IBI CORPORATION. GOLD and OTHER MINERAL EXPLORATION IN UGANDA

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1 IBI CORPORATION GOLD and OTHER MINERAL EXPLORATION IN UGANDA In the last two years, gold has taken on a renewed glitter, with a significant run-up in price. This aspect has obviously created the current interest in gold, as an investment. $ Price of Gold January 01, December 16, 2004 $ $ $US $ $ $ $ Jan-00 Aug-00 Feb-01 Sep-01 Apr-02 Nov-02 Jun-03 Jan-04 Aug-04 Date Uganda, a significantly mineral-rich country, is in the process of marketing the outstanding opportunities in its mining sector to the international mining community. This marketing effort is largely a result of the recently approved grant of US$25 million by the World Bank and syndicate partners, Exhibit 1, to the government of Uganda to fund the upgrading of its Mining and Geological Department. 1

2 An updated comprehensive outline of the mining opportunity, Investing in Uganda s Mineral Sector, is available at The Company has investigated the availability of prospective gold and other mineral concessions in Uganda. We are well positioned to do this because of the Company s first-hand knowledge of the geology and resources of Uganda; our excellent working relationship with Uganda s Mining and Geological Survey Department, our high-level government relationships; and our existing, well established operating infrastructure. The confidence shown in the Company by the Government of Uganda, as exemplified in the Company receiving Uganda s Investor of the Year for 2002, also helped position the Company favourably to diversify and capitalize on many new opportunities. Mining related activities in Uganda are carried out by Canmin Gold Limited, a whollyowned subsidiary of IBI Corporation and a sister company to the established Canmin Resources Limited. Managing Director is Hans I.M. Hansen. Local technical exploration operations are under the supervision of Nathan Walukawu, B.Sc., a graduate in geology from the University of East Africa in Nairobi, Kenya. Nathan is a native Ugandan, born and raised in the south-east of the country. He is an experienced gold exploration geologist in Africa. Ulrich Kretschmar, principal of Kretschmar International Geoscience Corporation of Orillia, Canada, has been retained as a Qualified Person as defined under Canadian securities legislation, to prepare and certify a technical report and reserve determination for the Busia gold prospect. The following map outlines in red our currently defined prospecting areas: 2

3 Namekara Vermiculite Mine (1) Busia 622 km 2 (2) Ibanda 371 km 2 (3) Bugiri 41 km 2 A BUSIA PROSPECT 622 km 2 The Permitted Lands were secured in three separate parcels in mind to late 2004 (40km km km 2 ) are part of the regional Greenstone Belt extending from Tanzania to Kenya and Uganda. This Belt has a number of significant developing gold strikes and producing gold mines, including operations by a number of well-known senior international producers. See Exhibit 2 for an outline of the development in Tanzania in recent years. 3

4 Initially, the Company completed the following overview assessment: Review of the geology of the area; Analysis of the geological structure and operating results of the contiguous producing gold mine; Magnetic survey of the inherent trends on the property; Geological and geochemical sampling at random locations on the property. Based on the positive results of the foregoing, the Company secured two exploration permits ( EPLs ) covering 40 sq. km. in the area of the town of Busia. According to reports from the Department of Mining and Geological Survey, most of the surface of Uganda is underlain by Pre-Cambrian rocks which have undergone varying degrees of metamorphism. However, the Western Rift Valley is characterized by up to 4,000 m. of undisturbed sediments. The tertiary period saw intrusions into the rocks of Eastern Uganda of alkaline and sub-volcanic complexes. Much of the surface of Uganda has been deeply weathered, hence creating a thick layer of residual soil, masking the geology. Uganda is characterised by four geological systems: the Nyanzian System, the Buganda-Toro System, the Karagwe-Ankole System, the Carbonatite Complex as well as younger formations. It is important to note that these systems provide promising potential for mineral occurrence in Uganda. The Nyanzian System represents a greenstone belt sequence in South eastern Uganda. The rocks consist mainly of rhyolite, tuffs, basalt, quartzite, shales and banded iron 4

