 0.00 9.00 9.00 0.17 5101 48.37 0.41

KCNX1C23 A 2.00 3.00 1.00 0.57 6010 45.60 0.52

KCNX1C24 1As 0.00 6.00 6.00 0.25 4748 36.53 0.35


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m From


av As (ppm)

av Sb (ppm)

av Hg (ppm)

1As 0.00 3.00 3.00 0.78 2735 11.97 0.37 KCNX1C25

A 2.00 3.00 1.00 2.36 4420 10.75 0.68

KCNX1C35 1Sb 6.00 8.00 2.00 0.06 88 191.00 0.11

KCNX1C39 1Sb 0.00 2.00 2.00 0.08 154 234.00 0.18

KCNX1C40 1Sb 1.00 2.00 1.00 0.06 32 726.00 0.15

KCNX1C40-1 1Sb 0.00 1.00 1.00 0.06 17 3302.00 0.23

KCNX1C40-2 1Sb 0.00 1.00 1.00 0.05 10 4500.00 0.35

KCNX1C40-3 1Sb 0.00 1.00 1.00 0.07 12 7495.00 0.40

KCNX1C41 1Sb 0.00 1.00 1.00 0.08 30 709.00 0.44

KCNX1C42 1Sb 0.00 4.00 4.00 0.08 13 439.50 0.18

KCNX1C45-1 1Sb 0.00 1.00 1.00 0.06 18 1010.00 0.22

KCNX1C45A-1 1Sb 0.00 1.00 1.00 0.03 16 1615.00 0.21

KCNX1C45A-2 1Sb 0.00 1.00 1.00 0.04 28 1490.00 0.28

KCNX1C48 1As 0.00 2.00 2.00 0.16 1638 349.00 1.23

KCNX2C01 1Sb 0.00 6.00 6.00 0.05 30 1256.67 0.19

KCNX2C02 1Sb 0.00 4.00 4.00 0.05 46 1715.75 0.44

KCNX2C04 1Sb 0.00 1.00 1.00 0.05 22 1180.00 0.23

KCNX2C06 1Sb 0.00 1.00 1.00 0.05 20 498.00 0.20

KCNX2C07 1As 0.00 3.00 3.00 0.21 3473 40.93 0.30

KCNXC54 1As 0.00 1.00 1.00 0.20 4600 7.83 0.29

KCNXC55 1As 0.00 2.00 2.00 0.30 3250 6.62 0.67

KCNXC56 1As 0.00 2.00 2.00 0.14 2530 7.41 0.58

KCNYC02 1As 1.00 2.00 1.00 0.03 1660 13.80 0.21

1Sb 0.00 4.00 4.00 0.10 574 504.30 0.16 TCNXGST01

1As 14.00 17.00 3.00 0.14 4293 20.97 1.57

1Sb 4.00 5.00 1.00 0.02 90 215.00 0.17

2Sb 10.00 11.00 1.00 0.05 194 623.00 0.24

3Sb 15.00 21.00 6.00 0.07 120 655.50 0.16

4Sb 23.00 24.00 1.00 0.05 204 346.00 0.21

1As 28.00 31.00 3.00 0.49 3830 354.33 2.36

TCNXGST02

1Sb 30.00 34.00 4.00 0.08 1693 505.75 0.83

10.2.5 Grab Sampling

Grab rock samples taken during soil geochemical sampling and traverse mapping generally returned poor responses on Au mineralisation. Of 405 grab samples taken during the GJCM program, only 3 contain Au values above 0.2g/t (Table 10.4). There are also no significant samples based on the As, Sb and Hg cut offs used in Table 10.3.


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Table 10.4 Summary of Significant Grab Samples

SampleID Location Eastings Northings Au g/t As ppm Sb ppm Hg ppm

JC0000010 270m NW of Weipai #7

18589505 2771478 0.38 469 1.7 0.25

JC0001942 Weipai #4 18590351 2771985 0.91 3160 34.8 3.85

JC0004173 26m E of KCNX1C01

18599118 2764841 0.25 44.2 49.2 0.2

10.2.6 Pole-Dipole IP Survey

Two programs of IP geophysics (April-May 2008 and May-June2009) were conducted over the Weipai #3-#9 and Weipai #8 areas, with the first program containing 13,800m arrays for a total line km of 12.5, and the second program consisting of infilling and expansion of the first. Both IP programs were contracted to the Baoding Institute of Geophysics, a well known geophysical contractor in China.

An initial 3D model on the first IP program and a final 3D model for the combined 2008-2009 programs were prepared by Terry Ritchie of GRS Pty Ltd in Brisbane. Figures 10.2 and 3 show the 2D chargeability and resistivity sections produced by Baoding for the combined programs. Two lines of IP produced as part of the first program over Weipai #3 have not been included in Figure 10.3, and were also not included in the 3D model.

The 3D modelling result shows much improvement on the 2D sections. In the Weipai #8 area, the 3D resistivity model is largely in agreement with, and gives much insight into the extension at depth, of the mapped surface geology. In Weipai #4-9 3D model, a prominent chargeability anomaly lies below and along the ridge between Weipai Village and Weipai #3 pit, which has been the focus for the latest phase of GJCM’s drilling.

The 3D modelled result, as well as the 2D result from the Baoding contractor, shows a series of chargeability anomalies that have been tested by drilling with mixed results in terms of location of Au mineralization. In the Weipai #4-9 area, all of the anomalies were adequately explained by the presence of disseminated diagenetic pyrite intersected in the drill holes although the small quantities of hydrothermal pyrite locally present would have made a contribution. At Weipai #8, the IP did reflect the known mineralization but of real disappointment is the failure of a 3 hole programme to explain the pronounced chargeability anomaly to the west of the Weipai #8 mineralisation. Through discussion with the IP contractor, the most likely explanation is that this anomaly is caused by low levels of disseminated pyrite in the Bianyang lithology. However, this explanation is poorly supported by GJCM’s drill hole logging. The other explanation, which the IP contractor refuses to acknowledge, is that the anomaly is false and maybe inherent to the IP configuration used.


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Figure 10.2 Stacked 2D IP Survey Profiles of Weipai#8 Area


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Figure 10.3 Stacked 2D IP Survey Profiles of Weipai#4-9 Area


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10.3 Surface Exploration Result and Discussion

Geological mapping of the small open pit mine at Weipai #8 (Figure 9.1) revealed complex, small-scale folding associated with thrusting but sampling within the eastern pits gave no significant gold assays. Systematic sampling of semi-oxidised material in a small western pit showed significant Au values of 8m @ 2.63 Au (KCWP8C01), 3m @ 7.19g/t Au (KCWP8C03), 6m @ 6.39g/t (KCWP8C04) (for more detail refer to Table10.3), with elevated As values. Strike and dip of this mineralisation is difficult to ascertain from pit mapping, therefore the interpreted mineralised zones are based more on channel sample result. The main lode strikes east-west, with the eastern extension of the western pit mineralisation supported by significant As intersections in channel KCWP8C08. A smaller shoot, showing a more north-east strike between the western pit and KCWP805 is indicated from mapping. This structure seems to continue through to KCWP8C11 that shows elevated As and poor Au values. A strong NNE-trending structure seems to cut off the main Weipai#8 lode at the western wall of the western pit. This mapped structure is further supported by a structure of similar orientation from aerial photo interpretation and 3D IP result. The western extension of the Weipai #8 lode is therefore uncertain. TCWP8T03, TCWP8T02 and TCWP8T09 all intersected wide zones of elevated As. But the matching of this structure with the main Weipai #8 structure remains problematic. To the east in Wai Mu village under construction, reconnaissance mapping and sampling located two east-west mineralized zones, the southern one near the bridge over the Beipan River appearing likely to be an extension of the Weipai #8 lode. To date, there has been no trenching in the intervening 300m. Subsequent detailed mapping within the village has revealed tight folding and further east-west faulting up to 150m into the foot wall of the lode.

Significant amount of oxide material has been taken from Weipai #7 (Figure 9.2). The mineralisation here seems to be controlled by two dominant structures. One is EW-trending and sub-vertically dipping that runs through KCWPC25 and KCWP7C11, which recorded 3m @ 2.16g/t Au and 1m @ 0.8g/t Au, respectively. The other is NS- to NW-trending that started as a steeply E-dipping structure in the east, but become shallowly dipping and conformable with the topography to the west and north-west. The best mineralisation in the pit seems to be confined to where the two sets of structures intersect. In the SE corner, significant material has been mined from a circular deep pit where these two structures met. The best channel result occurs between KCWP7C01 and KCWP7C04, where Au values above 1g/t over several metres were consistently obtained (Figure 9.2). The NS-trending structure may join up with KCWP7C18 in the northern tip of the Weipai #7 pit. It is likely that there may exist two main EW-trending structures and a series of NS- to NNW-trending structures, the intersections of which gave rise to better grade mineralisation. This pit needs further mapping and structural interpretation before the main controls on mineralisation can be comprehensively established.

