BOGUNAY PROPERTY

The Bogunay Gold Property is located 196 km from Krasnoyarsk, center of Krasnoyarsk Territory, South Siberia, Russia.   The Bogunay mine was in operation from 1936 to 1951 and is reported to have run at an average grade of 8.5 g/t Au. The area had been closed due to its proximity to a Soviet strategically sensitive location until 2002, at which time a license to conduct exploration and subsequent production of gold was issued.  It is in effect until 2026.  Since the issuance of the license, more than US$2 million has been invested in exploration of the licenses. This work has included drilling, ground and airborne geophysics, trenching and chip sampling, environmental and as well as several other studies. 

Based on non-compliant (and therefore not disclosable) Russian resource estimates and other historic information the Company has estimated a potential target  ranging  in tonnage from 5,800,000 to 9,400,000 tonnes, at grades ranging from 2 to 10 g/t Au, for total contained gold ranging from 22.2 tonnes to 40.1 tonnes or 648,000 ounces to 1,171,000 ounces.    The area includes the Bogunay mine area, old mine tailings and other exploration targets within the property boundary.  The Property is accessed via graded gravel road (12 km) and is 16 km to the nearest railway station. The project has excellent access to power, water and a qualified local workforce.

Kola plans to process old mine tailings utilizing a local mill.  It is also considering using this mill along with contract miners to start early production from the old mine which could generate near term cash flow for the company.  

A Due Diligence study (TEO Konditsiy) at the Bogunay Gold Prospect has been completed.   Since April, when the Company acquired its interest in the Bogunay Gold Prospect, the company has been working on baseline geological works.  The objective of the work program was to meet the work requirements of the license agreement. The completion of this work allows Kola Mining to continue exploration work on the other target areas of the Bogunay gold Prospect such as the Bogunay mine area; the old mine tailings; the Krasnoyarsk mineralized zone; the Ivanovskaya zone; and other exploration targets within the property boundary”.

Kola Mining has hired a local geological exploration firm to prepare an exploration program and budget, respectively for ongoing work at the Bogunay Prospect.  As well, APEX Geoscience Ltd. has been retained to complete a National Instrument 43-101 compliant report specific to the Bogunay Gold Prospect.