UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(D) of the Securities Exchange Act 0f 1934
Date of Report: September 8, 2006
MOTHER LODE GOLD MINES CONSOLIDATED
(Exact name of Company as specified in its charter)
CALIFORNIA 0-16468 94-2236016
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
1312 CONCANNON BOULEVARD, LIVERMORE, CA 94550
(Address of principal executive offices)
(925) 606-5939
(Registrant's telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously
satisfy the filing obligation of the registrant under any of the
following provisions:
? Written communication pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
? Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240 14a-12)
? Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17
CFR 240.14d-2(b))
? Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17
CFR 240.13e-4(c))
Section 8. Other Events
Item 8.01
Pacific FarEast Minerals, Inc. ("PFEM"), an Investee corporation of
Mother Lode Gold
Mines Consolidated ("MLGM"), conducts geologic operations in the
People's Republic of
China for the purpose of locating deposits of gold, and other metals,
that may have
economic potential for mining operations. One such project is located
in the County of
Weichang, Province of Hebei, People's Republic of China, and is
referred to as "The
Weichang Project".
PFEM has issued a report to shareholders, titled "Corporate Update",
dated September 8,
2006, describing the progress of PFEM and The Weichang project in particular.
MLGM deems this report to be of importance to the security holders
of MLGM. MLGM
currently holds a 29.9% interest in PFEM. PFEM's report is submitted herein.
In addition to PFEM's corporate update report to shareholders,
MLGM received, on
September 21, 2006, a copy of the Audit of Accounts for the Chengde
Great Wall Minerals
Company, Ltd. by the Chengde Zhengyuan Accountant's Office Co., Ltd.,
Chinese registered
accountants, 50 Xinxing Street, Shuanggiao, Chengde, Hebei
Province, China. The Chengde
Great Wall Minerals Company, Ltd. is owned 100% by PFEM.
This report is submitted
herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly
authorized.
Mother Lode Gold Mines Consolidated
(Registrant)
Date September 21, 2006
o/s Frank M. Orrell
Chairman/CEO
CORPORATE UPDATE
PATHWAY TO CASHFLOW
Page 1
Figure 1
Asia map showing location of Weichang County, Hebei Province,
in the People's Republic
of China
PACIFIC FAREAST MINERALS INC.
DISCLAIMER
The Information contained in this presentation has been prepared using the
information available to Pacific FarEast Minerals Inc. (PFEM) at the time of
preparation. This presentation contains forward-looking statements that
were based
on expectations, estimates and projections as of the date of this
presentation. Any
forward-looking statement is subject to known and unknown
factors which may cause
actual results and developments to materially differ from those
expressed by, or
implied by the forward-looking statements in this presentation.
External or other factors may have impacted on the business of
PFEM and the content
of this presentation since its preparation. Pacific FarEast Minerals does not
undertake to update any forward-looking statements that are contained in this
presentation, except in accordance with applicable securities laws.
In addition,
this presentation may not include all relevant information regarding PFEM.
PFEM has taken all reasonable care in preparation of this presentation,
however; the
content of this presentation should not be relied upon in relation
to any further
action including investment in Pacific FarEast Minerals Inc. Any person
considering
an investment in PFEM is advised to obtain independent financial
advice prior to
making an investment decision.
Page 3
Figure 2
Map of Peoples Republic of China showing location of project in
Hebei Province, PRC
Page 4
Figure 3
Google Earth photograph of Weichang shear zone development
WEICHANG PROJECT GEOLOGICAL MAP
Page 5
Figure 4
Weichang Project geological map showing location of dominant rock types
PRESENTATION SUMMARY
CORPORATE OVERVIEW
PROJECT UPDATE
PATHWAY TO Operating
CASH FLOW
CORPORATE UPDATE
By: Frank M. Orrell, Chairman
PACIFIC FAREAST MINERALS INC.
Dated: September 8, 2006
CAPITAL STRUCTURE
September 8, 2006
Total Shares Outstanding 6,925,352
Treasury Shares* 2,040,000
Share Price $0.60
Market Capitalization $4,155,211
Options on Issue 60,000
Number of Shareholders 27
*Shares acquired from former Founder and returned to Treasury on Sept.6, 2006.
Any shareholder is entitled to see the opinion of Counsel in this regard. The
Company recently engaged the Law Firm of De Martini & Walker
(Corporate Law) and
The Boone Law Group (SEC Law), through the good offices of MLGM.
SHAREHOLDER BASE
SHARES % No. of
Mother Lode Gold Mines Consolidated* 29.96 2,074,591
Havilah Mining Company Inc. * 20.44 1,415,836
Minority Founders as a Group 17.39 1,204,088
Shares issued for Compensation 5.54 384,000
Individual Investors as a Group 26.67 1,846,837
Total Outstanding 100.00% 6,925,352
Holders of Convertible Debt 8% Debenture 351,000
Shares under Option 60,000
Warrant A 352,518
Warrant B 352,518
Fully Diluted Shares (Excludes 2,040,000 Treasury Shares) 8,041,388
* (Founders)
MARKET CAPITALIZATION
Page 10
Figure 6
Bar Chart showing comparative market capitalization of like
companies compared to
Pacific FarEast Minerals, Inc.
