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 Ashanti Gold Belt
Kubi In October 2007, PMI Gold announced an agreement had been reached with Nevsun Africa (Barbados) Ltd., a wholly owned subsidiary of Nevsun Resources Ltd. of Canada, to purchase its Kubi Gold Project located 20 kilometres south of AngloGold Ashanti's Obuasi mine and 46 kilometres southeast of our Obotan Gold Project.  PMI Gold has purchased all of the shares of Nevsun Resources (Ghana) Ltd. ("NS Ghana"), a Barbados registered company, which holds the Kubi Gold Project interests, for 9 million shares in the capital stock of PMI Gold, and an additional US$3million, due June 27, 2008. In addition, Nevsun retains the right to a seat on the Board of Directors of PMI Gold. The Kubi deposit was first developed by local artisanal miners, with eight adits being driven in the 1920's. In 1988 BHP (now BHP Billiton), during a major reconnaissance soil survey along the western margin of the Ashanti gold belt, outlined strong gold anomalies near the old workings and completed a program of ground geophysics and drilling. NS Ghana optioned the property from BHP in 1993. Subsequently, they completed extensive exploration at Kubi in the mid through late 1990's, and defined gold mineralization in a near vertical 1.0 to 15.0 metre thick gold, garnet, and sulfide rich horizon. Drilling has defined the mineralized zone over an 1,800 metre long by up to 700 metre deep block contained within a northeast trending shear zone at the contact between Birimian and Tarkwaiian metasediments. In 1999, NS Ghana transferred the property to Ashanti, who in return for cash and royalty payments to NS Ghana, mined from two small pits 58,696 ounces of gold in 500,230 tonnes of oxide ore grading 3.65 g/t gold, with the recovered grade 28% higher than Ashanti's modelled grade. In 2006/2007 Ashanti backfilled the pits and completed the reclamation. The property has now been returned to NS Ghana. Golder Associates Completes N.I. 43-101 Report Golder Associates Africa (Pty) Ltd., on behalf of PMI Gold, carried out data verification on drill logs and assay values and completed a site visit in early June, 2007 and has prepared a current NI 43-101 compliant mineral resource report. Their mineral resource estimate using multiple indicator kriging is based on data from 212 diamond drill holes in the NS Ghana database less the resource already mined by AngloGold Ashanti:
Within the zone estimated above, a core of higher grade material can be determined and this will be the initial target for ongoing studies. The Ghana Government holds a 10% free carried interest and has the right to purchase an additional 20% on terms to be agreed on between the parties. There is also a 3% net profits royalty, payable to International Royalty Corporation (an assignment from BHP), after all costs have been recovered. A portion of the Kubi mining lease is covered by forest reserve, however PMI Gold anticipates developing an underground operation by shaft or decline from the non-forest reserve area and therefore will not be overly impacted by forest reserve issues. The main Kubi mining lease covers 19.2 sq km and has a renewable 10 year term valid to 29 April 2009. Upon filing a satisfactory feasibility study PMI Gold anticipates extending the term by an additional 20 years. Golder Associates Completes Preliminary Economic Assessment A Preliminary Economic Assessment of the Kubi Project was prepared for a gold mine using conventional underground mining methods, to a designed depth of 400 metres, and gold extraction at a nearby mill facility. Preproduction development would include shaft sinking, lateral and raise development, utilities installation, mine backfilling, waste and ore mining, followed by gold mining. The waste rock produced during this project will be stockpiled. Ore grade material will be conveyed to the mill for processing. The tailings will be stored in the mill's tailings pond and will be treated and monitored by the mill. PMI Gold Corporation (PMI) and its 100% owned subsidiary Nevsun Resources (Ghana) Ltd. (NS Ghana) enlisted the services of Golder Associates Ltd. (Golder) to investigate the opportunity of underground mining the Kubi Deposit. The mining section and geological resource calculation have been conducted to a level sufficient that qualifies as a Pre Feasibility Study. However, the metallurgy section requires more examination and test work to make a solid estimate for construction purposes thus the report has to stay at the Preliminary Assessment Level Mineral Resource Estimate The mineable resources contained within the limits of the planned mine to the minus 400 meter elevation are calculated at 3.6 million tonnes with an average grade of 4.35 grams per tonne. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The total resource tonnage includes material within the designed mine boundaries grading above the cut off grade of 2.43 grams Au/ton. Waste material broken and hauled to surface by necessity will only incur the additional costs of surface trucking and milling. Mining The Kubi sulphide deposit will be accessed via a shaft and mined by underground mining techniques. The known potentially economic mineralization extends from near surface to the 400 metre below surface elevation. The mineralized zones will be mined at an initial rate of 500 tonnes per day (150,000 per annum) and increasing to the planned rate of 900 tonnes per day (280,000 per annum) of potentially economic mineralization. Longhole and shrinkage mining methods will be used with broken potentially economic mineralization mucked by air operated mucking machines and moved by rail. Processing The preferred process option is gravity recovery of the gold from the primary mill cyclone underflow, followed by conventional CIL cyanide leach. Nominal feed grade to the mill would be 4.35 grams Au per tonne, although this is expected to vary over the course of operations due to the nature of the orebody. Two concentrates would be produced, a high grade shaker table concentrate and a leach precipitate. Both concentrates would be smelted to produce dore bullion on site or use electrowinning to produce a final product. Alternately, it may be delivered to a nearby producer for final smelting and refining. Infrastructure Infrastructure to support the project will include mine access road, diesel generated power, mine, processing and administration offices and change house, assay laboratory, warehouse, water management and waste management facilities. No accommodation would be provided on site as labour will be bussed in from nearby Dunkwa. Project Capital Expenditures The estimated project preproduction capital expenditures, for the 930 tonnes per day operation, inclusive of a 15 percent contingency is approximately $US 41.5million: Mine US$25.1 million; Processing Plant US$8.9 million; Infrastructure US$7.5 million. Operating Costs The total average to refinery operating cost over the mine life is $US60.47 per tonne of potentially economic mineralization. Table 18.14 shows the operating cost per tonne processed for each department. The average underground mining cost per tonne of potentially economic mineralization would be approximately $US31.20. The processing cost would be approximately $US13.81 per tonne. The general and administration costs would average approximately $US15.46 per tonne. Economic Analysis For the purpose of this evaluation, a $US750 gold price and an exchange rate of 1 CAD = 1 USD was used for the revenue calculation. No inflation factor has been included in the production costs. The capital cost and taxation has been factored into this evaluation. The estimated mined ounces for the project are 505,122. At gold prices higher by 10% and lower by 10%, the project investment and returns would provide an IRR in the range of 34 % to 21 %. Increases in capital and operating costs in the order of 10% reduce IRR's to 25 % for the base case gold price. This study indicates that the Kubi Property has a highly promising resource which at a base case gold price of $US750 per ounce would provide good financial returns and a relatively quick payback ( 2.9 years) of the initial capital investment. Douglas R. MacQuarrie, President and CEO commented: "The Kubi Economic Pre-Assessment study, in combination with the large underground exploration target at our past producing Obotan project, the long term upward trending gold market, and Ghana as a destination of choice for mining investment, should over the next few years provide the backdrop for a new gold producer in Ghana. Previous metallurgical tests indicate that the gold mineralization at both Kubi and Obotan are non-refractory, free-milling, and have very high recoveries using conventional circuits. PMI Gold believes that a near term production decision will be possible. Significant further capital will be required to complete the above program, to be raised through a combination of equity and project financing, and which will be dependant on further positive engineering reports. A full pre-feasibility study on bringing Kubi into production has been commissioned and PMI Gold looks forward to moving these projects ahead."   