Mongolia - General Mining

generalmining.com

Mongolia - General Mining

General Mining Corporation

Limited

ABN 95 125 721 075

2009 Prospectus

An offer to raise up to $8,000,000 by the issue of

up to 40,000,000 ordinary fully paid Shares in the

Company at an issue price of $0.20 per Share.

Sponsoring Broker to the Offer

This is an important document. Please consult your

professional adviser(s) if you have any questions. The

mineral properties described in this Prospectus are at

the exploration and evaluation stage and accordingly

investment in the Shares offered by this Prospectus

should be regarded as speculative in nature.

General Mining Corporation Ltd ~ Prospectus

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Summary

IMPORTANT NOTICE

This Prospectus is dated 26 October 2009 and was

lodged with the ASIC on that date. No Shares will

be issued on the basis of this Prospectus later than 13

months after the date of this Prospectus.

Neither the ASIC nor ASX take any responsibility for

the content of this Prospectus or the merits of the

investment to which this Prospectus relates.

The distribution of this Prospectus in jurisdictions

outside Australia may be restricted by law and

therefore persons into whose possession this

document comes should seek advice on and observe

any such restrictions. Any failure to comply with these

restrictions may constitute a violation of those laws.

This Prospectus does not constitute an offer of Shares

in any jurisdiction where, or to any person to whom, it

would be unlawful to issue this Prospectus.

The Shares the subject of this Prospectus should

be considered speculative. It is important that you

read this Prospectus carefully, in its entirety and seek

professional advice where necessary before deciding

to invest in the Company. In particular, in considering

the prospects for the Company, you should consider

the risk factors set out in section 10 that could affect

the performance of the Company. The Offer does

not take into account your investment objectives,

financial situation and particular needs. Accordingly,

you should carefully consider the risk factors in light

of your personal circumstances and seek professional

advice from your accountant, stockbroker, lawyer or

other professional adviser before deciding whether to

invest.

No person is authorised to provide any information or

make any representation in connection with the Offer

contained in this Prospectus which is not contained in

this Prospectus.

WEB SITE – ELECTRONIC PROSPECTUS

A copy of this Prospectus may be downloaded from

the Company’s website at www.generalmining.com.

Any person accessing the electronic version of this

Prospectus for the purpose of making an investment

in the Company must be an Australian resident and

must only access the Prospectus from within Australia.

Persons who access the electronic version of this

Prospectus should ensure that they download and

read the entire Prospectus.

The Corporations Act prohibits any persons passing

onto another person an Application Form unless

it is attached to a hard copy of this Prospectus or it

accompanies the complete and unaltered version

of this Prospectus. Any persons may obtain a hard

copy of this Prospectus free of charge by contacting

the Company by telephone on (08) 9227 1186 during

normal business hours.


2009 Prospectus

GMM’s Directors view Mongolia as a major untapped mineral

province. A large multinational miner operating in Mongolia

is on record as saying that it sees parallels between Rio Tinto/

Ivanhoe Mines’ large Oyu Tolgoi copper/gold project and the

initial investment in Escondida copper mine in Chile over

20 years ago and their recent project in Madagascar,

which have helped develop strong sustainable

mineral industries in those countries.

EXPOSURE PERIOD

This Prospectus will be circulated during

the Exposure Period. The purpose of the

Exposure Period is to enable this Prospectus

to be examined by market participants prior

to the raising of funds. Potential investors

should be aware that this examination may

result in the identification of deficiencies in the

Prospectus and, in those circumstances, any

application that has been received may need

to be dealt with in accordance with Section

724 of the Corporations Act.

Applications for Shares under this Prospectus

will not be accepted by the Company until

after the expiry of the Exposure Period. No

preference will be conferred on persons who

lodge applications before the expiry of the

Exposure Period.

GLOSSARY

Certain terms and abbreviations used in this

Prospectus have defined meanings which are

explained in the Glossary at the end of

the Prospectus.