Weipai #6 pit occurs in the gap between the Hua Xin ML and the Weipai EL, which is under GJCM application. This pit saw the most oxide mining amongst all the surface pits in the Hua Xin area. GJCM has conducted extensive channel sampling with this pit and defined several zones of oxide and primary mineralisation. The best area of mineralisation occurs in the


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eastern pit between KCWP6C35 and 33 (Figure 9.3), where channels along and across a shallow E-dipping structure gave 4m @ 4.06g/t Au (KCWP6C06) and 4m @ 2.22g/t Au (KCWP6C25). The structure is sinuous and exposed for 60m along the pit wall. The western end contains 1.50m @ 1.55g/t Au (KCWP6C33). This structure seem to run into semi-oxidised and fresh pyrite-bearing siltstone in the western end where 1m @ 4.66g/t Au, 2m @ 1.55g/t Au and 1m @ 0.8g/t Au were obtained by channels KCWP6C08, 07 and 35, respectively. A zone of oxide mineralisation of >5m in width and reaching possibly 70-80m in length is defined in the western pit (from KCWP6C27 to KCWP6C43). Below this, fresh dark grey pyritic siltstone contains abundant orpiment and realgar in the form of stockwork veins. However, these rocks returned no gold mineralisation from KCWP6C36, 37 and 38, which is in contrast to rocks of similar nature (less As minerals) 50-80m SW of this locality where KCWP6C39 and 40 give 3m @ 1.03 g/t Au and 1m @ 1.16g/t Au. Relatively moderate mineralisation is also found in fresh rocks in the northern pit where two NS-trending faults with local strong silicification are poorly mineralised. A moderately E-dipping and NS-trending structure well exposed in the east of the Weipai #6 pit contains 5m @ 1.04 Au and 2.5m @ 0.9g/t Au. Elsewhere in the Weipai #6 pit, GJCM’s channel samples returned poor result on Au mineralisation, which is surprising especially for samples taken from the central pit (Figure 9.3). All the mapping and sampling evidence seems to indicate that mineralisation at Weipai #6 pit is controlled by both shallow and moderate E-dipping, NS-trending structures. Although the siltstone underlies much of the surface pit, these rocks probably only show grade when they are cut by the NS-trending faults.

Mineralisation at Weipai #5 pit and along Weipai #5 Gully is shown by Figure 9.4, which is a result of the most recent re-interpretation. Although the Weipai #5 pit itself is modest, the Wei Pai #5 Gully contains some significant Au assays such as 5m @ 4.17g/t Au (including 1m @ 15g/t)in KCWP5C10, 5m @ 2.43g/t Au (KCWP5C14) and 2.1m @ 4.35g/t Au (KCWP5C34). With a number of highest grade Au values obtained in the Hua Xin area, the Wei Pai #5 Gully has drawn much attention and been almost continuously channel sampled. It is believed in the past that mineralisation along this gully is controlled by a fault structure that runs at the same orientation. However, drilling for the continuation of this mineralisation has been disappointing to date, and the recent continuous mapping along this gully has revealed only moderate structures along the gully. The newest interpretation of the Weipai #5 Gully area is that mineralisation maybe controlled by both stratigraphy and structure, occurs in the form of several sub-parallel stacked lenses (Figure 9.4). Supporting evidence to this interpretation includes:

• Mineralisation in the Weipai#5 pit consists of two bedding parallel EW- to NEE-trending lenses.

• The most logical explanation of Au and As assay pattern in TCWP5T04 and 05 is a EW-trending structure as shown by Figure 9.4.

• The trace of the structure that was sampled by KCWP5C10 is plotted by constructing structural contours.

• Three layers of thin Au mineralisation within a broad EW-trending structure zone can be matched with a high degree of confidence.


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• The most significant soil geochemical samples seems to form a distinctive EW-trending zone and coincides with aerial photo interpreted linears of the same orientation and the Au mineralisation from Weipai #5 to Wei Pai #5 Gully then to the upper pit of Weipai #4.

The new interpretation sheds light on the potential geometry of key mineralised areas in Hua Xin, which probably require more drill testing. The space between Weipai #4 and Weipai #5 is adequate for hosting a significant NW- to EW-trending mineralised system.

Weipai #4 consists of two oxide pits, the main lower one along the access gravel road to the Weipai Village, and an upper small one 150m due north of the main one (Figure 9.5). All the channel samples in the main pit show consistently high As, but poor Au values. This is in contrast with the elevated Au but moderate As result obtained from the upper pit (1m @ 1.05g/t Au and 959ppm As from KCWP4C08 and 2m @ 1.45g/t Au and 1130ppm As from KCWP4C09). The upper pit is located at the intersection of the NNW-trending Guofan Fault and a NWW-trending structure (and the Niluo Fm lithology) that seems to host the mineralisation. This structureis conformable with the newly interpreted EW mineralisation corridor mentioned above. Two structural trends, NE and NW occur in the main pit, the former has expressions in aerial photos, and the latter parallels Guofan Fault and the contact between Bianyang and Xuman Fms. The contrasting styles of mineralisation between the two Weipai #4 pits further support the existence of an EW- to EWW-trending mineralisation pattern.

Detailed mapping in the Weipai #3 pit clearly demonstrates that the mineralised structure(s) are EW-trending and sub-vertically dipping. Channel sampling gave a best intersection of 4m @ 1.26g/t Au and 467ppm As on the main structure, but most other channels returned negative result (Figure 9.6). Subsequent drilling (WP3ZKS501 and 502) seem to indicate that the tenor of mineralisation at shallow depth is limited. Of more encouragement is perhaps the result of trenches TCWP3T10 and 10-1 that contains several zones of mineralisation including 2m @ 0.77g/t Au, 7m @ 1.24g/t Au, and 3m @ 0.95g/t Au. This may mean a new EW- to NWW-trending mineralisation horizon extending towards weak Au and As mineralisation shown in TCWP3T07 (Figure 9.6).

Figure 9.7 shows mineralisation at the Gaoshan and NX#2 prospects in the Na Xin EL, with the insert showing the location of the two prospects. Based on the location of pre-GJCM trenching and aditing in the area, GJCM has sampled two trenches and one channel. The result indicates that Au mineralisation is controlled by a NS-trending structure, with 3m @ 4293ppm As from TCNXGST01 and 3m @ 0.49g/t Au, 3830ppm As and 354ppm Sb from TCNXGST02. TCNXGST02 is also characterised by multiple Sb intersections (Table 10.3). More exploration is necessary to map out a more detailed pattern of mineralisation, for example, the As intersection from KCNX1C48 could mean a NW-trending structure or one parallel to the Goashan structure (Figure 9.7). The NX#2 prospect, discovered through GJCM’s exploration during 2009, shows enough encouragement for further exploration in the area (Figure 9.7). Mapping along the road cut at KCNX1C24 that contains 6m @ 4748ppm As shows a NE-trending structure that turns abruptly to the north-west along KCNX1C23 to KCNX1C56, with 9m @ 5101ppm As (including 1m @ 0.57g/t Au and


64

6010ppm As) and 2m @ 2530ppm As, respectively. The most significant Au value (3m @ 0.78g/t Au and 4748ppm As, including 1m @ 2.36g/t Au and 4420ppm As), however, lies several metres west of the NW-trending structure in pyritic siltstone (Figure 9.7). A number of other channels in the NX#2 area shows poor result.


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11.0 DRILLING

The only drilling done in the Central Tenement area has been conducted by GJCM. All has been in the Weipai#8 and Weipai#3-6 areas in three phases as tabulated in Table 10.2, i.e., from September 2008 to January 09, March-May 2009 and Agust-December 2009. Contractor for the first and second phase was Gz Non-Ferrous #1 and third phase, Yuandong Brothers. At the time of this report, GJCM has completed a total of 26 holes with 2 holes still in progress but expected to complete in December 2009. The decision on further drilling will be made upon the analysis of all drilling result and the compilation of a 2009 exploration report.

Assessment of the quality of the drilling was through safety inspection following drill set-up at each site, daily visits by GJCM personnel to drill sites, logging of drill core and the recording of progress and core recovery from driller’s daily reports.

All drill core was logged by GJCM staff following a set of written procedures that included the following aspects:

• Standard Chinese geological log to with Regulations/ regulatory reporting

• Geotechnical log that contains core recovery for confidence in sampling and drill contractor performance, RQD for geotechnical engineering assessment

• Strength log for geotechnical engineering assessment

• Discontinuities log for geotechnical engineering assessment

• Density log for resource evaluation /geotechnical engineering assessment

• Lithology log for geological interpretation/resource evaluation

• Structure log for geological interpretation/resource evaluation

• Alteration log for geological interpretation/exploration

• Mineralization log for geological interpretation/exploration/resource evaluation

• Veining log for geological interpretation/exploration

Sampling and assaying are described in Section 12 and 13.11.1

11.1 GJCM Drilling-Weipai #8

Fifteen holes have been designed and 14 completed in the Weipai #8 locality (Table 11.1), with their collar locations and survey trace shown in plan view in Figure 11.1.

The first phase of drilling consists of WP8ZKS001, 201, 202, 203 and 1201 (5 holes). WP8ZKS1201 targeted a prominent western IP chargeability anomaly west of the Weipai #8 pits, and the rest tested the outcropping mineralisation as defined by GJCM’s surface sampling and mapping. The second phase of drilling consists of 7 holes WP8ZKS002, 204, 205, 101, 102, 501, 502 designed to test the down-dip and eastern extension of the known mineralisation based on phase 1 result. After further IP geophysics and 3D modelling of results and traverse and outcrop mapping, three further holes were designed to further test the western IP chargeability anomaly (WP8ZKS801 and 1401), and to explore the possibility of


66

the existence of a parallel shoot south of the Weipai #8 mineralisation (WP8ZKS003). A total of 14 holes have been completed, and WP8ZKS003 is in progress at the date when this report is being prepared.

