Location

The Gobi Gold Project is located in the Gobi Desert of western Inner Mongolia, approximately 300 kilometres north of Yinchuan, the capital city of the neighbouring Ningxia Province, and 900 kilometres northwest of Beijing. The exploration permits surround the Zhulazhaga mine that is currently producing approximately 2,000 tonnes per day with a deposit average of 2.53 grams per tonne gold.

Work Program

• Surface mapping, trenching, and IP for drill target definition.

Ownership

The Gobi Gold Project holds exploration permits that cover 30 square kilometres through Inner Mongolia Damo Mining Co. Ltd. (Damo Mining). To date, Minco has earned a 63% interest in the Damo JV and has the right to increase its ownership to 75%, by spending a total of $2.6 million on exploration and development.

Background

The Gobi Gold Project is the culmination of a series of regional stream and drainage sampling programs undertaken by the Exploration Institute of Land and Resources of Inner Mongolia ("EILR"). These programs highlighted several regional gold anomalies, some of which were followed up by mapping, prospecting, and more closely spaced geochemical sampling. Minco completed regional property evaluations in 1998 and signed a joint venture agreement in 1999 with the EILR that led to the creation of Damo Mining, a fully-licensed Sino-foreign co-operative joint venture to explore for metallic mineral deposits within the Inner Mongolia Autonomous Region.

Geology and Mineralization

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The Zhulazhaga gold skarn is hosted by a sequence of Proterozoic platformal sediments which lie within the Tianshan-Xiangan Metallogenic zone. The metallogenic belt lies within a fold and thrust belt which is bounded to the north by the Siberian - Mongolian Craton and to the south by the North China Craton. Supracrustal rocks at Gobi are fractured and faulted, often about north trending axes and intruded by dykes and sills ranging in composition from diorites to granodiorites. Host lithologies include thin bedded limestone units and intercalated calcareous siltites.

Two skarn types are recognizable including distal skarns which lack any obvious intrusion association and proximal skarns which immediately flank diorite-carbonate contacts. Gold-copper skarn zones range in thickness from less than 1.0 metre to greater than 9.0 metres and over these same widths range in grade from less than 1.0 g/t to greater than 14.8 g/t gold. There is a strong association between the position of strongest mineralization proximal to north-south striking normal faults.

Results

Minco believes that the potential for discovering more extensive, near surface skarn mineralization is good, given the limited exploration that has taken place beyond the surficial oxide zones. An initial program of detailed ground magnetic surveys combined with geological mapping was completed to give better resolution of features controlling mineralization.

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Known mineralization is developed in calcareous sedimentary units and proximal to small felsic intrusions. Field examination of two prospects visited in 1999 showed features indicative of skarn style mineralization. The 2000 exploration program involved ground magnetic surveys and geological mapping over the two identified skarn prospects to establish drill targets. Field-checks of the remaining geochemical anomalies were conducted. The 2002 drill program tested results from previous exploration programs and 2003 fieldwork involved more drilling on the most favorable targets.