CAPITALIZATION
COMPANY SYMBOL (MILLION DOLLARS)
China Gold Corp GCDC 1.5
Pacific FarEast Minerals, Inc. PFEM 4.2
China Resources CAEO 17.0
Golden Tiger Mining GTX 19.0
Central China Goldfields GGG 23.0
Majestic Gold MJS 26.0
Intercitic ICI 38.0
Red Dragon Resources DRA 45.0
Minco Mining Minerals MMM 48.0
PROJECT OVERVIEW
Platforms for Growth in Place
Weichang, Focus
Hebei Province Development
Major Shear Zone South GuangDingShan
Exploration
Major Shear Zone North GuangDingShan
Ocean Close ErDaoChuanGouMeng
East Shear Zone DongFengShan
East Shear Zone Ext. DaYaoGou
Xiuyan,
Liaoning Province Prospect
Large Tailing site DongQianKuang
WeiKuangBa
BUILDING A MULTI METAL ASSET BASE
ON A FOUNDATION OF GOLD
OUR PATHWAY TO OPERATING CASH FLOW
TARGET
2008/9
DEVELOPMENT
South GuangDingShan
(Au)
EXPLORATION
North GuangDingShan
(Au, Cu, Zn)
ErDaoChuanGouMeng
(Au)
DongFengShan
(Au, Cu)
DaYaoGou
(Au, Zn)
Xiuyan Tailings
(Au, Ag)
There is good potential
to develop a large/huge gold
and
multi-metal area
in
Weichang, China
Mr. Zhang De-sheng, VP, GM
Hebei Prov. Reg. Geo. Min.Exp.Inst.
ACHIEVMENTS (Through August 31, 2006)
Completed: Identification of major gold bearing geologic structures
in China, capable
of providing a Pathway To Operating Cash Flow and Growth.
Completed: Addition of Prof. Sun Shu, former Chairman of the National Science
Foundation of China, to PFEMS Advisory Board, as Chief China Adviser (Prof.
Sun is recognized as Chinas leading structural geologist, and holds world
wide acclaim in his field of expertise).
Completed: Extensive literature review of past Governmental Exploration
in the Weichang
area and North China Block, pertaining specifically to Weichang and beyond.
Completed: Comprehensive Weichang Exploration and Development Plan.
Completed: Assessment of Weichang Infrastructure: Water, Power,
Roads, Labor, Rail,
Living Accommodations, Medical, Banking, Office, Communications facilities
and general Environmental conditions.
Completed: Establishment of relationship with The Weichang Gold
Company of the Manchu
Autonomous County of Weichang, Chengde Administrative area, President Ma
Yun, Manager. Established relations with City and County Authorities.
Completed: Exploration/Mining Agreement covering 6,200 sq km,
with option to enter into
77.5 / 22.5% Joint Venture Agreement with the Weichang Gold Co.
(subsequently expanded to 9,200 for preliminary exploration activity).
Completed: Establishment of the Chengde Great Wall Minerals
Co. Ltd, a China Foreign
Investment Company, Mrs. Wu Yi-Shan, Managing Director.
Completed: Opening of Weichang Field Office in the headquarters
of the Weichang Gold
Company.
Completed: Establishment of relations with new representatives of the Weichang
Industrial Bureau.
Completed: Regional investigations, preliminary observations and
exploration in the
Provinces of Liaoning and Hebei, China, during the year 2005.
Completed: Business License renewal.
Ongoing: Established relationships with the Ministry of Land and
Resources, in
Beijing, with the aid and assistance of Prof. Sun Shu.
Ongoing: Established fund for Deserving Students in Geology and Engineering.
Ongoing: Maintenance of relations with the Counsel Generals office in
San Francisco,
California.
Established: Banking, Accounting, Governmental and Local Ministry of
Land and Resources
Department relationships in the City Administrative area of Chengde, Hebei
Province, China.
WEICHANG SETTING
ATTRIBUTES
Infrastructure to Support Mining Operations:
Local Field Office of:
Chengde Great Wall Minerals Company, Ltd.
And
Headquarters of:
The Weichang Gold Company
Roads, Rail, Power, Water, Communications,
Large Work Force, Housing, Medical.
City, County Government Services
Excellent Exploration / Development Potential for upside.
Approved Exploration Permits
Approved Business License
County Gold Company as Partner
Mining a Strategic Goal of County Government
Coordinated team approach between PFEM and Government
Project registered as Strategic Project by:
Chengde Administrative Authority
Weichang Exploration / Development Program
Prepared by; The Chengde Great Wall Minerals Company, LTD;
a wholly owned subsidiary of
Pacific FarEast Minerals Company, Inc.
This document is highly confidential and is to be used only in the
evaluation of the
Company's progress by shareholders in the County of Weichang, China.
The Company's exploration and development efforts, shown on the areas
designated in the
"Weichang, GuanDingShan Multi-Metal Map", page 22, have been
concentrated on strategies
developed by western mining companies in search of large scale
gold and base metal
deposits formed at generally low temperatures, of a disseminated
type; associated with
major Shear Zones, and Hot Springs in an epithermal setting.