Talbe 11.1 Collar Table for Weipai #8 Drilling

Hole_ID East North RL Azimuth Dip EOH Drilling Contractor

End Date

WP8ZKS001 18595666 2774222 505 340 -70 81.06 NFGB 27/12/2008 WP8ZKS002 18595682 2774181 493 340 -70 179.28 NFGB 6/4/2009 WP8ZKS003 18595745 2773994 609 340 -70 275 Yuandong In progress WP8ZKS101 18595716 2774211 475 340 -70 165.00 NFGB 10/4/2009 WP8ZKS102 18595723 2774189 459 340 -80 246.29 NFGB 1/5/2009 WP8ZKS201 18595599 2774233 540 340 -70 76.74 NFGB 14/10/2008 WP8ZKS202 18595625 2774214 532 340 -70 72.44 NFGB 29/10/2008 WP8ZKS203 18595634 2774191 532 340 -70 115.75 NFGB 16/12/2008 WP8ZKS204 18595655 2774144 526 340 -70 205.66 NFGB 7/4/2009 WP8ZKS205 18595665 2774106 513 340 -75 274.10 NFGB 24/4/2009 WP8ZKS501 18595783 2774255 447 0 -90 109.90 NFGB 10/5/2009 WP8ZKS502 18595806 2774193 485 340 -75 243.00 NFGB 14/5/2009 WP8ZKS801 18595489 2774235 547 160 -80 206.26 Yuandong 27/10/2009 WP8ZKS1201 18595441 2774150 582 340 -70 258.10 NFGB 14/12/2008 WP8ZKS1401 18595359 2774243 515 160 -70 242.64 Yuandong 2/10/2009


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Figure 11.1 Drill Collars and grid of Weipai #8 Drilling


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Table 11.2 below tabulates all significant result from the Weipai#8 drilling. The same methodology was used to select significant drill hole intersections as that used for channel and trench samples, discussed in detail in Section 10.2.3. This also applies to Table 11.2 for the Weipai #4-6 drilling.

As the GJCM’s drilling program is still in progress and a systematic analysis of all the drilling result is being undertaken, only a summary of the drilling result is afforded here. The 3 holes drilled to test the consistent and significant western IP chargeability anomaly all returned poor result, and this anomaly remain largely unexplained, as no appreciable increase in disseminated pyrite has been observed in the core. There is no justification to further testing of this anomaly without additional compelling evidence.

It is adequate to generalise that phase 1 drilling at Weipai #8 over the main lode produced extremely encouraging results, pointing towards a S-dipping, E-plunging shoot of economic width and grade. Phase 2 drilling has been somewhat disappointing in limiting the size of this mineralised system to small to moderate. Although still in progress and waiting for assay result, visual inspection of WP8ZKS003 core suggests thst it is unlikely to have intersected significant mineralisation therefore diminishing the chance of a parallel lode to the main Wei Pai #8 lode. This said, there is probably a good chance of defining new valid drilling target after a review of all exploration results become available.


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Table 11.2 Significant Results from Weipai#8 Drilling Colour Key: [email protected]: intersection defined by Au cut off 0.5g/t Including 2m@2: intersection defined by Au cut off 2g/t 7m@1500: intersection defined by As cut off 1500ppm 3m@180: intersection defined by Sb cut off 180ppm 2m@24: intersection defined by Hg cut off 24ppm

Hole_ID Intersection m From m To m Length av Au (g/t)

av As (ppm)

av Sb (ppm)

av Hg (ppm)

1As 33.94 34.94 1.00 0.09 2220 3.74 2.56 2As 40.94 55.94 15.00 1.48 3507 12.03 19.01 A 44.94 45.94 1.00 0.86 1520 20.10 50.50

1Hg 45.94 46.94 1.00 0.10 1130 10.90 48.30 B 47.94 48.94 1.00 2.68 4140 9.21 12.60 C 51.94 55.94 4.00 4.41 6238 7.00 11.87

WP8ZKS001

C includes 51.94 54.94 3.00 5.44 7803 7.60 13.43 1As 6.70 8.70 2.00 0.05 1795 3.78 0.82 2As 36.70 43.70 7.00 0.09 2346 5.02 1.42 3As 51.70 55.70 4.00 0.13 1593 4.96 1.00 A 111.70 121.70 10.00 1.24 1756 8.49 11.96

WP8ZKS002

A includes 112.70 113.70 1.00 4.38 6260 9.90 13.20 A 72.81 85.81 13.00 3.49 1190 7.59 7.63 A includes 76.81 85.81 9.00 4.73 1435 8.21 8.41 1Hg 89.81 92.81 3.00 0.18 306 11.01 43.81 2Hg 95.81 96.81 1.00 0.16 376 15.10 33.00 B 108.81 109.81 1.00 0.50 819 7.05 13.70 C 113.81 116.81 3.00 C includes 114.81 115.81 1.00 2.08 638 6.18 15.30

3Hg 116.81 119.81 3.00 0.18 322 4.81 46.30 D 120.81 121.81 1.00 2 674.00 7.29 12.4

1As 125.81 127.81 2.00 0.07 2035 5.53 5.24 2As 132.81 135.81 3.00 0.67 1832 7.44 4.70

WP8ZKS101

E 134.81 135.81 1.00 1.87 1960 14.05 7.42 1As 72.00 73.00 1.00 0.05 2150 2.96 1.15 2As 131.00 135.00 4.00 0.12 2350 12.78 9.90 1Hg 135.00 136.00 1.00 0.33 1020 11.50 40.40 2Hg 138.00 139.00 1.00 0.18 416 12.90 24.60 A 140.00 144.00 4.00 1.89 990 9.15 8.79 A includes 140.00 142.00 2.00 2.38 1244 11.69 10.19 3As 154.00 155.00 1.00 0.35 1857 7.95 6.83 4As 181.00 182.00 1.00 0.13 1840 8.15 3.28 B 185.00 191.00 6.00 2.37 1632 8.19 8.83 B includes 188.00 190.00 2.00 4.56 2096 8.22 3.88 5As 191.00 194.00 3.00 0.08 2007 7.29 2.23 C 195.00 196.00 1.00 1.55 1314 5.45 2.06

WP8ZKS102

D 200.00 202.00 2.00 0.88 1085 5.21 2.17


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av As (ppm)

av Sb (ppm)

av Hg (ppm)

6As 210.00 214.00 4.00 0.03 2865 5.32 6.43 3Hg 220.00 221.00 1.00 0.05 631 4.01 28.10

7As 221.00 225.00 4.00 0.05 3958 7.50 6.86 1As 59.45 65.45 6.00 0.07 2143 11.62 1.87 2As 74.45 80.45 6.00 0.08 2278 7.53 2.80 WP8ZKS1201

3As 86.45 87.45 1.00 0.08 1600 4.63 1.81 1As 40.47 43.47 3.00 1.30 3543 19.67 28.23 A 41.47 43.47 2.00 1.85 4010 23.45 36.55 A includes 42.47 43.47 1.00 2.32 2440 35.00 55.20 B 48.47 53.47 5.00 1.62 4410 11.32 6.84 B includes 51.47 52.47 1.00 3.23 8280 12.00 7.30

WP8ZKS202

2As 49.47 54.47 5.00 1.55 4802 12.81 7.37 1As 74.58 77.58 3.00 1.62 3867 6.45 6.18 A 75.58 83.58 8.00 1.53 2585 5.07 5.45 A includes 76.58 77.58 1.00 3.39 4770 7.74 8.64 A includes 80.58 81.58 1.00 2.03 2170 5.58 6.27

WP8ZKS203

2As 80.58 84.58 4.00 1.48 2845 6.34 6.26 1As 60.66 65.66 5.00 0.06 1994 4.41 0.73 2As 98.92 101.92 3.00 0.10 2087 4.60 0.94 A 148.16 149.16 1.00 0.64 854 11.40 7.47

WP8ZKS204

1Sb 156.16 157.16 1.00 0.04 270 1530.00 1.26 A 147.94 148.94 1.00 0.77 2030 28.10 7.04

WP8ZKS205 1As 150.94 151.94 1.00 0.05 2470 9.20 0.98 1As 141.00 142.00 1.00 0.07 1675 9.06 11.40 2As 194.00 207.00 13.00 1.23 2530 9.51 4.04 A 196.00 204.00 8.00 1.95 2795 12.13 4.95 A includes 198.00 202.00 4.00 3.39 3035 15.34 5.74

WP8ZKS502

B 241.00 242.00 1.00 2.11 236 1.41 1.27

11.2 GJCM Drilling-Hua Xin

Two holes have been drilled at Weipai #3 and nine (1 still in progress) in the Weipai #4-6 area (Table 11.3). Drilling at Weipai #3 was targeted at the depth extension of the mineralization in the surface pit, and revealed comparable result to the channel sampling in the pit, and no detailed discussion is warranted in this report.

Figure 11.2 shows collar and down hole survey trace of drill holes conducted in the Hua Xin area. Phase 1 drilling at Hua Xin, consisting of 4 holes (WP4-6ZKS001, 601, 2001 and 2401), targeted 1) the strong IP chargeability anomaly in the Weipai #4 and #6 areas to check the likelihood that it resulted from the presence of diagenetic pyrite (and the remote possibility that the pyrite could be auriferous) but also to test interpreted fault structures for indications of gold mineralization, and 2) the depth potential of significant channel sample


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result from Wei Pai #5 Gully. WP4-6ZKS1801 was drilled during phase 2 to further test mineralisation under the Wei Pai 5 Gully. After the completion of additional geophysical survey, phase 3 drilling consisting of 4 holes (WP4-6ZKS301, 002, 1401 and 3201), was designed to test the strong IP chargeability anomaly lying under the ridge between the Weipai Village and Weipai #3 pit, as well as mapped surface structures in this area.

