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REPORT ON THE IKUNGU GOLD PROPERTY,

MUSOMA, TANZANIA, EAST AFRICA FOR MDN

INC.

Prepared by

Marc Boisvert P.Eng.

Vice President Exploration

And

Guillaume Mamias M.Sc.

Exploration Manager Tanzania

March 27, 2012

Montréal Canada

Table of Contents

1 Summary ................................................................................................................................................ 1

2 Introduction ............................................................................................................................................ 4

2.1 General ........................................................................................................................................... 4

2.2 Terms of Reference ........................................................................................................................ 4

2.3 Sources of Information.................................................................................................................... 4

2.4 Details of personal inspections ....................................................................................................... 5

3 Reliance on Other Experts ..................................................................................................................... 5

4 Property Description and Location ......................................................................................................... 6

4.1 Property location ............................................................................................................................. 6

4.2 Property Description ....................................................................................................................... 6

4.3 Ownership ....................................................................................................................................... 8

5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ........................................... 8

5.1 Access ............................................................................................................................................ 8

5.2 Climate ............................................................................................................................................ 8

5.3 Local Resources and Infrastructure................................................................................................ 8

5.4 Physiography .................................................................................................................................. 9

6 History .................................................................................................................................................. 11

7 Geological Setting and Mineralization ................................................................................................. 17

7.1 Regional geology .......................................................................................................................... 17

7.1.1 Lake Victoria geology and the Musoma Mara greenstone belt ............................................... 17

7.1.2 Lake Victoria Metallogeny ....................................................................................................... 20

7.2 Property Geology .......................................................................................................................... 20

7.3 Mineralization (gold) ..................................................................................................................... 33

ii

8 Deposit Type ........................................................................................................................................ 35

9 Exploration ........................................................................................................................................... 36

9.1 Grab sampling .............................................................................................................................. 36

9.2 Mobile Metal Ion survey ................................................................................................................ 37

9.3 Surface Observation Stratigraphy and Structure .......................................................................... 39

10 Drilling ............................................................................................................................................. 42

11 Sampling Method and Approach ..................................................................................................... 51

11.1 Soil and MMI Sampling ........................................................................................................... 51

11.1.1 Soil Sampling ...................................................................................................................... 51

11.1.2 MMI Sampling ..................................................................................................................... 52

11.2 RAB, RC and DD sampling ..................................................................................................... 52

11.2.1 Drill hole Location and Specification ................................................................................... 52

11.2.2 RAB sampling ...................................................................................................................... 53

11.2.3 RC sampling ........................................................................................................................ 54

11.2.4 DD sampling ........................................................................................................................ 54

11.3 Grab and Trench Samples ...................................................................................................... 55

12 Sample Preparation, Analysis and Security .................................................................................... 56

12.1 General .................................................................................................................................... 56

12.2 Soil and MMI Samples ............................................................................................................ 56

12.2.1 Soil samples ........................................................................................................................ 56

12.2.2 MMI samples ....................................................................................................................... 57

12.3 RAB, RC, DD and rock samples ............................................................................................. 57

12.4 QAQC ...................................................................................................................................... 58

12.4.1 Lakota QAQC ...................................................................................................................... 59

12.4.2 Shanta QAQC ..................................................................................................................... 59

12.4.3 MDN QAQC ......................................................................................................................... 59

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12.4.4 Security ............................................................................................................................... 61

13 Data Verification .............................................................................................................................. 61

13.1 Commercial standards ............................................................................................................ 61

13.2 Blanks ...................................................................................................................................... 62

13.3 Field duplicates ....................................................................................................................... 62

13.4 Inter-laboratory comparisons .................................................................................................. 63

13.5 Data collection verification ...................................................................................................... 66

14 Mineral Processing and Metallurgical Testing ................................................................................ 66

15 Mineral Resource Estimates ........................................................................................................... 66

16 Adjacent Properties ......................................................................................................................... 66

17 Other Relevant Data and Information ............................................................................................. 66

18 Interpretation and Conclusions ....................................................................................................... 67

19 Recommendations .......................................................................................................................... 70

19.1 Proposed Exploration Program ............................................................................................... 70

19.2 Exploration Cost ...................................................................................................................... 71

21 References ...................................................................................................................................... 75

iv

List of Figures

Figure 1 - Ikungu property location ............................................................................................................... 7

Figure 2 - Geographic location of the Musoma area and the Ikungu Peninsula ........................................... 9

Figure 3 - Topographic map of the Ikungu peninsula (UTM, arc1960) ....................................................... 10

Figure 4 - Drill holes prior to MDN (UTM, arc1960) .................................................................................... 16

Figure 5 - Geological units of Tanzania, (Hester et al., 1998) .................................................................... 18

Figure 6 - Lake Victoria geology and Musoma-Mara greenstone belt (Hester et Al., 1998) ...................... 19

Figure 7 - Geological map of the Ikungu Gold Project. ............................................................................... 21

Figure 8 - (A) General cross section of the Ikungu Peninsula, (B) lithostratigraphic column and (C) cross

section focused over Chandoa Hill (section 2770E). .................................................................................. 22

Figure 9 - Grab sample of metasediment from an artisanal pit................................................................... 23

Figure 10 - Core picture of metasediment drill hole IKD-25, meter 100. .................................................... 23

Figure 11 - Grab sample of metasediment ................................................................................................. 24

Figure 12- Grab sample of sericitic metasediment ..................................................................................... 25

Figure 13 - Grab samples of massive basalt .............................................................................................. 26

Figure 14 - Pillowed basalt, view towards N100°. ....................................................................................... 27

Figure 15 - Grab sample of Pyroxenite ....................................................................................................... 27

Figure 16 - Grab sample of a gabbro sill, southern flank of Kwkerge Hill. .................................................. 28

Figure 17 - Grab sample Diorite .................................................................................................................. 29

Figure 18 - Grab sample of feldspar porphyry diorite ................................................................................. 29

Figure 19 - Lamprophyre grab samples. ..................................................................................................... 30

Figure 20 - Grab sample of granite, from an apophysis of the East batholith. ........................................... 31

Figure 21 - Granite apophysis cut in drill core, IKD-19 meter 60. ............................................................... 31

Figure 22 - Grab sample microgranite ........................................................................................................ 32

Figure 23 - Grab sample of aplite dyke ....................................................................................................... 32

v

Figure 24 - Picture of sub horizontal vein at Main Reef artisanal working area ......................................... 34

Figure 25 - IKD-39 VG hosted in quartz vein which yielded 37.2 g/t Au. .................................................... 35

Figure 26 - Panning gold with mercury ....................................................................................................... 37

Figure 27 - Crusher ..................................................................................................................................... 37

Figure 28 - Artisanal miners hauling out the ore from the shaft .................................................................. 37

Figure 29 - Bags of ore from which random samples were collected ......................................................... 37

Figure 30 - 2009 MMI survey grid ............................................................................................................... 40

Figure 31 - 2009 MMI survey results (ratio) ................................................................................................ 41

Figure 32 - MDN drilling map (UTM, arc 1960) ........................................................................................... 44

Figure 33 - Geological cross section 2830E (looking North West) ............................................................. 45

Figure 34 - Geological cross section 3745E (looking North West) ............................................................. 46

Figure 35 - IKD-28 collar ............................................................................................................................. 53

Figure 36 - Longsection of the Ikungu Structure with area of more than 2.7 g/t and true thickness of more

than 2 metres .............................................................................................................................................. 72

List of Tables

Table 1 - Summary of Pls and shareholding ................................................................................................. 1

Table 2 - Units of measurements and abbreviations .................................................................................... 5

Table 3 - Geographic coordinates for PL 5150/2008 PL 4456/2007 and HQ-P21764 ................................. 6

Table 4 - Averages of Tangold trench intersections ................................................................................... 11

Table 5 - Sampo DDH intersections above 1 g/t Au ................................................................................... 12

Table 6 - JCI RCH intersection above 1g/t Au ............................................................................................ 13

Table 7 - JCI DDH intersections above 1 g/t Au ......................................................................................... 14

Table 8 - Shanta DDH intersections above 1 g/t Au ................................................................................... 15

Table 9 - Best gold composites produced before MDN work ..................................................................... 15

Table 10 - Grab sample results taken from artisanal shafts (UTM, arc 1960) ............................................ 36

Table 11 - MMI survey phase I detail (UTM, arc 1960) .............................................................................. 38

vi

Table 12 - MMI phase II details (UTM, arc 1960) ....................................................................................... 39

Table 13 – Diamond drill hole information from the 2009, 2010 and 2011 campaigns. ............................. 48

Table 14 - RCH information from the 2009, 2010 and 2011 campaigns .................................................... 49

Table 15 - Best gold composites from the 2009, 2010 and 2011 drilling campaigns. ................................ 50

Table 16 - Analysis method......................................................................................................................... 58

Table 17 List of standards used during MDN exploration .......................................................................... 60

Table 18 Sign Test over MDN Field Duplicate ............................................................................................ 63

Table 19 - MDN QAQC Analyses ............................................................................................................... 64

Table 20 - MDN commercial standard results plot ...................................................................................... 65

Table 21 - cost of the first exploration phase .............................................................................................. 71

1 Summary

The Ikungu Gold Project is situated in northern Tanzania approximately 860 km north-northwest of the

economic capital, Dar es Salaam, and 135 km northeast of Mwanza.

The Property is subject to an option and joint venture agreement signed on March, 11th, 2008 between

Lakota Resources Inc. (“Lakota”) now Tembo Gold Corp (a parent company of Mwamba Resources Ltd)

and MDN Inc (“MDN”). According to the terms of this agreement, MDN must make a series of 6 annual

option payments totaling USD $215,000, , and must spend USD $2,000,000 in order to acquire an

undivided 60% interest in the venture on or before the seventh anniversary date of the agreement. MDN

also has the option of further increasing its holdings to 70% by spending an additional USD $2,000,000 in

exploration on the Property during the time period covered by the agreement.

There are four PMLs (Primary Mining License) within PL (Prospecting License) 5150/08. MDN has signed

a Purchase Option Agreement with three of the PML owners and is negotiating a similar agreement with

the fourth.

The property comprises 2 PLs and 1 application in various stages of advancement as summarized

below in Table 1.

Current PL N°

Holders Interest earned by MDN

Status Area (km²)

PL4456/07 Mwamba Resources Ltd 70% 1st renewal 3.40 PL5150/08 Mwamba Resources Ltd 70% 1st renewal application 10.25 HQ-P21764 MDN Tanzania Ltd 100% application 3.80

Table 1 - Summary of Pls and shareholding

PL4456/07 and PL5150/08 are in their first renewal period (3 years) that will respectively expire on May

23, 2013 and on July 20, 2014. This will be followed by the second renewal period (2 years).

The Ikungu property, occurring on a peninsula in Lake Victoria, is partially underlain by an isolated

fragment of the Musoma-Mara greenstone belt (GSB), with volcanosedimentary rocks of the belt

occurring in the western two-thirds of the area and granites in the eastern third. Ikungu greenstones are

dominated by mafic massive and pillowed lava flows interbedded with rhythmic sequences of sedimentary

rock. Large ultramafic intrusions are also present, as well as several types of dykes. The Ikungu

lithostratigraphic sequence becomes younger to the south and can be divided into three domains, each

with their associated basalts. The lower domain contains lenses of metasedimentary rock interbedded

with pillowed basalts, suggesting moderate volcanic activity with periods of relative quiescence. The

middle domain of homogeneous basalt is weakly magnetic. The Upper domain consists of a thick

sequence of basaltic flows intruded by several ultramafic sills. The mineralized structure of economic

significance, known as the Ikungu Structure, is located in the metasedimentary rocks and, more precisely,

towards the contact between metasedimentary rock and their middle domain hangingwall basalts. The

metasedimentary units represent a zone of competency contrast resulting in development of more intense

deformation and formation of tension gashes during several episodes of tectonic reactivation. This zone

would have focused hydrothermal fluid movement, thereby increasing the potential for gold mineralization

along the structure.

2

The project is based around a small underground mine that produced a total of 47,344T of ore grading

12.5 g/t Au between 1938 and 1946. Exploration by Patrician Gold Mines (1,279 m of diamond drilling in 9

holes in 1994) and JCI (Tanzania) Ltd. (including 1,320 m of RC drilling in 18 holes and 2,406 m of

diamond drilling in 11 holes in 1996) focused on the potential for open pit mineralization. This potential

was not fully evaluated. Subsequent work by Lakota Mining Company (“Lakota”) aimed at evaluating two

areas with gold-in-soil anomalies located on the western and eastern extensions of the Ikungu gold-

bearing structure. Two north-south lines of Rotary Air Blast drilling were completed but only the west line

cut the mineralized structure. Lakota then entered into a joint venture with Shanta Mining Compagny Ltd

(“Shanta”). Shanta’s field work concentrated on trenching over the gold-in-soil anomaly, mapping and

drilling (244.75 m of diamond drilling in 3 holes) over the Forest, Main and 18dwt reefs.

The Ikungu gold-bearing structure (“Ikungu Structure”) was drilled during four MDN campaigns, once in

2009, twice in 2010 and once in 2011. During the fourth quarter (“Q4”) of 2009, the drill targets were the

strong Mobil Metal Ion anomalies positioned along a known mineralization corridor. During Q1 of 2010,

the main objective of the drilling was to establish the lateral continuity of the mineralized host along strike

at relatively shallow depths. The work focused on a 2.0-km-long mineralized zone which (1) was the site

of the18dwt, Main and Forest colonial mines, (2) ), sustained artisanal mining operations and (3) was the

focus of drilling by previous operators. During Q3-Q4 of 2010, the drilling program was designed to prove

mineralization continuity down to RL 800 so as to ensure availability of a minimum resource for further

exploration, as well as to explore the western extension of the Ikungu Structure. Lastly, the Q1 toQ3

drilling program explored the extensions of the Ikungu Structure to the West and East, and followed up on

high grade zones over the 2-kmlong mineralized zone.

During these drilling programs, 10781 core samples, 6309 RC samples and 1838 QA/QC samples (656

blanks, 598 field duplicates and 580 standards) were sent to the SGS laboratory for gold assay. QA/QC

samples represent 10.7% all samples sent to SGS.

The Ikungu Structure is known to extend for over 3800 m along strike. Of this strike length, MDN has

demonstrated continuity of the mineralized zone over 2140 m and, at depth, down to 800 RL

approximately 300 m below the surface. The structure displays a consistent dip of 70°-80° towards the

SSW. It is open in all directions. All boreholes drilled into the Ikungu gold-bearing structure reached their

target and returned gold values.

Gold mineralization chiefly occurs with grey-blue quartz vein networks often associated with highly

silicified arsenopyrite-rich replacement zones within the upper half of the metasedimentary rock sequence

in contact with the middle basalt unit. This existence of this quartz-carbonate vein milieu, together with the

presence of lenticular graphite zones, underline the similarity between the Ikungu gold occurrence and

the Bulyanhulu deposit in the Kahama Greenstone Belt currently mined by African Barrick Gold.

The Ikungu gold bearing structure with a strike length of about four km and numerous gold intercepts is

concluded to be an important gold mineral structure. A mineral zone of 2km long by 300 m depth have

been delineated by 53 holes. Inside the mineral zone, four lenses have been identified with minimum

horizontal thickness of 2 meters and average grade intervals above 2.7 g/t Au and up to 24.54 g/t Au.

This is indicating potential for continuity and for intervals with potential economic values.

The following recommendations are provided for ongoing development of the Ikungu gold project:

In a first phase, it is recommended to increase the volume of the mineral zone by testing lateral

3

extensions and depth extensions followed by more drilling to confirm continuity and quality of the grade in

order to better characterized the potential resources as detail below (see longsection Figure 36):

1. Explore extension:

a. West Extension: it is recommended to add sections of boreholes in the northwest portion of the

mineral zone between the holes IKBH-48 section and IKD-59 section..

b. East Extension: It is recommended to add sections drill holes in the south-east portion of

the mineral zone between hole IKD-43 and IKBH-71.

c. Deep Extension: It is recommended to drill the mineral zone at depth. Drill results

indicated an increase in thickness with depth. Drill holes are proposed to be located in

the plunge of the four identified lenses.

2. Confirm continuity and quality of grade: it is proposed the addition of drilling on existing

sections could permit the links between the area intercepted near surface and deep zones

intercepted. To define the orientation, dip and vertical extent of the mineralized zones, the

sections should have at least two drill holes intersecting the mineralized zones. This infill program

might be sufficient for the definition of inferred resource.

In a second phase of in-fill drill program of 35 000 metres will be scheduled if the results of the first phase

are encouraging. Drilling grid spacing between 50 and 100 meters is considered to be sufficient to classify

the resources at the indicated category.

The total cost for the first phase is estimated at $2,351,300 (see details in Table 21).

4

2 Introduction

2.1 General

On March 10, 2008, MDN Inc. (“MDN”) entered into an option and joint venture agreement with Lakota

Resources Inc (Now Tembo Gold Corporation) for the Ikungu property. Since the agreement became

effective MDN has been the project manager, undertaking exploration work on behalf of the joint-venture

partners. This report presents the description and results of exploration work done between March 2008

and December 2011. The report also includes a geological interpretation update as well as conclusions

and exploration recommendations for the Ikungu project.

