12 Years in Mongolia

By David Anderson CEO QGX Gold

QGX is a Canadian based exploration company listed on the Toronto Stock Exchange whose sole focus is mineral exploration in Mongolia . The company has been active in Mongolia since 1994 when it became the first foreign company to be granted a mineral lease.

The company has now been active in the country for 12 years and management has developed a good understanding of the country's mineral potential, the challenges facing the emerging mining industry and has established good relations with the people and government of Mongolia .

In the last three years the company has made two discoveries that are now undergoing advanced engineering studies. The initial discovery at the Central Valley Zone (CVZ) in Western Mongolia is a copper, gold, silver volcanogenic massive sulphide deposit and the second Baruun Naran is a significant coal deposit in the South Gobi near the border of China .

The company plans to fast track the coal deposit to production which is anticipated to begin in the second half of 2007. In October 2003 Barrick Gold acquired a 9.4% interest in QGX.

QGX's success in the past few years is predicated in part on the company's historical presence in country but it is also a testament to the mineral endowment of the country.

The geology of Mongolia is highly prospective and hosts a "bread basket" of resources that it can offer its hungry neighbour to the south. It is surrounded by some of the world's largest mineral deposits and the country's mineral potential has been confirmed not only through QGX's success but the Russian/Mongolian discovery of Erdenet ( a large porphyry copper deposit), Tavan Tolgoi (Asia's largest undeveloped metallurgical coal deposit) and more recently, the discovery of Oyu Tolgoi.

As a result, there are now more than 200 mining and exploration companies (both juniors and majors) active in Mongolia and we can expect to see news of their success in the years ahead.

Mongolia in many ways is similar to Canada . It has a large land area of over 1.5 million square kilometres with a small population of 2.8 million, great mineral wealth, and large neighbours on its borders.

Like Canada , Mongolia will be dependent on the development of the natural resource industries to ensure robust economic growth. Mining has historically been the prime source of foreign exchange in Mongolia primarily through the exports of copper, molybdenum, fluorspar and more recently coal.

Despite Mongolia 's mineral wealth and its proximity to China the rate of economic growth will be a direct function of the strength of the mining industry. This can only be achieved by maintaining the existing, attractive and transparent mining laws that will ensure the foreign investment necessary to overcome infrastructure challenges.

If Mongolia is successful in developing the necessary infrastructure during the current bull market the country will maintain its competitiveness when the markets soften. Established infrastructure will improve the economics of future discoveries that in turn will ensure ongoing employment and maintain a strong tax base for the government during tougher times.

While the difficulties of working with a young democracy could temporarily slow the growth of the industry recent history suggests that the government will continue to support attractive and transparent mining laws that are fair and equitable to all parties.

Strategies for growth at QGX are focused on the rapid evaluation and development of the Baruun Naran metallurgical coal deposit in the South Gobi which is anticipated to be in production in the 2nd half of 2007.

In a parallel effort engineering studies are underway at the Central Valley Zone (CVZ) which is a copper-gold-silver deposit in Western Mongolia . In early 2005 QGX published a NI-43101 study on the CVZ indicating a resource of 3.3 million gold-equivalent ounces (measured, indicated and inferred).

Exploration teams are actively exploring in the immediate areas of these deposits and on other exciting exploration opportunities throughout the country.