Marino Pieterse is the editor of Goldletter International. He has prepared a special report on Jinshan Gold Mines. Goldletter International is the international independent information and advice bulletin for gold and related investments. The ASIA Miner presents Goldletter International’s report on Jinshan Gold Mines. More information about Goldletter is available at www.goldletterint.com or e-mail info@goldletterint.com

Jinshan Gold Mines is building one of the largest gold mines in China through its 96.5% owned Changshan Hao (CSH) Gold Mine in Inner Mongolia.

The final feasibility study indicates the mine is expected to produce about 117,000 ounces of gold per year for an initial mine life of about 9 years. An engineering study is underway to expand gold production from its present rate to about 160,000 - 180,000 ounces per year.

In addition to the development of the CSH Gold Mine, Jinshan is drilling the Dadiangou Gold Project in Gansu Province and is conducting regional exploration in the prolific Tianshan Gold Belt in Xinjiang Province, northern China, where it has 13 exploration licences.

Through its well established joint venture partnerships with Ningxia Pacific Mining on the development of the CSH Gold Mine, Gansu Pacific Mining on the Dadiangou Gold Project and Yunnan Xindian Mining on the East Tianshan Projects, Jinshan has a strong presence in China.

Jinshan has earned a 96.5 % interest in the CSH Gold Mine Project in Inner Mongolia, centrally positioned within the prolific east-west trending Tianshan Gold Belt that extends from Uzbekistan, Kazakhstan and Kyrgyzstan through northern China into Mongolia. The Ningxia Nuclear Industry Geological Exploration Institute has the remaining 3.5% carried interest.

Jinshan has fully fulfilled its contractual obligations to the Chinese partner by payment of US$2.0 million.

The stratigraphical setting, the style of structural deformation and the age of mineralization at the CSH Gold Project is similar to several very large sediment-hosted gold deposits found along the Tianshan Belt, including Muruntau (140 million ounces), Vasilovakoye (20 million ounces), Kumtor (10 million ounces) and Bakyrchik (13 million ounces).

The findings from an independent final feasibility study prepared by KD Engineering of Tucson, Arizona, pursuant to Canada’s NI 43-101, support the development of a commercial mining operation at the CSH Gold Mine Project. The independent study was designed to not exceed the current mine permit applications and indicates that the mine would be capable of producing about 117,000 ounces of gold per year for an initial mine life of approximately 9 years.

Gold production at CSH has totalled 26,945 ounces since start-up on July 31, 2007 to the end of January 2008. Gold sales have totalled US$16.7 million at an average unhedged price of US$762 per ounce over this period.

The mine is performing at about 50% of its design capacity with leaching slowed during start-up and through the first winter of operation.

In future years, the volume of ore on the leach pad will be substantially increased and it is expected that solution temperature, volume and peg grade, will be easier to maintain, resulting in improved performance.

The mine continues to work through start-up toward commercial production, expected later this year, by optimizing the leach circuit. Mining activities are confined to the North-west Zone where about 20,000 tons of ore are mined per day.

An expansion study is underway that will evaluate the potential to increase the mining rate from 20,000 to 30,000 tonnes per day and update the proven and probable reserves to include the South-west Zone and the expanded resource at the Northern Zone.

On February 14, 2008 Jinshan announced results of a new NI 43-101 compliant resource estimate at its CSH Gold Mine by Mario Ross of Geosystems International. Measured and indicated resources, at a 0.35 grams/tonne cut-off grade, now total 171.3 million tonnes at 0.71 grams/tonne gold for 3.92 million ounces of contained gold, compared with the April 2006 estimate of 2.9 million ounces of gold. In addition, inferred resources are now estimated at 1.33 million ounces of gold, contained within 64.2 million tonnes grading 0.65 grams/tonne gold at a 0.35 grams/tonne cut-off.

With the addition of the inferred resources at Dadiangou total gold resources at Jinshan’s China projects are now 3.9 million ounces in the measured and indicated categories and 2.1 million ounces of gold in the inferred category.

Jinshan has started an engineering study to expand the projected gold production of the CSH Gold Mine to 160,000 - 180,000 ounces per year. The expansion study, being prepared principally by KD Engineering, is designed to incorporate the mining of measured and indicated resources in the South-west Zone.

Exploration and drilling will continue at the CSH Gold Mine during the 2008 field season. The first priority for exploration is to convert inferred resources to the measured and inferred category with additional infill drilling at the North-east and South-west zones.

The second priority will be to drill several gold anomalies and carry out trenching along the 9km surface strike extension of prospective stratigraphy that was defined by grid rock sampling during the 2007 field season. Finally, additional work is planned for the Dadiangou Property and potentially other prospects in China during 2008.

The Dadiangou gold system is in the central part of China in southern Gansu Province, within the prolific Qinling Fold Belt. The licence covers about 15sqkm and is owned by the Northwest Industrial Nuclear Economic Technical Corp (part of the Shaanxi Nuclear Geology Bureau of China).

The joint venture agreement allows Jinshan to earn a minimum of 80% on the property, with the Chinese partners having the option to participate at 20% or to become diluted.

The Dadiangou Main Zone (DMZ) contains about 87% of the estimated resource. The Dadiangou South Zone (DSZ) and Dadiangou Far South Zone (DFSZ) make up about 12% of the total resource, with the remaining 1% contained within small zones peripheral to the three named zones.

The DSZ and DFSZ are parallel to the DMZ and occur, respectively, 40 and 180 metres south of the DMZ. The DSZ varies in width from 10 to 40 metres and is about 2000 metres in strike length. The DFSZ is 70-90 metres wide and is known to be at least 350 metres in length, but remains open to the west.