2.2 Terms of Reference

From 2008 to end of 2011, MDN has completed a lithological grab sample survey, two successive phases

of Metal Mobil Ion “MMI” soil surveys, a mapping survey and four campaigns of diamond drilling.

This report has been prepared in accordance with the Canadian National Instrument 43-101 ("NI 43-101")

Standards for disclosure for mineral projects and will be filed with the various regulatory authorities. The

report has also been prepared to assist in acquiring financing for the development of the project. The

objective of this technical report is to provide a summary of material scientific and technical information

concerning mineral exploration activities on the Ikungu property in Tanzania.

This report has been prepared for MDN Inc., 1010 rue de la Gauchetiere Ouest, Bureau 680, Montreal,

H3B 2N2, Quebec, Canada, by Marc Boisvert, P. Eng. Vice President Exploration for MDN, a qualified

person under the terms set out in National Instrument 43-101 and Guillaume Mamias, .M.Sc.geologist,

Exploration Manager Tanzania.

2.3 Sources of Information

Information and data contained in the technical report were sourced from field work and desktop

compilations done by MDN under the supervision of Guillaume Mamias, M.Sc. Exploration Manager for

MDN. Data are filed in the MDN office in Mwanza as paper files or as digital data files. Other information

in this report came from the many technical papers and reports on the property, adjacent properties and

Tanzania in general by authors cited throughout the text and listed in the Reference section at the end of

this report.

All references to currency in this report are in United States dollars. All units in this report are metric

unless otherwise stated. The coordinate system is UTM using ARC 1960 datum

Table 2 summarizes abbreviations referred to in this report.

5

Abbreviations Descriptions

Amsl Above mean sea level Au Gold Az Azimuth BIF Banded Iron Formation GSB Greenstone belt °C Degree Celsius cm Centimeter DDH Diamond drill hole DD Diamond Drilling E East G Gram EOH End of hole g/t Gram per tonne kg Kilogram km Kilometre

km2 Square kilometre

m Metre mm Millimetre µm Micron N North % Percent ppm Part per million RAB Rotary air blast RCH Reverse circulation hole RC Reverse circulation RL Relative elevation (above mean sea level) S South t Metric tonne USD $ United States Dollars UTM Universal Tranverse Mercator coordinate system VG Visible gold W West

Table 2 - Units of measurements and abbreviations

2.4 Details of personal inspections

The authors have visited the project several times since 2008, and the exploration managers visited the

property regularly during each MDN field survey. Both Marc Boisvert, P.Eng. and Guillaume Mamias,

M.Sc. implemented and supervised all field work for the gold exploration program on the Ikungu property

between March 10, 2008 and December 31, 2011.

3 Reliance on Other Experts

Since March 2008, the authors have supervised field work and carried out a review of all available data

and information on the property collected by MDN as well as information and documents collected from a

search of the Tanzania Geological Survey files in Dodoma. MDN has relied on the previous results

reported from technical reports, maps and publications found in archive and government sources to plan

and implement the first exploration program by MDN. Before MDN began to conduct significant

exploration work on the property, it relied upon technical reports and data collected from companies that

had previously explored the property; information largely collected from the government assessment files

and hard copies of reports, maps and documents copied from some of the previous operators.

6

4 Property Description and Location

4.1 Property location

The Ikungu Gold Project (“The Property”) is located in the Musoma District (topographic sheet QDS 12/1)

of the Mara Region in Tanzania. The Mara Region is situated in the northeastern part of Tanzania where

it is bounded to the North by the political border with Kenya and to the West by Lake Victoria. The Mara

Region comprises six districts, Musoma, Musoma Rural, Bunda, Serengeti, Rorya and Tarime.

The Property is located 17 km SW of the town of Musoma, along the shore of Lake Victoria.

Prospecting Licence Point

Coordinates

Latitude (S) Longitude (E) Deg Min Sec Deg Min Sec

PL 5150/2008 A 1 33 0 LV Shore Line B 1 34 40 33 40 56 C 1 34 40 LV Shore Line D LV Shore Line 33 38 5 E LV Shore Line 33 38 5

PL 4456/2007 A 1 33 0 33 40 56

B 1 33 0 33 41 27

C 1 35 11.5 33 41 27

D 1 34 40 33 40 56

HQ-P21764 A 1 34 40 Shore

B 1 34 40 33 40 56

C 1 35 11.5 33 41 27

D 1 35 11.5 Shore

E Boundary to follow Lake Victoria shoreline

Table 3 - Geographic coordinates for PL 5150/2008 PL 4456/2007 and HQ-P21764

4.2 Property Description

The property is formed by two Prospecting Licences (“PL”) PL5150/2008 and PL4456/2007 and one

application HQ-P21764. The PLs and the application are contiguous with a total surface area of 17.45

km² (Figure 3).

There are four PMLs within PL 5150. MDN has signed a Purchase Option Agreement with three of the

PML owners and is negotiating a similar agreement with the fourth.

7

Figure 1 - Ikungu property location

8

4.3 Ownership

The Property is subject to an option and joint venture agreement signed between Lakota Resources Inc.

(“Lakota”) a parent company of Mwamba Resources Ltd and MDN on March 11th, 2008.

According to the terms of this agreement, MDN must make a series of 6 annual option payments totaling

USD 215,000 and must spend USD 2,000,000 in order to acquire an undivided 60% interest in the

venture, on or before the seventh anniversary date of the agreement. MDN also has the option of further

increasing its holdings to 70% by spending an additional USD 2000,000 in exploration expenditures on

the Property during the currency of the agreement.

5 Accessibility, Climate, Local Resources, Infrastructure and

Physiography

5.1 Access

The property is accessible from Musoma using maintained gravel roads that more or less follow the lake

shore. Secondary gravel roads leading to the mine workings (6 km) are passable, although they are not

maintained. Additional trails were established by MDN so as to facilitate the exploration work.

5.2 Climate

The climate of Musoma is moderated by the 1,200 m elevation and the proximity of the lake with an

average temperature of 23.1°C. The area typically has two rainy seasons, the “small rains” from mid-

November through December and the “big rains” from mid-March into May, given the coolest temperature

of an average low of 18°C in April. The months of June through October are usually dry, with occasional

thunderstorms, given the highest temperature of 29°C in October. Annual rainfall averages 800 mm.

5.3 Local Resources and Infrastructure

The national power grid follows the Majita road and passes 5 km SE of the MDN exploration site.. Mobile

telephone network coverage, including Internet options, is adequate.

Musoma is linked to Mwanza, some 260 km to the SW by a tarred road. Musoma provides basic facilities

such as government services, a rough airstrip, unsophisticated medical facilities, private workshops,

refueling stations, general dealers and a fresh food market. Semi-mechanized fishing operations and fish

processing industries are the economic mainstays of the district.

9

Figure 2 - Geographic location of the Musoma area and the Ikungu Peninsula

5.4 Physiography

The Ikungu hills in the west of the peninsula rise to 1,201 m amsl while the Kwikerege hills in the east rise

to 1,279 m from the 1,135 m elevation of Lake Victoria. The hills and the lowland fringes of the lake are

largely covered by thick scrub and low acacia woodland. The flat open area in the northeast of the

property is covered by mbuga and sandy soils, with rank grasses growing. Some cattle and goat-grazing

is carried on in the hills and more so in the flatter east of the property. Here, many small maize farms are

present except in the mbuga (local term designating a swamp). Fishing in Lake Victoria is an important

part of the local economy.

10

Figure 3 - Topographic map of the Ikungu peninsula (UTM, arc1960)

11

6 History Descriptions of previous exploration work from the various original reports are summarized below. As

numbers occasionally differed from one report to the other, numbers quoted below always come from the

original company report. Numbers were also checked in the original company database (Pearman, 1996)

(Taylor, 2003).

1934 Discovery of gold at the site of the 18 dwt mine by Major F.H. Russell. Subsequently, the

Forest Reef mine was discovered. The property was sold to Ikungu Mines Ltd. in 1938.

1938-1946 A period of limited gold production from underground workings. 47,344 tonnes of ore

grading 12.5 g/t Au were mined and processed using cyanide leaching of crushed ore.

During this period, the Phoenix Reef was discovered. In 1946 the non-availability of

equipment forced the closure of the mine.

1946-1952 The claims were sold to Mr. E.H. Ratzeburg who held them until 1952.

1961 Tangold Mining Co. Ltd. (Tangold), a subsidiary of Kiabakari Mines, held EPL 837 (old

name of a prospecting licence) and carried out detailed trenching, sampling and mapping

along the Forest – 18dwt reefs. Samples returned values up to 103 g/t Au (see average

results for the different veins in the Tangold trenches in Table 4. The old Twin Potoawa adit

at the west end of the Main Reef, the 70’ level of the Road Shaft on Main Reef and the 50’

level of the #12 shaft on Forest Reef were dewatered and re-sampled. Results of this chip

sampling returned 1.9 g/t Au over 9.4 m from the quartz veins.

Area Vein Number of trenches

Average thickness (m)

Average grade (g/t Au)

Road vein 14 0.78 18.94 Summit vein 1 5 1.22 2.86 Summit vein 2 3 1.14 4.04 Main vein 40 0.93 7.90 W Main Vein 8 0.53 4.46 Scattered Vein 2 0.46 37.71 18 dwt Vein 3 0.94 6.91

Table 4 - Averages of Tangold trench intersections

1993 Sampo Resources Ltd (“Sampo”) carried out a widely spaced shallow residual soil

geochemical survey over the peninsula consisting of 6 lines of 1.2 km each. Samples were

screened and the <75 µm fraction was analysed by aqua-regia assay for Au and base

metals. Results indicated that Au and As anomalies were related to old tailings except for a

few values over the Main Reef.

1994 Patrician Gold Mine Ltd carried out soil sampling over small grids. Gold nuggets were

identified west of the 18dwt mine. The 18dwt, Main, Forest and Phoenix reefs were

mapped in detail. A geological interpretation was compiled from the old underground plans.

Subsequently, 9 DDH totalling 1,279 m were drilled under the old workings. Two holes

returned very high grade results in SIK1 (24.54 g/t Au over 1.31 m) and SIK8 (11.5 g/t Au

over 2.02 m) (Table 9) but were drilled downdip.

12

Hole ID Sample Number

From (m)

To (m) length (m)

Grade (g/t Au)

SIK1 5786 124.52 125.48 0.96 1.28 SIK1 5802 139.88 140.84 0.96 1.26 SIK1 5803 140.84 141.80 0.96 6.8 SIK1 5804 141.80 142.76 0.96 31.75 SIK1 5805 142.76 143.72 0.96 33.05 SIK1 5806 143.72 144.68 0.96 26.58 SIK5 6001 105.00 106.00 1.00 1.35 SIK5 6002 106.00 107.00 1.00 1.15 SIK5 6011 115.00 116.00 1.00 2.58 SIK5 6014 118.00 119.00 1.00 1.09 SIK6 6047 123.00 124.00 1.00 2.4 SIK8 6305 189.90 190.80 0.90 2.11 SIK8 6306 190.80 191.80 1.00 5.16 SIK8 6322 206.90 207.90 1.00 6.35 SIK8 6323 207.90 208.90 1.00 4.78 SIK8 6324 208.90 209.90 1.00 36.25 SIK8 6325 209.90 210.90 1.00 12.2 SIK8 6326 210.90 211.90 1.00 5.99 SIK8 6327 211.90 212.81 0.91 2.62

Table 5 - Sampo DDH intersections above 1 g/t Au

1995 JCI carried out a LANDSAT study of the Lake Victoria area. An early N-S compressional,

E-W extensional event was overprinted by the African rifting event with extension oriented

NNW-SSE. Field checks noted the presence of artisanal miners who were extracting vein

quartz with disseminated sulphides from strongly foliated mafic greenstone rocks and the

possibility that the Forest Reef was hosted by siliceous aplitic dykes. It was concluded that

the gold occurred in shears and that there was a potential for an open pit deposit. A

regional geochemical orientation survey was done in 1995. Forest Reef was interpreted to

be a mineralized skarn near a granite pluton. A soil test concluded that the fine fraction

(<106µm) was the most suitable fraction for analysis. An airborne EM and radiometric

survey was undertaken at this time.

1996 A preliminary interpretation was completed and a set of maps was prepared. A large grid

was cut to cover all known showings. A lithological and structural map was completed, and

it was concluded that mineralization was primary and hosted by a complex variety of

metasedimentary rocks. Due to the difference in competence and in rock chemistry, the

thin sheet of metasediments within large units of metavolcanics was the natural locus for

structural failure and subsequent hydrothermal fluid flow. Gold is found at both primary and

remobilized sites.

Interpretation of the aeromagnetic data and air photographs revealed numerous

prospective structures related to the known mineralized breaks. The radiometric survey

provided information on granite types, distribution and phases of intrusion.

A geochemical survey was completed over the grid. The gold and arsenic assays

delineated the Forest – 18 dwt reefs precisely. Other minor parallel trends were noted. An

18 hole RC program was completed to determine the strike extent of the mineralization

13

between Forest Reef and 18 dwt Reef and additional holes were drilled over a number of

soil geochemical anomalies. An 11 hole diamond drill program then tested the

mineralization and the stratigraphy. Results above 1 g/t Au are presented in Table 6 and

Table 7


From (m)

To (m) length (m)

Grade (g/t Au)

IKBH02 2535 16.50 17.00 0.50 1.41 IKBH02 2536 17.00 17.50 0.50 1.41 IKBH02 2537 17.50 18.00 0.50 3.21 IKBH02 2615 56.50 57.00 0.50 1.11 IKBH04 2890 12.50 13.00 0.50 1.61 IKBH12 3148 16.50 17.00 0.50 1.91 IKBH12 3149 17.00 17.50 0.50 4.21 IKBH12 3150 17.50 18.00 0.50 1.41 IKBH17 3851 68.00 68.50 0.50 1.11 IKBH17 3866 75.50 76.00 0.50 1.31 IKBH17 3876 80.50 81.00 0.50 1.11 IKBH18 3882 1.00 1.50 0.50 1.81 IKBH25 4850 56.00 56.50 0.50 6.41

Table 6 - JCI RCH intersection above 1g/t Au


From (m)

To (m) length (m)

Grade (g/t Au)

IKD01 163 177.40 178.40 1.00 1.11 IKD01 171 185.29 185.64 0.35 6.11 IKD02 263 95.21 95.71 0.50 2.81 IKD02 264 95.71 97.02 1.31 5.11 IKD02 265 97.02 98.10 1.08 2.21 IKD02 273 103.56 104.34 0.78 1.51 IKD03 452 66.50 67.50 1.00 2.51 IKD03 453 67.50 68.15 0.65 3.51 IKD04 765 149.62 150.62 1.00 6.31 IKD04 812 194.90 195.80 0.90 1.81 IKD04 825 206.72 207.72 1.00 1.71 IKD04 826 207.72 208.72 1.00 1.61 IKD04 828 209.08 209.40 0.32 9.71 IKD04 829 209.40 210.19 0.79 4.11 IKD04 834 213.71 214.71 1.00 1.38 IKD04 848 226.04 226.75 0.71 3.21 IKD04 850 227.85 228.86 1.01 2.71 IKD04 851 228.86 229.87 1.01 13.11 IKD04 852 229.87 230.88 1.01 13.41 IKD04 857 234.79 235.35 0.56 1.11 IKD05 943 103.61 104.61 1.00 1.11 IKD06 1092 66.81 67.81 1.00 11.31 IKD07 1410 171.00 172.00 1.00 1.61 IKD07 1417 178.00 179.00 1.00 3.65 IKD07 1418 179.00 180.00 1.00 4.11 IKD07 1422 183.00 183.43 0.43 2.81 IKD07 1434 194.24 195.24 1.00 1.21 IKD07 1437 197.24 197.49 0.25 1.91

14

IKD07 1438 197.49 198.49 1.00 2.31 IKD07 1439 198.49 199.63 1.14 1.11 Hole ID Sample

Number From (m)

To (m) length (m)

Grade (g/t Au)

IKD07 1509 263.12 263.60 0.48 3.19 IKD07 1516 269.00 270.00 1.00 1.21 IKD08 1639 93.00 94.00 1.00 1.11 IKD08 1647 99.16 99.78 0.62 3.11 IKD08 1685 135.15 136.15 1.00 2.31 IKD08 1695 142.80 143.30 0.50 55.53 IKD08 1789 233.03 234.03 1.00 1.15 IKD10 2031 131.45 132.45 1.00 1.13

Table 7 - JCI DDH intersections above 1 g/t Au

A petrographic study concluded that the mineralized horizon at Forest Reef consists of iron-

rich arkoses to mudstones inter-bedded with mafic volcanics affected by hydrothermal

fluids emanating from the adjacent quartz-diorite pluton with the resultant formation of

skarns.

JCI then completed a resource calculation which indicated a resource of 2,557,585 tonnes

averaging 2.25 g/t Au (185,000 oz. Au). This resource calculation is not documented.