KEY DATES

Lodgement of Prospectus 26 Oct 09

Opening Date 3 Nov 09

Closing Date (5.00pm WST) 4 Dec 09

Allotment of Shares under this

Prospectus (anticipated)

Trading of Shares to

commence on ASX

(anticipated)

9 Dec 09

11 Dec 09

The above dates are indicative only and may

vary. The Company reserves the right to

change the key dates of the Offer without prior

notice which may have a consequential impact

on other dates.

Golden Cross license 13847X

General Mining Corporation Ltd ~ Prospectus

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Summary Investment Summary

Directors

Michael Wright

(Chairman)

Dr. Boris Matveev

(Managing Director Elect)

Robert Wanless

(Non-executive Director)

Craig Readhead

(Non-executive Director)

Christopher Wanless

(Non-executive Director)

Company Secretary

Lindsay Colless

(Joint Company Secretary)

Karen Brown

(Joint Company Secretary)

Registered Office and Principal

Place of Business

129 Edward Street

Perth WA 6000

Tel: (61) 8 9227 1186

Fax: (61) 8 9227 8178

PO Box 8475

Perth Business Centre WA 6849

Sponsoring Broker

State One Stockbroking Ltd

AFSL No. 247100

Level 14, State One House

172 St Georges Terrace

Perth WA 6000

Ph: (61) 8 9288 3388

Fax: (61) 8 9321 6998

Level 20, Australia Square

264 George St

Sydney NSW 2000

Ph: (61) 2 9024 9118

advice@stateone.com.au

www.stateone.com.au

Company Directory

Solicitor to the Offer & Report

on Australian Tenements

Allion Legal

Level 2

50 Kings Park Road

West Perth WA 6005

Independent Geologist

JL Geological Services Pty Ltd

13 Peter Street,

Attadale WA 6156

Auditor and

Independent Accountant

Stantons International Pty Ltd

Level 1, 1 Havelock Street

West Perth, WA 6005

Ph: (61) 8 9481 3188

Share Registry

Advanced Share Registry Limited

150 Stirling Highway,

Nedlands, WA 6009


2009 Prospectus

Table of Contents Chairman’s Letter 6

1 Project Overview 10

2 Profiles of Directors & Management 18

3 Details of the Offer 20

4 Independent Geological Report - Mongolia 22

5 Independent Geological Report – Australia 40

6 Licensing in Mongolia 62

7 Independent Solicitor’s Report 66

8 Independent Accountant’s Report 74

9 Corporate Governance 85

10 Risk Factors 90

11 Additional Information 95

12 Directors’ Statements 102

Glossary 103

Application Form 105

General Mining Corporation Ltd ~ Prospectus

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Investment Summary

Chairman’s Letter

Dear Investor,

On behalf of the Directors of General Mining Corporation Limited (ASX code: GMM) it is with pleasure that

I invite you to invest in GMM by subscribing for Shares under this Prospectus.

The continued activity in the resources sector during the recent downturn, particularly by interests associated

with China, illustrates the strong underlying demand for resources which is expected to increase as the

world economy improves. Two of the Company’s projects in particular offer exposure to the appetite of the

fast developing economies of Asia. In Mongolia, the Uvs Basin evaporite project comprises over 2000km 2

of licences covering prospective evaporite horizons that may host high grade potash layers intersected by

limited historical drilling within 30km of the Company’s tenements. Potash is a bulk commodity utilised

primarily on food crops. The project is strategically located next to transport corridors leading to major Asian

markets including China, the world’s largest importer and consumer of potash.

The recent signing by the Mongolian Government of the Oyu Tolgoi agreement with Rio Tinto and Ivanhoe

provides greater certainty for foreign investors in Mongolia, and is set to focus attention on what is widely

regarded as one of the world’s last exploration frontiers. GMM is in possession of a significant historical

geological database covering many of the identified mineral occurrences and deposits of Mongolia. With

the recent appointment of Dr. Boris Matveev as Managing Director, who has extensive experience in Central

Asia and neighbouring Russia, the Company is well placed to take advantage of opportunities in Mongolia.