Of special importance to
the Company are Ocean Close type prospects, created by complex
hydrothermal processes,
i.e. subduction and accretion during orogeny. Such deposit types may
contain several
million ounces of fine gold, and/or major base metal deposits, more
generally known as;
"World Class Deposits", or in some rare cases, "Giant Deposits"
These occurrences are deposited by hydrothermal or metasomatic
events within large
volumes of host rocks of different origin and / or source rocks deep
within the earths
crust, or mantle. The low grade of many of these types of ore bodies
can only be mined
economically if the volume of such ore body is large enough
to justify the capital
expenditure necessary to bring the project into production.
Therefore; the size of the
potential target area must be extremely large in scale, and
inclusive of a unified land
position. Due to the extremely large size of the "Weichang Occurrence"
envisioned by the
Chengde Company, and the large funding necessary to perform an
adequate scoping study of
the entire subject area, the Company initially made its first application for
prospecting permits covering certain known gold occurrences
that coincide with the
company's geologic perspective. Those permits now cover an area of
251 sq km. The
Company has rights to explore over a 6,200 sq km area under
terms with The Weichang
County Gold Company. The Mayor of the City County Government,
in the Spring of 2006,
graciously extended these rights to cover the entire county of
9,200 sq km, giving the
Company, what it believes, is one of the largest, if not the
largest prime prospecting
areas in all of China.
With the approval of the initial prospecting permits; and the
guidance its China
Staff, Senior Adviser and Ministry of Land and Resources Officials,
the Company was
lawfully permitted to embark upon a program to study individual
gold occurrences; areas
of alteration, rock types etc., perform geochemical studies,
trenching, drilling and
other necessary work prior to actual mining operations. Success
in developing highly
prospective targets through our Qualified Work Program allows
the company access to
world capital markets, providing a pathway, or avenue, for future
project financing.
The Company estimates the amounts of future investment capital
to be employed in the
Weichang area to be very substantial. Positive findings during
the field season in 2005
and early 2006 by the Company's geologists, and senior personal,
are leading the
Company to seriously consider a further expansion of the permitted
prospect areas, in
line with the written Agreement dated; August l6, 2003, between
the Company and The Gold
Company of Weichang County. The intent of this agreement from the
onset of its
implementation was the development of large scale industrial type
gold and other mineral
mining and processing operation. The company has expended in
excess of 3,700,000 Yuan to
date in advancing the Weichang project into the "development stage".
Further investment
capital will be supplied to the Chengde Company upon additional
positive findings, as
exploration and development progresses.
The Company began its exploration efforts in a target rich
environment at the core of an
extremely large regional epithermal occurrence, crossed
by major shear zones, rift
structure and Ocean Close apparatus. The GuangDingShan
area is just one target among
others in the heart, or intersection, of these massive geologic
structures. Aside from
its major goals, as stated above, the Company has discovered
what it and the Hebei
Regional Geological Institute, Langfang, believes is a large to
huge high grade Au vein
and multi metal system of major proportions in the North and
South GuanDingShan
prospect area and beyond (See, page 24 for further details).
The Company is in early
stages of planning to bring the southern portion of this target
into production as its
"Pathway to Cash Flow", it also believes SGDS will be augmented
by the results of this
years work on its North GuanDingShan prospect (This exceptional target
exhibits high
grade gold prospects, as well as large scale base metal characteristics).
The current
production target is a multiple deposition quartz vein type of
deposit the Company
believes has great depth perception and can be mined efficiently
over wide widths, using
the forces of gravity, local environment and large labor force
in order to reduce
operating costs. In near proximity to the GDS project area the
Company has started
early exploration work on what it believes is an exceptional
Ocean Close prospect,
previously mined for high grade gold values, in line with the
work of K. Leahy et al.
(2005), Geodynamic Processes that Control the Global Distribution of Giant Gold
Deposits.
The key point of an exploration effort in such an environment,
as Weichang, is based on
a widely accepted concept that large shear zone and related
low temperature deposits
almost always leave profound geochemical evidence of their
existence. Therefore, the key
exploration technology used by the company will center on gathering existing
geochemical data from all sources, as well as using and developing
new highly
sophisticated geochemical sampling techniques, which are now being
employed in the
Western World, (such as those being employed in the famous
Carlin Trend in Nevada,
U.S.A.). The Company has, or has access to, certain inter-nationally
recognized
professionals to analyze and interpret our highly specialized approach
to this type of
exploration and subsequent development procedures.
The Company has also; (1) Contracted with established Chinese
Geological Organizations
for certain specialized work, such as the Hebei Regional Geological Exploration
Institute, and will; (2) Train Chinese Nationals who will become an
integral part of the
Chengde Company.
In broad terms we see the following multi-phased exploration and
development plan to be
a generalized approach for the company's work in the Weichang area:
Page 18
Figure 7
STAGES AND EXPENDITURES
IN A MINERAL EXPLORATION PROGRAM
A qualitative graph of expenditures (vertical axis) against the
phases of a mineral
exploration program (horizontal axis)
Phase l
(I)* Planning Completed
(II)* Literature search and data accumulation
(III)*
Reconnaissance Completed
l. Balance in combination with (l.2) Remote Sensing and Geological profiling
Phase II
(IV)* Target Appraisal and Identification Completed
l. The sheer size of the target area prohibits detailed
geochemical work being
applied to the whole territory evenly. We therefore have had
to identify more
favorable areas for exploration and concentrate our major
effort at first on such
targets.