2003 The work carried out by Lakota at the Ikungu property in 2003 aimed at evaluating two

areas of gold-in-soil geochemical anomalies located on the eastern and western extensions

of the Phoenix Reef and the Main Reef-18 dwt Reef structures, respectively. A limited soil

sampling program was also carried out west of any previous known sampling.

Two N-S lines of rotary air-blast (RAB) holes were drilled across two soil anomalies located

at distance from the known reefs. All samples were analysed for gold and arsenic. In

addition, MMI samples were collected at 50 m intervals along each RAB line to help

determine if any gold mineralization found in the surficial environment was transported or

in-situ.

The highest gold result from this drilling program was 0.7 g/t Au over 2 metres in hole

RB040 west of the 18-dwt Reef.

2004 - 2005 Shanta digitized all results of previous exploration work and produced compilation maps,

some of which are used in this document. Shanta’s field work initially concentrated in

investigating soil geochemical anomalies not previously tested by JCI by pitting and

trenching. Following disappointing results, Shanta concentrated on the Forest – Main – 18

dwt rreefs with detailed mapping, underground sampling and 3 diamond drill holes.

Underground samples returned assays of 0.85 m at 3.78 g/t Au and 1.12 m at 3.89 g/t Au

at 18 dwt Reef, 0.95 m at 2.75 g/t Au and 0.6 m at 1.85 g/t Au at Main Reef; 1.29 m at 4.65

g/t Au and 0.77 m at 5.45 g/t Au at Forest Reef.

Best results of the 3 DDH located in previously untested parts of the Main Reef returned:

15


From (m)

To (m) length (m)

Grade (g/t Au)

IKD12 2314 49.65 50.15 0.50 2.41 IKD12 2315 50.15 50.65 0.50 1.81 IKD12 2316 50.65 51.15 0.50 1.6 IKD12 2317 51.15 51.65 0.50 1.27 IKD12 2318 51.65 52.15 0.50 1.5 IKD12 2324 54.65 55.65 1.00 1.57 IKD13 2346 40.50 41.50 1.00 1.03 IKD13 2349 44.08 44.78 0.70 4.55 IKD13 2350 44.78 45.48 0.70 4.48 IKD13 2351 45.48 46.18 0.70 2.11 IKD13 2352 46.18 46.88 0.70 4.34 IKD16 2386 44.80 45.30 0.50 2.16 IKD16 2387 45.30 45.80 0.50 3.39 IKD16 2389 46.56 47.06 0.50 1.21 IKD16 2390 47.06 47.56 0.50 4.81 IKD16 2391 47.56 48.06 0.50 2.15 IKD16 2410 65.50 66.50 1.00 6.97

Table 8 - Shanta DDH intersections above 1 g/t Au

Section Hole ID From (m)

To (m) Grade g/t Au

True Width (m)

1800E IKD07 177 180 2.72 2.6 1800E IKD07 196.24 199.63 1.48 2.94 1950E IKD08 133.55 136.15 1.07 2.26 1950E IKD08 142.17 143.3 24.76 0.98 1950E SIK5 115 119 1.1 1.37 2300E IKBH02 15.5 18 1.51 2.17 2370E IKD04 206.72 211.19 2.27 1.53 2370E IKD04 226.04 230.88 6.74 1.66 2550E IKD16 44.8 48.06 2.12 2.83 2550E IKD16 65.5 67.25 4.11 1.52 2850E IKD13 44.08 46.88 3.87 2.43 2980E IKD12 49.65 52.65 1.52 2.6 3325E IKD06 65.81 68.81 3.77 2.6 3550E IKD03 66.5 69.15 2.08 2.3 3735E SIK8 189.9 193.8 2.1 1.33 3735E SIK8 206.9 212.81 11.5 2.02 3750E IKD02 95.21 98.1 3.63 2.51 3750E SIK1 140.84 144.68 24.54 1.31

Table 9 - Best gold composites produced before MDN work

16

Figure 4 - Drill holes prior to MDN (UTM, arc1960)

17

7 Geological Setting and Mineralization

7.1 Regional geology

7.1.1 Lake Victoria geology and the Musoma Mara greenstone belt

Tanzania lies on the African plate that contains Archean cratons over 2.5 billion years. The Ikungu

property is located in the Precambrian Tanzania Craton which occupies most of Tanzania. The Archean

of Tanzania consists of granite-greenstone terrains in which linear belts of greenstones are set in a field

of predominantly granitic rocks. The Archean is divided in the Dodoman system, Nyanzian system,

Kavirondian system and the granite-gneiss terrain.

The Dodoman system is mainly of sedimentary origin and forms a band across the southern part of the

craton.

The Nyanzian system comprises a sequence of mafic volcanic rocks and immature sedimentary rocks

which form the greenstone belts of the central craton. These belts host most of Tanzania’s gold deposits.

The Nyanzian can be subdivided into a Lower and an Upper Series on the basis of a recognizable

upward transition from mafic to felsic lavas, with minor tuffs and interbedded sedimentary rock. The

Lower Series consists mainly of basalt, andesite and dacite pillow lavas. The sedimentary rocks include

banded iron formation (BIF) recrystallized cherts and some shale and conglomerate. The Upper Series of

the Nyanzian sequence is characterized by an assemblage of felsic lavas, tuff, ferruginous cherts, BIF

and subordinate meta-pelite. The greenstones are folded about steeply dipping axial planes, which define

a generally east-west grain.

The Kavirondian system occurs in the north part of Tanzania. It consists mainly of conglomerates,

coarse arkositic and feldspathic grits and quartzites resting unconformably on the Nyanzian rocks.

The granite-gneiss terrain forms the matrix surrounding the greenstones. Their age varies from Archean

to Proterozoic.

Several geochronological studies have been carried out on the greenstone belts that compose the Lake

Victoria gold fields (Borg, et al., 1999) (Manya, et al., 2003) (Manya, 2006) (Manya, et al., 2007) Using

mainly Sm-Nd and U-Pb systems it was established that the mafic volcanism occurred at different times

depending on the greenstone belts, commencing with the Sukumaland GSB at ≈2820 Ma, then the

Kilimafedha GSB at ≈2720 Ma and the Musoma-Mara GSB at 2676-2669 Ma (Figure 6). Data further

suggests that the volcano-sedimentary sequence of the latter belt was emplaced in a relatively short

period of time (i.e. 10-20 Ma) (Manya, 2006).

18

Figure 5 - Geological units of Tanzania, (Hester et al., 1998)

19

Figure 6 - Lake Victoria geology and Musoma-Mara greenstone belt (Hester et Al., 1998)

20

7.1.2 Lake Victoria Metallogeny

It is reported (Hester, et al., 1998) that over 90% of the gold produced in Tanzania comes from Archean

rocks in the vicinity of Lake Victoria. The principal gold deposits are considered as “Archean greenstone

lodes.” Gold has been recovered intermittently since 1898 and systematic exploration for gold began only

in the 1990s. New discoveries made over the past ten years total over 24 million ounces. Recent

discoveries include Bulyanhulu (>10 M ounces), Geita (>10 M ounces), Golden Pride (2.0 M ounces),

North Mara (3.9 M ounces), Golden Ridge (1.6 M ounces), Kahama (1.9 M ounces) and Tulawaka (0.8 M

ounces).

Gold mineralization discovered in Tanzania occurs in two environments:

In BIF with felsic volcanoclastics and shale of the Upper Series of the Nyanzian system, such as the Geita and Golden Ridge deposits.

In shear zones within a volcano-sedimentary sequence belonging to the Lower Series Nyanzian system, such as Bulyanhulu.

The global resources of the Geita mine stand at 14.6 million ounces (Hill, et al., 2002). The majority of the

gold is hosted by three deposits with Nyankanga accounting for 51% and 64% of the mine’s resources

and reserves, respectively (Hill, et al., 2002). Mineralization at Nyankanga is hosted by both diorite and

BIF units. Mineralization within the BIF is high grade and related to pervasive silica-pyrite alteration,

whereas mineralization within diorite is more brittle in nature, occurring as breccia and stockwork with

patchy silica-pyrite alteration. It is reported (Hill, et al., 2002) that the Nyankanga area is part of a fault

nappe.

Bulyanhulu resources are over 10 million ounces (African Barrick Gold web site). Mineralization occurs as

a quartz vein with sulphides that is found at a particular lithologic contact marked by a graphitic shale

horizon between basalt volcanics in the footwall and felsic volcano-sedimentary units in the hanging wall.

The mineralization longitudinal is over 5 km in strike length and is oriented 315º. South of the deposit, the

presence of a quartz-feldspar porphyry intrusive is reported. The Bulyanhulu gold mine belongs to the

greenstone-hosted quartz carbonate vein deposit type (Dubé, et al., 2007).

7.2 Property Geology

The Ikungu property, occurring on a peninsula in Lake Victoria, is partially underlain by an isolated

fragment of the Musoma-Mara GSB with volcanosedimentary rocks of the belt occurring in the western

two-thirds of the area and granites in the eastern third.

Ikungu greenstones are dominated by mafic lava flows (massive or pillowed) interbedded with rhythmic

sequences of sediments. Large ultramafic intrusions as well as several types of dykes are also present.

The Ikungu lithostratigraphic sequence youngs southward and can be divided into three domains, each


with pillowed basalts, suggesting the rocks were deposited during moderate volcanic activity punctuated

by periods of relative quiescence. The middle domain of homogeneous basalt is weakly magnetic. The

upper domain consists in a thick sequence of basaltic flows intruded by several ultramafic sills. This

succession is consistent with the regional high rate of volcanic activity and flow emplacement as argued

by Manya. S. (Manya, 2006) (Figure 7 and Figure 8).

21

Figure 7 - Geological map of the Ikungu Gold Project.

22

Figure 8 - (A) General cross section of the Ikungu Peninsula, (B) lithostratigraphic column and (C) cross

section focused over Chandoa Hill (section 2770E).

23

Regarding other intrusion types the following statements can be made: the diorite and dioritic

lamprophyre dykes are, obviously, younger than their host and postdate peak greenschist facies

metamorphism; the granite batholiths are younger than the greenstones and the microgranite bodies

postdate the granite batholiths.

Metasedimentary Units (MSED) These layered formations occur exclusively as lenses trending WNW-

ESE in the northern third of the area (lower basalts), beginning from the Ikungu Structure. Weathering

tends to highlight the layers according to their composition and resistance to erosion. Chemical

differences between the layers also produce a distinct patina of colours such as dark greenish grey, ochre

cream and rusty ochre. On a fresh surface, layers of mafic minerals alternating with layers of quartz or

chert are clearly visible (Figure 9). By reason of their nature MSED have preserved the effects of the

successive episodes of deformation that occurred in the region. Unlike the other lithologies they display

decimeter-scale folds that can be measured in the field or in cores (Figure 10).

Figure 9 - Grab sample of metasediment from an artisanal pit.

Figure 10 - Core picture of metasediment drill hole IKD-25, meter 100.

24

Figure 11 - Grab sample of metasediment

Two studies of thin sections were completed on drill core samples taken from one hole in the vicinity of

the Forest mine in the eastern part of the Ikungu Structure. These studies came to two different

conclusions regarding the origin of the metasediments and also the subsequent mineralizing events.

On one hand, Sampo (Klipfel, 1994) interprets the sediments as chemical sediments derived mostly from

an exhalite suite. Part of this opinion stems from the abundance of tourmaline in these sediments. This

amount of chemical sediment suggests that a prolific hydrothermal system existed on the ocean floor,

which could be consistent with the subsequent burst of mafic lava flows that constitute the series south of

the metasedimentary lenses.

On the other hand, JCI (Pearman, 1996) regards the succession as being formed of arkoses, quartz

wackes and iron and alumina rich mudstones locally containing carbonates lenses. In opposition to

Klipfel, they interpret the tourmaline as secondary, not primary. This leads them to suggest that

mineralization was related to hydrothermal fluids having high silica and potassium as well as boron and

metals. This hydrothermal system would be related to a deep-seated dioritic intrusion. They describe

skarnification, especially within calcareous lenses, and link tourmaline abundance to late boron-rich fluids.

Minerals are not easy to identify in such fine-grained rock. Mafic layers are most common and are

probably composed largely of pyroxene and chlorite. Locally, weathering highlights the presence of iron-

rich minerals.. In the cream-coloured layers, quartz is abundant and feldspar is also present. Locally,

silky, platy epidote, muscovite leaves along foliation planes (Figure 11) and different sulphides such as

25

pyrrhotite, arsenopyrite, pyrite and chalcopyrite may be observed. Sulphides occur as disseminations as

well as stringers or veins or as masses extending along foliation planes. Graphite has been noted as

well.

The whole area has experienced metamorphism to the greenschist facies, as suggested by the presence

of chlorite. Moreover, muscovite and epidote that may have been formed by hydrothermal alteration may

be partially derived from metamorphism. The metasediments account for most of the mineralization.

The sericitic metasediments (MSEC) – These are closely related to the metasediments as they are

found in the same context and with the same geometry. Their patina however is ochre to light brown. On

fresh surfaces they display a pure white color with streaks of grey where quartz and/or sulphide layers are

located (Figure 12).

Figure 12- Grab sample of sericitic metasediment

The grain size of these metasediments is very fine. MSES are composed of very fine-grained white mica

or sericite, with the remaining proportion generally made up of quartz and various minerals such as

sulphides.

Although, observations made on drill core suggest that MSES are derived from the same protolith as

MSED but have endured much higher fluid flow during metamorphism and more certainly during

hydrothermal activity. Rapid but smooth transition between MSED and MSES is often seen in drill cores.

Basalts (VBAS) – These are the most abundant lithology of the Peninsula. They are generally found in

two different unit types, one massive (Figure 13 and Figure 14) and one pillowed. The pillows are

widespread across the area and indicate that the sequence is younging southward. This provides an

important indication of relative chronology concerning the multiple ultramafic intrusions that are found in

the peninsula. The linear distribution of the mineralization coupled with the airborne magnetic map pattern

have led to the definition of three domains of basalt: (1) the oldest Lower Basalt, north of the

mineralization; (2) the Middle Basalt with weakly magnetic intensity that forms a band of variable width on

26

the map that follows the mineralization; and (3) the youngest Upper Basalt, south of the previous basalt.

The mineralogy of the basalt with a weakly magnetic response may differ from the rest by containing less

ferromagnesian minerals and / or sulfides. This basalt comprises both massive and pillowed types.

Basalts are very fine-grained and are composed of a matrix of locally visible pyroxene and plagioclase

feldspar. Sulphides can also be present in proportion of up to several percent.

Although they have undergone greenschist facies metamorphism and are more intensely chloritized than

other lithologies, massive and pillowed basalts do not show any other alteration features apart from some

silicification. Because of their competence and permeability relative to massive basalts or ultramafic

intrusions, pillowed basalts have suffered more deformation and greater fluid circulation, which result in a

number of features. These include the margins of the pillows and hyaloclastite are generally silicified,

especially in the vicinity of the mineralized zone; and the fluid pathways show more alteration and are

frequently filled with quartz.

Figure 13 - Grab samples of massive basalt

27

Figure 14 - Pillowed basalt, view towards N100°.

Pyroxenite (IPRX) – This type of intrusion is found in two locations. The first and major location is on the

southern edge of Kwikerge Hill, while the second is on its north slope.These intrusions generally contain

over 90% pyroxene, with the rest mainly constituted by plagioclase feldspar (Figure 15). No olivine or

olivine alteration mineral has been observed. IPRX has a porphyritic texture.

Figure 15 - Grab sample of Pyroxenite

These intrusions are interpreted as sills that were emplaced shortly after formation of the volcanic

28

sequence, and thus were metamorphosed to the same degree as the volcanic pile. No specific alteration

feature has been observed and pyroxenite bodies do not seem to be related to mineralized areas. The

MMI soil data does not seem to distinguish between the pyroxenites and the surrounding basalts.

Gabbro (IGBR) – Gabbro intrusions are the most common of the mafic-ultramafic intrusions, with 10

mapped bodies of gabbro compared to 3 pyroxenite bodies. The geometry of the gabbros subparallel to

the stratigraphy is typical of a sill. The host rock is generally basalt, although the intrusion present in the

area of interest and intersected in the drill holes is also partly hosted by metasedimentary strata. The

margins of most gabbro intrusions are sharp and suggest that there was a certain time lap between the

basalt flows and the emplacement of the sills. Nevertheless, towards the top of the series, some gabbro

bodies have very irregular gradational margins, suggesting a very short period of time between the

emplacement of both lithologies.

Figure 16 - Grab sample of a gabbro sill, southern flank of Kwkerge Hill.

As is the case for the volcanic sequence, gabbro bodies have suffered the same greenschist facies

metamorphism and deformation. However, the rheology of gabbro is such that, in gabbro, structures have

a different mode of occurrence than in the surrounding basalts or metasediments. In the immediate

vicinity of MSES surface grab samples show highly altered gabbro. The gabbro distributed throughout the

rest of the peninsula does not present much alteration except for local silicification.

Diorite (IDIO )– Diorite appears to occur exclusively as dykes that are generally oriented in a NNW-SSE

direction. However, gabbro-hosted diorite dykes on the south slope of Ituma Hill exhibit a zigzag pattern

between ~N340° and ~N20°. Dykes have been observed in cores (IKD-24) as well as on surface.