This has also led to GMM entering into a Strategic Alliance with ASX-listed Galaxy Resources Ltd with a

view to jointly identifying and developing lithium projects in Central Asia. Operating in Mongolia is not

without its risks and investors are asked to understand the sovereign, political and climatic risks detailed in

section 10.

At the Shoemaker project in Western Australia, preliminary exploration indicates good potential for a large

direct shipping grade iron deposit within the emerging Mid-West iron-ore province. With companies in China

seeking alternatives to the BHP-Rio Tinto dominated Hamersley, the Mid-West region is set to become an

important supplier of iron ore. Other projects in Australia cover prospective manganese horizons within the

emerging Wolfe Basin (Mt Kinahan) and two ready to drill geophysical targets prospective for iron-oxidecopper-gold

and carbonatite related mineralisation (Eyre and Webb).

The directors of GMM are all well experienced in the mid-sized mining and exploration industry and have

strong and diverse technical backgrounds, including corporate and project management, exploration and

mine geology, metallurgy, financing, legal, corporate governance and metal and minerals marketing.

The funds raised by this Prospectus will be used to commence exploration and drilling programs at the

Uvs Basin potash project in Mongolia, and at Shoemaker, Eyre and Mt Kinahan in Western Australia, whilst

conducting preliminary work on the Company’s other projects.

Shareholders of Galaxy Resources Ltd have a priority right to subscribe for shares in GMM. For details of

the priority offer refer to section 3.2 .

I look forward to welcoming you as a shareholder of GMM.

Michael Wright

Chairman


Expenditure Plans and Use of Funds

The budgeted expenditure figures for the Company for the first two years following listing are set out below. The

Board has elected to accept a minimum capital raising of $4 million, which the Board considers will be sufficient to

achieve substantial progress with all the projects and allow the Company to have sufficient working capital to meet

its business obligations, as set out below, upon completion of the Offer. The objective will be to raise $8 million

which will allow the Company to undertake exploration programs in Australia and Mongolia.

$4 million raising $8 million raising

IPO funds $4,000,000 $8,000,000

Budget Expenditure $4 million raising $8 million raising

Year 1 Year 2 Year 1 Year 2

Pre-float and acquisition expenses $220,000 – $220,000 –

Broker fees $200,000 – $400,000 –

Uvs Basin project $200,000 $300,000 $750,000 $1,500,000

Shoemaker project, Australia $440,000 $440,000 $440,000 $440,000

Eyre project, Australia $180,000 $50,000 $180,000 $110,000

Webb project, Australia $50,000 $50,000 $340,000 $155,000

Veevers project, Australia $40,000 $75,000 $40,000 $75,000

Other Mongolian projects $75,000 $75,000 $150,000 $150,000

Other projects 1 $100,000 $100,000 $200,000 $200,000

Administration $580,000 $525,000 $875,000 $850,000

Working capital $150,000 $150,000 $425,000 $500,000

Total $2,235,000 $1,765,000 $4,020,000 $3,980,000

1 Black Hill, Mt Kinahan, Galaxy Alliance

The proposed expenditure will be refined to suit the results of programs as they proceed, and will significantly

exceed the statutory minimum expenditure requirements.

Details of the intended exploration programs are set out below.

Capital Structure

As at the date of this Prospectus, the issued share capital of the Company is 22,100,000 Shares.

The capital structure at completion of the Offer, assuming the Offer is fully subscribed, is set out below:

Issued Share capital Number of

Shares

$4m Raising $8m Raising

% of Shares Number of

Shares

% of Shares

Shares on issue as at the date of the Prospectus 22,100,000 45.6% 22,100,000 32.1%

Shares to be issued on acquisition of tenements 1 5,000,000 2 10.3% 5,000,000 2 7.3%

Other shares to be issued on listing 3 937,394 2% 937,394 1.3%

Shares to be issued pursuant to the Prospectus 4 20,000,000 41.3% 40,000,000 58.2%

Broker success shares 400,000 0.8% 800,000 1.1

Total Shares on issue at the close of the Offer 48,437,394 100% 68,837,394 100%

1 Details on the Shares to be issued on acquisition of tenements is set out in Section 7 of this Prospectus.

2 Shares to be issued to Galaxy Resources Ltd under the Shoemaker Sale Agreement. See section 7 for details.

3 Shares to be issued to Directors and Mineral Administration Services Pty Ltd in lieu of fees. See section 11 for details.

