Golden Reign Resources Ltd. - Overview



Overview Magadan Province Canada		RUSSIA AT A GLANCE *Area: 17,075,200 sq. km. Population: 142,893,540 (July 2006 est) Mineral Resources: Gold, Aluminum, Bauxite, Cobalt, Diamonds, Nickel, Platinum, Tin, Copper, Lead, Molybdenum, Tungsten, Zinc, Silver, Iron Gold in Russia: Russia ranks second on the list of gold-rich states after the South African and is the world's sixth leading gold producer behind South Africa, Australia, US, China and Peru. Russia has gone from being a marginal player to representing one of the most exciting growth opportunities. Total estimated gold resources are 500 million ounces. With output of 5.9 million ounces in 2004 and roughly 5.4 million ounces during 2005, this resource life is an estimated 85 years at the current rate of extraction. Except for South Africa, most major producers (US, Australia, Canada) have a resource life of only 15-20 years. The implication is that there is vast potential for raising output in Russia. Recent years have seen a shift from placer to hard rock mining. Russia is one of the world's lowest-cost producers with an average cost of $220/oz., as compared to the global average of $256/oz. For almost four decades, Russia's hard rock mineral deposits were discovered and explored but seldom put into production. Today's exploration success is greatly enhanced by the existence of a large database of prospective deposits, accumulated during the Soviet era and essentially 'shelved' for many years. With Russian and Western companies taking over the cost of exploration from the state, Russia has become the new frontier for exploration. Liberalization of the mining sector, political reform, lower tax rates and improved legal transparency which have occurred under Putin's presidency, have contributed to the waning perception of Russia being a high risk, political and economic, country in which to conduct business. These changes, coupled with the potential for new discoveries and existing in-country mining expertise, makes Russia extremely favorable. Mining Factoids: Russia possesses a significant percentage of the world's mineral resources, and 2004 accounted for about 7.3% of the worlds' total mineral extraction. Russia's gold production up 6.7% in 5 months during 2006 (source: Heraeus, Precious Metals Weekly, 7 July 2006) Russian output growth 8.4% from 1999 to 2005 and anticipated to accelerate as its large resource base is further developed. (Aton news release, 23.11.2005) The amount of gold that has ever been mined now exceeds the unmined world gold reserve. At current annual demand rates, approximately 3,600 tons, world gold reserves will evaporate in 25 years. 84% of gold ever produced has been mined since 1900. 60% of gold ever produced has been mined since 1950, at an accelerating pace. (Gold Fundamentals, www.anygoldnow.com) Jewelry accounts for an estimated 81% of total global gold consumption (3000+ tons per year), with India being the primary consumer. Retail investment is at 9.05% , industry 7.70% and dental 1.84%. MAGADAN OBLAST (PROVINCE) OVERVIEW* Magadan Oblast is located in Russia's Far East, running north from its capital Magadan along the northern shore of the Sea of Okhotsk and eastwards to the Taignonos Peninsula and the middle reaches of the Omolon River. Apart from swampy taiga along the coastline, most of the rugged mountainous area is covered by tundra on permafrost soil. Economically, apart from some fishing to the south, the most important industry is mining, especially of gold and other non-ferrous metals, mainly around the upper reaches of the Kolyma River. There is a road from Magadan city to the Sakha Republic that crosses the Kolyma gold fields. The climate is sub-arctic. Magadan Oblast has been widely known as a mineral storehouse. Its mineral wealth includes more than 11 percent of proven placer gold reserves, 15 percent of lode gold, and about 50 percent of proven silver reserves in Russia. Moreover, the probable reserves of precious metals are 3-6 times greater than the proven reserves. In addition to well-known gold and silver deposits, there are also prospective deposits of copper, complex ores, molybdenum, tungsten, mercury, and antimony, various non-ferrous and ornamental colored stone deposits.