PROSPECTING REPORT FOR SKMB 8/90 DAERAH SUNGAI KATONG MUKIM HULU NERUS JAJAHAN SETIU FOR

PRELIMINARY INVESTIGATION Initial field inspection and investigation of the prospecting land under SKMB 8/90 in Daerah Sungei Katong area is carried out during the period from 17th November to 27th November 1990. The boundaries of the approved prospecting area are inspected.

1.1

Locality The prospecting land under Prospecting Permit SKMB 8/90 covers a total area of 227.9192 hectares (or 563.200 acres). It is situated south of the confluence of Sungai Kok and Sungai Katong in Mukim Hulu Nerus Jajahan Setiu. The land is located approximately 40km West of Kuala Terengganu or about 30km south of Kg Buloh.

Centre point of the elongated shaped prospecting land is near grid reference 325-810 on Topo Sheet No 37 under Ulu Telemong. 1.2 Access Access into the land from Kuala Terengganu is via the public road linking to Kg Buloh north of the land. At about 33Km along the road near Kg Sungai Tong, a secondary road bances out south westward and travels along the banks of Sungai Pelong passing Kg Banggol Nyor. Total distance is about 17Km to arrive at the northen corner of the land. 1.3 Topography In general, the ground terrain in the land comprises of lower and undulating low lying plain in the centre. Flanking to the east and west are rising high ground ascending to over 110, above Mean-Sea-Level(MSL). The level of the low lying central plain is near 45m above MSL. The low lying plain is occupied by Sungai Katong and Sungai Kok in the east and West respectively. Both rivers flow northward meeting at the northern section of the land and to join Sungai Tualang which in turn flows northward to join the larger Sungai Pelong some 2 Km north of the land

1.4

Vegetation

Main vegetation covering the land now is mainly shrubs and thick bushes in the high ground. Dense undergrowths are found in the lying valley floors. 1.5 Geology Regional geology indicates that the land is lying in a basin of sedimentary rocks of the Carboniferous. Age surrounded by the plutonic granitic missives of the Eastern Belt. Numerous major faults are identified in the area trending near east-west direction. The sedimentary shale rocks are metamorphosed. Auriferous depositions found here are mainly elluvial ore bodies with possible auriferous lode veins in the high land area. The associate matrix is gerallyshally-quartz material in thin lenses near the basal layer. Associated minerals are mainly pyrite. 1.6 Feasibility Mining operation for the elluvial golddeposits in the low lying land is feasible with sufficient area for tailing retention.

PROSPECTING WORKS Field prospecting works are executed from 6th January 2010

2.1

Type of Mineral Prospected Prospecting works are carried out with the main aim of locating and delineating the existence of economic gold ore bodies for full scale mining operation.

2.2

Method of Prospecting The main method of prospecting is by pitting excavated with the aid of a backhoe excavator. The size of each pit is 1.5m by 4m down to bedrocks. The pits are refilled after completion of sampling works.

2.3

Prospecting Program All positions of the pits are carefully planned and executed systematically on a 160m apart along river valley floors and lower portion of hill slopes to give maximum coverage of the land.

2.4

Prospecting Expenditures Total costs and expeditures of the entire prospecting programme can be summerised as follows: 2.4.1 Preliminary investigation inclusive of demarcation works 2.4.2 Boring/Pitting works 30days @RM400/Day RM12,000.00 2.4.3 Travelling Expenses 2.4.4 Prospecting Permit Expenses : RM2,000.00 : RM2,000.00 : RM2,000.00 :

2.4.5 Mining Report & Legal Fees TOTAL EXPENDITURES 2.5 Prospected Area

: RM3,000.00 : RM21,000.00

The prospecting programme executed covers a total area of about 150 hectares covering mainly the low lying area in the central portion. More detail works to delinate the lode gold ore bodies in the high ground may be carried out in later stage.

