CURRENT TO SEPTEMBER 14, 2004

Figure 1: Satellite Image of the Dachang Project Area

Golmud (pronounced "Geermu") is a new industrial city located on the plateau in central Qinghai. Close to the borders of the Gobi Desert and the Kunlun Mountains at an elevation of 3,000m, the city is strategically situated in the Golmud River valley, which provides the primary access route into Kunlun Mountains of southern Qinghai and the Autonomous Region of Tibet. With a population of 150,000 the city has experienced construction and heavy equipment contractors and an infrastructure supported by modern road, rail and air service to the capital Xining and the rest of China.

Situated on the Qinghai Plateau at an elevation of 4,500m the Dachang Project area is accessible by four-wheel drive vehicles along paved and gravel roads to the property a distance of approximately 250 kilometres.

Figure 2: Geology Map of the Dachang Project Area

The Dachang Project Area is underlain by a sequence of Mesozoic sandstone, slate and limestone of the Bayankara Mountain Group. This sequence of sedimentary rocks has been intensely folded and fractured along a northwesterly trending axis. The property lies on the northern flank of the Apeng'eliqu anticline, which tends northwesterly along the southern boundary of the property. The dominant structural feature in the area is the Gaude MaduoThrust Fault, which trends northwesterly across the area and transects the center of the property. This thrust fault is parallel to and cuts the northern flank of the Apeng'eliqu anticline and is believed to be the major controlling factor for the gold deposits on the property. Numerous northeasterly trending cross faults, such as the Zhayejia fault offset the sedimentary sequence. Granodiorite, an intrusive is exposed east of the property.

The topography generally reflects the underlying geology. The faults, representing major fracture/breccia zones, are less resistant to weathering and erosion and define the river valleys in the area. The erosion of the sediments is generally uniform across the sequence; however, the more silicified the units are more resistant to erosion. These units tend to represent low ridges parallel to the strike of the overall sedimentary sequence.

Figure 3: Satellite-Airborne Magnetic Image of the Dachang Project Area

All rocks are composed of minerals and all minerals have their own magnetic susceptibility or fingerprint. For example, magnetite a principal mineral of iron ore has a high magnetic susceptibility. In contrast, limestone generally contains no magnetic minerals and would therefore have a low magnetic susceptibility. As a result of this basic principle, rocks can be identified by their magnetic fingerprint.

Figure 3 illustrates areas of different colors from white to green to red. White to light green represents areas underlain by rocks having relatively low magnetic susceptibility and red represents areas underlain by rocks having relatively high magnetic susceptibility. The entire Dachang property exhibits various shades of white to light green. Inter-Citic's consulting geophysicis believes these various shades represent individual rock units within the sedimentary sequence mapped on the property. In the immediate area surrounding the Dachang property there are three distinct red areas; one located immediately southwest, one small area immediately northeast, and one larger area comprising a number of discrete red clusters immediately east of the property. Inter-Citic's consulting geophysicist believes that these red areas are the magnetic fingerprint of an intrusive, probably part of the same intrusive. Geological mapping east of the property has identified a granodiorite intrusive associated with this magnetic fingerprint. The significance of this observation is that Inter-Citic's consulting geologists believe that this intrusive is the source of the gold at Dachang and was the heat pump, which initiated the convection currents of the gold bearing solutions within the faults and fracture zones identified in Figure 2.

Figure 4: Satellite Geochemical Composite Image of the Dachang Property

Figure 4 illustrates the results of three geochemical surveys complete over the area and on the property, overlain on the satellite image. The orange contour lines are similar to those on a topographic map; but in this case, instead of representing increases in elevation these contour lines represent increases in gold concentration based on the results of a regional stream sediment sampling program. The lowest contour line represents a gold concentration of 2.5ppb and the highest contour line represents a gold concentration of greater than 10ppb. The second layer of data is represented by various shades, ranging from orange to yellow. Each color represents an increase in the concentration of gold from a low of 4ppb to greater than 240ppb. The final layer represents the results of a detailed soil geochemical survey over a portion of the property and illustrates numerous blue zones, which identifies 28 individual gold zones within the survey area. It is significant to note the scale of the map; the area outlined by the contour lines and the subsequent orange to yellow infill areas cover over 100km2 or approximately 40 square miles. This is a very large gold bearing area, which has been traced northwesterly for over 25km, approximately 15 miles and is coincident with the Gaude Maduo fault.