Remote Sensing (RS) The Hebei Institute had access to 1:50000
multi-band satellite
data of the designated area and several institutions and
specialists, in China.
This information has been used in a targeting strategy, on the basis of
interpretation of such data.
1.1 Geological Profiling (GP)
At the same time, the company has started to develop several lateral cross
sections of the identified project area, which is being investigated,
sampled and
further studied in great detail. Special attention was given to detailed
geochemistry, thin-section ore petrography and studies of alteration
in contact
zones, along areas of high energy tectonic activity, exhibiting evidence of
mineralization and zones of low rock density.
This work will allow us, without having to undertake a huge and very expensive
effort to map the whole territory at the appropriate scale, to understand in
detail the scale, nature and particulars of the hydrothermal or metasomatic
process, alterations, movements of the chemical fronts and other geochemical
relevant events.
1.2 Combining of Remote Sensing and Geological Profiling
(RS) (GP) for the
purpose of better adjusting RS filtering and processing to the specifics of the
Weichang region (Every territory and terrain has certain specifics
that have to be
taken into consideration while doing RS interpretation). Important feedback
information from field geologists was used to analyze anomalies relevant to the
needs of the RS interpreter, giving our team a great advantage in adjusting
techniques to be used to further delineate interesting potential target areas.
Thus, we plan to have a prolonged RS interpretation cycle that we expect
to adjust
to such extent that success of interpretation will be greatly improved.
Phase III
2. Geochemical Survey (GS) of the designated target areas:
2.1 After reviewing the available preliminary RS and GP results, the team
delineated promising areas for further investigation. Additional work was then
performed on these areas in the form of detailed geochemical surveys. The
reliability and value of geochemical work heavily depends on precision and
consistency of every step during the process. Such surveys were
conducted by the
Hebei Regional Exploration and Geological Institute with very
experienced survey
crews and in combination with very high level analytical work. The geochemical
surveys scale and sampling protocols of course were developed with regards to
local conditions. Relief, soil chemistry, weathering, vegetation, streams
geometry and many other factors were taken into consideration in
order to develop
sampling and analytical protocols specific to the Weichang area.
Special attention was paid to sample preparation, assaying technology and in
mapping, with emphasis on alteration and structure, soil and rock geochemistry.
Large scale shear zone and related disseminated gold / base metal
deposits demand
special attention during sample preparation of geochemical surveys, due to the
fact that the gold particles in these types of deposits, or prospects, are much
smaller than in a quartz vein environment (typically these particles are
encapsulated in quartz), much finer milling equipment is needed for adequate
sample preparation. This process will be applied to many of the
project areas we
are exploring in the Weichang epithermal system.
Another area where precision and well-developed procedures are vital
is between-
sample equipment cleaning, and finally, our assaying lab has to have
solid quality
control (QC) protocols that are absolutely followed. PFEM has used the SGS lab
near Beijing and the American Assay Lab in Reno, US, to check sample results to
date, in comparison with the Hebei Inst. Lab in Langfang, China. The labs have
been inspected by Donald L. Gustafson (Consulting Economic Geologist)
and Stanley
D. Rhyu (PFEM Metallurgist).
2.2 Geochemical anomalies, their interpretation and selection of first target
areas for exploration drilling:
After the initial GS information was collected, the process of delineating
first
tier target areas was begun, assessing their connection to the geology and ore
potential. These areas were tested additionally with appropriate geochemical
methods, and have been undergoing detailed geological mapping, etc., in
preparation of exploration drilling. Undoubtedly some additional Remote Sensing
(RS) work will be done on these areas in 1:25000, or even 1:10000 scales.
2.3 Preparation of a set of maps and sections with geological, structural,
alteration, fluid inclusion and geophysical data, combined with skillful
interpretation to define target potential.
PFEM in conjunction with the Hebei Regional Exploration Institute is working to
establish a model of such data geochemically and mathematically.
Phase IV
(V)* Target Testing Underway
1. Trenching, tunneling Underway
2. Drilling, logging, plotting and analysis Planning
3. Computerization of data in order to create a three-
dimensional framework. Early Stage
4. Data plotted on several scales of maps
and sections Completed or Underway
(VI)* Ore Body Development Mining Engineering Underway
(VII)* Mine Development Mining Engineering Early Stage Planning
(VIII)* Mining Mining Engineering Early stage Planning
Summary
There is no quick and easy way to find and develop a major ore body
containing millions
of ounces of gold and/or other metals in the Weichang area. A well
conceived serious,
and skillfully executed staged exploration and development program,
is much more likely
to have success than shoddy one, both in terms of ore found and
the ratio of the value
of the ore found to the cost of finding it.
Exploration planning should divide the program into stages that are
very sequential and
consequential. The exploration program model we are using is
flexible and will be
responsive to the data generated on a daily basis by the program.
Target concepts
evolve from time to time as our team works with the existing data
and/or new data.
Relevance, rank, and collection sequence will be critical in the data gathering
process.