In February 2007, Jinshan began a Phase I 5,202 metre drill program at Dadiangou. The focus of this program was to establish the potential to host a bulk-tonnage, open-pit deposit at the main zone. The planned drilling was designed to test a large volume of rock within the main zone in order to define the potential to hoist a bulk-tonnage, open-pit deposit.

The drilling program was budgeted for about US$1.6 million and included about 35 drill core holes to depths of up to 300 metres.

By the end of May 2007, Jinshan announced final results from the Phase I diamond drilling. Results show that the mineralized shear zone extends for at least 2km and remains open in both directions.

Highlights of Phase I drilling included intercepts of 37.7 metres grading 1.63 grams/tonne gold, 24 metres grading 1.95 grams/tonne gold, 32.4 metres grading 1.6 grams/tonne gold, and 19.6 metres grading 2.1 grams/tonne gold.

On December 20, 2007 Jinshan announced final results from its Phase 2 diamond drilling program at Dadiangou. Drilling along strike from previous work has extended the mineralized length of the Dadiangou Main Zone to more than 3km.

Infill drilling and underground sampling in the central portions of the DMZ have returned gold grades and widths consistent with the Phase I results and has provided the data density needed to proceed with the resource estimate.

One hole drilled along the eastern extension to the Dadiangou South Zone (DSZ) has returned the best intercept to date at Dadiangou with 9.0 metres at 6.76 grams/tonne gold. During Phase 2 drilling, 29 diamond drill holes were completed for a total of 6663 metres.

Jinshan has now completed 11,865 metres in 51 drill holes at Dadiangou since drilling began in February 2007.

In addition to the drilling, Jinshan has completed an underground sampling program of all accessible cross-cuts within the central portions of the Dadiangou Main Zone. In total, 37 crosscuts were sampled with continuous, high-quality, saw-cut channel samples. In general, the results from this sampling are consistently and in some cases significantly higher than the results from nearby drill intercepts.

Highlights of underground channel sampling include 6.34 grams/tonne gold over 10.15 metres, 3.31 grams/tonne gold over 11.67 metres and 1.94 grams/tonne gold over 15.30 metres.

Four drill holes were completed at the Dadiangou North Zone (DNZ) and intersected sporadic grades of up to 1.5 metres at 1.29 g/t gold. The DNZ is about 1km north of the Dadiangou Main Zone.

On January 31, 2008, Jinshan announced results of an initial NI 43-101 compliant independent resource estimate at Dadiangou. An inferred resource of 26.3 million tonnes grading 0.92 grams/tonne gold, totalling 778,000 ounces of contained gold, was calculated, using a cut-off grade of 0.4 grams/tonne gold.

Within this global resource, a 1.9 million-tonne higher-grade core was delineated that grades 2.48 grams/tonne gold and contains 152,000 ounces at the same 0.4 grams/tonnee gold cut-off.

Targeting new gold discoveries in the prolific Tianshan Gold Belt, Jinshan has acquired 13 exploration permits under a Sino-Foreign Joint Venture in which it holds a 99% share and the Partner, Yunnan Geological and Mining holds a 1% share. Permits were granted by the State Ministry of Lands and Resources in Beijing.

Using public and private databases, regional geophysics, satellite imagery, locations of known deposits and existing mines, and reconnaissance exploration programs conducted in 2004 and 2005, Jinshan has developed a China-wide GIS database for exploration targeting and property assessment.

The completed data resulting from this effort have proven essential in the evaluation of both the Tianshan Gold Belt and future prospects.

The Changshen Permit, 3 permits totalling 86.2sqkm, is a geological setting similar to the giant Muruntau Deposit in Uzbekistan. Grab samples from quartz veins at Changshen have returned up to 4.6 grams/tonne gold.

The Xingou Permit, 4 permits totalling 146.2sqkm, has interpreted bulk potential. One composite grab sample of veins returned 8.35 grams/tonne gold.

The Kumutage Dong Permit of 43.3sqkm has strata bound gold-copper mineralization which has been mapped over 3km strike length on the property. Assays from this unit range from 5.94 to 27.4 grams/tonne gold along a 100-metre trend. Previously discovered high-grade gold occurrences located immediately west of the permit boundary range up to 38 grams/tonne gold and 1% copper.

The Jingerquan Xi Permit of 86.4sqkm has structurally-controlled gold which occurs as quartz veins and within shear zones hosted by intrusive and sedimentary rocks. Outcrop grab samples have returned up to 17.8 grams/tonne gold.

The Kongqueshan Permit of 38.9sqkm hosts gold mineralization within a 3km diameter area. Gold occurrences range up to 1.27 grams/tonne gold and 0.5% copper from surface rock-chip samples.

The Dananhu Nan Permit of 9.1sqkm hosts porphyry-style copper mineralization which grades up to 1.04 grams/tonne gold with elevated copper from outcrop grab samples. The Hongshingong Dongbei Permit of 9.1sqkm hosts gold mineralization targets.

The Aketage Xi-nan Permit of 17.2sqkm hosts structurally controlled gold mineralization. There are numerous gold and copper stream sediment anomalies and rock-chip sampling has returned up to 0.85 grams/tonne gold.

Surface programs including geological mapping, prospecting, rock and chip sampling, and geophysical surveys are planned for the Changshan projects. The goal of the programs is to define and expand known gold mineralization and may lead to drilling later in this field season.

In addition to the property-specific work, Jinshan’s geologists are conducting regional reconnaissance work and evaluations aimed to acquire and define additional drill-ready projects.

Jinshan is building one of the largest gold mines in China through its CSH 217 Gold Mine. As a result of the production start-up on July 31, 2007, followed by the substantial increase of resources at CSH 217 and the first resource estimate at Dadiangou, the market capitalizaton of Jinshan got a boost to Can$440 million from Can$334 million since our first report on the company, dated August 2007. Our next price objective is Can$ 5.00

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