Sino Gold has increased its ownership in the Eastern Dragon Lode 5 gold-silver project and the surrounding exploration licence, and will shortly begin an aggressive drilling program at the property in northern China’s Heilongjiang Province.

The company has spent US$20 million on increasing its Eastern Dragon Lode 5 stake from 80% to 95% and a further US$11 million in increasing its stake ion the surrounding 53sqkm exploration licence from 25% to 60%.

Sino Gold’s chief executive officer Jake Klein says, “We are very pleased to increase our ownership in both Eastern Dragon Lode 5 and the surrounding exploration licence. Our feasibility studies completed to date have confirmed the uniqueness of the asset in the global gold universe with predicted cash operating costs of only US$100 per ounce, including silver credits.

“Increasing our ownership in the surrounding area enables us to trigger a comprehensive exploration program for Lode 5 and the surrounding ground in the upcoming field season. We plan to mobilize five drill rigs to Eastern Dragon by late April.

“We look forward to testing the strong potential for Lode 5 along strike and for parallel lodes plus now exploring the surrounding area for additional high-grade, epithermal deposits similar to Lode 5.

“Our team is continuing to progress the required permitting and further studies aimed at enabling the Sino Gold Board to commit to develop the Eastern Dragon Project during 2009 to become Sino Gold's third operating mine as rapidly as possible.”

The geological setting of the surrounding area is considered favourable for hosting similar epithermal gold-silver deposits. A number of outcropping quartz veins have been previously identified and tested to varying degrees by trenching and drilling, some with known gold mineralization. A systematic exploration program is planned to begin early in the 2009 field season.

Very attractive project economics for Eastern Dragon Lode 5 have been detailed in a recently completed Chinese Feasibility Study. The high silver grade of the ore body provides significant revenue to supplement the gold revenue.

A Beijing design institute has recently completed the study, which is a key document required to progress permitting for the project. In parallel with obtaining relevant approvals from the Chinese authorities, engineering design work for the project is progressing.

Sino Gold has set an ambitious schedule to bring Eastern Dragon into production. Development may start in late 2009 if feasibility and design work continues on schedule and provided required approvals are received expeditiously.

Eastern Dragon Lode 5 is a high-grade, low-sulphidation, epithermal, gold-silver vein deposit and the Chinese study indicates it is potentially a simple combined open-pit and underground mining operation with a carbon-in-leach processing plant.

The initial mineral resource estimate totals 3.4 million tonnes at 7.1grams/tonne gold and 66 grams/tonne silver, containing 0.8 million ounces gold and 7.2 million ounces silver.

www.sinogold.com.au