The goals of our program are intensely practical. There will be
consideration of
economic parameters along with geological parameters at each stage,
as well as a deep
concern for the Environment and People from the earliest stage
through the final stages
of exploration, development, and operations.
The Chengde Great Wall Minerals Company and its Manager are
developing an environment
where imagination, innovation and initiative are encouraged as
well as stimulated (all
a part of Western Mining Company Strategy). The Manager and the
Gold Company of
Weichang County, with the assistance of local and regional officials,
will lead this
effort towards our fundamental objectives:(1) The discovery of
major (World Class)
type gold, silver and/or base metal deposits. (2) The development of a
profitable, as
well as responsible mining enterprise, providing mutual benefits
for all parties,
including the People of Weichang County. (3) Advancing the
Science of Geology and
Mining Engineering in China.
Weichang Exploration 2005
Page 22
Figure 8
Photographs showing exploration work at the Weichang site (2005)
Page 23
Figure 9
Geologic map showing Weichang, Guang Ding Shan gold, silver
and multi-metal locations
DEVELOPMENT
South GuanDingShan, Weichang, Hebei Province, China
Completed: Exploration Permits Issued by Ministry of Land and Resources.
Completed: Preliminary exploration and literature review in
2004 on 100 sq km area
outsideSouth GuanDingShan area; due to snow cover, Gustafson and Robert S.
(Steve) Friberg (Certified Professional Geologist), were physically unable
to inspect the South Guan Ding Shan Prospect. In their report of January
2005, Gustafson and Friberg suggested that PFEM should direct its efforts
toward the major identified shear zones, containing geophysical and
geochemical anomalies over significant areas that might outline important
targets, which the Company needed to explore for major deposits. Gustafson
suggested these anomalies may be indicating large disseminated ore bodies
at depth.
Established: Relationship with Hebei Regional Exploration and Geologic
Institute,Langfang, China.
Completed: Pre-Exploration plan and budget by Hebei
Geological Exploration Institute,
focused on Major Shear Zone recommended by D. L. Gustafson, and Freiberg,
above.
Completed: Extensive geo-chemical sampling, 18 trench
program (rock type and lab
analysis). Identified 11 gold ore bodies within the working areas from 91
channel samples in 18 trenches.
Ore Body Scale and Grade
OreBody No.
Length?m?
Grade?g?t?
Trench
Sample & Grade
Sample No.
Grade?g?t?
I
160
3.02
TC1
1-2
3.61
1-3
1.32
TC2
2-2
4.12
II
160
3.45
TC1
1-5
5.11
TC2
2-4
1.78
III
200
7.0
TC15
15-4
8.86
TC16
16-6
5.83
16-7
6.31
IV
160
11.8
TC14
14-2
11.8
V
160
6.43
TC14
14-5
5.75
14-6
7.10
VI
335
6.77
TC9
9-2
2.22
9-3
18.00
9-4
4.82
TC10
10-1
4.03
10-3
6.02
10-4
6.58
TC12
12-2
7.32
12-5
6.97
TC13
13-2
4.97
VII
120
1.92
TC8
8-2
1.92
VIII
120
1.51
TC8
8-5
1.51
IX
120
5.03
TC6
6-1
5.03
X
120
10.0
TC6
6-4
10.0
XI
120
4.38
TC6
6-6
4.38
Completed: Identification of large high grade vein system,
as potential bulk mineable
resource with world class potential; associated with major regional shear
zone target area in epithermal environment; adjacent to highly prospective
huge Au and base metal prospect (NGDS) .
Completed: Survey of potential Mill Site and Environmental conditions.
Completed: Check Sampling by SGS lab, 43-101 certified: I
nspection of Langfang and SGS
labs by Donald L. Gustafson, Robert S. (Steve) Friberg and Stanley D. Rhyu
to inspect procedures, on separate occasions.
Completed: Safety Inspections and established procedures
according to Chinese law.
Completed: Data analysis, extensive geo-chem survey,
trenching, sampling and l by 2500
mapping.
Completed: Topographic map 1:2500.
Initiated: Exploration for extensions of new ore zones
within the confines of South
GuanDingShan project area, as a basis for estimation of size and scope of
Project.
Initiated: Adit on Au 5 with Cross Cut from 5-1 to obtain composite sample for
analysis of bulk sample, run of mine ore.
Established: Outline of Due Diligence Study and Data base
of all work as early stage
(Pre-Feasibility).
Postponed: Further work on XingJiaGou tunnel in preference to
development work on
existing SGD structures, May 2006.
Planning: Early stage Pre-Feasibility, Environmental assessment
for mine/mill
development and mining methods.
Ongoing: Development of Community Relations with City,
County and Village
Representatives in Weichang County.
Completion of 2006 development and exploration plan for GuanDingShan.
Next stage of deposit development, planning and budget for the 2007 field
season.
WEICHANG SHINING STAR PROJECT
PROJECT SUMMARY BAR CHART
Page 27
Figure 10
This project flow chart is PFEM's first time estimate of the
progression through
commissioning of the "Shining Star" operating facility,
located in the County of
Weichang, Hebei Province, China. The schedule will be adjusted for continuing
developments ie; Permitting, Environmental, Land Acquisition, People
Considerations and
other factors
Weichang Project tasks to be accomplished showing the
projected start of, and duration
of, individual tasks. Years 2006 and 2007.