Talbe 11.3 Collar Table for Weipai#4-6 Drilling

Hole_ID East North RL Azimuth Dip EOH Drilling Contractor End Date

WP4-6ZKS001 18590316 2771715 402 230 -70 160.48 NFGB 23/11/2008 WP4-6ZKS002 18590570 2771927 512 230 -80 210.25 Yuandong 30/9/2008 WP4-6ZKS301 18590566 2771813 470 0 -90 226.46 Yuandong 13/9/2009 WP4-6ZKS601 18590506 2772029 535 230 -80 270.16 NFGB 18/10/2008 WP4-6ZKS1401 18590406 2772150 575 230 -80 401.36 Yuandong 27/10/2009 WP4-6ZKS1801 18590076 2771984 429 230 -70 125.34 NFGB 14/5/2009 WP4-6ZKS2001 18590132 2772082 503 230 -70 279.60 NFGB 4/1/2009 WP4-6ZKS2401 18590073 2772130 535 230 -68 189.66 NFGB 13/11/2008 WP4-6ZKS3201 18590170 2772420 680 230 -70 260.00 Yuandong In progress WP3ZKS501 18590000 2772505 791 0 -70 54.06 NFGB 16/12/2008 WP3ZKS502 18590000 2772505 791 0 -85 117.75 NFGB 8/1/2009


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Figure 11.2 Drill Collars and grid of Weipai #4-6 Drilling


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Table 11.4 summarises significant intersections of drilling in the Hua Xin area. Again only a brief summary is afford in this report as data review is in progress.

WP4-6ZKS001 was designed to test depth extension of mineralisation in Weipai #6 pit, and intersected 4 zones of Au mineralisation (Table 11.4), the width and grade of which are comparable to channel samples obtained from the pit. This hole may have just missed the zone of mineralisation in the western pit of Weipai #6, so the test here in inclusive.

The 3 holes drilled to test Wei Pai 5 Gully mineralisation returned mixed result. While the best intersection comes from WP4-6ZKS2401 of 1m @ 6.02g/t Au that can be correlated with channel samples in the gully, and there are two additional 3m intersections with Au just over 1g/t (ZKS2401 and 2001), numerous other intersection have only slightly elevated Au and highly variable As values. It has also been noted from logging that the hinge zones of mesoscopic folds tend to be the locus of better Au grade, a feature that has also been noted during mapping excise in the gully.

Perhaps the most surprising result of GJCM’s drilling is the discovery of Permian bioclastic limestone at depth from WP4-6ZKS301 and 002. This implies the existence of a concealed carbonate dome beneath Hua Xin area, which provides a very favourable geological setting for the formation of significant mineralisation, as the contact between the Permian carbonates and Triassic clastic rocks hosts several deposits in the district (e.g., Banqi). However, it is a little disappointing that both holes returned no significant Au assay, despite the distribution of coarse stibnite blades in the carbonates close to the contact.

WP4-6ZKS1401 contains the best Au mineralisation of GJCM’s drilling to date, with numerous significant Au and As intersections outlined (Table 11.4), the best being 2m @ 4.44g/t Au. Of more significance in the result, however, is the presence of wide low-grade zones of Au and very wide zones of strong As levels. In addition, logging of WP4-6ZKS3201 (in progress) reveals a comparable style of mineralisation.

The presence of a Permian bioclastic carbonate dome and the potential of its brecciated margin for hosting significant Au mineralisation will definitely warrant more diamond drilling in the Hua Xin area. There is also strong evidence, i.e., from geochemical pattern, channel-trenching in the Wei Pai 5 Gully area, and the latest drilling result of WP4-6ZKS1401 and 3201, to support the existence of a broad EW-trending mineralisation corridor that extends from Weipai #5 to Weipai #4 (upper pit) and beyond. This will also demand further drilling, based on revised structural and mineralisation interpretation.


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Table 11.4 Significant Results from Weipai#4-6 Drilling


av As (ppm)

av Sb (ppm)

av Hg (ppm)

A 39.23 40.23 1.00 0.55 134 1.47 1.35 WP3ZKS501

B 43.23 44.23 1.00 0.94 788 5.18 8.55 A 48.11 49.11 1.00 1.02 519 2.22 3.84

WP3ZKS502 B 109.11 110.11 1.00 0.76 2020 1.09 2.38 1As 17.69 23.69 6.00 1.00 3530 41.78 8.25 A 19.69 23.69 4.00 1.44 3978 29.20 8.88 A includes 21.69 22.69 1.00 2.06 2950 25.30 6.63 B 30.69 33.69 3.00 0.73 786 3.27 3.94 C 80.69 84.69 4.00 1.70 740 6.94 8.14 C includes 80.69 81.69 1.00 2.10 1080 8.25 11.30

WP4

-6ZK

S001

D 83.69 84.69 1.00 2.32 577 7.00 8.06

1As 157.87 158.87 1.00 0.05 1660 1.06 0.39 2As 161.87 166.87 5.00 0.14 1557 4.31 2.60 WP4-6ZKS002

3As 168.87 170.87 2.00 0.29 2810 6.43 4.69 A 50.45 53.45 3.00 1.96 1057 10.30 2.29 A includes 51.45 53.45 2.00 2.43 976 9.65 1.97 1As 93.45 96.45 3.00 0.06 3055 14.18 0.71 2As 103.45 104.45 1.00 0.06 2010 34.96 0.90 3As 111.45 112.45 1.00 0.08 1520 10.22 0.60 1Sb 120.45 121.45 1.00 0.07 54 285.50 0.31 4As 122.45 125.45 3.00 0.14 3005 20.94 1.21 5As 127.45 128.45 1.00 0.05 2450 22.66 0.76 B 142.45 143.45 1.00 0.55 3635 2.15 1.13

6As 142.45 158.45 16.00 0.56 8802 19.79 8.39 C 145.45 147.45 2.00 0.67 2133 1.90 2.81 D 149.45 152.45 3.00 0.92 29577 72.99 22.70 E 157.45 158.45 1.00 2.63 2550 38.20 2.03 7As 179.45 180.45 1.00 0.22 2600 20.09 3.46 8As 183.45 186.45 3.00 0.09 2234 10.56 6.24 F 188.45 189.45 1.00 1.35 1100 6.85 8.48

9As 192.45 196.45 4.00 0.52 2245 10.04 10.27 G 194.45 196.45 2.00 0.87 1740 9.13 8.37 H 219.45 220.45 1.00 0.53 6980 123.00 30.40 10As 219.45 226.45 7.00 0.17 4149 54.22 22.86 I 231.45 232.45 1.00 0.51 608 4.57 0.83 11As 246.45 258.45 12.00 0.65 4500 5.90 8.13 J 247.45 249.45 2.00 1.21 13730 7.74 23.60 K 253.45 255.45 2.00 1.73 3060 8.87 8.87 K includes 254.45 255.45 1.00 2.90 4110 9.96 11.80 12As 260.45 261.45 1.00 0.01 1920 2.54 0.59 L 281.45 283.45 2.00 4.44 23800 57.86 19.70

WP4

-6ZK

S140

1

13As 281.45 296.45 15.00 1.28 16949 54.55 13.58


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av As (ppm)

av Sb (ppm)

av Hg (ppm)

M 287.45 289.45 2.00 2.29 42750 179.50 15.55 M includes 288.45 289.45 1.00 3.30 57200 240.00 18.40 N 292.45 297.45 5.00 1.05 13626 51.84 9.02

14As 298.45 307.45 9.00 0.69 5443 18.58 11.11 O 300.45 305.45 5.00 1.17 7588 23.16 12.51 O includes 303.45 304.45 1.00 2.77 13600 38.50 22.80

15As 309.45 311.45 2.00 0.12 9415 18.76 19.52 16As 318.45 320.45 2.00 0.01 3590 17.36 15.13 17As 323.45 324.45 1.00 0.02 2120 4.67 5.45

18As 326.45 329.45 3.00 0.02 2802 7.11 7.96 A 7.50 9.50 2.00 0.68 668 2.42 1.03 1As 71.50 72.50 1.00 0.06 3330 2.30 0.43 WP4-6ZKS1801

2As 75.50 76.50 1.00 0.04 3470 3.01 0.79 A 2.83 3.83 1.00 0.50 449 3.14 3.22 B 6.83 9.83 3.00 1.04 1160 3.89 3.57 C 13.83 14.83 1.00 0.50 2140 8.36 1.54

3As 14.83 15.83 1.00 0.40 2020 4.36 2.11 4As 19.83 26.83 7.00 0.11 3323 5.60 1.54 D 52.83 53.83 1.00 0.58 1280 1.92 5.04 1Hg 54.83 55.83 1.00 0.31 1050 1.64 100.80 5As 55.83 58.83 3.00 0.31 1643 1.60 5.68 E 71.83 74.83 3.00 0.94 4143 5.54 5.73 6As 129.43 132.43 3.00 0.15 6833 6.45 4.23 7As 149.43 150.43 1.00 0.12 1590 1.62 0.55 8As 165.43 166.43 1.00 0.08 3840 1.88 0.58 9As 174.43 175.43 1.00 0.09 2070 1.63 0.52 10As 182.43 183.43 1.00 0.13 1780 1.39 0.69 11As 185.43 186.43 1.00 0.11 1700 1.26 0.77 12As 241.43 242.43 1.00 0.07 1968 3.61 1.56 F 246.43 247.43 1.00 0.64 2590 4.08 1.83 G 253.43 254.43 1.00 0.62 1889 3.60 0.93 13As 255.43 257.43 2.00 0.17 2676 2.41 0.81

