DESCRIPTION OF PROPERTY
We have options to acquire 100% interests in the Altan and Ovorkhangai property
licenses, as described in detail in Item "Description of Business". We do not
own or lease any property other than our options to acquire interests in the
Altan and the Ovorkhangai Property Licenses.
Net Smelter Royalty
A 1.5% net smelter royalty payment is required to be paid to Ton Fei Fred Tham
and Associates for both properties. Net smelter royalty is defined as the net
revenue generated fro the sale of the metal or product produced by a mine. The
payments are required to be paid annually and will continue as long as the mine
is in production. The payments are limited to cash, unless another method is
agreed upon by both parties. If we are unable to pay the royalty payments or
fall short of our work exploration programs, we will lose our interests in the
Altan and Ovorkhangai property mineral licenses.
UNDURSHIL AIMAG (ALTAN) PROPERTY - SUMMARY DESCRIPTION REPORT
Location and Access
The Altan project area is located in the Undurshil district and spans the
Dundgovi province of Mongolia (figure 1). These provinces are located
approximately 385 kilometers south of Ulaanbaatar, the Capital of Mongolia. The
central point of the license is located approximately 75 kilometers southeast of
the nearest town named Undurshil. Access from Ulaanaatar to the town of
Undurshil is via the Mongolian interstate highway and access from Undurshil to
the property is via a gravel road.
43
[[Image Removed]]
44
Property and Ownership
The property was originally comprised of 20,000 hectares (located on map sheet
L49-109) in the Dundgovi provinces of Mongolia. However, on August 23, 2004,
pursuant to a "Memo Regarding Downsizing of Undershil Aimag (Altan) Property,"
the Altan property has been reduced to 8,000 hectares. See Exhibit 10.12. The
claims are under license number 4767X, which is held by Ton Fei Fred Tham &
Associates. The license was issued on September 27th, 2002 and is valid for a
period of two years and eleven months (see Figure 2 for license boundary).
Pursuant to the above-mentioned "Memo Regarding Downsizing of Undershil Aimag
(Altan) Property, the license has been renewed as of August 23, 2004.
License Number Hectares Date Issued Period
4767X 20,000 September 27, 2002 2 years 11 months
[[Image Removed]]
Figure 2, Altan Claim Boundary Location
45
Conditions to keep mineral title
In order to maintain the mineral title, payments must be made to the Mineral
Resources Authority of Mongolia at the following rates:
º US $0.05 per hectare for the first year and US $0.10 per hectare for each
of the second and third years.
º US $1.00 per hectare for each of the 4th and 5th years during the first
exploration license renewal.
º US $1.50 per hectare for each of the 6th and 7th years during the second
exploration license renewal.
Rock Formations
The Altan property displays typical basin (lows) and range (highs) style
topography. The basin is covered with flat lying Devonian (geological period
from 345 million to 405 million years ago) to Cenozoic (geological period from
63 million years ago) sediments, with topographic highs associated with igneous
intrusions (produced under conditions involving intense heat; "igneous rock" is
rock formed by solidification from a molten state) of carboniferous (from 280
million to 345 million years ago, of or relating to the Carboniferous geologic
era; "carboniferous rock system") granite.
The surficial (pertaining to or occurring on or near the earth's surface)
geology of the Altan property consists of old sediments and modern sand and
gravel deposits, constituting 60% of the surface exposure. The remaining part of
the property is composed of carboniferous Matad (an area in Mongolia) rock
granitic (granite formed rock which is "very hard") complex, limestone and
sandstone formations, and Cretaceous (geological era from 63 million to 135
million years ago) basalt (the most common type of solidified lava).
Previous geological studies have shown two geological regions: the Olziit and
the South Mongolian Belts, which are separated by a Fault that runs through the
center of the property. A portion of the Olziit Metallogenic Belt (geological
belt containing or made of or resembling or characteristic of a metal) overlays
the northern section of the property and the dominant mineralization associated
with this belt includes base metal, precious metal, and gold deposits. A portion
of the South Mongolian Metallogenic Belt (geological belt containing or made of
or resembling or characteristic of a metal) overlies the southern area of the
property. Mineralization found in this belt includes base metal, manganese, and
gold-silver mineralization.
The Present Condition
All mineral claims are currently in good standing with the Mongolian Government
and are readily available for the company's activities.
Work Completed 2003
The company is currently involved in a grassroots exploration in Mongolia and in
October 2003, Rio Minerals Limited of Vancouver was contracted by Ton Fei Fred
Tham & Associates to undertake a reconnaissance geological investigation of the
Altan property.