Development Current through September 2008
Pre-Feasibility June 2007 through July 2008
WEICHANG SHINING STAR PROJECT
PROJECT SUMMARY BAR CHART
Page 28
Figure 10 (Continued)
Weichang Project tasks to be accomplished and projected start
of, and duration of,
individual tasks. Years 2008 and 2009.
Development Continue through September 2008
Pre-Feasibility Completed
Feasibility January through July 2008
Engineering August 2008 through March 2009
Site Preparation January 2009 through April 2009
Incoming Power January 2009 through September 2009
Water Supply March 2009 through September 2009
Roads March 2009 through May 2009
Dam/Tailing Pond March 2009 through September 2009
Foundation March 2009 through April 2009
Administration Building March 2009 through July 2009
Assay Laboratory Building March 2009 through July 2009
Security/First Aid Building March 2009 through July 2009
Pit & Service Building March 2009 through September 2009
Crushing Structure April 2009 through October 2009
Field Tank May 2009
Conveyors July 2009 through October 2009
Process Plant May 2009 through November 2009
Process Plant/Electric & Instrument August 2009 through November 2009
Process Plant/ Mechanical & Piping September 2009 through November 2009
Commissioning December 2009
North GuangDingShan
Completed: Exploration Permits being issued by Ministry
of Land and Resources, Chengde
Brigade.
Completed: Soil Sample survey over 20 sq km: 1:15000:
line to line: 500m; point to
point: 50m; soil samples taken 896. Observation of geology, structure and
mineralization along survey lines and their perimeters. Soil Survey results
show; three Au anomalous zones, TAu1-4, with Au1 showing potential width
and length mining dimensions, up to 280 times background values.
Completed: Geology Survey 1: 2500 mapping of extensive
Multi Metal prospect area and
data analysis.
Completed: (a.) Soil Survey Au, Ag, As, Sb, and Hg contour map 1:10000
(b.) Soil Survey Cu, Pb, Zn, and Sb contour map 1:10000
(c.) Soil Survey Mo, W, and Bi contour map 1:10000
(d.) Soil Survey Au contour map 1:10000
Initiated: Trenching, sampling on high grade Au zones
indicated by sampling, up to 250
times background. Cu and Zn mineralization open in all directions.
Ongoing: Planning next stage development.
ErDaoChuanGouMeng (Ocean Close)
Completed: Exploration Permits Being Issued by Ministry of Land and Resources.
Completed: Preliminary field investigation and lab assays.
Completed: Geologic mapping 1:2500, data analysis and
preliminary geo-chem survey and
attendant map.
Completed: Topographic map 1:2500.
Completed: oil Survey 1:20000
Completed: Opening of tunnel, formerly worked by the
Weichang Gold Company on high
grade vein structure.
Ongoing: First phase trenching in Ocean Close granitic
rock type previously sampled
by Stanley D. Rhyu; assayed at Langfang lab.
Planned: Inpection of all work to date; by Stanley D. Rhyu, spring of 2007.
DongFengShan (2.5 sq km)
Completed: Exploration Permits Issued by Ministry of Land and Resources.
Completed: Recommended by Donald L. Gustafson and
Friberg as potential low temperature
deposit possibility within shear zone, at depth, January 2005.
Completed: Area and Path maps (preliminary sampling)
Completed: Preliminary field investigation by Hebei Province Exploration and
Geological Institute; found and identified this prospect to be the Eastern
extension of the mineralized belt, an extension of the ChaoYang Wan mine.
Completed: Samples from limited exposures sent to Langfang lab.
Ongoing: Plan of attack as to how next stage exploration will be conducted.
Da YaoGou (Placer area)
Completed: Applications being prepared for submission to Ministry of Land and
Resources.
Completed: Soil Survey 1: 20000
Completed: Stream sediment sampling; 305 samples.
Ongoing: Trenching and additional work upon evaluation of geo-chem results and
issuance of permit.
Xiuyan Tailings Deposits
Completed: Title check: Owner supplied legal documents.
Completed: Initial inspection of 3.5 million ton tailings
dump of former large lead
and zinc producer.
Completed: Additional testing of various sample areas as follow up to original
inspection and sampling.
Underway: Agreement of Intent with Owners.
Planned: Three drill hole and sampling program to give further evidence of
substantial resource potential, prior to more extensive testing; Spring of
2007.
PFEM'S WEICHANG VISION
The Vision is to create
In
Weichang, China,
A long life
"Mineral Processing industry"
Operating in the lowest cost
Quartile to profitablity
Producing a variety of metals
And
Mineral products
Gold
Will be the foundation, upon which
This vision of future growth is built
(REGISTRANT'S NOTE: END OF PFEM "CORPORATE UPDATE")
Auditing Report
Chengde Zhengyuan Office Foreign Auditing Mark (2006) No. 8
Chengde Great Wall Minerals Company, Ltd.,
We have audited the appendixes: the balance sheet and the profit
sheet of Chengde Great
Wall Minerals Company, Ltd. as of December 31, 2005. The
management team of Chengde
Great Wall Minerals Company, Ltd. is responsible for editing the
accounting report
forms, so we only take the responsibilities of making suggestions on
these forms on the
basis of the auditing execution.