29

Figure 17 - Grab sample Diorite

Although of mafic composition, diorite dykes do not have the same amount of chlorite suggesting that

these dykes postdate the peak of greenschist metamorphism of the area. Bands of silicification can be

observed and epidote veins locally crosscut the dykes.

Diorite Feldspar Porphyry (IDFP) – This facies represent a small part of the diorite otherwise present

over the Ikungu peninsula. It has been observed on surface outcrop as a roughly circular body with “onion

peel” erosion feature, suggesting an origin different from the diorite dykes.

Figure 18 - Grab sample of feldspar porphyry diorite

This rock type facies appears to postdate most of the greenschist metamorphism and does not exhibit

any particular alteration or mineralization.

Lamprophyre (ILAM) – Observed in both cores and outcrops, lamprophyre occurs exclusively as dykes.

Most of them have the same orientation as the diorite dykes, which, coupled with their very similar

30

mineralogy, tends to suggest a common source and / or similar age.

As is the case with the diorite dykes described above, lamprophyre dykes display lesser metamorphism

but approximately the same amount and types of alteration, such as carbonates. They yield no value for

gold assays.

Figure 19 - Lamprophyre grab samples.

Granites (IGRN)– Granites surround the greenstones on the regional scale, and are present immediately

on the East side of the Peninsula. Apophyses crosscut the greenstones for a distance of up to several

hundred meters and have a subhorizontal orientation (IKD-19, 20, 21) (Figure 20).

Apophyses with pegmatitic texture locally contain tourmaline crystals (Figure 21).

The batholiths do not display signs of metamorphism or alteration and despite the presence of MMI

anomalies no mineralization has been encountered in the granite.

31

Figure 20 - Grab sample of granite, from an apophysis of the East batholith.

Figure 21 - Granite apophysis cut in drill core, IKD-19 meter 60.

Microgranites (IMGRN) – At least three intrusive bodies are present over the area. The main one, in the

SW, forms the relief of Rwansoga Hill.A second much smaller one outcrops just SE from Ituma Hill and a

last one is present near the school in Kigera Village.

32

Figure 22 - Grab sample microgranite

No significant traces of metamorphism have been observed in this facies. Weathering appears to be the

sole alteration feature and no relation has been noticed with mineralization.

Aplites (IPAL) – This rock type is of relatively minor importance. It appears as secondary structure

related to the granite batholiths and their apophyses. As such the orientation of the aplitic intrusions is

variable and they are more frequently encountered in drill core or as floats rather than outcrop. Many

aplites encountered in drill core have significantly different texture than the leucocratic aplite seen in

outcrop (Figure 23).

The garnets might be indication of metamorphism of upper amphibolite grade or be simply the result of

differing melt chemistry. As mentioned the aplite structures cut by the drill holes display a different texture,

much more uniform than the grab samples and with greenish color, all of which may indicate that they

endured extensive alteration in the mineralized area. No link with mineralization has been noticed.

Figure 23 - Grab sample of aplite dyke

33

Quartz veins (OQVN) – Although a variety of vein types cut through the Ikungu formations, only some of

them are related to gold mineralization. Most, however, contain sulphides. These types are the following:

Bluish, grey, smoky quartz veins. Generally indicative of high grade mineralization, they are mined by

artisanal miners and can be divided into three groups: one running subparallel to stratigraphy, another

slightly crosscutting the Ikungu Structure at N80° and a last one cutting through this structure with

subhorizontal dip.

Vitreous, colorless quartz. These veins cut across fractures and infiltrate bedding planes. They are

probably associated with an event of profuse silica flooding and potassic alteration. They do not correlate

well with gold mineralization.

Milky white, sugary quartz. Very abundant, thin veins (1 to 5 cm) have been observed crosscutting the

whole lithological sequence but may also be bedding parallel. They rarely indicate gold mineralization.

Quartz-Calcite and Quartz-Epidote veins. They are generally thin, highlighting fractures, and can form

stockworks. Quartz-calcite veins may also contain chlorite and tourmaline.

7.3 Mineralization (gold)

Lithological and structural association - The work done to date indicates that the main gold mineralization

occurs at the contact of two geological units (Figure 8). A series of pillow basalts with intercalated

metasediments (lower basalt series) is situated to the north of the gold mineralization, while a series of

pillow basalts and gabbroic sills (upper and middle basalt series) occurs to the south. Gold mineralization

occurs at the contact between these two geological units and is represented by a very continuous layer of

metasediments exhibiting sericite and silica alteration. This layer strikes NW-SE and dips steeply towards

the south.

Intersections of economic significance are located in the metasediments and, more specifically, towards

the contact between metasediments and their hanging wall basalts (middle basalt domain). The

metasediments represent a zone of competency contrast which favored more intense deformation and

development of tension gashes during several successive episodes of tectonic reactivation. This zone

would have focused hydrothermal and mineralizing fluid flow and thereby increasing the potential for gold

deposition.

The metasediments are distributed as subparallel units as observed on surface, in drill core and

underground workings. One of these units hosts gold mineralization that was first exploited during the

colonial mining period and is now by extracted by artisanal miners. This linear unit is defined as the

Ikungu Structure and comprises four 2-km-long sections, the Forest Mine, Road Shaft, Main Zone and the

18 DWT Mine. A fifth subsidiary area of mining is located farther North and is called Phoenix Mine.

During the 2010 and 2011 drilling campaigns, additional drilling intersected the Ikungu Structure along its

eastern and western extensions, bringing the strike length of the gold bearing structure from 2140 m to

3800 m long. Towards the west, holes IKBH-42 (2.15 g/t Au over 6.94 m) IKBH-45 (1.72 g/t Au over 3.47

m) and IKBH-48 (2.87 g/t Au over 1.74 m) extended the gold bearing structure by 860 m and 800 m

eastward with hole IKBH-71 (13.43 g/t Au over 1.74 and 1.83 g/t Au over 4.34 m) (Table 15).

Another distinct association is that between fault gouges and breccia zone, at the flanks of which occur

34

discrete, mineralized quartz veins. This type relates to brittle deformation, and more often occurs in

basalts oriented N80°

Focusing on the area that had already been drilled, three directions of mineralized shoots have been

distinguished:

- Steeply dipping quartz veins, subparallel to the stratigraphy and foliation, forming the main

mineralization plane (Ikungu Structure);

- Subhorizontal quartz lodes following the Ikungu Structure (Figure 24);

- Steeply dipping, N80° striking quartz veins, crosscutting the Ikungu Structure at a shallow angle.

Figure 24 - Picture of sub horizontal vein at Main Reef artisanal working area

Mineral association – In terms of mineral association gold occurs with sulphide rich zones. Multi-element

analysis performed by JCI and MDN reveal both a very strong correlation (coefficient of correlation > 0.7)

between gold-silver and gold-sulfur and a good correlation (coefficient of correlation > 0.4) with gold-

arsenic, gold-potassium and gold-titanium.

The gold-arsenic association is more recognizable visually, being highlighted by the presence of fine

arsenopyrite dissemination inside gold mineralization (Figure 25).

Whereas gold-arsenic association relates to high arsenic grades, silver concentrations are much lower

than of the gold grades to which it correlates.

2 m

35

JCI postulated that potassium-rich fluids originated from a nearby diorite, responsible for alkaline

hydrothermalism.

The gold-potassium association may have resulted from emplacement by alkaline hydrothermal fluids.

This association can be explained by the presence of microcline described by JCI (Pearman, 1996).

Figure 25 - IKD-39 VG hosted in quartz vein which yielded 37.2 g/t Au.

Generally speaking, gold mineralization at Ikungu can be summarized as described below:

Most gold mineralization is associated with (i) grey-blue quartz vein networks, but gold is also present (ii)

in highly silicified arsenopyrite-rich replacement zones within the upper half of the metasediments in

contact with the middle basalt unit. The combination of the two types results in thick mineralization zones

having, in some places, true widths up to 15 m (IKD-45 at 8.6 g/t Au over 14.67 m). On the one hand,

grey-blue quartz veins return values generally up to 5 g/t Au (IKD-39 19.26 g/t Au over 1.53 m), while

rocks with high silicified arsenopyrite-rich zones return values generally below 2 g/t Au (IKD-57 1.31 g/t

Au over 18.05 m) (Table 15).

In terms of geometry, the mineralized host is structurally controlled, striking at N110° and displaying a

consistent dip of 70˚- 80° towards the SSW. Other gold mineralization occurs at N80° inside steeply

dipping narrow quartz veins but this type is not of economic significance.

8 Deposit Type

The Ikungu gold project presents a lot of similarities with the greenstone-hosted quartz-carbonate vein

deposits (Dubé, et al., 2007) which are a sub-type of lode gold deposits.

Gold

Arsenopyrite

36

It is reported by Dubé and Gosselin (Dubé, et al., 2007) that greenstone-hosted quartz-carbonate vein

deposits typically occur in deformed greenstone belts of all ages, but are more abundant in terms of gold

content in the Archean GSB. They are distributed along major crustal-scale fault zones, and spatially

associated with major boundaries, such as volcano-plutonic and sedimentary domains.

Greenstone-hosted quartz-carbonate vein deposits correspond to structurally controlled complex

epigenetic deposits characterized by simple to complex networks of gold-bearing, laminated quartz-

carbonate fault-fill veins. These veins are hosted by moderately- to steeply-dipping, compressional brittle-

ductile shear zone and faults with locally associated shallow-dipping extensional veins and hydrothermal

breccias. Gold is largely confined to the quartz-carbonate vein network but also occurs within silicified and

arsenopyrite-rich replacement zones.

The Ikungu gold project also presents similarities with the Bulyanhulu gold mine in Tanzania that has of a

reserve of 10 million ounces of gold ( African Barrick Gold).This mine also belongs to the greenstone-

hosted quartz carbonate vein deposit type.

The main gold mineralization at Bulyanhulu, Reef 1, is a narrow structure averaging 2 to 4 meters wide.

However, it is very continuous on strike (5 km) and at depth (2 km). Furthermore, like Ikungu, Reef 1 also

occurs at the contact between basalts in the footwall and a felsic unit in the hanging wall containing

argillaceous sediments and graphitic zones (Chamberlain, et al.web document)

9 Exploration

Exploration conducted by MDN on the Ikungu property between 2009 and 2011 consisted of grab

sampling, MMI soil survey, mapping, reverse circulation drilling and diamond drilling on specific targets.

9.1 Grab sampling

In January of 2009, MDN conducted initial reconnaissance geological assessment and rock sampling in

the areas of known artisanal mining, and encountered encouraging results. These areas included the 18

Dwt Mine, Main Reef, Forest Mine and Phoenix Mine

Sample # Easting Northing Description Au g/t

66521 575162 9826534 Quartz reef material from productive shaft - Forest Mine 26.00









66546 573417 9827082 Quartz reef material from productive shaft - 18 dwt Mine 70.10




Table 10 - Grab sample results taken from artisanal shafts (UTM, arc 1960)

37

Figure 26 - Panning gold with mercury

Figure 27 - Crusher

Figure 28 - Artisanal miners hauling out the ore from the shaft

Figure 29 - Bags of ore from which random samples were collected

9.2 Mobile Metal Ion survey

Early in 2009, MDN carried out a review of the conventional soil geochemistry data carried out by

companies prior to MDN at Ikungu and came to the conclusion that due to the possible soil contamination

generated by the mining history of the peninsula (colonial mines and small scale mining) a Mobile Metal

Ion (MMI) survey over the property was required.

During the MMI survey, 400 g of material were collected. Roots and any other coarse debris were

subsequently removed. Samples were sealed into two clean plastic bags, the first with only the sample

which was then placed inside the second plastic bag with the tag number and closed with tape. During

sample collection the sampling team was checked to make sure that no jewelry was being worn that

could have led to possible contamination..

At each station one sample was collected from 10 cm to 25 cm below the organic-rich soil layer which is

the common depth for a MMI survey in Tanzania.

38

The samples were transported to SGS Mwanza for preparation and sent to SGS Toronto for analysis.

Phase I - The campaign started in March 2009 and ended in April 2009. Twelve parallel sampling lines

were set at 400 m intervals with a N22° direction, except in the western part of the property where three

north-south lines 400 m apart were used.

In areas of high gold-in-soil anomalies (> 70th percentile) or in areas of suspected mineralization trends,

sample spacing was set at 25 m along the lines and, elsewhere (< 70th percentile), the sample survey

was carried at 50 m space (Figure 30).

A total of 951 samples were collected, excluding field duplicates, as illustrated below (Table 11). 45 field

duplicates were introduced in the sample sequence during sampling.

First station Last station

Lines Length (m)

Easting Northing Easting Northing Sample spacing (m)

Number of sample

Sample collected

3000E 750 572156 9827178 572427 9827848 25 30 25 3600E 775 572474 9826734 572745 9827404 50&25 22 22 4000E 1600 572478 9825776 573077 9827260 50&25 38 38 4400E 2075 572824 9825560 573583 9827438 50&25 52 52 4800E 3150 573058 9825064 574214 9827912 50&25 89 86 5200E 3250 573418 9824912 574617 9827880 50&25 95 94 5600E 3350 573814 9824768 575050 9827878 50&25 95 95 6000E 3750 574201 9824660 575588 9828092 50&25 114 114 6400E 4375 574626 9824632 576246 9828642 50&25 122 122 6800E 4350 575082 9824648 576702 9828658 25&50 123 123 7200E 3500 575492 9824656 576794 9827878 25&50 99 99 7600E 2300 575953 9824656 576796 9826742 50 46 46 1W 950 571860 9826488 571860 9827388 50 19 19 2W 800 571410 9826488 571410 9827238 50 16 16 3W 300 570508 9826840 570508 9827103 25 12 0

TOTAL 972 951

Table 11 - MMI survey phase I detail (UTM, arc 1960)

Phase II - The campaign started late in September 2009 and ended in October 2009. Sixteen MMI infill

lines were sampled, including 8 infill lines oriented at N22° and 8 infill lines oriented N-S on the western

end of the peninsula.

Except for the western part of the survey during phase II, all the lines were run in the zone of highest

gold-in-soil anomaly (Figure 31).

A total of 724 samples were collected, excluding field duplicates, as illustrated below (Table 12). 35 field

duplicates were introduced in the sample sequence during sampling.

39

First station Last station

Lines Length (m)

Easting Northing Easting Northing Sample spacing

(m)

Number of

sample

Sample collected

5400E 1450 574276 9826506 574819 9827850 25 59 59 5800E 1325 574754 9826532 575250 9827761 25 54 53 6200E 1875 575081 9826284 575783 9828022 25&50 76 75 6600E 3175 574868 9824700 576057 9827644 25 98 98 7000E 2825 575288 9824660 576346 9827279 25 114 113 7400E 2950 575736 9824664 576841 9827399 25 84 83 3300E 850 572290 9826870 572608 9827658 25 35 35 3800E 750 572630 9826588 572911 9827283 25 31 31

3W 575 571000 9826638 571000 9827213 25 24 21 AW 675 571206 9826544 571206 9827219 25 29 26 BW 775 571630 9826494 571630 9827269 25 32 30 4W 275 570600 9826814 570600 9826989 25 12 12 5W 1950 570600 9827014 570100 9827712 50 40 25 6W 1900 569700 9825824 569700 9827724 50 39 36 7W 1000 569300 9826276 569300 9827276 50 21 19 8W 200 568900 9826966 568900 9827166 25 9 8

TOTAL 757 724

Table 12 - MMI phase II details (UTM, arc 1960)

9.3 Surface Observation Stratigraphy and Structure

The current geological map of the Ikungu peninsula is the result of compilation work carried out in 2011

and is based on 1729 soil descriptions made during the 2009 MMI survey, 580 outcrops listed by MDN

during 3 years of field work and 210 drill holes including RAB, RCH and DDH performed by MDN and its

predecessors.

The geological map, two summary geological cross sections and one lithostratigraphic column are

presented in Figure 7 and Figure 8.

This compilation reveals that the Ikungu Peninsula is composed of a single sequence of mafic volcanics

younging toward the south, striking at N110° and dipping steeply SSW.

40

Figure 30 - 2009 MMI survey grid

41

Figure 31 - 2009 MMI survey results (ratio)

42

10 Drilling

MDN carried out three drilling campaigns during 2009, 2010 and 2011 including reverse circulation and

diamond holes. The holes were targeted mainly to test the Ikungu Structure along strike and at depth as

well as the MMI anomalies.

The first drilling campaign (Wagendorp, et al., 2010) occurred between Q4 2009 and Q1 2010 and was

operated by Capital Drilling Ltd. The upper section of the holes was drilled HQ size down to fresh

unbroken ground. The remainder of the hole was drilled NQ size. Core orientation marks were provided

by the contractor for every rod drilled, wherever ground condition permitted. Down-hole surveys, using a

Reflex Camera were performed every 50 m so as to record dip and azimuth. All holes were drilled with an

azimuth of N 20° and dips of minus 50°. All cores, rejects and pulps are stored in aluminum core trays at

the MDN Mwanza base, Capri Point.