WP4

-6ZK

S200

1

14As 260.43 262.43 2.00 0.08 3306 2.31 0.71 A 96.92 97.92 1.00 0.81 1320 2.59 0.76 1As 102.92 103.92 1.00 0.40 2050 3.88 1.04 2As 107.92 108.92 1.00 0.36 1850 3.77 3.18 3As 110.92 111.92 1.00 0.46 1970 5.68 5.35 B 113.92 116.92 3.00 1.04 1437 2.40 2.12 C 119.92 120.92 1.00 6.02 260 4.67 0.62

WP4

-6ZK

S240

1

4As 158.02 162.02 4.00 0.13 3280 4.65 4.67

WP4-6ZKS301 1Sb 166.28 169.28 3.00 0.03 78 574.00 1.75 1As 78.30 82.30 4.00 0.19 2255 14.45 1.96

WP4

-6Z

KS6

01

A 132.40 133.40 1.00 0.74 854 14.45 1.81


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av As (ppm)

av Sb (ppm)

av Hg (ppm)

1Sb 134.40 135.40 1.00 0.12 807 211.00 0.93 2As 137.40 139.40 2.00 0.03 1500 8.60 0.53 3As 152.61 153.61 1.00 0.03 1920 3.00 0.67 B 155.61 156.61 1.00 0.72 4380 4.41 1.19 4As 155.61 158.61 3.00 0.35 3040 4.58 1.41 5As 171.07 172.07 1.00 0.02 1972 22.30 1.01 C 180.07 183.07 3.00 0.85 7986 9.48 8.62

6As 180.07 184.07 4.00 0.76 6512 7.71 7.82


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12.0 SAMPLING METHOD AND APPROACH GJCM has undertaken 3 types of sampling in Jin Ce: soil sampling mainly during the period February to June 2008, channel sampling in mine openings and trenches during the same period and sporadically through 2009 and drill core sampling from October to December 2008 and from September 2009 to the present. All sampling was done by or supervised by GJCM employees in the sampling methods and following written procedures provided by WEC. 12.1 Soil Sampling Soil samples were taken at 30m intervals along all lines: planned ridge lines, pre-selected spur lines and, in one locality in Hua Xin and at Mao Zhai, along 100m spaced grid traverses. Control of spacing was by measuring tape, sample location by Trimble GM GPS. Samples were given a unique number through a pre-printed numbered tag being inserted into the sample bag. Sample number and sample type was recorded in the GPS instrument at time of sampling. Samples were taken of material immediately below the normally poorly developed A-zone at a depth about 10cm. A coarse sieve was used to exclude residual rock fragments and vegetal material. At every 20th sample site, a field duplicate was taken from soil from the same excavation as the primary sample. Duplicates were given the sample number next in the sequence. Preparation of samples at Ceheng for dispatch to the laboratory for the first batch of samples consisted of drying (at <30oC), sieving for sufficient sample for assay and retention of the remainder as a back-up sample. For the second set, samples were halved to provide the back-up sample and the unprepared sample sent to the GAS laboratory for preparation. This strained the resources of the laboratory’s sample preparation facility, so, for the third and subsequent batches, preparation was undertaken again at Ceheng. Samples were halved in the field, half put aside as a back-up sample, the remainder dried, broken up with a rubber hammer and sieved to -60# for the assay sample. The field duplicates were prepared in the same way and formed part of the same sample batch for assay as their primary equivalent. 12.2 Rock Sampling Channel sampling was used to systematically sample exposed mineralization in the old mines, in re-opened and newly dug trenches, the few accessible adits and, on occasions, to check for mineralization in road cuttings or other areas of continuous rock exposure. Most of this sampling was of oxidised rock. All channels were cut to the same nominal specifications of channels 7cm wide by 3cm deep and all samples 1m in length. This produced samples of weight approximately 5kg each. Sample positions were pre-measured and marked using spray paint. Channels were cut using a hammer and spike and the sample


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collected on synthetic canvas drop sheets. Samples were bagged and labelled at the channel site. As for the soil samples, samples were given a unique number through insertion a pre-printed sequentially-numbered tag into each sample bag. The position of channel ends was recorded by GPS and the course the channel measured and recorded using compass, clinometer and tape. Sampling in the old mine workings was planned to cross exposed mineralization approximately perpendicular to its strike and to sample at least 2m into hanging wall and footwall. Floors of trenches were sampled along the full length of exposed rock. Adits were sampled along one wall at a height of 1m above floor or across the roof depending on the orientation of the mineralization exposed in the mine opening. In one locality, a wide highly silicified fault zone in Na Xin, channel sampling was not practical and systematic chip sampling was applied. Apart from the actual method of removal of the sampled rock from the rock face, chip samples were taken and recorded in the same way as channel samples. Chipping was done with a hammer, small chips taken every few cm and as evenly spaced as possible over a width of about 10cm along the length of each sample interval. An adjunct to the ridge and spur sampling programme was the recording and sampling of outcropping mineralized rocks located on or near ridges or on access tracks to the sampling lines. None of these samples were systematically taken as channels or chip samples. They were labeled “grab samples” and assay results used solely to prioritise and plan follow-up systematic sampling. Duplicate and certified reference standard samples were inserted each at the ratio of 1 in 20 samples into every batch of samples for assay. Sample numbers for duplicate and standard samples and the primary sample to be duplicated were determined at the time of rock sampling. Sub-sampling of the primary sample pulp for the duplicate and insertion of the standard sample was done by GJCM staff at the GAS sample preparation facility on completion of sample preparation for each batch. 12.3 Drill Core Sampling Drill core sampling was undertaken in the GJCM core facility subsequent to photographing of the core, core recovery measurement, geotechnical logging and geological logging. Sample intervals, nominally 1m, were marked out on the core and the core box by the geologists to fully cover intersections of mineralization or alteration recognised in the logging and wall rocks for at least 2m above and below these intervals. Sample numbers were allocated to each interval using the same set of sample tags used in the channel sampling. Sampling was undertaken by GJCM staff using a diamond saw to halve the core longitudinally, one half being submitted for assay, the other retained in the core box as a


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record for possible future re-logging or re-sampling. The half-core samples were bagged into pre-numbered bags and sample tags attached at the saw ready for despatch to the laboratory. As for the rock samples, duplicate and Standard samples were inserted each at the ratio of 1 in 20 samples into each sample batch by the same method as described in Section 12.2. Although there was some tendency for core recovery to fall within the more strongly mineralized core, overall recovery was high and rarely fell below 90%. WEC believes that, considering the fine grained disseminated nature of the mineralization, sample bias would not be materially introduced by the reduced sample recovery. WEC has reviewed the sampling methods used at the Jin Ce project and finds them consistent with modern Western practice. The sample sizes collected are at the larger end of the range of core often used in the West and are likely to be adequate for a moderate-grade, disseminated gold deposit of the type seen in the Jin Ce area.


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13.0 SAMPLE PREPARATION, ANALYSES AND SECURITY

All rock and core samples taken by GJCM have been prepared through the sample preparation facility of GAS attached to its laboratory in Guiyang. All assay determinations for arsenic, antimony and mercury and most assays for gold were also made at this laboratory. From October 2009 onward, selected batches of samples from drill core were sent to the ALS Chemex laboratory in Guangzhou, Guangdong Province, (ALSG) for gold analysis by a more accurate fire assay method. The GAS laboratory is accreted as one of China’s National Laboratories and operates in conformity with the Specification for the Quality Control of Laboratory Tests for Geological Minerals [China National Standard (Geology) No.DZ/T0130-2006.]. ALSG is similarly accredited and accredited through the China National Accreditation Service for Conformity Assessment, equivalent to ISO17025. WEC visited the GAS facility and toured the wet chemical and sample preparation facilities during its January 2008 property visit. It has not visited the ALSG facility. 13.1 GAS Sample Preparation Prior to sample preparation, samples were dried at <40oC to minimise loss of mercury. Sample preparation of rock samples at GAS is conventional with primary crushing by jaw crushers and secondary crushing by roll crushers. For crushing of channel samples and core samples, no splitting of the samples is performed. The entire sample goes through primary and secondary crushing and is crushed to minus 5 mm After secondary crushing, an approximately 500 g sample is split off with a Jones riffle splitter for pulverizing and the reject coarse sample returned to GJCM for storage. Pulverization can be accomplished by one of two methods, either ring-and-puck pulverizer of identical design to that used in Western laboratories, or a mini rod mill constructed of large diameter pipe with a threaded end in which are placed steel rods and the sample. The pipe is capped using the threaded ends and gangs of mills can be turned concurrently on a large rolling machine. Samples are pulverized to -200#. Approximately 150g of the pulverized material is taken for assay, the remainder being split in two with half retained by the laboratory, half returned to GJCM for storage. Soil samples, sieved at Ceheng to -60#, are split at GAS to approximately 150 g with a Jones riffle splitter and this sub-sample pulverized to -200# in an agate ball mill prior to assay. Reject material is retained by GAS. WEC has reviewed the sample preparation facility and finds it to be adequate. The crusher room had good dust control with each crusher work station being separately ventilated by a large fan. Pulverizing was undertaken in a separate room with separate ventilation. The facility and each piece of equipment were thoroughly clean. 13.2 GAS Assaying


