CHINA – Initial estimate for Zhao Gou deposit

The maiden resource estimate for Dragon Mountain Gold’s Zhao Gou deposit in the Lixian Project is 2.2 times larger than reported by previous explorers.

The inferred JORC resource is 18.9 million tonnes @ 1.8 grams/tonne gold for 1.1 million ounces and it remains open in all directions. It was based on drilling undertaken in the past 11 months.

Zhao Gou is the first of at least four deposits in the Liba area within the Lixian Project to be delineated.

Within the resource is a core of high grade mineralization which contains 610,000 ounces grading 2.4 grams/tonne gold. This higher grade material is open at depth, to the east and will enhance the economics of the deposit.

The estimate also includes a high grade core up to 36 metres wide that has been identified from near surface down the entire eastern boundary of the resource. The core includes drill intersections of 115.7 metres at 3.96 grams/tonne gold and 43.3 metres at 5.32 grams/tonne gold from 75 metres and 30 metres below surface respectively.

The stage 1 mineral resource has only been drilled to a depth of about 250 metres and represents only the central 440 metre portion of known mineralization that extends over a known total 800 metre strike length. The resource remains open along strike and at depth with additional mineralization also identified in the hanging wall and footwall which remains to be included in further resource upgrades.

Initial scoping studies on the stage 1 resource at varying gold prices and using expected operating costs are continuing. Studies demonstrate that even at this preliminary stage, the partially delineated resource at Zhao Gou could see an open pit developed to more than 165 metres deep with strip ratios in the order of 4:1 being targeted.

Dragon Mountain has submitted its Mining Area Demarcation application, which begins the process of obtaining a Mining Licence. The Environmental Impact Statement and several other supplementary reports required for the licence application are near completion.

www.dragonmountain.com.au

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