Deutsche Rohstoff AG to Take up Gold Production in Mongolia

Deutsche Rohstoff AG (DRAG) has extended its activities to Mongolia. To such end, the Group has entered into a contract with the Mongolian company T&T Unix (T&T). T&T holds the rights to two gold deposits located in the Province of Bayankhongor accumulating total explored resources of 12,000 ounces of gold. The repositories contain so-called alluvial or placer gold which may be panned fully mechanically from the sediments. The two gold deposits are projected for mining in 2011 and 2012.

Contract signed with Mongolian partner – Start of production in June

Heidelberg, Germany. Deutsche Rohstoff AG (DRAG) has extended its activities to Mongolia. To such end, the Group has entered into a contract with the Mongolian company T&T Unix (T&T). T&T holds the rights to two gold deposits located in the Province of Bayankhongor accumulating total explored resources of 12,000 ounces of gold. The repositories contain so-called alluvial or placer gold which may be panned fully mechanically from the sediments. The two gold deposits are projected for mining in 2011 and 2012.

The agreement provides that T&T places the rights to the deposits and concessions at the disposal of DRAG and that its acts as partner for Mongolian suppliers and service providers. DRAG will assume responsibility for managing mining operations and provide the required processing equipment which will remain the property of DRAG. The gold so extracted will be sold to the National Bank of Mongolia paying the international spot price less a 2% mark-down every two weeks. Following deduction of all operative expenses, the contracting parties will share the proceeds on a 50:50 basis. The new partners intend to secure and mine further alluvial gold deposits all over Mongolia.

Dr. Titus Gebel, CEO at DRAG, comments: “Following long preparations we decided to go to Mongolia. We hold the view that Mongolia is a politically and legally stable country. Our experience shows that German companies are very welcome in Mongolia. Additionally, we have full confidence in our partner T&T.”

Dr. Thomas Gutschlag, DRAG’s CFO, adds: “The great advantage of mining placer gold lies in the relatively lower capital expenditure and pre-funding requirements. We expect to fully recover our invested funds and to generate a surplus before the end of the current financial year. Moreover, our processing equipment can be set up and disassembled rather quickly and transferred to different locations. We can imagine very well extending our alluvial gold mining operations also to further countries in the years to come.”

DRAG acquired two mobile standard processing plant in New Zealand, each holding a capacity of 50 to 75 m3 an hour. This equipment is already on its way to Mongolia. Further material will be sent from Germany. The contracting partners reckon that the entire machinery will be ready for commissioning and start of production at the agreed locations by the beginning of July. DRAG will send its own supervisory personnel to the locations. The required mining concessions have already been granted. The authorities expressly welcomed DRAG’s concept based on the environmentally friendly “strip mining” extraction method. This mining practice removes only a single strip of soil which is re-cultivated right away. Since – due to weather conditions – excavation work may be performed only until the beginning of November, the mines will be operated 24 hours a day. The contracting partners plan to produce 5,000 ounces by the end of the season. DRAG’s total investments do not exceed EUR 500,000.

Besides conventional alluvial gold extraction, a novel dry-blowing method – developed by DRAG in collaboration with RWTH Aachen, the University of Applied Sciences in Aachen, Germany – will be tested on the areas holding the deposits. To date, placer gold may be extracted on industrial scale only by using water. However, many placer gold deposits are situated in completely dry areas, including the locations in Mongolia. The dry-blowing technique recently developed replaces water by a flow of air. This new extraction method is tested for the first time under real-life conditions. Should this novel technology prove its effectiveness successfully, vast areas in Mongolia and other countries would be open to industrial gold mining for the first time.

Heidelberg, Germany, 2 May 2011

Entry Standard-listed Deutsche Rohstoff AG is setting up a new commodity producer. The Group’s priority areas include gold, oil, gas and so-called ‘high-tech metals’ such as tungsten, tin and rare earth elements. All projects are located in politically stable countries, whereby special focus is placed on Germany. The Group’s business model is based upon (re)developing deposits which were explored in depth in the past. First production activities were taken up in January 2011 in Georgetown, Australia. For further information about Deutsche Rohstoff AG log on to www.rohstoff.de.

Contact:

Dr. Thomas Gutschlag
Deutsche Rohstoff AG
Friedrich-Ebert-Anlage 24, 69117 Heidelberg
Tel. (06221) 87 100-0
Fax (06221) 87 100-22
info@rohstoff.de
www.rohstoff.de

Horst Koppelstätter
Koppelstätter Kommunikation GmbH
Friedrichstraße 2, 76530 Baden-Baden
Tel. (07221) 97372 11
Fax (07221) 97372 22
hok@koppelstaetter-kommunikation.de

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