In Q4 2009, 10 holes totaling 2023.7 meters were drilled and a total of 2006 samples excluding QA/QC

were assayed with one rig. The holes were numbered IKD-17 to IKD-26. Out of 10 holes drilled, 5 were

drilled beneath MMI anomalies, away from the known mineralization trend (IKD-19, IKD-20, IKD-21, IKD-

22,IKD-23). The other five were drilled into the Ikungu Structure itself (IKD-17, IKD-18, IKD-24, IKD-25,

IKD-26).

In Q1 2010, 11 holes totaling 2348.52 meters were drilled with two drill rigs simultaneously and a total of

2345 samples excluding QA/QC were assayed. The holes were numbered IKD-27 to IKD-37. All 11 holes

were drilled into the Ikungu Structure.

The second drilling campaign (Mamias, et al., 2011) occurred in Q3 and Q4 2010, starting on August 1,

2010 and ending on November 12, 2010. Major Drilling Tanzania Ltd (Major) was the contractor. One

UDR 650 diamond-only rig and one multipurpose, convertible rig were used to complete the program.

The program was divided into one diamond drilling phase and a short, exploratory RC drilling phase.

The diamond drilled holes (NQ size core) were pre-collared with RC to 100 m down-hole. Holes were

surveyed every 50 m with a Reflex camera. Core orientation marks were provided for each run along the

zones of interest. Given that the pre-collar reached deep into fresh rocks, only a few meters of HQ size

core were drilled per hole.

A total 4678.7 m of diamond core in 14 boreholes and 1380 m of RC pre-collar were drilled during the

diamond drilling program. Holes were numbered from IKD-38 to IKD-51.

A fence of 4 RC holes totaling 393 m was drilled towards the end of the program. The holes were

numbered IKBH-42 to IKBH-45.

The third drilling campaign (Mamias, et al., 2012) occurred in Q1, Q2 and Q3 of 2011. Drilling started on

January 30, 2011 and ended on August 23, 2011. During this period two drilling companies were used.

From February to May, Ausdrill was the drilling operator. During this period, 3864 meters of reverse

circulation drilling (RC) were completed, including, 3664 m dedicated to the West and East extensions of

the Ikungu Structure and 200 m of pre-collar RC with 257.30 meters of diamond core inside the western

extension of the Ikungu Structure. In May, the Ausdrill contract was terminated by MDN due to

43

inadequate performance.

From June to August, Major replaced Ausdrill and started the follow-up of the low grade polygons with

two diamond rigs including 2294.09 m of diamond core and 723 m of RC pre-collar.

The drilling program was divided into one exploratory RC drilling phase targeting the east and west

extensions of the Ikungu Structure and a diamond drilling phase targeting the low grade polygons:

During the exploratory drilling phase 3664 m of RC were drilled. The holes were numbered IKBH-46 to

IKBH-81. On the west part of the Ikungu Structure, 11 holes were drilled on section 970E, 2 holes were

drilled on section 1195E in order to complete the fence started in 2010. On the eastern part of the Ikungu

Structure 10 holes were drilled on section 4590E, 5 holes on section 4540E, 5 holes on section 4180E

and 1 hole on section 4390E.

During the follow-up of high grade zones, a total 2551.92 m of diamond core in 11 boreholes and 723 m

of RC pre-collar were drilled during the drill program. Holes were numbered from IKD-52 to IKD-62 and

were drilled between section 1195E and section 3550E. The diamond drilled holes (NQ size core) were

pre-collared with RC to 100 m, down-hole. Holes were surveyed every 50 m with Reflex camera. Core

orientation marks were provided for each run along the zones of interest. Given the pre-collar reaching

deep into fresh rocks, only a few meters of HQ size core were drilled per hole.

The location, azimuth, depth and other relevant information are reported in Figure 32, Table 13 and Table

14. Best gold intersections are listed in Table 15.

Ikungu Structure central zone

The Ikungu Structure central zone is 2140 m long, between section 1700E and section 3840E and is

where the artisanal miners are currently working. Thirty- six holes were drilled to crosscut this structure.

The drilling targeted (i) the shallow depth extension of existing artisanal workings between 80 m and 120

m below the surface, (ii) the continuity of the mineralization along strike over 2140 m of the known

structure (iii) the downdip extension of gold intersections occurring in drill holes and (iv) the depth

extension between RL850 and RL800 about 300 m below the surface.

44

Figure 32 - MDN drilling map (UTM, arc 1960)

45

The shallow depth extensions and the lateral continuity at shallow depth include, from west to east, the

following holes: IKD-33, 24, 56, 45, 17, 25, 32, 35, 18, 27, 34, 29, 26, 30, 28 and 36.

The downdip extensions from west to east include the following holes IKD-46, 58, 55, 61, 31, 50, 49, 62

42, 37, 44 and 43.

The depth extension at about 300 m below the surface from, west to east, include holes IKD-47, 57, 38,

41, 39, 48, 40 and 51.

Figure 33 - Geological cross section 2830E (looking North West)

46

Figure 34 - Geological cross section 3745E (looking North West)

Ikungu Structure West extension

Two RC fences were completed during 2010 and 2011, at 550 m and 790 m westwards from IKD-33, on

sections 1195E and 970E, respectively. These fences include holes NKBH-42-58 (Table 14). Six RC

holes on section 1195E drilled below a MMI anomaly directly in the western extension of the known

mineralized structure returned encouraging results from metasedimentary units in IKBH-42 (1.54 g/t Au

over 24.3 m and 2.54 g/t Au over 6.94 m) and in IKBH-45 (1.72 g/t Au over 3.47 m) (Table 15). Eleven

RC holes on section 970E were drilled also. The mineralized structure was cross cut in IKBH-48 within

basalts (2.87 g/t Au over 1.74 m).

Diamond drill hole IKD-52 was drilled to test for depth continuity of mineralization intersected in IKBH-42

but returned disappointing results.

Directly in the extension of the Ikungu Structure, holes IKBH-93 (2.35 g/t Au over 3.06 m), IKD-59 (3.25

g/t Au over 2 m) and IKD-60 (1.63 g/t Au over 2.1 m and 1.44 g/t Au over 3.06 m) (Table 15) crosscut the

mineralized structure at 40 m, 140 m and 140 m below the surface, respectively. The drilling intersected a

graphitic unit at the contact of the pillowed volcanics and the metasediments.

47

Ikungu Structure East extension

Two RC fences on sections 4590E and 4180E were drilled in 2011at 750 m and 360 m eastwards from

IKD-43 in order to test a MMI anomaly which was directly in line with the eastern part of the Ikungu

Structure. These fences include holes NKBH-61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 77,

78, 79 and 80 (Table 14). Fifteen holes were drilled on section 4590E, with the best results occurring in

hole IKBH-71 (1.83 g/t Au over 4.34 m and 13.43 g/t Au over 1.74 m) in the southern part of the fence

within metasediments. This suggests that the eastern portion of the Ikungu Structure may be displaced.

Five holes were drilled on section 4180E, but no significant gold values were encountered. This is

probably due to fact that the mineralized structure has a more southerly orientation at this locality.

MMI anomalies outside the Ikungu Structure

Two MMI anomalies were tested on section 3600E with holes IKD-19, 20 and 21 and on section 4400E

with holes IKD-22, 23 and IKBH-76. These holes returned disappointing results.

Hole ID Pre Collar ID

Easting Northing Elevation Az Dip DD Length

(m)

RC Length

(m)

EOH Final Depth

Year

IKD-17 573719 9826855 1180 20° -50° 301.8 301.8 2009 IKD-18 574136 9826704 1212 20° -50° 251.6 251.6 2009 IKD-19 575025 9826715 1174 20° -50° 164.6 164.6 2009 IKD-20 575082 9826874 1166 20° -50° 160.7 160.7 2009 IKD-21 575057 9826795 1170 20° -50° 153.4 153.4 2009 IKD-22 575613 9826002 1169 20° -50° 158.4 158.4 2009 IKD-23 575592 9825936 1160 20° -50° 159.4 159.4 2009 IKD-24 573291 9826998 1158 20° -50° 272.6 272.6 2009 IKD-25 573863 9826825 1183 20° -50° 200.6 200.6 2009 IKD-26 574550 9826609 1203 20° -50° 200.6 200.6 2009 IKD-27 574200 9826699 1218 20° -50° 165.6 165.6 2010 IKD-28 574765 9826577 1187 20° -50° 146.8 146.8 2010 IKD-29 574341 9826642 1216 20° -50° 252.7 252.7 2010 IKD-30 574610 9826589 1200 20° -50° 149.3 149.3 2010 IKD-31 574526 9826552 1209 20° -50° 251.3 251.3 2010 IKD-32 573945 9826819 1189 20° -60° 200.5 200.5 2010 IKD-33 573183 9827062 1153 20° -50° 251.5 251.5 2010 IKD-34 574257 9826675 1223 20° -50° 169.1 169.1 2010 IKD-35 574049 9826800 1200 20° -50° 155.4 155.4 2010 IKD-36 574976 9826539 1175 20° -50° 181.9 181.9 2010 IKD-36x 574876 9826536 1182 20° -50° 22.7 22.7 2010 IKD-37 575037 9826304 1180 20° -60° 401.7 401.7 2010 IKD-38 IKBH-26 573693 9826645 1200 20° -60° 404.0 100.0 504.0 2010 IKD-39 IKBH-29 573977 9826597 1206 20° -60° 305.4 100.0 405.4 2010 IKD-40 IKBH-27 574260 9826417 1204 20° -60° 452.2 100.0 552.2 2010 IKD-41 IKBH-28 573861 9826581 1217 20° -60° 410.0 100.0 510.0 2010 IKD-42 IKBH-30 574950 9826458 1179 20° -60° 153.1 100.0 253.1 2010 IKD-43 IKBH-32 575138 9826304 1177 20° -60° 291.9 100.0 391.9 2010 - IKBH-31 575137 9826298 1176 20° -60° 40.0 40.0 2010 IKD-44 IKBH-36 575038 9826222 1185 20° -60° 400.8 100.0 500.8 2010 IKD-45 IKBH-33 573636 9826889 1176 20° -60° 170.2 100.0 270.2 2010 IKD-46 IKBH-34 573439 9826884 1174 20° -60° 274.5 88.0 362.5 2010 IKD-47 IKBH-35 573304 9826814 1177 20° -60° 412.8 100.0 512.8 2010 Hole ID Pre Easting Northing Elevation Az Dip DD RC EOH Year

48

Collar ID Length (m)

Length (m)

Final Depth

IKD-48 IKBH-37 574123 9826483 1203 20° -60° 389.2 100.0 489.2 2010 IKD-49 IKBH-39 574684 9826350 1210 20° -60° 358.6 70.0 428.6 2010 - IKBH-38 574684 9826352 1211 20° -60° 22.0 22.0 2010 IKD-50 IKBH-41 574617 9826452 1210 20° -60° 250.0 100.0 350.0 2010 IKD-51 IKBH-40 574448 9826351 1231 20° -60° 406.0 100.0 506.0 2010 IKD-52 - 572575 9827012 1150 20° -50° 200.2 200.2 2011 IKD-53 - 572675 9826971 1151 20° -50° 42.8 42.8 2011 IKD-54 - 572991 9827040 1149 20° -50° 14.3 14.3 2011 IKD-55 IKBH-59 573812 9826716 1197 20° -60° 224.5 100.0 324.5 2011 IKD-56 IKBH-84 573466 9826957 1169 20° -50° 216.2 100.0 316.7 2011 IKD-57 IKBH-85 573489 9826723 1187 20° -50° 402.3 100.0 502.3 2011 IKD-58 IKBH-86 573709 9826679 1198 20° -50° 291.5 100.0 391.5 2011 IKD-59 IKBH-83 572991 9827043 1149 20° -50° 254.3 62.0 316.3 2011 IKD-60 IKBH-94 573087 9827051 1152 20° -60° 263.2 100.0 363.2 2011 IKD-61 IKBH-88 574228 9826330 1207 20° -60° 477.6 85.0 562.6 2011 IKD-62 IKBH-89 574880 9826440 1184 20° -50° 164.5 76.0 240.5 2011

Table 13 – Diamond drill hole information from the 2009, 2010 and 2011 campaigns.

Hole ID Section Easting Northing Elevation Az Dip EOH Final Depth

Year

Fence1195E IKBH-42 1195E 572600 9827069 1153 20° -50° 100.0 2010 IKBH-43 1195E 572620 9827123 1150 20° -50° 100.0 2010 IKBH-44 1195E 572641 9827177 1149 20° -50° 100.0 2010 IKBH-45 1195E 572663 9827233 1146 20° -50° 93.0 2010 IKBH-57 1195E 572682 9827287 1145 20° -50° 145.0 2011 IKBH-58 1195E 572713 9827371 1141 20° -50° 54.0 2011 Fence 970E IKBH-46 970E 572330 9827005 1161 20° -50° 75.0 2011 IKBH-47 970E 572345 9827046 1162 20° -50° 87.0 2011 IKBH-48 970E 572363 9827095 1165 20° -60° 120.0 2011 IKBH-49 970E 572383 9827147 1169 20° -60° 100.0 2011 IKBH-50 970E 572399 9827190 1172 20° -60° 100.0 2011 IKBH-51 970E 572415 9827233 1174 20° -60° 100.0 2011 IKBH-52 970E 572431 9827277 1170 20° -60° 100.0 2011 IKBH-53 970E 572448 9827320 1164 20° -60° 100.0 2011 IKBH-54 970E 572463 9827363 1162 20° -50° 51.0 2011 IKBH-55 970E 572472 9827388 1161 20° -60° 48.0 2011 IKBH-56 970E 572478 9827409 1159 20° -60° 24.0 2011 Fence 4590E/4550E IKBH-91 4550E 575633 9825621 1196 20° -50° 100.0 2011 IKBH-71 4550E 575654 9825688 1187 20° -50° 120.0 2011 IKBH-72 4550E 575680 9825752 1180 20° -50° 120.0 2011 IKBH-73 4550E 575702 9825811 1173 20° -50° 120.0 2011 IKBH-74 4550E 575723 9825873 1168 20° -50° 120.0 2011 IKBH-75 4550E 575746 9825938 1165 20° -50° 150.0 2011 IKBH-61 4590E 575830 9826008 1164 20° -50° 90.0 2011 IKBH-62 4590E 575850 9826059 1162 20° -50° 54.0 2011 IKBH-63 4590E 575861 9826091 1161 20° -50° 100.0 2011

Hole ID Section Easting Northing Elevation Az Dip EOH Year

49

Final Depth

IKBH-64 4590E 575867 9826141 1159 20° -50° 120.0 2011 IKBH-65 4590E 575900 9826193 1157 20° -50° 120.0 2011 IKBH-66 4590E 575921 9826257 1156 20° -50° 120.0 2011 IKBH-67 4590E 575943 9826319 1157 20° -50° 120.0 2011 IKBH-68 4590E 575968 9826384 1156 20° -50° 120.0 2011 IKBH-69 4590E 575995 9826448 1155 20° -50° 120.0 2011 IKBH-70 4590E 576020 9826511 1154 20° -50° 120.0 2011 Fence 4180E IKBH-77 4180E 575411 9826066 1172 20° -50° 162.0 2011 IKBH-78 4180E 575429 9826157 1167 20° -50° 162.0 2011 IKBH-79 4180E 575466 9826227 1163 20° -50° 102.0 2011 IKBH-80 4180E 575487 9826276 1161 20° -50° 150.0 2011 IKBH-81 4180E 575515 9826354 1157 20° -50° 114.0 2011 Fence 4390E IKBH-76 4390E 575640 9826071 1164 20° -50° 156.0 2011 IKBH-92 4390E 575530 9825744 1198 20° -50° 120.0 2011 Ikungu Structure IKBH-93 1630E 573081 9827131 1144 20° -60° 150.0 2011

Precollars

IKBH-60 2390E 573727 9826729 1193 20° -60° 100.0 2011 IKBH-82 1300E 572676 9826971 1151 20° -50° 76.0 2011 IKBH-87 2560E 573904 9826664 1203 20° -50° 100.0 2011 IKBH-90 3925E 575222 9826296 1173 20° -50° 100.0 2011

Table 14 - RCH information from the 2009, 2010 and 2011 campaigns

Section Hole ID From (m)

To (m) Grade g/t Au

True Width (m)

1210E IKBH-42 19.00 27.00 2.15 6.94 1210E IKBH-42 32 34 0.96 1.74 1210E IKBH-42 38 66 1.54 24.3 1210E IKBH-45 56 60 1.72 3.47 1570E IKD-59 213.4 215.7 3.25 2 1630E IKBH-93 123 127 2.35 3.06 1660E IKD-60 171 174 0.73 2.29 1660E IKD-60 223.25 226 1.63 2.1 1660E IKD-60 229 233 1.44 3.06 1750E IKD-33 108 113 2.5 4.34 1750E IKD-33 141.6 145 2.26 2.95 1750E IKD-33 154 161 2.66 6.07 1850E IKD-24 160 163 2.58 2.6 1960E IKD-47 383 394 2.72 8.41 2050E IKD-46 245 250 1.81 3.82 2050E IKD-46 260.2 263 1.1 2.14 2150E IKD-57 392 412.8 1.31 18.05 2230E IKD-45 122.9 136.15 2.41 10.13 2230E IKD-45 138.7 158 8.6 14.76 2365E IKD-38 444.23 446 1.73 1.35 2390E IKD-58 334.9 337.75 2.1 2.47 2450E IKD-25 97 100 1.51 2.6 Section Hole ID From

