Gold Exploration in West Africa

[FL]

NEW Senegal: Mineral Deposits Ltd. (MDL in Sydney)

See: http://www.mineraldeposits.com.au/index.html

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Company Profile

Mineral Deposits Limited is an Australian based resources company, developing a gold project in Senegal and two mineral sands projects, one in Senegal and the other in southern India. In order to develop these mineral sands and gold Projects, which are of an international calibre, MDL combines its proven management and marketing skills with the technical expertise of major external groups.

The Grande Côte Zircon Project ("GCZP"), on the coast of Senegal, is in feasibility study stage and is expected to ramp up production of 70,000 tonnes of Zircon and 12,000 tonnes of Rutile/ Leucoxene per annum, in late 2006. MDL is relocating much of its existing heavy dredge and concentrating equipment from Australia, where it is currently being disassembled, to the GCZP, thus saving at least U$50 million of capital expenditure.

The Sabodala Gold Project, which is situated 450 kilometres inland from the coast, near the Mali border, will be subject to a feasibility study. The Mining Convention has been signed by the Minister of Mines and Energy and the commencement of the feasibility study into recommencing a gold mine, where a resource of some 1 million ounces of gold has previously been estimated, is awaiting the Presidential decree.

In India, Mineral Deposits has a contract with Beach Minerals (Sands) Company pvt Ltd ("BMC") to assist them with marketing the ilmenite, which is being produced from the recently expanded Kuttam operation in the state of Tamil Nadu. This expansion was facilitated by the relocation and re-erection of the Company's Fullerton wet mill to BMC's sand mining operation in India

In July 2003, the company ceased operating activities, which were centred on production at the Hawks Nest mineral sand plant in New South Wales, Australia. The company is completing it environmental rehabilitation programs.
Sabodala Gold Project

Mineral Deposits Limited ("MDL") was selected by the Government of Senegal to develop the Sabodala Gold Project ("Sabodala") in October 2004, following an international open tender. The open tender was also keenly sought by international mining companies including several major gold producers.

The MDL bid was as a joint venture between MDL (70%) and private Senegalese interests (30%). MDL and the private Senegalese interests, subject to finalising title over Sabodala and following completion of the Mining Convention, intend to merge their interests in the project with MDL to manage.

The Mining Convention has been signed by the Minister of Mines and Energy and the commencement of the feasibility study into recommencing a gold mine, where a resource of some 1 million ounces of gold has previously been estimated, is awaiting the Presidential decree.

Once concluded the company intends to rapidly optimise and validate the existing gold reserve/ resource. Work will include a drill programme, commencement of an ongoing social responsibility plan and initiation of an environmental impact study. MDL plans to expedite start-up of a gold mining operation.

The political environment in Senegal is very attractive for investment. The new Mining Code (24 November 2003) has facilitated an encouraging investment environment for the development of mining projects. In particular, the tax incentives introduced for new mining projects include a tax-free period of up to 15 years.

The area involved is a 20.3 square kilometre rectangular lease centred on the main defined ore zone and oriented so as to encompass the strike extensions both north and south of the major shear zone hosting the deposit. The deposit, as known to date, has been partially drilled and has a previously announced resource of approximately one million ounces. MDL believes that drilling below the current drilling limit of 120 metres and along strike has the potential to substantially expand the resource. The shallow nature of the deposit, the good grade and the low waste to ore ratio all point to an outstanding development opportunity. Further details of the project are given below.


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SABODALA

The Sabodala deposit was drilled in the early 1980s by the French government's resources arm, Bureau de Recherches Geologique et Miniere ("BRGM"). The Australian company Paget Mining Limited optioned the project from BRGM in 1993 and conducted a limited drilling programme. Following a dispute with BRGM, the option expired in 1994 with drilling incomplete. No work was done on the project until a Senegalese company mined a small quantity of soft, shallow oxide ore in 1999.

Access to the Sabodala project area is very good with all-weather roads leading to and throughout the project area and a large private, paved air-strip within 10 kilometres.

Based on the limited and incomplete work of Paget combined with the earlier BRGM drilling, consultants commissioned by Paget calculated a resource of 8.79 million tonnes at 3.15 grams per tonne. MDL will not quote its own resource estimates until it has completed its proposed detailed 20,000m development drilling program.

Sabodala is hosted by Birimian greenstones and sediments and is linked structurally to a number of large gold deposits in adjacent Mali by the broad Mali-Senegal Shear Zone. These include the Sadiola Gold Deposit of IAMGold and AngloGold. The 9.8 million ounce Sadiola Gold Deposit has annual production of approximately 600,000 ounces of gold. Additional world-class gold deposits in adjacent Mali hosted by the same structural/geological environment include Morila (5.6 million ounces), Syama (5.2 million ounces) Loulo (4.0 million ounces) and Yatela (2.6 million ounces).

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The Mali-Senegal Shear Zone, a 5.0 kilometre wide northeasterly trending structural zone hosts all of the known mineralised showings and deposits in the Sabodala region. At the Sabodala deposit, mineralisation within the shear zone is expressed by albitised-pyritised and silicified breccia and complex sheeted vein hosted gold mineralisation over a true width in excess of 120 metres, features similar to the well-established gold deposits in adjoining Mali.

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NOTICES

The information contained in this section is based on, and accurately reflects, information compiled by Messrs Nic Limb and Chris Young who are Corporate Members of the Australasian Institute of Mining and Metallurgy.

Mr Young has relevant experience in relation to mineralisation being reported to qualify as a Competent Person as defined in the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves and Chapter 5 of the ASX Listing Rules.