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Chah-e-Zard Project

The Chah-e-Zard gold project is located approximately 550km southeast of the capital city of Tehran near the city of Yazd. Persian Gold holds an option to acquire a 70% equity interest in the project, which it is currently exercising. Two phases of drilling and trenching have been completed including a total of 38 diamond drill holes. The corporate goal is to define a near surface oxide gold resource and to develop a profitable open pit, heap leach mine. All project results have been modelled to determine the size, grade and engineering characteristics of the mineralisation as defined in the Southern Zone. The modelled results of the drilling results indicate a near surface resource of 160,000 ounces of gold and 1 million ounces of silver in the Southern Zone.

Chah-e-Zard is a large gold target hosted in intermediate composition tertiary volcanics and volcanic breccias. The zone of defined gold mineralisation within the project area is located in a large area strongly altered by hydrothermal fluids to clay, alunite and silica. The gold mineralisation appears to be directly related to the strength of the silicification observed in the system. This is very similar to other large volcanic hosted gold systems throughout the world.

Exploration work at Chah-e-Zard to this point consists of two separate phases of sampling, trenching and drilling. The initial stage of exploration defined a large coherent surface zone of gold mineralisation. This was confirmed through the trenching of multiple areas and followed up by a 16 hole diamond drilling programme. The first phase of drilling returned very strong gold results. The results of that first phase programme indicated that the best gold grades and longest gold intercepts were within an area now termed as the Southern Zone. The first three holes of that drill programme delivered some of the best results. Drill hole ZDH-1 encountered 40 metres of 1.24 g/t Au, hole ZDH-2 hit 40 metres of 0.43 g/t Au and drill hole ZDH-3 delivered the strongest intercept of 122 metres of 1.95 g/t Au. Mineralisation from the first phase drilling programme consisted of both a near surface oxide gold zone and a deeper zone of gold in sulphides.

The second phase of trenching and drilling at Chah-e-Zard, completed in late 2007, was directed at the definition of a near surface oxide gold zone in the southern part of the project area. A total of twenty four trenches and 22 diamond drill holes were completed as part of this second phase programme. This work was positive and further defined the location and controls to the near surface gold mineralised structures.

Following a review of the geological data, it has been decided to;

• Exercise the option to acquire 70 percent of the joint venture company which holds the Chah-e-Zard licence.
• Apply to the Iranian authorities for a Discovery Certificate. While not final at this stage, it is likely that the application will cover 160,000 ounces of gold and 1 million ounces of silver.
• Begin a scoping study into a small leach gold/silver mine based on the oxide ore.

Drill Results

• First Phase Highlights
• ZDH 1: 40m @ 1.24 /g/t gold (Au), 49.3 g/t silver (Ag) (incl 16m 2.37 g/t Au, 92.2 g/t Ag)
• ZDH 2: 40m @ 0.43 g/t Au
• ZDH 3: 122m @ 1.95 g/t Au and 23.8 g/t Ag (incl 10m @ 13.60 g/t Au) (This is a high class result)
• Gold was found in 13 of the 16 drill holes
• Second Phase Highlights
• A 2nd phase of 24 trenches & 22 drill holes was undertaken in the southern zone to define the oxide gold resource.
• BEST TRENCH RESULTS
• Trench 10: 61m @ 5.13 g/t gold (Au) (inc. 18m @11.54 and 10m @5.17 g/t Au)
• Trench 7: 10m @ 4.98 g/t Au
• Trench 12: 8m at 2.29 g/t Au
• BEST DRILL RESULTS
• ZDH 4: 2m @ 45.4 & 12m @ 6.2 g/t gold (Au)
• ZDH 5: 12m @ 2.65 Au
• ZDH 5-2: 5m @ 6 & 19m @ 2.2 g/t Au
• ZDH 10: 32m @ 5.9 & 3m @ 11.6 & 14m @ 3.1g/t Au
• ZDH 10-2: 3m @ 2.63 Au
• ZDH 11: 5m @ 11.1 & 1m @ 7.5 & 1m @ 9.04g/t Au
• Gold and silver grades were found in every hole