(m) To (m) Grade

g/t Au True Width (m)

50

2450E IKD-25 109 112 1.71 2.6 2450E IKD-25 115 119 1.6 3.47 2470E IKD-55 288 291.4 1.68 2.6 2550E IKD-32 83 86.75 6.51 2.87 2550E IKD-32 97.83 114.5 1.41 12.75 2560E IKD-41 440.6 443.75 1.72 2.41 2560E IKD-41 367.3 372 2.34 3.59 2650E IKD-35 61.84 64.26 2.76 2.1 2650E IKD-35 72.5 81 2.79 7.38 2650E IKD-39 358 360 19.26 1.53 2650E IKD-39 286 287.8 8.46 1.38 2750E IKD-18 100.5 103.5 2.04 2.6 2750E IKD-18 138.5 141.5 1.31 2.6 2750E IKD-18 242 245 5.79 2.6 2825E IKD-27 75.4 78.4 2.53 2.6 2825E IKD-27 91.3 94.3 1.05 2.6 2830E IKD-48 356.2 357.55 2.43 1.03 2830E IKD-48 392.3 396.3 5.92 3.06 2830E IKD-48 399.1 401 1.39 1.45 2830E IKD-48 413.45 425.85 3.11 9.48 2900E IKD-34 97.2 99.8 6.63 2.26 2900E IKD-34 138.1 141.7 2.85 3.12 2975E IKD-29 87.2 90.07 3.35 2.49 2975E IKD-29 174.1 176.7 2.79 2.26 2980E IKD-40 394.1 400.1 1.13 4.59 2980E IKD-61 539.7 542 2.25 1.76 3190E IKD-31 137 141 2.49 3.47 3190E IKD-31 241 243 1.24 1.74 3190E IKD-51 423.3 426.1 1.67 2.14 3190E IKD-51 434.2 440 1.93 4.44 3190E IKD-51 448 457.2 3.39 7.04 3200E IKD-26 64.6 70.6 3.67 5.21 3200E IKD-26 173.6 175.6 3.18 1.74 3250E IKD-30 77 80 2.37 2.6 3325E IKD-50 273.9 276 1.85 1.61 3325E IKD-50 279 287 1.9 6.12 3400E IKD-28 59 62 2.52 2.6 3400E IKD-28 35.5 37.5 16.41 1.74 3400E IKD-49 334.2 340.6 2.27 4.89 3600E IKD-36 51.6 56.94 13.22 4.63 3745E IKD-44 383.7 388.45 0.61 3.63 3745E IKD-44 401 409 2.53 6.12 3745E IKD-44 418 423.86 0.76 4.48 3750E IKD-37 276.5 281.7 5.39 4.51 3840E IKD-43 302.7 307.6 1.21 3.75 4590E IKBH-71 55 60 1.83 4.34 4590E IKBH-71 17 19 13.43 1.74 970E IKBH-48 64 66 2.87 1.74

Table 15 - Best gold composites from the 2009, 2010 and 2011 drilling campaigns.

Composites are calculated with a strict cut-off limit of 0.5 g/t and a minimum width of 2.0 m.. Isolated

values greater than or equal to 0.5 g/t were included in the composite as long as they were no more than

2 m away from the composite margin.

51

11 Sampling Method and Approach

MDN employs a systematic approach to sampling, data collection and storage. Data and dataflow is

managed by Mr. Etienne Le Goff, Eng., MDN’s Geologist Database Manager. All exploration data is

received as Microsoft Excel spreadsheets, and is subsequently transferred to and maintained within a

Microsoft Access database at the MDN office in Mwanza. Data collection has been optimized to fit into a

database system.

11.1 Soil and MMI Sampling

11.1.1 Soil Sampling

Sampo

Samples were collected at 25-30 cm depths and 50 m intervals, except at 25 m intervals over the known

auriferous structures (Taylor, 2003).

No details have been provided concerning the sampling method used by Sampo for soil sampling. It is to

be understood that MDN has simply acquired the sample database, and is not in possession of any

methodological or other procedural documentation.

JCI

Prior to the systematic soil sampling survey, a soil geochemistry orientation survey was undertaken. This

comprised the collection of a suite of samples from one trench representative of the complete weathered

profile near the Forest and Main reef workings. These samples were sieved into different fractions and

analyzed for iron, manganese, arsenic, and gold. Results of the orientation survey indicated that the fine

fraction (<106 μm) was the optimum sampling medium to detect anomalous gold concentrations in the

underlying bedrock (Pearman, 1996). Following the orientation survey, 1425 soil samples were collected

along the grid line. The samples were taken from a depth of 30 cm.

Lakota

In the soil geochemical program on the western part of PL 5150/08, north-south lines with 400 m spacing

were sampled at 50 m intervals. A total of 64 samples were collected. One blank and one commercial

standard were inserted in the batch of samples sent for preparation and analysis.

The sample locations were controlled by hand-held GPS units (Garmin Etrex). Location data was

recorded in UTM coordinates using the ARC 1960 datum (the system used on all Tanzanian

topographical maps). This data was later downloaded by cable to a portable computer and transferred to

a spreadsheet. The database also includes the sample shipment number and all analytical results along

with the laboratory certificate numbers and, when available, the date the certificate was prepared.

Location of sample sites, monitoring of sampling by a team of samplers, and data recording was carried

out by Edwin Mchihiyo, Senior Geologist for Lakota Mining Company Ltd. Each sample site was assigned

a number in sequence from preprinted sample tag books, commencing with number 3001. The

appropriate numbered tag was added to the sample bag before it was stapled shut. No further sample

preparation was carried out by Lakota. Basic information on the nature of the sampled medium was noted

52

in the sample book.

All samples were taken at a depth of approximately 30 cm, from small pits dug with elementary hand tools

(Taylor, 2003).

11.1.2 MMI Sampling

Lakota

The two lines selected for RAB drilling to test for gold-in-soil geochemical anomalies from previous work

done by JCI were also covered by MMI soil samples collected at 50 m intervals. Sample spacing was

controlled by hand-held GPS (Garmin 76), and the data was downloaded by cable to a portable computer

and transferred to a spreadsheet in the database. All the MMI samples were taken by M.J. Taylor at

depths of 1-4 cm, immediately beneath the loose surface organic debris (Taylor, 2003).

MDN

The prescribed MMI sampling procedures were adhered to as detailed below (Hamis, 2009):

Thin, dark brown, organic soil layer described as level 0 was scraped away and not sampled.

MMI samples were taken between 10 and 25 cm depth below the humus-rich layer, after

eliminating loose organic matter, debris, rock fragments and any possible local surface

contamination.

The sampled material of approximately 250 g to 350 g was placed into clean, plastic bags,

using a scoop.

Coordinates were recorded using a GPS (Garmin 76) in UTM 36 coordinates using the Arc

1960 datum. Between sample collections, the sampling equipment was brushed to eliminate

residue from previous samples and flushed with soil from the new sample site.

11.2 RAB, RC and DD sampling

11.2.1 Drill hole Location and Specification

Sampo, JCI, Lakota and Shanta

No details concerning the collar settings for the RC and DD have been provided by Sampo, JCI and

Shanta.

For JCI DD holes from IKD03 to IKD06, a Maxibor down-hole survey system was used which recorded

the azimuth and dip every 3 meters. The other JCI holes were surveyed using a single shot Sperry

Suninstrument at intervals of approximately 50 meters (Pearman, 1996). The others holes do not seem to

have been surveyed.

Each RAB hole drilled by Lakota was located so that its collar overlapped the vertical projection to surface

of the end of the previous hole by about 3 m (Taylor, 2003).

MDN

Two Tanzanian senior geologists with full time employment contracts, Mr. Hussein Hamis and Mr. Yasin

53

Kabula, were responsible for the collar settings, supervision of the sampling, on-site logging of RC chips

and for confirming that the target depth had been reached.

The following procedures were used to spot the collars:

Care was taken to accurately align the rig with pre-positioned, orientated poles.

All drill holes were located with GPS (Garmin 76) and more recently with a 10 cm accuracy DGPS

(Sxblue 3L) using the UTM 36 coordinates Arc 1960 datum.

A down-hole survey was done every 50 m in order to have an accurate trace of the drill core.

Upon completion all drill holes were plugged with a small concrete plug in order to reduce the

environmental impact.

After the early exploration stage all holes were surveyed using DGPS.

For the RC fence, the first hole was spotted using a GPS and then the next collar was spotted so that its

collar overlapped the vertical projection to surface of the end of the previous hole by about 6 m. Prior to

drilling, the surveyed line was cut through the thick brush to the width of the drill rig by a crew of day

labourers.

Figure 35 - IKD-28 collar

11.2.2 RAB sampling

On each of the two RAB lines performed by Lakota, a series of holes were drilled northwards across the

anomalous zone, each hole being sampled continuously from top to bottom with each sample constituting

a two-metre interval. All material exiting the cyclone was collected, and bagged for each 1 m interval

separately.

Four local samplers worked under the direction of Mr. Sudi Mpemba, the geologist for Lakota.One

sampler took multiple small scoops of the material from each of two consecutive 1 m samples to create a

representative 2 m composite of approximately 2 kg. Each bag was numbered and tagged before being

54

stapled closed. One duplicate sample was taken from each hole drilled, and one commercial standard

and one blank were inserted in each batch of 100 samples. No further sample preparation was carried out

by Lakota (Taylor, 2003).

11.2.3 RC sampling

JCI

No details were available concerning the numbering system, transport of samples, etc. used by JCI for

the RC sampling. It is to be understood that MDN has simply acquired the sample database and are not

in possession of any other procedural documentation regarding the sampling methodology.

MDN

All material, except the overburden, is collected from a rig’s cyclone for every 1.0 m interval drilled in each

RC hole. The material is collected directly from the cyclone in large, pre-marked plastic bags (90 cm x 50

cm) protected by a 20 liter plastic bucket. At the completion of each meter drilled, the driller signals the

samplers and the bag is then removed and replaced by another one. The sample is then carried to the

logging area, set up at least 30 m upwind from the drill rig so as to be away from potential dust

contamination and noise. The sample is then weighed on a spring scale and logged by a geologist.

The individual 1.0 m bulk samples are laid out in the sequence in which they were collected and checked

for accurate numbering. In the fence programs, the entire hole was sampled as 1 m composites.

Initially 50% of the original 1.0 m samples from the entire hole (approximately 20 kg) were stored at the

Mwanza head office as archive material. This became problematic due to the quantity of material

requiring storage, and in 2011 much of this material was discarded. It has subsequently become common

procedure to only keep samples within gold bearing zones (>0.5 g/t). Individual sample bags to be sent to

the laboratory for analysis are placed into large rice bags that hold between 20 kg and 30 kg of sample

material. Each shipment between the field and the SGS Minerals Laboratory, Mwanza has a covering

dispatch form that is filled out in duplicate, one for MDN records and one for the laboratory. Any

discrepancies are dealt with immediately.

A scoop of approximately 200 g of RC chips is collected for each 1.0 m interval. This is laid out on a table,

and numbered for each 1.0 m interval. The material is sieved, and the coarse fraction is washed and

placed in a pre-numbered rock chip boxes for logging by the geologist. Once logged, these chip boxes

are stored at the Mwanza head office.

A technician monitors the sample weights and drilling information such as ground conditions, bit changes,

up-and-down movement of rods to stabilize the hole and any other drilling activities which may cause

down-hole contamination. All the data are then entered into an Excel spreadsheet and send to the office

through email or on a USB key.

11.2.4 DD sampling

JCI and Sampo

No details concerning the numbering system, transport of samples, etc. used by JCI for the core sampling

55

were available. It is to be understood that MDN has simply acquired the sample database and is not in

possession of any other procedural documentation regarding the sampling methodology.

Shanta

No records concerning the sampling method, transport of samples, etc. used by Shanta for the core

sampling were available. However, the database shows that sample lengths vary from 0.5 m to a

maximum of 1.7 m. Sample boundaries followed the geological contacts. Samples were labeled from

SM005 to SM126 and recorded with their certificate number. The samples were processed and analyzed

at SGS Minerals Laboratory, Mwanza.

MDN

During the DD program specific instructions were repeatedly given to the driller to ensure that core was

consistently and carefully laid out in core boxes together with appropriate core blocks. Core is regularly

collected from the rig site and care is taken to avoid loss or spillage during transport.

Core is collected from the rig site daily and where only a single shift is being drilled per day, this is done

at the end of shift if core has been recovered. The core is subsequently laid out on steel logging racks at

the Ikungu Camp. Core blocks are checked for consistency and core trays are marked with hole numbers

and drill hole intervals. Core orientation marks are drawn up and the core aligned and marked for splitting.

Core is marked with a blue cutting line in non-orientated sections and with a red line which is the

theoretical bottom line in orientated zones. Then the core is sprayed with water and photographed with a

digital camera. The image ID is renamed according the down-hole depth. Finally, the core is geologically

logged and stored in the core shack. At the end of the drilling campaign the core is transported to the

secure core yard in Mwanza under the supervision of the company’s senior staff.

In the early days of MDN exploration, sampling was done over the entire length of the recovered diamond

drill core. Later on, the sampling focused selectively on sections of evident geological interest and on

quartz veins.

As a result sample length varies markedly from 0.5 m to a maximum of 2 m. Geological contacts are

sampled following the sample boundaries.

All the samples were sent to SGS Minerals Laboratory, Mwanza under the direct supervision of a senior

MDN employee. Individual sample bags were packed into large rice bags that hold between 20 kg and 30

kg of sample.

Each shipment between the field and the laboratory is accompanied with a covering dispatch form that is

filled out in duplicate, one for the MDN records and one for the laboratory. Any discrepancies are dealt

with immediately.

11.3 Grab and Trench Samples

Grab rock samples are collected in areas of exposed potential gold mineralization. Grab samples are a

locally representative sample of rock mineralization, and do not represent true thickness or length of a

mineralized interval. MDN grab samples are collected in plastic bags sealed with staples, and their

geographic location recorded with a GPS (Garmin 76) using the UTM 36 coordinates Arc 1960 datum.

No details concerning the sampling method, transport of samples, etc. used by Shanta for the trench and

56

pit sampling were available for examination. However, the database shows that coordinates of samples

were taken by means of a GPS. Sample of trenches 1 to 8 and pit 1 to 38 were sent to Humac

Laboratories, Mwanza and the other samples were sent to SGS Mwanza (Shanta, 2005).

12 Sample Preparation, Analysis and Security

12.1 General

Soil sample collected by Sampo were assayed at the Anglo American Research Laboratories in

Zimbabwe. No certificate was available to support the numbers incorporated in the database. .

There is no indication as to where the JCI samples were analyzed.

Shanta Mining analyzed the core samples at SGS laboratory, Mwanza which conforms to the

requirements of ISO/IEC 17025:2005. Some pit and trench samples were assayed at Humac

Laboratories, Mwanza. No certifications are available from this facility.

At MDN, sample preparation is done by the company’s full-time employees. The SGS Mwanza facility

was used for the MDN core samples analysis and MMI samples preparation. MMI assays were done at

SGS Toronto. Both these facilities conform to the requirements of ISO/IEC 17025:2005. Check sample

analyses were prepared at the ALS facility, Mwanza and forwarded by air for analysis to ALS

Johannesburg, South Africa.

Most ALS laboratories are registered or are pending registration to ISO 9001:2008, and a number of

analytical facilities have received ISO 17025 accreditations for specific laboratory procedures.

12.2 Soil and MMI Samples

12.2.1 Soil samples

Sampo

Samples were sieved through 200 mesh (75 μm) and the <75 μm fraction was analysed by atomic

absorption for Au, As, Cu, Pb, Zn, Ni and Co at the Anglo American Research Laboratories in Zimbabwe

(Taylor, 2003).

JCI

The samples were taken from a depth of 30 cm. They were dried, sieved to minus 80 mesh and assayed

for gold using a 50 g fire assay charge with an Atomic Absorption (AA) finish. Copper, zinc, manganese

and arsenic were also analyzed using an AA technique (Pearman, 1996). It is not known where the

samples were analyzed.

Lakota

The samples were taken to SGS Minerals Laboratory in Mwanza in Lakota’s rented vehicle accompanied

by S.D. Robinson, Exploration Manager, or M.J. Taylor, Senior Consulting Geologist for Lakota. On

57

receipt of the soil samples in Mwanza, SGS first sorted and checked the samples numbering against the

packing list sent from the field site. Each soil sample was then dried in a paper packet or calico bag

before being disaggregated in a wooden mortar and pestle that was cleaned with barren sand between

samples. After disaggregation the entire soil sample was sieved at 80 mesh (180 μm), and a 50 g split of

the - 80 mesh fraction was taken for gold analysis by fire assay with AA finish (Taylor, 2003).