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GAS conducts gold analyses using an Atomic Absorption Spectrophotometry (AAS) method. AAS analyses are performed by placing 20 g of pulp in a ceramic crucible and heating at 700º C for about 4 hours. This is done to oxidize any organics or sulphide minerals present. The pulp is then placed in a flask and dissolved using a 2 acid digestion by heating to the boiling point for 45 minutes. The flask is not allowed to boil dry and, after cooling, the volume is made up with a solution containing 1% animal gum, 2% citric acid and 10% hydrochloric acid. Gold is collected from this solution on a mixture of paper pulp and activated carbon in an adsorption column. A Buchner funnel is used to collect the residue which is then placed in a ceramic crucible and ashed at 700oC. Gold is extracted from the ash using a KCN–aqua regia mix and taken into the solution used for AAS determination in 10% HCl. A modern Hitachi AAS machine which captures data electronically was in use at the time of WEC’s visit. The laboratory carries a wide range of Chinese National assay standards and has established procedures for internal quality control through the use of duplicates and standards. GAS assays for arsenic and antimony by ICP-AES, for mercury by a modified AAS technique. 13.3 ALSG Assaying For the GJCM samples, gold was determined by ALSG’s Au-AA26 method – Fire assay with AAS finish. ALSG specifies a lower limit of detection of 0.01 g/t Au for the method. Fifty gram samples of the prepared pulp is mixed with fluxing agents including lead oxide, and fused at high temperature. The lead oxide is reduced to lead, which collects the gold. When the fused mixture is cooled, the lead remains at the bottom, while a glass-like slag remains at the top. The precious metals are separated from the lead in a secondary procedure called cupellation where the lead button is placed on a magnesia cupel in a furnace at 960-1000oC. At this temperature, the lead melts and is simultaneously oxidised. Part of the lead is volatilised and part is drawn into the cupel by capillary attraction. Eventually the lead is entirely removed and what remains behind is a small precious metal bead that represents the entire precious metal content of the original sample. This precious metal bead is dissolved and the gold quantified by Atomic Absorption Spectrometry AAS.


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14.0 DATA VERIFICATION In order to monitor laboratory performance, from the beginning if its programme GJCM instigated a scheme of inserting pulp duplicates and gold standards with every batch of rock samples and analysing the results as a reflection of laboratory precision and accuracy, batch-by-batch and overall. The scheme had a secondary use in that it served as one of the checks for errors in laboratory data transfer and reporting. Pulp duplicates were inserted at the ratio of 1 in 20 samples by the methods described in Section 12.2. Four reference standards obtained from Gannet Holdings of Perth, Western Australia, were used through 2008 and part of 2009 to be complemented over the last few months by use of a further three obtained from the same supplier. Standards were also inserted at a ratio of 1 in 20. Standards were not used to check accuracy for the other 3 elements assayed, As, Sb and Hg. Appendix 2 lists the recommended gold values for the reference standards. Field duplicates were collected at the ratio of 1 in 25 samples from the soil geochemical sampling programme and assayed through the GAS laboratory. To December 2009, this has resulted in assay of rock 325 duplicates, 327 standards and 350 geochemical field duplicates. 14.1 QA-QC Results - Rock samples through GAS laboratory A total of 312 pulp duplicates have passed through the laboratory and 312 standards inserted. Analysis of performance below, however, includes only results up to November 2009, there being suspected reporting errors in the last several batches which are still being investigated by GJCM. Figure 14.1, below is a QA-QC plot which show that the analyses of the two standards above 0.5 g/t Au fall within acceptable limits although at the higher level GAS results are showing a slight low bias. The scatter of values for standard ST07/5343 illustrates poor precision at values approaching the lower detection limit for the assay method, seen particularly in duplicate analyses and commented on below.


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Figure 14.1 Assay Results for Gold Standards - GAS

Duplicate values for gold, arsenic, antimony and mercury all show the expected pattern of wide variance at low values near the lower detection limits of the assay techniques used and acceptable laboratory results at higher values. Figures 14.2 and 14.4 to 14.6 below show the gold, arsenic, antimony and mercury assay variance for all duplicate samples. Figure 14.3 shows variance for gold for samples assaying 0.3 g/t and higher. For gold values at ore-grade levels, including those for oxide ore, variations are within acceptable bands and variations for the other 3 elements are acceptable. However, it is disappointing that precision in gold assays at GAS in the range 0.1 to 0.3 g/t is not better as this would make assays of rock/core more useable in an exploration sense in identifying zones of weak mineralization.


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Figure 14.2 Pulp Duplicate Variance GAS - Gold

Figure 14.3 Pulp Duplicate Variance GAS – Gold > 0.3 g/t

Orange band = 15% relative difference


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Figure 14.4 Pulp Duplicate Variance GAS- Arsenic


Figure 14.5

Pulp Duplicate Variance GAS- Antimony



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Figure 14.6 Pulp Duplicate Variance GAS- Mercury


14.2 QA-QC Results - Rock samples through ALSG laboratory Five reference standards have been used through this laboratory but only assayed a limited number of times so far. Figure 14.7 below shows a tendency, which may or may not become a pattern, for the laboratory to assay slightly low but that the results are very acceptable.

Figure 14.7

Assay Results for Gold Standards - ALSG


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A very limited number of duplicates have so far passed through this laboratory and these have been assayed for gold only by the laboratory. Figure 14.8 below shows the variance which is within acceptable bands.

Figure 14.8 Pulp Duplicate Variance ALSG - Gold


14.3 QA-QC Results - Soil samples through GAS laboratory Duplicate values for gold, arsenic, antimony and mercury for the field soil duplicates all show the pattern of wide variance at low values near the lower limits of the geochemical assay techniques used and acceptable laboratory results at higher values. Figures 14.10 and 14.12 to 14.14 below show the gold, arsenic, antimony and mercury assay variance for all duplicate samples. Figure 14.11 shows variance for gold for samples assaying 2 ppb and higher. For the gold values above 2 ppb, the set which would clearly host most of the population of anomalous values, variations are within acceptable bands. Variations for the other 3 elements are acceptable. For the lower gold value samples, some variance is expected from different field samples having different gold content, some from sub-sampling of the sieved material for pulverizing rather than pulverizing the whole -60# sample and some related to poor analytical precision in the laboratory. There has been no test work to determine which has the most serious effect on precision and if precision could be improved. Improved confidence with better precision could help GJCM in defining geochemical patterns and trends and, through this, to better focus its follow-up field work.


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Figure 14.9 Field Duplicate Variance - Gold

Figure 14.10 Field Duplicate Variance – Gold > 2 ppb


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Figure 14.11 Field Duplicate Variance - Arsenic


Figure 14.12

Field Duplicate Variance - Antimony



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Figure 14.13 Field Duplicate Variance – Mercury



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15.0 ADJACENT PROPERTIES There are no adjacent properties which affect the opinion offered in this report.


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16.0 MINERAL PROCESSING AND METALLURGICAL TESTING WEC was informed during discussions with GJCM personnel that there is no record of metallurgical test work having been undertaken on samples, either oxide or sulphide-bearing, from Hua Xin prior to 2008. GJCM has not commissioned any metallurgical test work. The similarity between the primary mineralization seen at Jin Ce and that seen at the nearby Jin Feng mine or described as Carlin-like elsewhere in the Golden Triangle and in the United States is such that it is anticipated that Jin Ce ore would be refractory. The Jin Feng treatment facility uses bacterial leach on sulphide concentrate to extract the gold. Reported recovery is 85%.


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17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES GJCM has estimated no mineral resources for the Jin Ce project. Gz Non-Ferrous #1 has made certain mineral resource estimates for several zones on the Hua Xin and Wei Pai properties which have been determined to not be NI 43-101 compliant. These mineral resources are discussed under historical resources in Section 6 of this report.


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18.0 OTHER RELEVANT DATA AND INFORMATION

All of the relevant data and information in regard to the Jin Ce project and the proposed program of mineral exploration have been included in other sections of this report.