Prospecting Results The prospecting results, from a total of 48 pits with a total depth of 266.6m, shows that elluvial auriferous ore bodies are non uniformaly distributed in the valleys floor. Average epth of the placer deposits is 5.5m with overburden depth extending down to about 4.5m. The overburden waste material comprises of mainly decomposed granite and altered shale. Underlying auriferous ellivium of about 1.0m in thickness consists of mainly shally quartz material. Bedrocks encountered are predominatly shale, decomposed shale and quartz veins. In view of the wide spatial distribution of the elluvial gold deposits, the whole of the central low lying area of SKMB 8/90 comprises of 117.4 hectares (290 acres) is selected for full scale mining operation. The overall average value of the gold deposits in the selected area is 0.120g/cu m at an average depth of 5.6m. The free native gold particles vary from fine to medium sizes. Purity of the gold particles ranges from 850 to 920 parts per thousand. Associated heavy minerals are mainly pyrites. The proven economic gold ore reserves within the selected area can be summarized as follow. The recovery factor of 75% is used in the evaluation. Summary of gold ore reserves is as follows; Total area of economic ore reserves Overall averahe depth of ore bodies Total throughput to be mined Average grade of ore bodies Total Gold Ore Reserves Recovery Factor Total Recoverable Gold Ore Reserves @880 ppt purity Value at the current price (1 May 2011, RM140/g) : RM35,280,000.00 : 50 ha : 5.6m : 2,800,000 cu m : 0.120 g/cu m : 366,000 grams : 75% : 252,000 gram

About 20% of the economic gold reservesis locked in the river and its banks. These gold reserves shall only be released after deviation of the existing river courses. Suitable river

deviation proposal shall be submitted at later stage when the mine is in operation.

Proposed Mining Scheme 4.1 Mining Operation The economic elluvial gold ore bodies in the land are shallow and widely separated and located in hilly terrains. Therefore, the most suitable mining method to be employed to exploit the reserves is by the Opencast Dry Excavation Method. By the proposed mining scheme, both the overburden waste and the ore bearing elluvium shall be dry excavated using hydraulic backhoe excavators, loaded onto tipper lorries to be transported to the respective sites. Whilst the waste material shall be dry stacked in the designated areas, the gold ore bearing material shall be delivered to the palong site. Initial operation shall involve the construction of the perimeter bunds around the tailing retention area using the waste overburden material. The ore bearing material transported to the palong site shall be washed or broken-up by strong water jets, in a shallow through with reinforced concrete base. Oversize gravels of quartz, and hard shale shall be removed by the grizzly bars in front of the through. The underflow slurry from the grizzly shall pass over an initial section of gold-collection chute lined with riffles to enable first stage of gravity separation of the gold particles and the associated heavy minerals. After this gold-collection chute, the slurry shall then be distributed into the 4-lane palong body lined with more riffles to enable second stage of gravity separation of gold and other heavy nminerals. Gold concentrates shall be obtained by cleaning the gold collection chutes and the palong at regular intervaqls. Final clean gold ore shall be obtained by 2 to 3 layers of Shaking Tables. 4.2 Tailing Retention Tailing retention of the sand and slime tailing material from the end of the palong shall be retained in a confined area. The perimeter bund shall have an initial height of 3m, crown width of 7m and side slope of 1:1.5. Total wet dumping capacity of the proposed initial tailing retention area can be calculated as follows; Total Area of tailing dump Total Depth of initial dump Total Dump Capacity : 7.0 Ha : 3.0 m : 7.0 X 10,000 X 3.0 = 210,000 cu m It is anticipated that the rate of mining achievable shall be about 50,000 cu m per

month. With the ore to waste ratio of about 1:4.6 and taking into consideration of about 20% oversize rock material, the volume of tailing sand to be generated and expected useful life of the proposed tailing retention area shall be: Volume of tailing sand = 50,000 / 5.6 X 0.8 = 7,100 cu m/month Life of initial dump = 210,000 / 7,100 = 29.6 months (or 2.5 years) Therefore, the wet dumping capacity of the proposed initial tailing retention area shall be sufficient to cater for anticipated volume of tailing from treating the elluvium in the initial stages of mining operation. In practice, large portion of the sand and oversize generated surfaces. Hence, the useful life of the proposed initial tailing retention area is much longer. A spillway shall be installed at the far end of the proposed tailing retention area to allow only clear and excess water to be discharged by overflowing its sill. Close circuit water recirculation shall be effected between the tailing pond and the monitors near the head of the palong via a 270kw water pump.

Operational Life The operational life of the land is dependent upon the total volume to be mined and the rate of mining achievable. Therefore, the operational life of the mine can estimated as follow; Operational Life = Total Throughput to be mined / Rate of mining per month = 2,800,000 / 50,000 = 56 months (4.7 Years) However, consideration should be given to the inevitable time losses due to the yearly monsoon period, initial development works and other unforeseen stoppages. It is estimated that the additional time period required is equivalent to about 3 months for every year of the estimated operational life. That is a total of 14.1 months approximately should be added to the estimated operational life of 56months, giving a total time period of 70.1 months or about 5.8 years. Hence, it is strongly recommended that the mining lease application by PRODUKTIF TETAP SDN BHD over the selected area of 117.4 hectares (or 290 acres) within Prospecting Permit No 8/90 be approved for a total time period of SIX (6) Years.