12.2.2 MMI samples

Lakota

The samples were sealed in zip-lock plastic bags, with no processing being done by Lakota or by SGS,

Mwanza. Care was taken to keep the samples out of direct sunlight or high ambient heat. These soil

samples were accompanied to SGS by S.D. Robinson, Exploration Manager for LMC, and shipped by

SGS Mwanza to SGS XRAL in Toronto, Canada, for the MMI “B” extraction and analysis for Au, Ag, Co,

Ni and Pd.

MDN

Collected samples were sealed into two clean plastic bags, the inner bag with only the sample and the

outer bag containing the numbered tag. During sample collection and handling, sampling team members

were not permitted to wear jewelry which could have introduced contamination (Hamis, 2009).

The samples were transported to SGS Mwanza for preparation with MDN shipment numbers and then

sent to SGS Toronto for analysis.

Samples were processed using extremely weak solutions of organic and inorganic compounds rather

than the conventional aggressive acid digest solutions or fusions. The metal ions held in solution are

therefore the chemically active or 'mobile' component. These mobile ions occur in very low concentrations

that are readily measurable by modern ICP-MS analytical instrumentation.

12.3 RAB, RC, DD and rock samples

JCI

No details concerning the sample analysis, transport of samples, laboratory, type of analysis etc. used by

JCI has been found in the record. However, the database from JCI shows that core sample analysis was

done for gold, copper, zinc, arsenic, lead, tin, molybdenum, antimony and silver.

RAB, RC chips, DD core and grab sample from Lakota, Shanta and MDN were all sent to SGS Mwanza.

On receipt at SGS Minerals Laboratory, the samples were laid out and checked against the shipping list

provided by the company. All MDN and Lakota samples were analyzed for gold using FAA550 (previous

F650) analysis protocol, while Shanta samples were analyzed using FAA303 protocol. All these analyses

were subjected to fire assay with an AA finish. Lakota RAB samples were also analyzed for arsenic using

AA70A protocol subjected to AA.

MDN multi-element analyses done on mineralized sample pulps at ALS Johannesburg laboratory were

analyzed using Inductively Coupled Plasma - Atomic Emission Spectroscopy (ICP - AES) analysis

58

protocol. Results are corrected for spectral inter-element interference. Gold was analyzed using AA-25

method with an AA finish.

Laboratory Method Code Element Symbol Units Lower Limit

Upper Limit

Sample Weight (g)

SGS AA70A Arsenic As ppm 50 SGS FAA505 (F630) Gold Au ppm 0.01 100 50 SGS FAA303 Gold Au ppm 0.01 100 30 ALS Au - AA25 Gold Au ppm 0.01 100 30

ALS ME-ICP61 Silver Ag ppm 0.5 100 0.25 Aluminum Al % 0.01 50 Arsenic As ppm 5 10000 Barium Ba ppm 10 10000 Beryllium Be ppm 0.5 1000 Bismuth Bi ppm 2 10000 Calcium Ca % 0.01 50 Cadmium Cd ppm 0.5 500 Cobalt Co ppm 1 10000 Chromium Cr ppm 1 10000 Copper Cu ppm 1 10000 Iron Fe % 0.01 50 Gallium Ga ppm 10 10000 Potassium K % 0.01 10 Lanthanum La ppm 10 10000 Magnesium Mg % 0.01 50 Manganese Mn ppm 5 100000 Molybdenum Mo ppm 1 10000 Sodium Na % 0.01 10 Nickel Ni ppm 1 10000 Phosphorus P ppm 10 10000 Lead Pb ppm 2 10000 Sulphur S % 0.01 10 Antimony Sb ppm 5 10000 Scandium Sc ppm 1 10000 Strontium Sr ppm 1 10000 Thorium Th ppm 20 10000 Titanium Ti % 0.01 10 Thallium Tl ppm 10 10000 Uranium U ppm 10 10000 Vanadium V ppm 1 10000 Tungsten W ppm 10 10000 Zinc Zn ppm 2 10000

Table 16 - Analysis method

12.4 QAQC

Quality control procedures included the insertion of blanks, field duplicates and commercial standards

with each batch of samples sent for analysis. Systematic quality control and recording was employed on

all MDN exploration programs. The QA/QC measures and results were reviewed and reported in the

exploration drilling report of 2009, 2010 and 2011

The ISO accredited laboratories utilized comprehensive in-house QA/QC measures from sample

preparation to instrumental finish and reporting of the results. Equipment was cleaned between batches

59

and crushing and pulverizing was monitored by sieve testing. Routine laboratory Quality Control sampling

(pulp duplicates and pulp repeats) was also performed on pulps retained at the laboratory. This provided

an indication of any sample preparation/sub-sampling/sample digest and assay error.

No details concerning the QAQC of Sampo and JCI samples have been provided. It is understood that

MDN has simply acquired the sample database and is not in possession of any other procedural

documentation concerning methodology.

Consequently it is not possible to formulate an opinion on these aspects other than to note that Sampo

and JCI, as well-respected and successful exploration companies, are believed to have employed strict

and well-defined procedures. As a consequence the reliability of the results is assumed and deemed valid

for use in conjunction with other exploration techniques and as first pass target identification purposes

only.

12.4.1 Lakota QAQC

The blanks, consisting of fine silica sand, were inserted in the RAB and soil sampling streams (not MMI)

to check on possible contamination during sample preparation as well as analytical calibration. All blanks

return a value lower than the detection limit.

Field duplicates were taken in the RAB drilling program at the rate of one sample per hole drilled to check

on the assay repeatability for the samples and consistency of the sampling method. Commercial

standards were inserted into the RAB and soil sample streams to check on the laboratory accuracy and

calibration. The majority of the field duplicate samples taken from the RAB drilling gave good correlation

with the original sample, despite minor inaccuracies when scooping equal amounts of material from two

consecutive 1 m piles on each of two occasions.

The three commercial standards used by Lakota, OREAS 42P, 2Pa and 4Pa prepared by Ore Research

& Exploration Pty Ltd. (Australia), were inserted into each sample batch to verify instrument calibration

(Taylor, 2003).

12.4.2 Shanta QAQC

No details concerning Shanta’s QAQC procedure of have been provided. However, 3 laboratory

standards and 3 blanks for 116 drill core samples were submitted within the mineralized horizon and

returned assays falling within acceptable limits (Shanta, 2005).

12.4.3 MDN QAQC

MDN field QA/QC protocols included insertion of regular standards, duplicates and blanks in the field for

all sample batches collected at Ikungu. The QC assays are reviewed immediately upon receipt of labs

results and assessed for every batch, which permitted immediate intervention on sampling and analytical

issues. A lab QAQC report was delivered monthly in order to follow the lab analysis.

During the drilling program, 10781 core and 6309 chips samples were sent for assay. Within these

sample batches, 1834 QA/QC (including 656 blanks, 598 fields duplicate, 580 standards) were inserted in

order to control laboratory consistency. QA/QC samples represent 10.7 % of all samples sent to SGS.

Pulps for key mineralized intersections have been sent to the ALS Mwanza facility for preparation and

60

then shipped to ALS Johannesburg for data verification and multi-element analysis.

Standard

MDN used a variety of commercial standards derived from certified laboratories based in South Africa,

New Zealand and Australia.

Most of the certified laboratory standards were obtained from African Mineral Standards in South Africa or

from ALS Laboratory, Mwanza for incorporation into the sampling sequence. MDN utilized a well-

designed suite of standard samples to match both the expected gold tenor of the samples and the type of

sample submitted.

580 samples of 26 different types of standards were used representing 31.5 % of the total QA/QC

samples. Standards samples were inserted on a regular basis (almost every 30 samples); the field

geologists had the option to put a low value standard in a zone of expected mineralized or a high grade

standard in a “sterile” horizon. Commercial standards used by MDN are listed below.

Standards Grade (ppm)

Standard deviation (ppm)

Number Company Country

AMIS0045 0.221 0.032 5 AMIS South Africa AMIS0081 0.52 0.06 41 AMIS South Africa OxE56 0.61 0.03 44 Rocklabs New Zeland AMIS0042 0.808 0.08 48 AMIS South Africa OXG70 1.007 0.013 1 Rocklabs New Zealand OXH55 1.282 0.015 21 Rocklabs New Zealand SH24 1.326 0.016 1 Rocklabs New Zealand AMIS0035 1.56 0.09 44 AMIS South Africa AMIS0043 1.65 0.17 36 AMIS South Africa SJ32 2.65 0.07 52 Rocklabs New Zealand AMIS0044 2.9 0.19 46 AMIS South Africa OxK48 3.557 0.04 7 Rocklabs New Zealand AMIS0023 3.57 0.26 14 AMIS South Africa AMIS0103 4.73 0.38 1 AMIS South Africa SL34 5.893 0.057 24 Rocklabs New Zealand ST327 6.83 0.25 15 Gannet Australia AMIS0167 7.29 0.38 7 AMIS South Africa AMIS0078 8.36 0.5 21 AMIS South Africa SN38 8.57 0.29 32 Rocklabs New Zealand AMIS0112 12.21 1.36 23 AMIS South Africa OXP50 14.89 0.33 27 Rocklabs New Zealand AMIS0029 15.79 0.8 23 AMIS South Africa AMIS0111 20.49 0.91 19 AMIS South Africa AMIS0030 21.42 1.24 13 AMIS South Africa AMIS0076 36.5 1.8 4 AMIS South Africa AMIS0100 44.97 3.1 11 AMIS South Africa TOTAL

580

Table 17 List of standards used during MDN exploration

61

Since the beginning, MDN utilized 2 and 3 Standard Deviation performance gates to assess the quality of

samples analyses for all core and chips drilled on the property. Standards falling outside these limits were

systematically reassayed together with 5 samples before and 5 after.

Blank

MDN Tanzania used commercial blanks to monitor the crushing and the pulverization of the DD samples.

One blank is inserted at the beginning of each shipment and then every 30 samples. The commercial

blank consists of clean crushed granite bought at the Humac Mwanza Laboratory. A total of 656 samples

were included were used representing 35.6 % of the total QA/QC samples.

Field Duplicate

A total of 598 field duplicates were taken. For DD field duplicates were prepared from a quarter split of

core in the same manner as the original samples and given the number immediately following in the

sequence. For RC, a duplicate sample was taken during drilling operations. Duplicate samples were

numbered 20 sample numbers ahead of the position in the sample string. This sample is used to monitor

sample batches for poor sample management, contamination and tampering and to a lesser extent

precision. These samples also give valuable data on the homogeneity of gold distribution within the

sampled interval. Field duplicate were placed on a regular basis. Density of field duplicate increased in

the horizons where gold values were expected.

12.4.4 Security

All aspects of the sampling is overseen and/or supervised by a qualified geologist. The samples are

stored in a designated storage area until they are transported to the laboratory. The samples are

transported in a company vehicle by a senior employee. All transported samples are accompanied by a

dispatch form which is signed off on receipt at the laboratory.

13 Data Verification

13.1 Commercial standards

During the DD/RC campaigns at Ikungu, 580 Commercial Standards (“CS”) were inserted into the sample

series sent to mineral laboratories for assaying.

As a routine data validation procedure, MDN generates graphs and tables showing the variation of each

CS assayed by the laboratory against its theoretical value stated on the suppliers’ certificate. In the

population of data so obtained, MDN considers a deviation greater to 3 standard deviations (“SD”) as a

“pass/fail” limit.

For the Ikungu project, a total of 96.71% of the laboratory assay values fell within 3 SD of the stated

certificate’s grade.

For every commercial standard failing the 3 SD test, the standard was re-assayed together with the five

62

preceding and the 5 following rock samples’ pulp. All re-assayed rock pulp samples returned acceptable

repeat values.

Three different situations were highlighted for the 3.29% CS fails. In most minor instances, it was noted

that the manufacturer’s inherent CS standard deviation was lower than the capability of the instruments

used by the laboratory.

In other instances, the re-assays highlighted human errors of mislabeling of the CD by the field personnel.

In many cases, the remaining material of the CD supplied was not sufficient for re-assaying.

13.2 Blanks

The analytical blanks most widely used by the Tanzanian exploration community are of crushed barren

granite supplied by Humac Laboratories, Mwanza.

For each blank returning an assay value greater than five times the detection limit of 0.01 g/t, the blank

was re-assayed together with the 5 preceding and the 5 subsequent rock pulp samples.

In most cases the submitted rock pulp samples together with the inserted blank yielded acceptable repeat

assay values. 98.78% of the blank returns a value lower than the caution limit (5 times the detection limit

– 0.05 ppm). In some minor cases, the blank failed the test and was considered as a “faulty” blank. In this

case, the rock pulp original values were accepted as correct and incorporated into the database.

13.3 Field duplicates The A graphs in Table 19 were generated from a population of 598 pairs of field duplicates ranging in Au

grades from 0.01 g/t to 6.13 g/t.

The arithmetic difference between the original assay value and that of its duplicate were compiled. MDN

found that 155 differences were positive, 156 negative and 287 were nil. The maximum difference was

1.22 g/t.

Given the known erratic distribution of gold within Archean gold vein deposits worldwide, the variations

between original sample and duplicate values at Ikungu do not appear to be unreasonable.

Original Sample

Duplicate Sample

Mean 0.06 0.07 Mean Median 0.01 0.01 Median Mode 0.01 0.01 Mode Standard Deviation 0.35 0.38 Standard Deviation Variance 0.12 0.15 Variance Minimum 0.01 0.01 Minimum Maximum 6.13 5.67 Maximum Number 598 598 Number

Sign Test

63

Numbers of pairs 598 Number of positive 155 Number of negative 156 Number of equal value 287 Maximum variation 1.22

Table 18 Sign Test over MDN Field Duplicate

13.4 Inter-laboratory comparisons

Rock samples pulps from SGS’ original assays were submitted to ALS laboratories for inter-laboratory

comparison purposes. This sub-population of 37 samples was selected from the most interesting high

and low grade mineralized intersections drilled at Ikungu..

Although there are minor in-built differences between laboratories (instrument capabilities, calibrations, 50

g assays versus 30 g etc...), such comparisons have become accepted within the exploration

communities.

Statistical analysis of the two sets of assay results obtained yielded a squared correlation coefficient of

0.96 and the values plot is illustrated on graph B in Table 19

64

Table 19 - MDN QAQC Analyses

R² = 0.9186

0.005

0.05

0.5

5

50

0.005 0.05 0.5 5 50

Log Scale

MDN Field Duplicate

0.005

0.05

0.5

5

50

0.005 0.05 0.5 5 50

Log Scale

R²=0.9651

SGS vs ALS

0

10

20

30

40

50

0 10 20 30 40 50

SGS

Au

re

sult

s p

pm

Standard Value

Standard distribution

A B

C D

65

On the upper graphs, blue symbol ---| represent the 2

standard deviation limit, red symbol ---| represent the 3

standard deviations limit. Black square symbol

represents the expected standard value

Table 20 - MDN commercial standard results plot

0

1

2

0 1 2

SGS

Au

re

sult

s p

pm

Standard Value

0-2 g/t standard

2

7

2 7

SGS

Au

re

sult

s p

pm

Standard Value

2-8 g/t standard

6

11

16

8 13

SGS

Au

re

sult

s p

pm

Standard Value

8-16 g/t standard

16

26

36

46

56

18 28 38 48

SGS

Au

re

sult

s p

pm

Standard Value

16-45 g/t standard A B

C D

66

13.5 Data collection verification

A full set of original laboratory certificate and analyses is maintained at the MDN office located in

Mwanza. A digital version of this data send by email to the Vice President, the exploration manager and

the database manager is stored on different hard drives.

MDN maintains an Access and GIS database in its Mwanza office. A copy is regularly sent to Montreal

head office.

MDN Database Manager systematically checks the database through the Geosoft Target QAQC tools

after every update so that the data entry errors can be detected and corrected during the drilling program.

A DGPS survey of drill collars was completed on the Ikungu peninsula. All the MDN holes were found, but

only a few collars from previous holes were located. In most cases, the concrete pads had been removed

by the artisanal miners and some pieces of concrete were found in the surrounding area.

14 Mineral Processing and Metallurgical Testing

No mineral processing or metallurgical testing was conducted before the completion of this report.

15 Mineral Resource Estimates

No mineral resource estimates were carried out before the completion of this report.

16 Adjacent Properties

No work is being carried out on properties immediately adjacent to Ikungu.

17 Other Relevant Data and Information

MDN has comprehensive prospecting rights and acquisition option agreements with the owners of

Primary Mining Licenses (‘’PML’’) PL5150/08

Although the details of these agreements vary from case to case, the elements common to each of these

agreements allows MDN unlimited access for prospection within the PML in consideration for an annual

rental fee and an exclusive, irrevocable option to “acquire” the PML, at any time, at MDN’s discretion,

within the currency of the agreement.

In terms of the Tanzanian mining laws, foreign-controlled companies are prohibited to own PML’s; the

acquisition mechanism, in the agreements, therefore includes surrendering and cancelation of the mineral

title by the PML owner, concurrent with an application by MDN to be granted the PML area becoming

vacant as a matching enlargement of the surrounding PL. (referred to as the ‘’dissolution’’ mechanism)

Another common feature of these agreements is that they fall under the prevailing Tanzanian laws and

67

regulations and have in-built dispute resolution clauses coupled with an arbitration option.