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19.0 INTERPRETATION AND CONCLUSIONS

The exploration work performed by the GJCM team over the last two years has clearly demonstrated the presence of Carlin-like mineralization at Hua Xin and Weipai #8. Gold has been intersected in fault structures, as is typical of the many deposits of the Golden Triangle, but also locally in altered but structurally unaffected sandstones. This indicates pre-ore preparation of the host through decarbonatisation and some movement of ore fluid from the structure into the wall rocks, with the associated suggestion of increased size potential. The increasing evidence of stratigraphic control of the widespread Au-As mineralization in the Weipai #5 Gully area supports this interpretation. Gold grades so far have been low with only the narrow or isolated intersections at Hua Xin exceeding the 3 or 4 g/t level needed to define resource in these refractory deposits. Drilling at Weipai #8 has shown that the ore fluid there carried sufficient gold to be deposited at these grades over distances of 100 m or more, although the partly defined “ore” shoot at Weipai #8 seems to have too small a size potential on its own to warrant much more investigation. Overall, the extent of mineralization at Hua Xin as seen in the distribution of small mines and the primary halo of typical Carlin-style post-ore arsenic, antimony and mercury minerals and the complexity of structure leave the impression that this environment still has considerable potential for the discovery of a large Carlin-like ore deposit Ore potential at Weipai #8 has been severely diminished by the drilling but re-assessment following the results of the current drill hole could indicate some structural location deserving of further drill testing. Better understanding of Weipai #8 will certainly assist exploration at Na Xin and the investigation of the several so-far unchecked geochemical anomalies in the footwall of the Banchang Fault in the eastern part of Nong Ying and the south-western corner of Ping Mai. The Na Xin area is a large geochemical anomaly much like Hua Xin but marked by antimony and mercury, the typically more distal late stage primary halo elements of Carlin-like systems, rather than the more proximal arsenic and gold. Recently, GJCM has focused in on the NX#2 and Guoshan prospects where there is a Au-As association and, at NX#2 at least, Au at a significant grade from trench sampling. Na Xin is at a very early stage of exploration and more needs to be done to gain a better understanding of its gold potential. Although not within the southern extension of the Hua Xin structural corridor or in the footwall zone of the Banchang Fault, the several unchecked geochemical anomalies in the central part of Nong Ying could represent mineralization on a structure connected with one of these systems. The same applies to anomalies within Ping Mai, although in the hangingwall of the Banchang Fault, could be associated with important structures, so little is known of the geology of Ping Mai at this stage. The GJCM team has used the published research on Carlin-like deposits in the US and China and their field observations and experience to develop an exploration model for the Jin Ce


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Central Tenements but one that should have broader application within the Golden Triangle. GJCM would be wise to lower its overall exploration risk by increasing the number of good exploration properties within its portfolio through the use of the model in regional studies to focus in on ground for acquisition.

19.1 Proposed Exploration Program GJCM has proposed that the detailed evaluation of the mineral potential of Hua Xin be continued with the direct aim of finding a gold deposit of sufficient grade and thickness within the coming 6 months to warrant the commencement of a systematic programme of resource evaluation. The detailed focus of this programme and the priority of various segments are very much dependent on the assessment of and the interpretation based on the results of the current drilling programme which is nearing completion. Broadly, however, it considers that the programme will likely include drilling of the EW-trending strata/structure-bound mineralization in the Weipai 4-5 area, further investigation around the limestone dome and further testing at depth of the Weipai #6 mineral zones. Notional programmes are listed below and provision is made for resource evaluation drilling if this is warranted. Other segments of the programme for 2009 include assessment of recent results from Weipai #8 and a provision for further drilling, continuation of prospect development at Na Xin, initial field assessment of geochemical anomalies and the start of regional assessment with project acquisition in mind.

19.1.1 Hua Xin – Weipai 4-5 Programme Assessment of the results of existing surface sampling, previous drilling and drill holes WP4-6ZKS1401 and WP4-6ZKS3201 in cross section and plan will be followed by targeting and drilling of 3 drill holes to test for ore grade mineralization within the upper part of Xuman4.

19.1.2 Hua Xin – Limestone Dome Programme The intersection of a low angle fault structure with the bioclastic breccia on dome margin is regarded as a favourable site for ore deposition. The proposal is to improve interpretation of dome geometry and location of structures as far as possible from updating of plans and sections with the results of the most recent drilling, consider improving the interpretation through the conduct of a small CSAMT or seismic geophysical survey and provision for drilling of 2 holes to test targets which may come from the interpretation.


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19.1.3 Hua Xin – Weipai #6 Deep Targets Drill hole WP4-6ZKS001 tested the mapped Weipai #6 central and eastern mineralized zones at shallow depth down dip but failed to reach the western zone. The proposal is to drill 2 holes to the full set of structural zones further down dip.

19.1.4 Hua Xin - Resource Evaluation Drilling Provision is made for resource evaluation drilling through the latter half of 2010 and continuing into 2011.

19.1.5 Hua Xin – East-West Geochemical Anomaly GJCM will investigate the Au-As geochemical anomaly extending westward from the Weipai #5 by geological mapping, trenching and sampling particularly in the area where it is strongest near the western boundary of the Hua Xin structural corridor.

19.1.6 Weipai #8 Exploration

The structure and distribution of mineralization will be re-interpreted in section and plan following completion of the current drill hole and receipt of assay results. Provision is made for the drilling of 2 holes to test any further zones of potential mineralization indicated.

19.1.7 Na Xin Exploration GJCM proposes to concentrated work on the NX#2 area while still advancing the Gaoshan exploration. Detailed geological mapping around NX#2 will be followed by further trenching with the aim of defining drilling targets by mid-2010. Two further trenches are proposed to the east of Gaoshan to check for a second north-south mineralized fault structure. Provision is made for 2 drill holes at Na Xin.

19.1.8 Central Tenements Regional Programme. It is proposed to field check, reconnaissance map and take in-fill r&s soil samples, where warranted, over 11 existing r&s Au anomalies with priority on those in the footwall zone of the Banchang Fault, 2 in Nong Ying and 2 in Ping Mai. Follow-up of encouraging results will be by trenching and sampling. In Nong Ying central area, three anomalies will be advanced in a similar fashion but on a lower priority. Geological interpretation of Aster imagery is proposed for Ping Mai followed by traverse mapping for ground truth input to the interpretation before field location of the 4 r&r anomalies in this area.

19.1.9 Regional Assessment and Project Generation


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An integrated programme involving use of existing geological maps, regional geochemistry, structural interpretation from satellite imagery and aeromagnetics, known distribution of mineralization and the distribution of exploration tenements is proposed as a way to focus regional assessment onto areas favourable for the discovery of Carlin-like deposits. The Chinese 1:200,000 regional stream sediment data for key parts of the Golden Triangle will be purchased. Landsat imagery will be used as a broad filter to select areas for detailed interpretation of structural on Aster imagery.

GJCM has prepared an estimated budget for the 2009 program described above. Table 19.1 below summarizes this budget, indicates which items have been completed and outlines the remaining expenditures to be made. A total expenditure of US$4.55 million is budged for the proposed program. This expenditure excludes new project acquisition, which will require additional fund being made available if a positive decision was made.

Table 19.1 Jin Ce Exploration Program Budget

RMB/US$ Exchange Rate (23/12/2009): 6.8287 Drilling cost: 700 rmb/m (including 600-630 rmb/m drilling, mobilization and compensation) Core/rock assay: 132 rmb/sample (based on 15 sample prep (GAS), 67 Au fire-assay (ALS) and 50 As Sb Hg (GAS)); assuming 50% of drilling samples to be assayed Trenching: 50 rmb/m3 CSAMT: 30,000 rmb/line-km


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Project Justification Program Type

Description Cost (US$)

Status

Hua Xin – Weipai 4-6

Investigate Weipai #6 East and Hua Xin ridge IP anomalies

Nearing completion

Weipai #8 Phase 3 drilling

Investigate western and SE IP anomalies

Nearing completion

Hua Xin – Weipai 4-5

Investigate potential of E-W stratigraphic/ structural gold mineralization

Exploration for Resource Discovery

1,200 m DD 134,610

Start early 2010

5 line-km CSAMT, 21,970

Start early 2010

Hua Xin – Limestone Dome

Locate &investigate structures cutting dome

Exploration for Resource Discovery 800 m DD 89,740 Start early

2010 Hua Xin – Weipai #6

Investigate western mineralized zone down dip

Exploration for Resource Discovery

900m DD 100,960 Start early 2010

Hua Xin Resource Evaluation

Resource evaluation of any ore discovery from above

Resource Definition

30000m DD 3,365,210 Provisional

Hua Xin EW Geochemical Anomaly

Investigate anomaly near W edge of structural corridor

Exploration 300m3 trenching, 150 rock samples

5,100 Planning

Weipai #8 Synthesis

Re-intrepret for possible further targets

Exploration Possible 700m DD 78,520 Planning

Na Xin Exploration

Investigate NX#2 and Gaoshan for drilling targets

Exploration 300m3 trenching, 150 rock samples, possible 400m DD

49,970 Planned

Central Tenements Regional

Investigate soil geochemical anomalies from 2008-09 sasons

Exploration 500m3 trench, 250 rock samples

8,490 Planned

Acquire remote sensing data from various sources

25,000 Planning Project Generation

Assess region for prospective land aquisition

Project Generation

Acquire 1:200K regional geochem data

146,440 Planning


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Fixed Costs Staff administration, travel and accommodation, resource model audit, computer equipment etc.

For 2010 calendar year, based on 300,000rmb/month

527,190 On going

Total 4,553,200


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20.0 RECOMMENDATIONS

WEC has reviewed the results to date of GJCM’s exploration in the Jin Ce Project and the proposed exploration program made in the Conclusions and Recommendations Section of this report, and supports the concept that there is still good potential for discovery of a Carlin-like gold deposit. It is WEC’s opinion that the project merits further exploration and that GJCM’s proposed exploration plan is properly conceived and justified and should be continued. The data and technical opinions offered in this report are current as of December, 2009. WILLIAMS EXPLORATION CONSULTING PTY LTD “Brian Williams”

Brian Williams, B.Sc. Principal Geologist WEC

December 23, 2009


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CERTIFICATE I, Brian Thomas Williams, B.Sc., do hereby certify that: 1 I am Principal Geologist of:

a) Williams Exploration Consulting Pty Ltd b) 135 Fox Valley Road, c) Wahroonga, NSW, Australia, d) 2076.