The Company has also issued 11,850,000 Options to Directors, officers and other parties, details of which are set

out in section 11.6 below

General Mining Corporation Ltd ~ Prospectus

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Investment Summary

INVESTMENT SUMMARY

Company Overview and Objectives

Key Points:

• Licences covering over 2000km 2 of prospective evaporite geology targeting

potash and lithium and potassium brines in north-western Mongolia.

• The signing of the investment agreement for the Rio Tinto and Ivanhoe Mines

Oyu Tolgoi deposit is set to lead to significant interest in resource rich Mongolia.

• GMM is well placed to take advantage of opportunities in Mongolia due to its

large geological database and experienced personnel.

• GMM’s managing director elect, Dr. Matveev has extensive experience in Central

Asia and Russia.

• Large exploration targets at Shoemaker (Western Australia) prospective for

hematite iron deposits.

• Strategic Alliance with Galaxy Resources Ltd to identify and jointly develop

lithium projects in Mongolia and Kazakstan.

• Up to 40% of the Offer to be allocated to Galaxy shareholders under a Priority

Offer.

• Investors should be aware that there are risks associated with an investment in

GMM and investors are encouraged to read Section 6: Licencing in Mongolia

and Section 10: Risk Factors.

BarunTserd, Mongolia:

outcrop in Middle Devonian evaporite


GMM has worked extensively over the last year to

bring together a strong portfolio of projects that offer

potential for economic discoveries. The Directors

believe that the recent signing of the $4 billion Oyu

Tolgoi investment agreement between Rio Tinto,

Ivanhoe Mines Ltd and the Mongolian Government is

set to generate significant interest in this resource rich

country. With Dr Boris Matveev, who has extensive

experience in Central Asia, and the Company’s

subsidiary, Golden Cross LLC, holding 10 licences

covering over 3800km2 and an extensive database of

geological information covering much of the country,

the Directors believe the Company is well placed to

take advantage of opportunities in Mongolia.

GMM has assembled a highly experienced and

successful team to move the Company forward.

Priority Offer for shareholders of Galaxy

Resources Ltd

GMM has also entered into a Strategic Alliance with

emerging major lithium producer Galaxy Resources

Ltd (ASX Code: GXY) with the intention of utilising

GMM’s geological database and networks to identify

lithium opportunities in Mongolia and Kazakhstan

for joint development by Galaxy and GMM. GMM

will receive a 20% free carried interest through to

completion of a bankable feasibility study if a project is

selected for joint venture under the Strategic Alliance.

In accordance with the Strategic Alliance, GMM has

agreed to set aside 40% of the Shares to be issued

under the Offer to Galaxy shareholders as at 5.00 p.m.

WST on 26 October 2009 with a registered address in

Australia (“Priority Offer”). Shares will be allocated

at the Directors’ discretion. See section 3.2 for details.

Company Objectives

The Company’s objectives for the immediate future

are:

• To advance the Company’s potash project in

Mongolia under the direction of a highly capable

exploration team in preparation for exploration during

the forthcoming Mongolian field season.

• To undertake a drilling program to define the iron

potential of the Shoemaker Iron project.

• To drill-test the Company’s ready to drill ironoxide-copper-gold

(“IOCG”) and carbonatite targets in

Australia.

The Company’s long term objectives are:

• To deliver long-term, sustainable cash flow through

the discovery and development of large high value

and high margin mineral deposits.

• To build a successful mining company through

focusing on long term growth opportunities and

prudent capital and financial management.