All agreements were signed by each of the partners in any PML and were being witnessed by the

Regional Mines Officer or its nominee. In addition, the agreements were translated into the official Swahili

language for the sake of better comprehension. The signed Swahili version is attached to the agreement

as an appendix.

From the commencement date until the end of the agreement period, the PML titles are held in escrow

either by MDN or by the Regional Mines Officer of the Ministry of Energy and Minerals. From the

commencement date, MDN also becomes responsible for keeping the title in force and in good standing.

MDN has three such agreements in place on PL 5150/08 at Ikungu. The details are summarized below.

Molandi Guyana and Partners (PML No 0002295). Status of the PML: valid, current and paid up.

Commencement date: May 17, 2008. Duration of the agreement: up to 36 months from commencement

date. Terms: a series of six-monthly prospection and acquisition option rights payments of TZS 1 500 000

each followed by a final payment of TZS 75 000 000 on exercise of the acquisition option by MDN.

Acquisition mechanism: transfer of the Minerals Title to MDN’s nominee.

Celestine Malundi and Partners (PML No 0017932). Status of the PML: valid, current and paid up.

Commencement date: August 13, 2010. Duration of the agreement: 36 six months from commencement

date. Terms: down payment of TZS 45 000 000 on commencement date, followed by a second payment

of TZS 45 000 000 eighteen months thereafter and a final bullet payment of TZS 400 000 000 upon

exercise of the acquisition option by MDN, thirty six months after commencement date. Acquisition

mechanism: cancellation and surrender of the title by the PML owner upon receipt of the final (acquisition)

payment.

Joseph Machibya & Juma, R., Ally. (PML No 0002523). Status of the PML: valid, current and paid up.

Commencement date: August 27, 2010. Duration of the agreement: up to 48 months from

commencement date. Terms: down payment of USD 54 000 on commencement date, followed by a

second payment of USD 27 000 twenty four months thereafter, followed by a third payment of USD 27

000 on the thirty sixth month after commencement date and a final acquisition payment of USD 400 000

upon exercise of the acquisition option by MDN, anytime on or before the end of the agreement.

Acquisition mechanism: cancellation and surrender of the title by the PML owner upon receipt of the final

payment.

18 Interpretation and Conclusions

The principal objectives of this Technical Report are: (i) To provide a geological overview and evaluation

of past exploration history on the Ikungu Gold property; (ii) Describe and evaluate the new exploration

work involving DD and RC drilling, MMI survey, and mapping and; (iii) Validate the data collected by the

MDN’s team over the past 3 years. It is the opinion of the authors that all these objectives have been

attained.

The work performed by MDN from 2008 to date, consisting in detailed geological mapping, two

successive MMI surveys and three extensive drilling campaigns, resulted in a much clearer

understanding of the geological context of the area surrounding the Ikungu colonial mine as summarized

68

below.

Geology

The Ikungu lithostratigraphic sequence youngs southward and can be divided into three domains, each


with pillowed basalts, suggesting moderate volcanic activity with periods of relative quiescence. The

middle domain of homogeneous basalt is weakly magnetic. The Upper domain consists in a thick

sequence of basaltic flows intruded by several ultramafic sills. The Ikungu Structure is known to extend

over 3800 m along strike. Of this strike length, MDN has demonstrated continuity of mineralization over

2140 m along strike and to 300 m depth to RL 800 m. The structure displays a consistent dip of 70°-80°

towards the SSW, and is open in all directions. All boreholes drilled into the Ikungu gold-bearing structure

reached their target and returned gold values.

Gold mineralization generally occurs with grey-blue quartz vein networks often associated with highly

silicified arsenopyrite-rich replacement zones within the upper half of the metasediments in contact with

the middle basalt unit. This mineralization type belongs to the quartz-carbonate model.

The drilling at Ikungu revealed an interesting geological setting that led to the discovery of a graphitic

zone at the edge of the mineralization at the contact of the pillowed volcanics and the metasediments.

This stratigraphic setting is similar to that of Bulyanhulu mine in Tanzania. Like the Ikungu project, the

Bulyanhulu mine is a narrow structure averaging 2 to 4 metres wide, with vertical continuity to a depth of

over 2 km.

Mineral gold distribution

The 53 holes drilled to date along a 3800 m stretch of the Ikungu structure have outlined four zones with

higher gold grades and a minimum horizontal thickness of two metres. These zones are formed by the

gold-bearing intervals around holes IKD-45 (8.6 g/t Au over 14.76 m) on Section 2230E, a second lense

around IKD-48 (3.11 g/t Au over 9.48 m) on Section 2830E, a third one with IKD-51 (3.39 g/t Au over 7.04

m) on Section 3190E and the fourth one with IKD-36 (13.22 g/t Au over 4.63 m) section 3610mE. (See

table below).

The following are main features of the gold mineralization:

The intersections with grades of over 3 g/t Au and horizontal widths of at least 2 m show a

weighted average grade of 5.93 g/t Au over a weighted average width of 4.40 m.

The structure widens at depth. From surface down to 120 m, the thickness ranges from two to

four metres. Below 120 metres, 11 of 18 holes showed thicknesses of more than four metres.

Holes IKD-45 (8.6 g/t Au over 14.78 m) and IKD-57 (1.31 g/t Au over 18.05 m) identified a lens

with a horizontal thickness of over 15 metres.

The gold-bearing structure is known over a distance of four kilometres, and shows vertical

continuity to a depth of 400 metres. It remains open along strike and at depth, which makes it a

major regional structure.

69

Results for the four mineralized zones

Hole #

Section (m)

From (m)

To (m)

Grade (g/t Au)

Interval (m)

True width (m)

Zone IKD-45 2230E 138.70 158.00 8.60 19.30 14.76

IKD08 1950E 142.17 143.30 24.73 1.13 0.98

IKD-47 1960E 383.00 394.00 2.72 11.00 8.41

IKD-57 2150E 392 412.8 1.31 20.8 18.05

Zone IKD-48 2830E 413.45 425.85 3.11 12.40 9.48

IKD-39 2650E 358.00 362.00 9.72 4.00 3.06

IKD-32 2560E 83.00 86.75 6.51 3.75 2.87

IKD-34 2900E 97.20 99.80 6.63 2.60 2.26

IKD-35 2650E 72.50 81.00 2.79 8.50 7.38

Zone IKD-51 3190E 448.00 457.20 3.39 9.20 7.04

IKD-50 3325E 281.50 287.00 2.47 5.50 4.21

IKD-49 3400E 334.20 340.60 2.27 6.40 4.90

Zone IKD-36 3600E 51.60 56.94 13.22 5.34 4.63

SIK1 3750E 140.84 144.68 24.54 3.84 1.31

SIK8 3750E 206.90 212.81 11.50 5.91 2.02

IKD-37 3750E 276.50 281.70 5.39 5.20 4.51

IKD-44 3745E 401.00 409.00 2.53 8.00 6.12

Possible zone to the east of IKBH-71

4590E 17.0 19.0 13.43 2.00 Undetermined

Possible zone to the west of IKD-59

1570E 214.3 215.17 7.90 0.87 Undetermined

70

Conclusions

The work done to date indicates that the Ikungu mineralization occurs at the contact of two geological

domains. To the north is a series of pillow basalts with intercalated metasediments, while the southern

part consists of a series of pillow basalts and gabbroic sills. Gold mineralization occurs at the contact of

these two geological domains, and is more specifically associated with a metasedimentary unit altered to

sericite and silica

The metasedimentary rock altered to sericite and silica shows continuity over a 4 km strike length at the

contact with pillowed volcanics showing weakly magnetic intensity. The stratigraphy at Ikungu shows

similarities with that of the Bulyanhulu Gold mine stratigraphy in Tanzania. The Bulyanhulu gold mine

feature can be used as exploration guideline for future exploration work.

Gold distribution indicates:

Potential for continuity for high grade values,

Concentration of higher values into four lenses distributed into an area of 2 km by 300 m depth. The four lenses remain open at depth,

Potential for additional lenses on both lateral extensions

19 Recommendations

The Ikungu gold bearing structure with a strike length of about four km and numerous gold intercepts is

concluded to be an important gold mineral structure. A mineral zone of 2km long by 300 m depth have

been delineated by 53 holes. Inside the mineral zone, four lenses have been identified with minimum

horizontal thickness of 2 meters and average grade intervals above 2.7 g/t Au and up to 24.54 g/t Au.

This is indicating potential for continuity and for intervals with potential economic values.

19.1 Proposed Exploration Program

In a first phase, it is recommended to increase the volume of the mineral zone by testing lateral

extensions and depth extensions followed by more drilling to confirm continuity and quality of the grade in

order to better characterized the potential resources as detail below (see longsection Figure 36):

Explore extension:

West Extension: it is recommended to add sections of boreholes in the northwest portion of the

mineral zone between the holes IKBH-48 section and IKD-59 section..

East Extension: It is recommended to add sections drill holes in the south-east portion of

the mineral zone between hole IKD-43 and IKBH-71.

Deep Extension: It is recommended to drill the mineral zone at depth. Drill results

indicated an increase in thickness with depth. Drill holes are proposed to be located in

the plunge of the four identified lenses.

Confirm continuity and quality of grade: it is proposed the addition of drilling on existing sections could

permit the links between the area intercepted near surface and deep zones intercepted. To define the

orientation, dip and vertical extent of the mineralized zones, the sections should have at least two drill

holes intersecting the mineralized zones. This infill program might be sufficient for the definition of inferred

71

resource (see longsection Figure 36).

The total cost for the first phase is estimated at $2,400,000.

In a second phase of in-fill drill program of 35 000 metres will be scheduled if the results of the first phase

are encouraging. Drilling grid spacing between 50 and 100 meters is considered to be sufficient to classify

the resources at the indicated category.

19.2 Exploration Cost

Description Cost

Drilling (9000m at $US 220) $1,980,000

Assay Analyses $50,000

Logistic

Exploration supplies $50,000

Truck (3 vehicles) $105,300

Fuel consuption (cars and generator) $25,000

Field Meal for 15 persons $40,000

accomodation $10,000

Personnel

1 Senior geologist $30,000

1 Tanzanian geologists $18,000

2 geo-technician $18,000

15 local helpers $25,000

GRAND TOTAL $2,351,300

Table 21 - cost of the first exploration phase

72

Figure 36 - Longsection of the Ikungu Structure with area of more than 2.7 g/t and true thickness of more than 2 metres

73

20 Certificates

I, Marc Boisvert, do hereby certify that:

1. I reside at 4684 rue du Courlis Saint-Augustin-de-Desmaures, Quebec, Canada, G3A 2G6.

2. I graduated from the University of Montreal, “Ecole Polytechnique” in 1978 with an Engineer

Bachelor in Geological Engineering.

3. I am member in good standing with the Quebec Engineering Association.

4. I have worked as Engineer in mining exploration for 25 years since graduation in 1978. From

1979 to 1991, I worked in Quebec-Abitibi for base metals and gold exploration for large producer

mining companies as Project Geologist and District Geologist. From 1990 to 1996, I worked in

Central and South America as Exploration Manager for copper and gold exploration. From 1997

to 1999, I worked as Vice-President Exploration for junior companies with projects in Uzbekistan,

Peru and Haiti. From 1999 to 2003, I worked as Tanzanian Exploration Manager for a large gold

producer. From 2004 to 2008 as Independent Consulting Engineer for exploration work. Since

2008 I work for MDN inc as Vice-President Exploration.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”

and certify that by reason of my education, affiliation with appropriate professional associations

(as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a

“qualified person” for the purpose of NI 43-101.

6. I have reviewed the gold aspect exploration of the Ikungu project the first time in September 2008

and on regular basis since.. I visited the property at several occasions. Based on field

observations and my review of data and data compilation, I have made interpretations and

recommendations included in this report.

7. I am not aware of any material fact or material change with respect to the subject matter of the

Technical Report that is not reflected in the Technical Report, the omission to disclose which

makes the Technical Report misleading.

Dated this 27th day of March, 2012

Marc Boisvert P.Eng.

74

I, Guillaume Mamias, do hereby certify that:

1. I reside at 3 place de l’église, 44190 Boussay, France.

2. I graduated a Master of Science degree in Geology from University of Bretagne Occidental,

France, in 1993, and also awarded a Master of Science in Data Processing to Earth Sciences

with Honors from University of Jussieu, Paris, in 1996.

3. I have worked in the mining exploration industry for 15 years since 1997. From 1997 to 2001 I

worked in French Guyana as a Project Geologist for gold exploration. From 2001 to 2005 I

worked as a Geology consultant in GIS for exploration companies. From 2006 to 2007 I worked

for Uranium exploration in Mongolia as Project Manager. From 2007 to date I work in Tanzania as

Exploration Manager for gold exploration.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”

and certify that by reason of my education, affiliation with appropriate professional associations

(as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a

“qualified person” for the purpose of NI 43-101.

5. I have followed the exploration of the Ikungu gold project since 2008. I have visited the property

each time that MDN Tanzania was conducted exploration worked on the property as Exploration

manager. I have produced all interpretations and recommendations included in this technical

report under the assistance of Mr. Marc Boisvert, Vice-President of MDN.

6. I am not aware of any material fact or material change with respect to the subject matter of the

Technical Report that is not reflected in the Technical Report, the omission to disclose which

makes the Technical Report misleading.

Dated this 27th day of March, 2012

________________________

Guillaume Mamias M.Sc.

75

21 References

African Barrick Gold. www.africanbarrickgold.com/operations/operating-mines/bulyanhulu.aspx.

www.africanbarrickgold.com. [Online] [Cited: february 23, 2012.]

Borg, G. and Krogh, T. 1999. Isotopic age data of single zircons from Archaean Sukumland Greenstone

Belt, Tanzania. Journal of African Earth Sciences, 1999, Vol. 29, pp. 301-312.

Chamberlain, Claire, et al. Bulyanhulu: anomalous gold mineralization in the Archaean of Tanzania.

http://www.mdru.ubc.ca/. [Online] [Cited: February 23, 2012.]

http://www.mdru.ubc.ca/home/resources/Bulyanhulu.pdf.

Dubé, B. and Gosselin, P. 2007. Greenstone-hosted quartz cabonate vein deposits. [ed.] Mineral

Deposits Division Geological Association of Canada. 2007, Vol. 5, pp. 49-73.

Hamis, Hussein. 2009. Ikungu MMI survey phase I April 2009 and phase II Octobre 2009. MDN

Tanzania Ltd. 2009. Internal Report.

Hester, Brian W., Barnard, F. and Johnson, A. 1998. Opportunities for Mineral Resource Development,

Tanzania. Ministry of Energy and Minerals, United Republic of Tanzania. 1998.

Hill, J.V., et al. 2002. Structural geology and exploration of the Geita Trend, Tanzania. s.l. : Australian

Institute of Geoscientists, 2002.

Klipfel, P. 1994. Petropgraphic report. Newcombre St Arvada, Nevada, USA : Mineral Resources Inc.,

1994. p. 14.

Mamias, G. and Le Goff, E. 2012. Ikungu Diamond and reverse circulation drill holes campaign Q1 Q2

and Q3 2011. 2012. Internal report.

Mamias, Guillaume, Wagendorp, Jacques and Le Goff, Etienne. 2011. Ikungu - Diamond drill holes

campaign - Q3-2010 and Q4-2010- PL 5150. MDN Tanzania Limited. 2011. Internal report.

Manya, S. and Maboko, M.A.H. 2003. Dating basaltic volcanism in the Neoarchaean Sukumland

Greenstone Belt of the Tanzania Craton using Sm-Nd method: implication for the geological evolution of

the Tanzania Craton. Precambrian Research, 2003, Vol. 121, pp. 35-45.

Manya, S. 2006. Ion microprobe zircon U-Pb dating of the late Archaean metavolcanics and associated

granites of the Musoma-Mara Greenstone Belt, Northeast Tanzania: Implicationsfor the geological

evolution of the Tanzania Craton. Journal of African Earth Sciences, 2006, Vol. 45, pp. 355-366.

Manya, S., Madoko, M.A.H. and Nakamura, E. 2007. Geochemistry and Nd Isotopic composition of

potassic magmatism in the Neoarchaean Musoma-Mara Greenstone Belt, northern Tanzania.

Precambrian Research, 2007, Vol. 159, pp. 231-240.

Pearman, C.S. 1996. Final report on the Ikungu project, Prospecting licence 25/92, Lake Victoria

Goldfields. JCI (Tanzania) Limited. 1996. Internal report.

76

Shanta. 2005. Summmary for Lakota. 2005. Internal Memorandum.

Taylor, M. 2003. Report one the exploration activities by Lakota Mining Compagny Ltd on the Ikungu

property PL1533/2000. 2003.

Wagendorp, J., Le Goff, E. and Mamias, G. 2010. Ikungu - Diamond Drill Holes campaign Q4-2009 and

Q1-2010. 2010. Internal report.

77

ANNEXE 1 : Propecting licences

86

ANNEXE II

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