We have planned and implemented the auditing project depending
on the independent
auditing guideline of Chinese registered accountants, in order to
reliably ensure
whether the accounting forms see a considerable wrong report
or not. This auditing
project covers the following: On the basis of spot check, the amount
which supports the
report form is checked with any of exposed evidences, an accounting
policy that the
management team had used to edit the form is appraised with an
important accounting
estimation made by this team, and the complete influence of report
form is evaluated. We
believe that our auditing project is able to provide our suggestions
with a reasonable
basis. Therefore, the auditing report forms are given as follows:
Your company was established on January 6, 2004. The registered number
of the enterprise
legal-person business license is: Enterprise Independent Hebei Chengde
Zongfu Mark
No.130800100283. The legal person is Frank Orrell. The registered
capital is: USD750,000
(the paid-up capital is USD150,000). And the operating scope
is: the survey and
development of mineral resource.
1. By December 31, 2005, the total capital of your company had been
RMB184,681.43 all of
which was the floating capital; and the rights and interests of the
proprietor had been
RMB184,681.43, including the paid-up capital of RMB1,719,939.94
and the unallocated
profit of RMB-1,535,258.51.
2. For the fiscal year of 2005, your company saw the null earnings,
the operating cost
of RMB998,678.00 and the total profit of RMB998,678.00.
We believe that the abovementioned accounting report forms are in
conformity with the
regulations of Enterprise Accounting Guideline and Enterprise
Accounting System, both of
which were published by the Chinese government. In all key areas,
the forms fairly
reflect the financial status of Chengde Great Wall Minerals
Company, Ltd. as of December
31, 2005, as well as its financial status and operations
achievements of the fiscal year
of 2005.
by Chengde Zhengyuan Accountant's Office Co., Ltd.
(Official Seal: Chengde Zhengyuan Accountant's Office Co., Ltd.)
Place: Hebei, China
Date: June 21, 2006
Chinese registered accountant: (personal seal)
Chinese registered accountant: (personal seal)
Address: No.50, Xinxing Street, Shuangqiao District, Chengde
Balance Sheet
Edited by: Chengde Great Wall Mining Industry Co., Ltd.
Date: December 31, 2005
Unit: RMB
Item
Line
Amount at beginning
of term
Amount at end of
term
Monetary capital
1
Short-term investment
2
Receivable bill
3
Receivable dividend
4
Receivable interest
5
Account receivable
6
Other receivables
7
Account paid in advance
8
Future deposit
9
Receivable allowances
10
Receivable withdrawn tax for export
11
Stock in trade
12
Including: Raw material
13
Finished products (commercial goods
in stock)
14
Deferred and prepaid expenses
15
Net loss of floating assets to be
handled
16
Investment of long-term liabilities
to be expired in one year
17
Other Floating assets
18
Total of floating assets
19
620,439.49
184,681.43
Long-term investment:
20
Including: Long-term investment in
shareholding rights
21
? Long-term investment in creditor's
rights
22
* Price difference for merge
23
? Total of long-term investment
24
Original value of fixed assets
25
Minus: Accumulated depreciation
26
Net amount of fixed assets
27
Minus: Preparation for reducing
value of fixed assets
28
Net amount of fixed assets
29
Liquidation for fixed assets
30
Project materials
31
Project under construction
32
Net loss of fixed assets to be
handled
33
Total of fixed assets
34
Immaterial assets
35
Including: Land use right
36
Deferred assets (Long-term deferred
and prepaid expenses)
37
Including: Repair of fixed assets
38
Cost on improvement of fixed assets
39
Other long-term assets
40
Including: Physical assets reserve
specifically authorized
41
Total of immaterial and other assets
42
Debit items of deferred and prepaid
tax
43
Total of assets
44
620,439.49
184,681.43
Short-term loan
45
Payable bill
46
Non-payments
47
Prepaid accounts
48
Payable wage
49
Payable welfarism
50
Unpaid profit (dividend)
51
Unpaid tax
52
Other payables
53
Other non-payments
54
Accrued expenses
55
Accrued loan
56
Investment of long-term liabilities
to be expired in one year
57
Other floating liabilities
58
Total of floating liabilities
59
Long-term loan
60
Payable bond
61
Long-term payables
62
Payables specifically authorized
63
Other long-term liabilities
64
Including: Physical assets reserve
specifically authorized
65
Total of long-term liabilities
66
Credit items of deferred and prepaid
tax
67
Total of liabilities
68
* Minority of shareholders' rights
and interests
69
Paid-up capital (capital stock)
70
1,157,020.00
1,719,939.94
State's capital
71
Collection's capital
72
Legal person's capital
73
Including: State-owned legal-person
capital
74
Collection-owned legal-person
capital
75
Personal capital
76
Foreign businessmen's capital
77
Accumulated capital
78
Accumulated surplus
79
Including: Legally accumulated
capital
80
Public welfare funds
81
Added floating assets
82
Unconfirmed loss of investment
(filled in with "-")
83
Unallocated profit
84
- -536,580.51
- -1,535,258.51
Foreign-currency conversion
difference
85
Total of owner's equity
86
620,439.49
184,681.43
87
Total of liabilities and owner's
equity
88
620,439.49
184,681.43
Table of Status on Income and Expenses of Foreign Exchange
Edited by: Chengde Great Wall Mining Industry Co., Ltd.