Gyimigya & Dunkwa In September 2008, the Company acquired two new concessions adjoining to the north and south of our current Kubi Mining Leases. The new prospecting license is in two parts, known as the Gyimigya and Dunkwa and cover 8.20 and 26.26 sq km respectively. Gyimigya adjoins immediately to the south of the AngloGold Ashanti Obuasi mine concession. The new property covers a part of the former 390 sq km Dunkwa Continental Mining Lease. Gold dredging activities were active from 1930 for nearly 70 years on the Ofin, and Ankobra Rivers (Asankrangwa gold belt) and the Oda and Jeni Rivers (Ashanti gold belt, southwest of Kubi). The dredging operation was based in Dunkwa, and during this period some 1.45 million ounces of gold were recovered, with dredge production peaking in the early 1960's at 69,000 ounces per year (Minerals Commission, 2002). Previous work on the PMI Gold 'Kubi' concessions, consisting of soil sampling, ground IP, magnetic and radiometric surveys, airborne magnetic and electromagnetic surveys, trenching, 27 exploration adits and shafts, and 499 RAB drill holes (14,296 m), 229 RC drill holes (19,274 m) and 230 DDH drill holes (70,634 m) has outlined two strong gold trends: the Kubi trend which hosts the Kubi gold deposit and which is currently being evaluated for underground production (see PMI Gold news release dated April 10, 2008); and the Ashanti trend which 20 km to the north of Kubi hosts the AngloGold Ashanti Obuasi gold mine (26 million ounces of gold produced to date with current reserves and resources of over 30 million ounces). Of particular interest to PMI Gold, are a series of airborne electromagnetic conductive targets that were outlined by the 1994 survey: which are in areas of elevated gold in soils; and occur on, near or between the defined Ashanti and Kubi trends. One of these targets coincides with the main Kubi gold resource, however there are some 20 km of defined conductors that have not yet been drill tested; and an additional 4 km of strike length of the Ashanti and Kubi trends that have not yet been surveyed. These targets will be the focus of further drilling once adequate financing is completed. Ofoase Concession In late 2005, PMI Gold optioned this 84 square kilometre concession from Goknet Mining Company of Accra, Ghana. It is located 20 kilometres due west of Newmont's 7 million ounce Akyem gold project and 45 kilometres northeast of AngloGold Ashanti's 30 million ounce Obuasi mine. The concession is primarily underlain by: Tarkwaiian meta-sedimentary rocks including quartz pebble "Banket" type conglomerates, quartz (tourmaline, ilmenite, pyrite) sandstones and siltstones; Birimian meta-volcanics; and granite -- on the south and west margin of the Banso batholith. Previous regional work conducted by the Ghana Geological Survey outlined gold anomalies in silt samples from streams draining the concession area. In 1999, a further 33 stream sediment samples were taken. Fire assay results on the 2kg samples were reported to range from 0.019 to 16.074 g/t Au, with 20 samples assaying greater than 1.0 g/t Au. Since acquiring the Ofoase option, PMI Gold has completed 516 line kilometres of helicopter borne high resolution DIGHEM V EM/Magnetometer surveys over the entire concession, and in the southeastern corner of the concession near the highly anomalous 16 g/t silt sample - 1242 soil samples, test lines of IP/Resistivity surveys, geological mapping and trenching, and 3 short diamond drill holes totalling 271 metres. The holes were drilled to test down dip from surface trenching where gold grades to 4.2 g/t in grab samples of Tarkwaiian conglomerate had been noted. Results from this drilling were discouraging with no further work planned on this particular target area. Further work on the Ofoase and Bankame properties were planned for 2008 but with Golder Associates currently completing their initial assessment of the mining potential of our Kubi Gold Project and an initial resource estimate at our Obotan Gold Project, in January 2008, we entered into a letter agreement with Golden Lion Resources (Ghana) Ltd. ("Golden Lion") and Goknet Mining Company (Ghana) Limited ("Goknet"), whereby Golden Lion will purchase a 100% interest, subject to the government of Ghana's 10% free carried interest, in these concessions. Adansi is the operator and currently holds an option interest in the concessions. Mono Minerals Limited ("Mono"), the registered owner of Ofoase, has also agreed to assign all its underlying rights in the Ofoase concession to Golden Lion. Golden Lion Resources Ltd., a company to be listed on the Australian Stock Exchange, has agreed to pay one million shares in its capital stock and a 2% NSR royalty interest, as to 50% to each of Adansi and Goknet, within 14 days of the listing of GLR on the ASX. This agreement is subject to the entering into of a Final Agreement incorporating the terms of the letter agreement; the listing of GLR on the ASX; and the requisite consent of the Minister of Lands, Forestry and Mines of Ghana. The GLR shares issued pursuant to this agreement may also be subject to an escrow period pursuant to the rules of the ASX. 
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