KEPUTUSAN KERJA CARIGALI UNTUK BIJIH EMAS DI ATAS SKMB 8/90 MUKIM HULU NERUS DAERAH KUALA TERENGGANU OLEH PRODUKTIF TETAP SDN BHD
Bil No Lubang dalam (m) berbijih (m) berbijih (m) berbijih (g/cu m) (g/cu m) Hampar Jumlah Dlm lap Tebal lap Nilai lap Nilai hit/pan Batu

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

D-5 D-7 F-5 F-7 F-9 H-7 H-9 H-11 J-9 J-11 J-13 L-9 L-11 L-13 L-15 N-9* N-11 N-13 N-15 N-19* P-5* P-7* P-9 P-11 P-13 P-15 P-17 P-19 P-23*

6.2 6.2 5.7 7.6 4.1 5.1 4.7 5.1 5.1 6.7 4.3 5.6 6.0 6.4 4.1 4.7 5.3 6.2 4.6 4.7 4.1 5.2 4.3 4.7 7.3 5.1 6.6 5.0 6.3

4.3 4.0 4.6 5.8 3.1 5.1 3.8 4.0 4.0 4.7 3.8 4.6 4.8 4.8 3.0 4.7 4.0 6.2 3.2 4.7 4.1 5.2 3.2 3.6 5.6 4.2 5.2 4.2 5.8

1.9 1.2 1.1 1.6 1.0 0.9 1.1 1.1 2.0 0.5 1.0 1.2 1.1 1.1 1.3 1.4 -1.1 1.1 1.7 0.9 1.4 0.8 0.5

0.946 0.433 0.518 1.283 0.492 0.470 0.232 0.232 0.402 0.774 0.280 0.840 0.261 0.261 0.285 0.526 0.195 0.128 0.601 0.623 0.660 0.625 0.378

0.290 0.100 0.100 0.270 0.120 NIL 0.090 0.050 0.050 0.120 0.090 0.050 0.210 0.070 0.070 NIL 0.070 NIL 0.160 NIL NIL NIL 0.050 0.030 0.140 0.110 0.140 0.100 0.030

DS DS DS DS DS DS DS DS DS DS DS DS DS Q DS S DS S DS S S S S S DS DS DS DS S

30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48

R-7* R-9* R-11 R-13 R-15 R-17 R-19 R-21 R-23 R-25 T-15 T-17 T-19 T-21 T-23 T-25 T-27 V-27 X-26

4.3 5.2 6.3 6.1 5.6 6.4 6.1 6.1 6.0 3.7 6.4 5.1 7.2 6.8 5.5 5.4 6.1 6.3 6.0

4.0 4.6 5.0 5.2 4.2 6.4 5.2 5.1 5.0 3.0 5.2 4.2 5.4 5.1 4.6 4.8 5.0 5.0 5.0

0.3 0.6 1.3 0.9 1.4 0.9 1.0 1.0 0.7 1.2 0.9 1.8 1.7 0.9 0.6 1.1 1.3 1.0

0.430 0.953 0.533 0.949 0.280 0.203 1.098 0.720 0.370 1.440 0.623 0.640 0.920 0.672 1.170 0.444 0.824 0.180

0.030 0.110 0.110 0.140 0.070 NIL 0.030 0.180 0.120 0.070 0.270 0.110 0.160 0.230 0.110 0.180 0.080 0.170 0.030

DS DS DS DS DS DS DS DS DS DS Q Q DS DS DS DS DS DS DS

* Lubang gerek diluar kawasan pilihan

Dlm Lap Hit/pan D S Sch G Q Lst

: dalam : lapisan : hitung panjang : Decomposed : Shale :Schist : Granite : Quartz : Limestone

Summary Detail Jumlah bilangan lubang dicarigali Hitung panjang dalamnya Hitung panjang nilai bijih emas (g/cu m) Kawasan digerek 48 266.6/48 28.442/266.6 Kawasan Dipilih 41 231.7/41 27.840/231.7

0.107

0.120