5 stones. Gold bearing veins have been mined at Tira and Amonikakinei in Eastern Uganda. Reports of certain regional exploration and aerial surveys were made available from the files and library of the Geological Survey, and they provided valuable preliminary data. Subsequently, in May through September 2004, the Company carried out additional targeted investigations including: Shallow trenching in the focused area previously identified; Laboratory analysis of quartz veinlets revealed in the trenches or in outcroppings; Geophysical magnetic survey at 20 m. intervals over 31,220 m (31.22 km) of priority sites, consisting of 12 general anomalies; The quartz veinlets established a clear indication of the presence of gold, in a higher concentration than in the surrounding grounds. See the picture of the typical outcropped quartz vein. The magnetic survey at the 20 m. intervals revealed a number of well-defined magnetic features and anomalous zones. The conclusion and recommendation from the second Geophysical Report, prepared by geophysicists Julius Nyakaana and John-Mary Kiberu, were as follows: Magnetic survey identified a number of magnetic anomalies suspected to be caused by shear zones which could be associated with gold mineralization. 5

6 It is strongly recommended that some detailed geological and geochemical sampling about 30 m. away and parallel to the survey lines needs to be carried out so as to establish the economic significance of the structures causing the magnetic anomalies. Once geological and geochemical sampling have been accomplished, trenches, pits, and/ or boreholes can be undertaken at locations where there is coincidence between magnetic, geological, and geochemical anomalies. Following the foregoing works, additional surface samples have been taken from targeted locations and forwarded to the ALS Chemex lab in South Africa in September. These results revealed excellent readings in October several in the range of 100 1,000 ppb. A reading of 100 is considered prospective for additional work. The following map, which outlines the initial 40 km 2 of the EPLs granted to Canmin Gold, indicates the 12 magnetic anomalies targeted at that stage. The following magnetic readings compare the readings at the TIRA gold mine with those at anomaly 2. 6

7 Following further analysis and sample testing in November, areas 17, 21, 28 and 14 were targeted for immediate interest. Also, application made and granted for EPL to cover additional 371 km 2 to the south. 7

8 In mid-november, trenching was done at areas 17 and 21. Area 17 schematic for trenching and samples as follows: Veins 79, 80, 81 and 83 have gold mineralization from 0.4 to 5 g/t. Veins 84 and 68 also have gold mineralization above g/t. Approximately 50 samples taken from trenching activity. In early December, secured further 190 km 2 of Greenstone Belt, all the way south to Lake Victoria. With this parcel we have secured 622 km 2 of Greenstone Belt, which is the majority of that geological structure in Uganda. With return of sample results the veins noted on following picture revealed several readings above 1.0 g/t but also revealed presence of certain nuggets which tend to skewer results in a particular sample. 8

9 As a result of these readings, investigation of surrounding area to 17 is being scanned using a DC Electrical Resistance tool to establish the direction of the veins, as a bases for planning a drilling program. B IBANDA PROSPECT km 2 This prospect is located in western Uganda, approximately 300 km west of Kampala. Exploration rights have now been secured and staked. Documentation generated from exploration work performed by the UN is on hand which defines extensive preliminary work and data, including recommended drill sites. Considerable artisinal mining for gold occurs in the area, and there is a small operational gold mine at a nearby site. As indicated on following map, there are four numbered sites recommended for drilling by UN. In addition, there are seven designated areas by which revealed in excess of 100 ppb, and are therefore worth of further investigation. The area of ( ) revealed a high magnetic anomaly which appears interesting for further investigation. 9

10 C BUGIRI PROSPECT 41 km 2 This 41 km 2 prospect was secured in November and is located in the south west corner of Busia Discrict, and is characterized by a cap of Gossan rock. Typically a variety of minerals will leach downward under the gossan. An aerial survey over this area available from the Geological Survey clearly delineates a structure of interest. A small sample of rock has revealed a reading high in palladium. It is also believed that the area is prospective for gold. 10