Figure 5: Satellite Geochemical Composite Image of the Southeastern Portion of the Dachang Property.

Figure 5 is a close-up of Figure 4 and focuses on the southeastern portion of the Dachang property. The size and extent of the gold anomalies becomes very clear and the significance of the 28 individual gold zones becomes clearer. It is significant to note that the density of the individual gold zones identified in blue in the central portion of the survey area is very high and abruptly stop to the southeast only to pick up again approximately 5km further to the southeast. The explanation for this rest in part because of the elevation of the property and in part because of inability to of the Chinese geologists to collect samples in this area. At Dachang the ground is permanently frozen (permafrost) for most of the year, which make makes collecting soil sample very difficult and in the particular area discussed above the Chinese were not able to collect useable samples because of the environment. The significance of this fact is that there is strong evidence to suggest that the 28 gold zones identified in the central portion of the survey area continue southeasterly for an additional 5km where similar geology and mineralization has been identified.

Figure 6: Detail of Several of the 28 Mineralized Zones

Figure 6 details several of the 28 gold bearing zones and focuses of three zones referred to as Zones 9, 10 and 11. These zones are located in the central part of the image and represent the longest continuous zone(s) defined by trenching, over 5km. The rust colored lines represent trenches, which have been excavated across the zone (s) to expose the geology, determine the width of the gold bearing zone (s) and the on-trend continuity of the gold zone (s).

Figure 7: Detail of Western Portion of Gold Zones 9, 10 and 11

Figure 7 details the western portion, approximately 2.5km length, of gold Zones 9, 10 and 11. Several sets of data are shown on this figure. The prefix "Z" designates a diamond drill hole, the prefix "T" designates a trench and the prefix "QJ" designates an exploration shaft. The work on this portion of the zone (s) discovered potentially economic gold grades over mineable widths and exhibits exceptional continuity along strike of the 2.5km of the zone (s) tested to date. Given the encouragement the Chinese completed a mineral resource estimate for the entire 5km length of zones 9, 10 and 11 defined in part by drilling and in part by trenching trenching. Dr. George Cargill, Inter-Citic's independent consulting geologist review the Chinese estimate and focused his review on the 2.5km length defined by drilling and reported a 43-101 compliant inferred resource of 5.7 million tonnes averaging 7g/t gold (approximately 1.3 million ounces). This inferred resource was based only on the results up to and including the 2002 exploration program. The results of the 2003 program were not received until after Dr. Cargill completed his review; however, the results of the 2003 program greatly increased the confidence in Dr. Cargill's review. The significance of this inferred resource is that it represents only a 2.5km section of three (zones 9, 10 and 11) of the 28 gold zones identified on approximately 10km2 of the 275km2 property area; most of the area is regionally anomalous in gold.

Figure 8: Gold Histograms along drill hole on the Western Portion of Gold Zones 9, 10 and 11

Figure 8 shows the direct relationship between the gold intersected in trenches and drill holes and the gold geochemical anomalies. The results strongly indicate that where gold geochemical anomalies have been identified follow-up trenching and drilling will intersect gold. This is extremely valuable exploration tool and supports Inter-Citic's belief that the property has excellent gold exploration potential.

Figure 9: Actual Histograms of the Drill Hole Assays on Zones 9, 10 and 11

Figure 9 shows the direct relationship between the gold geochemical anomalies and the gold zones discovered by trenching and drilling. Hole Z-11101 located on the far right portion of the image was one of the better drill holes, completed in 2003, on the property, which intersected 58.2 m averaging 5.3g/t gold and included 4.3m averaging 22.6g/t gold (See Press Release of January 8, 2004).

Figure 10: Detail of Typical Intersections on Zones 9, 10 and 11

Figure 10 details typical assays from various mediums on the western portion of Zones 9, 10 and 11. In this image "ZK" refers to drill holes "TC" and "CY" refers to trenches and "QJ" refers to exploration shafts.

Click on the map above for a larger version.