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|  | |  SouthGobi Energy Resources Ltd.'s metallic mineral division has discovered a new encouraging low-sulphidation epithermal gold and silver system on its 90-per-cent-owned project in Java, Indonesia. The discovery is located within an eight-kilometre-by-two-to-three-kilometre structural corridor where other occurrences of sinter, silica caps, high-level epithermal veins and anomalous levels of gold and silver have been recently recognized. An initial program of more than 70 trenches has identified numerous high-level epithermal veins in an area that is 520 metres wide and 200 metres in length. The veins are open to the southwest and may extend beneath a silica cap and thick soil for an additional 500 metres. Trenching continues to uncover new veins. SouthGobi plans an initial 3,000-metre diamond drill program which is scheduled to commence early in 2008. SouthGobi and Ivanhoe Mines geologists believe that the nature of gold grades at surface of the exposed epithermal system are highly prospective in this geological environment. The Kaputusan Porphyry Copper-Gold Prospect, Bacan Island, Maluku, Indonesia SouthGobi Energy Resources has signed a definitive Joint Venture agreement (JVA) and Cooperation Agreement (CA) with PT Harita Multi Karya Mineral (HMKM), a member of the Harita Group of Indonesia, to set up a joint venture to explore and develop the Kaputusan porphyry copper-gold prospect on Bacan Island, Maluku, Indonesia. The Kaputusan prospect is within a 25,775-hectare KP (Kuasa Pertambangan) exploration lease granted to HMKM in January, 2005. The entire lease is within 15 kilometres of the ocean and the prospect is accessed by new logging roads. Under the terms of the JVA and CA, SouthGobi can earn an 85% interest in an Indonesian joint venture company controlling the exploration leases by incurring expenditures of US$300,000 prior to September 7, 2007. Thereafter, the 15% interest held by HMKM is free carried to commercial mine production. Porphyry copper-gold mineralization was discovered at Kaputusan during a joint Indonesian-German regional exploration program carried out between 1977 and 1979. A follow-up program during 1983-1984 included 5,550 metres of trenching and 1,575 metres of NQ-BQ diamond drilling in 10 vertical holes. The Kaputusan prospect is a typical Western Pacific island arc porphyry copper-gold system. It is located in the active Halmahera volcanic arc and the mineralization is hosted by a potassic altered and magnetite bearing tonalite porphyry stock. Copper and gold mineralization is associated with a quartz vein stockwork. Copper leaching and secondary enrichment is evident. SouthGobi Energy Resources Establishes A 50-man Exploration Camp SouthGobi has established a 50-man exploration camp at Kaputusan and conducted extensive surface exploration. The objective of this program was to acquire high quality geological and geophysical data over the prospect and to verify the BGR trench results prior to a decision to drill. Detailed geological mapping by SouthGobi has confirmed porphyry copper-gold mineralization is hosted by potassic-altered and magnetite-bearing tonalite porphyry stocks over an area measuring approximately 1,300 metres by 500 metres (see Figure 1). The best mineralization is associated with quartz vein stockworks in two zones (Northern and Southern Zones) that are separated by an area of alluvial cover. A total 110 line kilometres of high resolution ground magnetics and 42 line kilometres of dipole-dipole Induced Polarization (IP) have been completed. The results of the IP survey show the Northern and Southern zones are surrounded by high PFE (Percent Frequency Effect) anomalies that are interpreted to be pyrite haloes surrounding mineralization. The IP results suggest the Northern and Southern zones are continuous beneath the alluvium. SouthGobi reopened and sampled seventeen of the original BGR trenches. A total of about 1,150 metres of the original 5,550 metres of trenches were re-sampled. SouthGobi channel samples were two or three metres in length while BGR channels were five or six metres in length. In all cases the SouthGobi results compare well with the BGR results and provide confidence in the remaining BGR analytical results as being similarly accurate. A complete list of all Asia Gold and BGR trench results is given in Table 1.(see press release September 21, 2006) New Trench Results Continue to Expand The Kaputusan Prospect SouthGobi has discovered a new zone of mineralization 175 metres (m) west of the previously identified North and South Zones.(see news release December 13, 2006) A 178-m section of mineralization in a trench from the new West Zone grades 0.19% copper and 0.29 grams per tonne (g/t) gold in a strongly weathered tonalite host rock. This section includes a 28-m interval grading 0.17% copper and 0.84 g/t gold. New trench results from Kaputusan expand the zones of porphyry style copper-gold mineralization by approximately 400 metres in the North Zone and approximately 150 metres in the South Zone. A 3,000 metre diamond drilling program to test the North, South and West Zones began in February 2007. In the North Zone, a 152 metre (m) section of mineralization in Trench 16B that is open to the east and west, grades 0.20% copper and 0.18 grams per tonne (g/t) gold in potassic and propylitically altered tonalite host rock. This section includes a 60-m interval grading 0.31% copper and 0.36 g/t gold. In the South Zone, a 34-m section in the new Trench 11B grades 0.14% copper and 0.15 g/t gold. The host rock is also a potassic altered tonalite. These results increase the north--south extent of copper-gold mineralization at Kaputusan to 1.8 kilometres. The mineralization is still open to the north and south. KP18, a new trench in the North Zone, hosts a highly significant mineralized section of 192 m grading 0.26% copper and 0.14 g/t gold that includes a 66-m interval grading 0.38% copper and 0.25 g/t gold. This section is open to the south. Trench KP13, located 5 m north of KP18, hosts a 65-m mineralized interval grading 0.41% copper and 0.26 g/t gold. The 5 m interval between trenches KP18 and KP13 was not sampled. The copper-gold mineralization in the new trenches is associated with strong sheeted to stockwork quartz veins hosted by weathered potassic altered tonalite porphyry and altered tonalite porphyry dykes intruding andesitic volcanics. The mineralization occurs as both oxides and sulphides. Maps:
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