KUUSAMO

Kuusamo Gold Project

In northern Finland, 700 kilometres northeast of Helsinki, the Kuusamo Gold Project covers a portion of the highly prospective Palaeoproterozoic Kuusamo Schist Belt, a metamorphosed volcanic and sedimentary sequence that is well endowed with gold, cobalt and uranium mineralisation.

This project is an integral part of Dragon Mining’s plan to significantly increase production in coming years, with the Company seeking to capitalise on its excellent potential. The project comprises five known gold deposits, with a combined Indicated and Inferred Mineral Resource of 383,500 ounces grading 5.4 g/t gold. Each of the five deposits display excellent potential for exploitation, and remain open along strike and with depth.

Kuusamo project outline displaying location of known deposits

The possibility of identifying additional deposits within the project area is high, with numerous indications of gold and the occurrence of a series of either untested or poorly tested geophysical, geochemical and geological targets in both the Kuusamo North and Kuusamo South areas. This provides the Company with a pipeline of prospects to advance over the coming years.

In late 2010, the Company commenced a 12 month, 20,000 metre drilling program focussed on Kuusamo North. A total of 64 holes have been completed to date for an advance of 13,407.9 metres the initial drilling campaigns targeting the Juomasuo and Hangaslampi deposits.

Kuusamo North - Juomasuo, Hangaslampi and Pohjasvaara deposits

Results from Juomasuo have yielded a number of very encouraging high grade intercepts, including 14.55m @ 4.81 g/t gold, 11.85m @ 5.30 g/t gold, 5.30m @ 12.97 g/t gold, 7.30m @ 8.18 g/t gold, 34.90m @ 9.30 g/t gold and, 25.60 m @ 9.66 g/t gold and 31.90m @ 45.67 g/t gold. Results have confirmed the continuation of the targeted lodes in concert with existing geological models and identified indications of additional lodes parallel to the existing lode set.

Multi-element analysis has also highlighted the presence of elevated cobalt and rare earth elements, either in conjunction with gold mineralisation or separately, and the occurrence of sporadic elevated levels of copper and uranium.

Juomasuo is the largest of the known gold deposits, comprising of a number of closely spaced, steeply dipping lodes that strike NW-SE over 280 metres in length and plunge steeply to the south and the southwest. A total of 298 holes were historically drilled into this deposit, returning a series of bonanza drill intercepts including 57.30m @ 62.56 g/t gold, 3.70m @ 426.98 g/t gold, 21.30m @ 58.79 g/t gold, 5.30m @ 206.85 g/t gold and 8.00m @ 48.85 g/t gold.

Juomasuo drill hole plan

Juomasuo Cross Section - Profile A-A

Juomasuo Cross Section - Profile B-B

The Hangaslampi deposit is located 1,000 metres south of Juomasuo. It represents a moderately dipping, medium to high grade zone of gold mineralisation that is defined over a strike length of 270 metres to a maximum vertical extent of 90 metres from surface. A total of 105 holes were historically drilled into this deposit, returning a number of very encouraging intercepts including 23.50m @ 13.25 g/t gold, 26.95m @ 5.78 g/t gold, 19.20m @ 7.00 g/t gold, 21.05m @ 13.70 g/t gold and 13.00m @ 20.41 g/t gold.

Hangaslampi drill hole plan displaying historic intercept highlights

A 20 hole campaign of drilling has been completed at Hangaslampi testing the extensions of the identified lodes. Results for 4 holes have been received, returning promising intercepts of 5.00m @ 3.40 g/t gold and 2.50m @ 9.33 g/t gold. Results for the remaining 16 holes are pending.

Drilling continues at Kuusamo with two rigs testing the strike and depth extensions of mineralised units at Juomasuo, whilst a third rig is completing a campaign of drilling at the Pohjasvaara deposit, 1,400 metres southeast of Juomasuo.

In conjunction with the drilling of the Juomasuo and Hangaslampi deposits, programs of re-logging and confirmation assaying, review of historic geophysical data and environmental studies will continue. These activities form part of an expansive program for 2011, which will also include mining and metallurgical studies.