46
The geological program consisted of prospecting (looking for mineralization) and
ground truthing (testing the validity of the government geology maps) the Matad
(an area in Mongolia) rock complex, the Erdenebayan (an area in Mongolia), and
the Hotol (an area in Mongolia) rock formations. The Matad (an area in Mongolia)
rock complex is located in the north-east portion of the property whereas the
Erdenebayan and Hotol rock formations are located in the southern part of the
property. While on the property, the Rio Minerals crew undertook prospecting and
ground truthing (testing the validity of the government geology maps). A total
of nine ground truth locations (verifying the data on the map verses what seen
on the ground) were observed.
Costs for Past and Future Programs
Past Programs Cost
The past mineral exploration programs on the Altan Property have cost $8356.00
USD to date.
Future Program Cost
Travel 2 persons - 4 days $ 2,250.00
Ulaanbaatar to interpret data/plan 2 persons - 1 day $ 850.00
Field 2 persons - 05 days $ 4,250.00
Mongolian Driver/Interpreter 2 persons - 07 days $ 560.00
Mongolian Geologist 1 person - 07 days $ 455.00
Camp Cook 1 person - 07 days $ 250.00
Sub total: $ 8,615.00
Expenses:
Visas 2 persons - 1 country $ 160.00
Accommodation $ 950.00
Meals $ 950.00
Supplies and Rentals $ 650.00
4 x 4 vehicle rental 1 vehicle - 7 days $ 550.00
(gas incl.)
Air tickets 2 persons $ 3,500.00
Satellite phone $ 500.00
Assays and shipping $ 1,500.00
Report Report $ 4,500.00
Consumables Maps, etc. $ 375.00
Subtotal: $13,635.00
Total $22,250.00
Source of Power
Currently, there are no sources of power on the Altan property; however, the use
of portable gas and wind electric generators are common throughout Mongolia.
Clear Statement
The company is currently involved in a grassroots exploration program on the
Altan property and is not aware of any economic mineralization on the property.
47
OVORKHANGAI PROVINCE PROPERTY - SUMMARY DESCRIPTION REPORT
Location and Access
This newly acquired mineral property is located in the Ovorkhangai province of
Mongolia, between 46? 00' to 46? 20' North and 102? to 102? 28' East. The
property is located immediately west of the town of Arvajheer. Access to
Arvajheer is via the Mongolian interstate highway. Access to the property from
the town of Arvajheer is via a gravel road.
Property and Ownership
The property is comprised of 118,223 hectares located in the Ovorkhangai
province of Mongolia. The claim number is 6524X, which is held by Ton Fei Fred
Tham & Associates. The license was issued on November 7th, 2003 and is valid for
a period of two years and eleven months; see Figure 3 for license boundary.
License Number Hectares Date Issued Period
6524X 118,223 November 7th, 2003 2 years 11 months
[[Image Removed]]
Figure 3. Paleogeographic Interpretation of Southern Mongolia-Central Asia
during the Devonian and the Paleotectonic reconstruction for the Early Devonian
displaying the Tuva-Mongol arc (simplified and modified from Sengö and Natal'n
1996).
48
Conditions to Keep Mineral Title
In order to maintain the mineral title, payments must be made to the Mineral
Resources Authority of Mongolia at the following rates:
º US $0.05 per hectare for the first year and US $0.10 per hectare for each
of the second and third years.
º US $1.00 per hectare for each of the 4th and 5th years during the first
exploration license renewal.
º US $1.50 per hectare for each of the 6th and 7th years during the second
exploration license renewal.
Rock Formations
Investigations were carried out at the Geological Information Centre in
Ulaanbaatar to obtain information pertaining to the geology and mineral
potential of the property.
The majority of the property, consisting of the western and central portions
(approximately 60%), is underlain by intrusive rocks (diorite, granodiorite,
granite). The remaining 40% of the property, mainly the eastern and southeast
portions, is underlain by sedimentary (resembling or containing or formed by the
accumulation of sediment; "sedimentary deposits") rocks. The southeast portion
is comprised mainly of Devonian (geological period from 345 million to 405
million years ago) age to Carboniferous (from 280 million to 345 million years
ago, of or relating to the Carboniferous geologic era; "carboniferous rock
system") age rocks; consisting of variable chert, shale and sandstone. The north
and north-easterly portions of the property contain younger sediments.
The Mongolian government geological reports were examined to provide geological
information. Report numbers 3912 and 4098 provided the most pertinent
information for the Ovorkhangai province property.
