Michelago Limited (MIC) – Advancing towards Gold Production in China

• The approval of a number of resolutions on 16 July 2003, has paved the way forward for MIC to acquire a 60% interest in two joint ventures with 40% held by the Laizhou Jincheng Gold Mine Group (Laizhou Gold) in the Jinya Gold Mine and nearby Exploration tenements located in the Guangxi Zhuang Province of southern China.
• A Chinese feasibility study was completed on the Jinya Gold Mine following 304 diamond drillholes, exploration level and shaft development, and minor mining of the near surface ore in 1995. The mine closed in 1997 (due to the ore’s refractory nature), after producing 380,000t at 5g/t. The Jinya ore was tested in early 2002 (as part of the feasibility study) and bacox recoveries were a very acceptable 95%.
• However, a revised study and review of the data is being undertaken by Michelago. MIC have a conceptual schedule of commencing construction in January 2004, with trial underground mining starting in December 2004, and process plant commissioning in June 2005 for concentrate sales at 39,000ozpa from August 2005. MIC then intends to complete a feasibility study in April 2006 based on installing a bacox plant in Guangxi for production from November 2006.
• The development of the Jinya Gold Mine is being driven by the 40% JV partner Laizhou Gold which is doubling the size of its Bacox plant (in the Shandong Province) to 200,000ozpa in November 2003 and needs refractory ore.
• The Jinya gold ore mineralisation has been classified as Carlin-type by the US Geological Survey in a recent open-file. It has the potential to develop into a significant gold district, and has the advantage that it does not need to find a bacox plant to treat its ore, it already has an offtake agreement for a 95% recovery.