2 I graduated with a degree in science, B.Sc. (geol), from the University of Queensland, Australia, in 1961. In addition, I have obtained a Graduate Diploma in Economic Geology from the University of Hobart, Australia, in 1998.

3 I am a Fellow of the Australasian Institute of Mining and Metallurgy.

4 I have worked as a geologist for a total of 48 years since my graduation from university.

5 I have read the definition of “qualified person” set out in National Instrument 43-101

(“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6 I am responsible for the preparation of sections 1 to 20 of the technical report titled “A

Review of the Mineralization at, and on the Exploration Program and Proposed Budget for the Jin Ce Gold Project, Ceheng County, Guizhou Province, Peoples Republic of China” and dated 12/23/2009 (the “Technical Report”) relating to the Hua Xin, Wei Pai, Nong Ying, Na Xin and Ping Mai properties. I first visited the Hua Xin, Wei Pai and Nong Ying properties on 03/07/2007 for 1 day and have had a number of visits during 2008 and 2009, the last being on 09/19/2009 for 12 days. I first visited the Na Xin and Ping Mai properties on 03/08/2007 for 1 day and have had several further visits in 2008 and 2009 the last being on 05/02/2009 for 1 day.

7 I have had no prior involvement with the properties that are the subject of the Technical

Report.

8 I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.

9 I am independent of the issuer applying all of the tests in section 1.5 of National

Instrument 43-101.

10 I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.


103

11 I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report.

Dated this 23rd Day of December, 2009 (signed by) “Brian Williams” Brian Thomas Williams, FAusIMM Dated this 23rd Day of December, 2009


104

REFERENCES

Hofstra, A.H. and Cline, J.S., 2000, Characteristics and Models for Carlin-type Gold Deposits. Soc. Econ.Geol. Reviews Volume 13, “Gold in 2000”, Eds. S.G. Hagemann and P.E Brown. Li, Z. P. and Peters, S. G., 1998; Comparative Geology and Geochemistry of Sedimentary Rock-Hosted (Carlin Type) Gold Deposits in the People’s Republic Of China and in Nevada, USA: U.S. Geological Survey Open-File Report 98-466 (version 1.3 on CD ROM or World Wide Web at URL http://geopubs.wr.usgs.gov/open-file/of98-466). Peters, S. G., Jiazhan H., Li, Z., Chenggui J., Hofstra A. H. Christensen O. D., Leonard C. S. and Mihalasky M.J.,2002; Geology, Geochemistry and Geophysics of Sedimentary Rock-Hosted Au Deposits in P. R. China. U.S. Geological Survey Open-File Report 02-131. (Version 1.0 on CD ROM or World Wide Web at URL http://geopubs.wr.usgs.gov/open-file/of02-131). Zhang, P. and Luo, T., 2006; A Preliminary Geological Survey Report on Weipai Gold Mine, Ceheng County, Guizhou Province. Unpublished report of No.1 Nonferrous Geological Survey Team of Guizhou Province.

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APPENDIX A JIN CE EXPLORATION LEASE DOCUMENTATION

1. HUA XIN MINING LICENCE

106

Translation

The people’s Republic of China

Mining Licence

(copy)

Licence No. 5200000721827

Licensee: Ceheng Huaxin Gold Mine Co.,Ltd.(Xu Qiang)

Address: Yanjia Town, Ceheng County

Tenement Name: Ceheng Huaxin Gold Mine

Type of Economy: Limited Liability Company

Type of Ore to Be Mined: Gold Deposit

Type of Mining: Underground

Scope of Production: 10,000 ton/year

Mine Area: 1.65 km2

Duration: 6 years and 11 months, from Nov. 2007 to Oct. 2014

Issued by

Guizhou Provincial Department of Land & Resources

Date of issue: 9th Nov. 2007

Printed by the Ministry of Land & Resource, PRC

Mine Boundary turning point coordinates

1 2772020 35591020

2 2772020 35589980

3 2771200 35589980

4 2771200 35589500

5 2771770 35589310

6 2772610 35589490

7 2773230 35590170

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2. WEI PAI EXPLORATION LICENCE

108

109

110

Translation The People’s Republic of China

Mineral Resources Exploration Licence

This Exploration Licence is authorized and issued pursuant to the provisions of the National Laws and Regulations and upon approval of qualification assessment.

Licence No. T52120080202002272

Licensee: Ceheng Huaxin Gold Mine Co.,Ltd.

Address of licensee: Yanjia Town, Ceheng County

Peoject Name: Detailed Exploration on Weipai Gold Mine, Ceheng County, Guizhou Province.

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Location: Ceheng County

No. of Topographical Map: G48E016016

Covering Area: 31.5km2

Duration: From 1st Jan. 2008 to 31 Dec. 2009.

Exploration Entity: No.1 Team of Guizhou Non-ferrous Geological Exploration Bureau

Address of Exploration Entity: 237 Hongfeng Road, Qingzhen, Guizhou

Issued by

Guizhou Provincial Department of Land Resources (Stamped)

Date of issue: 28 Feb. 2008


Notes to the Licensee

1. This Licence is a legal warrant for the acquisition of exploration right and shall be held by the Licensee only.

2. This Licence shall be filled in by the Exploration Registration Administrative Authorities and shall cease to exist in case of any alteration.

3. This licence should be kept properly. Any lost time accidents should be reported to the Issuing Authority together with a statement and a remediation procedure is always requested.

112

3. NONG YING EXPLORATION LICENCE

113

114

115

Translation

The People’s Republic of China



Licence No. T52120090502028975

Licensee: Guizhou Tongfa Mining Co.,Ltd.

116

Address of licensee: 10th Floor, North Tower, Tianheng City Garden, 66 North Fushui Road, Yunuan District, Guiyang

Project Name: Reconnaissance on Nongying Gold Mine, Ceheng County, Guizhou Province.

Location: Ceheng County

No. of Topographical Map: G48E018017, G48E018016, G48E019016


Duration: From 16th May 2009 to 15th May 2011.

Exploration Entity: Beijing Santai Tongdi Exploration Technology Development Co., Ltd.

Address of Exploration Entity: Suite 1001/10th F, Building No.1, Wandu Yishuiyuan, Haidian District, Beijing

Issued by


Date of issue: 19 May 2009






117

4. NA XIN EXPLORATION LICENCE

118

119

120




Licence No. T52120090302026855

Licensee: Guizhou Tongfa Mining Co.,Ltd.


Project Name: Reconnaissance on Naxin Gold Mine, Ceheng County, Guizhou Province.

121

Location: Dayang Town, Ceheng County

No. of Topographical Map: G48E018017, G48E019017, G48E019016, G48E018016

Covering Area: 7km2

Duration: From 31 Dec. 2008 to 31Dec. 2010.

Exploration Entity: Guizhou Jinsha Land Resources Exploration & Development Co.,Ltd.

Address of Exploration Entity: Suite A-6, 27th Floor, Xinhuayuan, 19 Beijing Road, Guiyang, Guizhou

Issued by


Date of issue: 26 Mar. 2009






122

5. PING MAI EXPLORATION LICENCE

123

124

125

Translation

The People’s Republic of China



Licence No. T52120090302026083

Licensee: Guizhou Jince Mining Co.,Ltd.


126

Project Name: Reconnaissance on Pingmai Gold Mine, Ceheng County, Guizhou Province.

Location: Ceheng County, Guizhou Province

No. of Topographical Map: G48E018017, G48E019017


Duration: From 3rd Feb. 2009 to 2nd Feb. 2010.

Exploration Entity: Guizhou Jinsha Land Resources Exploration & Development Co.,Ltd.

Address of Exploration Entity: 42 Dayingpo, Yunyan District, Guiyang

Issued by


Date of issue: 18th Mar. 2009






127

6. MAO ZHAI EXPLORATION LICENCE

128

129

130




Licence No. T52120080102000927


Address of licensee: 10th Floor, North Tower, Tianheng City Garden, 66 North Fushui Road, Yunuan District,Guiyang

131

Project Name: Reconnaissance on Maozhai Gold Mine, Wangmo County, Guizhou Province.

Location: Luo Wang Town, Wangmo County, Guizhou Province

No. of Topographical Map: G48E016018


Duration: From 8nd Dec. 2008 to 1st Feb. 2010.



Issued by


Date of issue: 10th Mar. 2009






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7. NAN ZHAI EXPLORATION LICENCE

133

134

135




Licence No. T52120080102001554



136

Project Name: Reconnaissance on Nanzhai Gold Mine, Jianhe County, Guizhou Province.

Location: Jianhe County

No. of Topographical Map: G49E008004, G49E009004


Duration: From 12th Nov. 2008 to 1st Feb. 2010.



Issued by


Date of issue: 11 Nov. 2008






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APPENDIX B GANNET HOLDINGS STANDARD REFERENCE MATERIAL ASSAY RESULTS

Reference No. GJCM No. Value Au Units Au Source ST01/0245 s1 1.46 g/t Gannet Holdings PL, Perth WA ST07/5343 s2 0.208 g/t Gannet Holdings PL, Perth WA ST05/6372 s3 2.46 g/t Gannet Holdings PL, Perth WA ST07/8441 s4 0.23 g/t Gannet Holdings PL, Perth WA ST49/6403 s5 1.99 g/t Gannet Holdings PL, Perth WA ST37/6374 s6 3.33 g/t Gannet Holdings PL, Perth WA ST274/5358 s7 5.96 g/t Gannet Holdings PL, Perth WA

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