All geological maps pertaining to the area were examined closely for mineral
occurrences. The focus of the investigation was to gather data pertaining to
base metal (metals such as copper, zinc, tin molybdenum mainly used for
industrial use) and precious metal (gold, silver, platinum) potential. There are
several geochemically anomalous areas outlined on the geological maps that are
mainly anomalous (abnormal chemistry of the earth's crust) in tungsten. Several
gold location sites are shown on the geological map for report 3912, but were
not referenced in the accompanying text for the report. There is, however, one
gold location site on the Mineral Occurrence map for Mongolia. This is a gold
occurrence that is located in the northwest corner of the property and is
described as an igneous (produced under conditions involving intense heat;
"igneous rock" is rock formed by solification from a molten state) related gold
occurrence. Also, several placer (an alluvial deposit that contains particles of
some valuable mineral) gold occurrences are found just off the northeast corner
of the property. Another placer gold occurrence is found in the southwest corner
of the property.
The base metal potential for the property is unknown at this point as there are
no known occurrences for copper, silver, lead, or zinc. Although numerous
samples have been taken during previous surveys, no values approaching economic
grade have been obtained.
49
The Present Condition
All mineral claims are currently in good standing with the Mongolian Government
and are readily available for the company's activities.
Proposed Exploration Plan
A field investigation of the undocumented gold occurrences at the northwest
corner of the property, the placer (an alluvial deposit that contains particles
of some valuable mineral) areas at the northeast and southwest corners of the
property, and the examination of the tungsten vein (a layer of ore between
layers of rock) area located in the southeast portions of the property are
planned.
Program Cost - Currently in progress
Travel 2 persons - 4 days $ 2,250.00
Ulaanbaatar to interpret data/plan 2 persons - 02 days $ 1,700.00
Field 2 persons - 06 days $ 5,100.00
Mongolian Driver/Interpreter 2 persons - 07 days $ 560.00
Mongolian Geologist 1 person - 07 days $ 455.00
Camp Cook 1 person - 07 days $ 250.00
Sub total: $10,315.00
Expenses:
Visas 2 persons - 1 country $ 160.00
Accommodation $ 1,580.00
Meals $ 950.00
Supplies and Rentals $ 650.00
4 x 4 vehicle rental 1 vehicle - 7 days $ 550.00
(gas incl.)
Air tickets 2 persons $ 3,500.00
Satellite phone $ 500.00
Assays and shipping $ 1,500.00
Report Report $ 4,500.00
Consumables Maps, etc. $ 375.00 Subtotal: $14,265.00
Total $24,580.00
Source of Power
Currently there are no sources of power on the Ovorkhangai province property,
however, the use of portable gas and wind electric generators are common.
Clear Statement
The company is currently involved in a grassroots exploration program on the
Ovorkhangai province property and is not aware of any economic mineralization on
the property.
Property Selection
The Properties were selected based on the technical information obtained from
the Geologic Information center in Ulaanbaatar, Mongolia.
50
The technical information used to select the properties was obtained by Derrick
Strickland, a professional geologist, and Greg Thompson, also a professional
geologist, by spending several days at the Geologic Information center in
Ulaanbaatar Mongolia researching publicly available scientific data.
Altan Property Selection -
The Altan property was selected based on the proximity to Ivanhoe Mine Ltd and
Magnum d'Or Resources Inc mineral claims. The geologic structure present on the
Altan property it genetically related to the same structures on both Ivanhoe
Mine Ltd and Magnum d'Or Resources Inc mineral claims. Each of the above
companies have had success exploring for mineral resources on their respective
properties.
Ovorkhangai Property Selection -
Several gold location sites are shown on a government geological map, but were
not referenced in the accompanying text for the report. There is however, one
gold occurence referenced on the Mineral Occurrence map for Mongolia. This
occurrence is located in the northwest corner of the property and is described
as a granitoid (resembling granite in granular appearance) related gold
occurrence. Also, a placer (an alluvial deposit that contains particles of some
valuable mineral) gold occurrence is found at the southwest corner of the
property.
Derrick Strickland, a professional geologist, has created two separate
geological reports; one on the Altan property and the other on the Ovorkhangai
property.
Greg Thompson, a professional geologist, and Ivan Bebek have visited the Altan
and the Ovorkhangai properties.
We intend to continue to use the services of consultants for exploration work on
our properties. For future mineral exploration programs the company intends to
use the following contractors:
º Derrick Strickland P.Geo, Geologist, B.sc, MBA, a professional geologist
with over 15 years of mineral exploration experience.
º Greg Thompson P .Geo, Geologist, B.sc, a professional geologist with over
20 years of minerals exploration experience.
º Rio Minerals Limited of Vancouver, B.C., who has been providing mineral
exploration services to the mining industry for over 10 years.
51