Date: December 31, 2005
Code of Organization:75751553?2
Code of Foreign Exchange License:130800040107
Unit: USD10,000
Assets
Amount
at
begging
of
period
Amount
at end
of
period
Debts and balances of checking accounts
Amount at
begging of
period
Amount at
end of
period
I. Monetary fund of foreign
exchange
8
2
XI. Accounts of foreign exchange
payable
0
0
1.1 Cash
Where: Domestic accounts payable
1.2 Deposit of capital
accounts
8
2
11.1 Goods trade
1.3 Deposit of checking
accounts
Where: Expiry is one year or longer.
1.4 Deposit of loan accounts
Financial leasehold
1.5 Deposit of other accounts
11.2 Service trade
II. Accounts of foreign exchange
receivable
0
0
Where: Expiry is one year or longer.
Where: Domestic accounts
receivable
11.3 Other accounts payable
2.1 Goods trade
Where: Expiry is one year or longer.
2.2 Service trade
XII. Accounts of foreign exchange
received
2.3 Other accounts receivable
?
?
Where: Expiry is one year or longer.
III. Accounts of foreign
exchange prepaid
?
?
XIII. Wages payable to foreign
employees
IV. Dividends of foreign
exchange receivable
?
?
XIV. Dividends of foreign exchang
payable
Where: Domestic dividends
receivable
?
?
Where: Expiry is one year or longer.
V. Overseas investment
?
?
XV. Overseas loans
0
0
Where: Fixed assets
?
?
15.1 Loans from financial
organizations
Immaterial assets
?
?
15.2 Loans from affiliated
enterprises
VI. Domestic foreign exchange
investments
?
15.3 Other loans
VII. Non-foreign-exchange assets
0
0
15.4 Publishing of bonds
7.1 RMB
?
XVI. Overseas loans of foreign exchange
7.2 Fixed assets
?
Where: Loans from financial
organizations in home and abroad
7.3 Immaterial assets
?
XVII. Dividends of foreign exchange
payable
7.4 Capital obligation shift
?
Where: It is the domestic dividends.
7.5 Single-side capital shift
?
XVIII. Overseas capital received
14?
23
7.6 Others
?
18.1 Foreign direct investment
14?
23
VIII. Structural difference in
foreign rate
14?
23
18.2 Foreign investment in securities
IX. Coversion difference in
foreign exchange
?
XIX. Domestic capital of foreign
exchange received
X. Other assets
?
XX. Difference of checking accounts
8
2
Total
22
25
Total difference of debts and checking
accounts
22
25
Appendix: 1.The newly added amount of warranty that is made for the
foreign party this year hits USD0. The reduced
amount of warranty this year is USD0
and the balance at end of year is USD0.
2.According to the stock rights or agreed ratio, all of the foreign party's
undistributed profit balance at end of year
is counted as USD0.
3.The "other assets" hits 0% of the "total of asset."
Date:2006-06-21
Edited by: Wu Yi Shan
Chief Accountant: Wu Yi Shan
Legal Representative: Frank Orrell
Audited by: Beijing Runchent Accountant's Office
Registered Accountant: Shi Liandong
Profit Sheet
Edited by: Chengde Great Wall Minerals Company, Ltd.
For the fiscal year of 2005
Unit: RMB
Item
Amount of this fiscal year
I. Income of main business
Including: Income from sales of imported products (commercial goods)
Income from sales of exported products (commercial goods)
Minus: discounts and allowances
II. Net income of main business
Minus: (I) Cost of business operation
Including: Income from sales of imported products (commercial goods)
(II) Tax and add-ons of business operation
(III) Operation expenses
998,678.00
(IV) Others
Add: (I) Deferred income
(II) income of check-off and commission
(III) Others
III. Profit of main business
Add: Profit of other business (filled in with "-")
Minus: (I) Operation expenses
(III) Management cost
(III) Financial cost
(IV) Others
IV. Operation profit (filled in with "-")
Add: (I) Income of investment (filled in with "-")
(II) income of futures
(III) income of allowance
Including: Income of allowance for deficit enterprise
before allowance is given
(IV) income beyond operation
Including: Income of disposal of fixed assets
Non-cash deal income
Income of sales of immaterial assets
Net income of penalty
(IV) others
Including: Balance of content of wages of previous years
used to make up the profit
Minus: (I) Expenditure beyond business
Including: Net loss of disposal of fixed assets
Loss of regrouped liabilities
Expenditure of penalty
Expenditure of donation
(II) Other expenditure
Including: Transferred content of wages responsible for balance
Add: Adjustment of profit and loss of previous years
V. Total amount of profit (filled in with "-")
- -998,678.00
Minus: Income tax
* Minority of shareholders' rights and interests
Add: * Unconfirmed loss of investment (filled in with "+")
V. Net profit (filled in with "-")
9