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Friday, July 20th, 2007

QGX Ltd. is pleased to announce a positive, NI 43-101 compliant, preliminary economic assessment (“PEA”) for the Company’s 100% owned Baruun Naran coal project (“the Project”) located in southern Mongolia. Minarco-MineConsult of Sydney, Australia (“MMC”), independently prepared the PEA on QGX’s behalf.
The PEA defines a conventional, truck-and-shovel, open-cut mining operation with coal processed on site using a wash plant to produce both coking and thermal coal products. The coal products are delivered to markets by rail starting in 2011. The PEA concludes that the Project is financially robust with an estimated after-tax NPV @10% of US$481 million and a discounted cash flow-internal rate of return (DCF-IRR) of 39%. Project highlights are summarized in Table 1 below.
Table 1. Project Production and Financial Highlights
Total Mined Coal (ROM Mt) 201
Mine Life (production years) 23
ROM Production Rate (Mtpa) 9.0
Average Stripping Ratio (bcm/ROM mt) 4.1
Typical Annual Saleable Coal Production
Coking Coal (10% ash) (Mtpa) 3.2
Premium Thermal Coal (14% ash) (Mtpa) 0.4
Standard Thermal Coal (25% ash) (Mtpa) 1.7
Typical Total Annual Saleable Coal Production (Mtpa) 5.2
Typical Costs, Revenues, and Profits
Cash Mining Cost, including royalty (US$/mt product) $23.45
Average Annual Revenue (US$ millions)* $320
Average Annual After-Tax Net Profit (US$ millions)* $90
Financial Summary
NPV @ 10% discount rate (US$ millions) $481
DCF-IRR (%) 39%
Payback (years)** 4.3
* for periods with sales revenue; ** from start of mine construction; Mtpa = million metric tonnes per year; mt = metric tonne
Paul Zweng, President and CEO of QGX Ltd., commented as follows:
“The Baruun Naran PEA confirms that the project has a significant after-tax net present value and a high internal rate of return which should generate significant value for our shareholders for years to come. Equally important, the development of Baruun Naran will provide substantial benefits to the people of Mongolia through taxes, jobs, and infrastructure.
This PEA is based on the current defined resource at Baruun Naran which represents a very small portion of the license. There is an excellent opportunity to expand the resource through additional exploration on the Baruun Naran license and another coal license held by QGX. However, in the short term we will remain focused on the development of the existing resource. Our next step is to conduct a pre-feasibility study in the third and fourth quarters of this year.
This study is the culmination of two years of intensive and rigorous work at Baruun Naran that is now beginning to deliver value for our shareholders. Reaching this milestone has been possible only through the support of our project team and contractors. Their efforts are greatly appreciated.”
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