Project Highlights

Uvs Basin, Mongolia

(Potash, GMM 100%)

• Five granted licences covering over 2000km2 of

prospective marine and non-marine evaporite geology

prospective for stratiform or diapir hosted potash and

also potassium and lithium brines.

• Reported potash intersections of 1.8m at 39.5%

KCl and 9.7m at 16.21% KCl along the nearby

Russian-Mongolian border. Whilst not located on the

Company’s licences the results confirm that sylvite

settling occurred within a middle Devonian evaporite

sequence which also outcrops on the Company’s

licences.

• Bulk commodity and solution mining target with

improving access to freight transport corridors in

Russia leading to ports and Asian markets.

Shoemaker, Australia

(Iron, GMM 50% earning up to 80%)

• Extensive hematite enriched outcrops with assays

up to 69.6% Fe from grab sampling with low levels of

contaminants.

• Geophysical surveys have identified numerous

gravity high and coincident magnetic low anomalies

up to 5km by 1km associated with mapped hematite

outcrops, representing possible large tonnage

exploration targets.

Mt Kinahan, Australia

(Manganese, Copper, GMM 100%)

• A prospective manganese horizon within the Wolfe

Basin in Western Australia, also being targeted by ASX

listed Ausquest Ltd.

• High grade copper pods along a north-east trending

fault.

IOCG & Carbonatite Targets, Australia

(Cu-Au-U, REE, GMM 100%)

• Large geophysical targets at Eyre, Webb and Veevers

covering coincident gravity and magnetic targets

prospective for Olympic Dam style iron-oxide-coppergold

or Palabora style carbonatite mineralisation.

• Drill testing of Eyre to commence shortly after

listing.

General Mining Corporation Ltd ~ Prospectus

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Summary

1 - PROJECT OVERVIEW

1.1 Project Locations

GMM holds exploration licences in both Western Australia and Mongolia.

The Company’s Mongolian licences are centered in the north-west region of the

country within the Uvs province which adjoins Russia to the north, and along

the Khangai fault. GMM has also entered into a Strategic Alliance with Galaxy

Resources Ltd with a view of jointly identifying and developing lithium projects in

Mongolia and Kazakhstan.

Uvs Potash Projects

Khangai Fault Projects

Black Hill

Mt Kinahan

Veevers

Webb

Shoemaker

Eyre

Figure 1: Location Map of GMM Projects


Mongolia

1.2 Mongolian Projects

1.2.1 The Untapped Mineral Potential of

Mongolia

Mongolia is a young, developing democracy that sits

between Russia and the resource hungry China. Since

the fall of communism in the early 1990’s in Mongolia

the Government has been seeking to overcome its

dependence on Moscow and Beijing, and accordingly

has been seeking to build stronger ties with the West

under its so-called “third neighbour” policy.

Despite Mongolia being surrounded by mineral

rich regions such as Siberia, Kazakhstan and Inner

Mongolia, only little modern exploration has been

conducted within the country. Russian explorers

throughout the 1960’s and 1970’s focused attention on

Mongolia, which resulted in an extensive database of

geological and geochemical maps and several world

class discoveries. More recently a rush of investment

in Mongolia during the late 1990’s and into the next

decade resulted in a number of significant discoveries

including the Oyu Tolgoi copper-gold deposit. This led

to a political debate in Mongolia over how the country

should best manage its resources. The ensuing political

and legal uncertainty resulted in long delays to the

signing of an investment agreement with Ivanhoe

Mines Ltd and Rio Tinto, the owners of Oyu Tolgoi.

The signing of a stability agreement for the development

of the Ivanhoe and Rio Tintos flagship, the multi-billion

dollar Oyu Tolgoi copper-gold project, is a large vote

of confidence by Mongolia in foreign investment

and by Rio Tinto and Ivanhoe in Mongolia’s future.

Notwithstanding this, there remain significant sovereign

risks in operating in a country such as Mongolia.

With world class deposits such as Oyu Tolgoi (reported

resources of 1.39b tonnes at 0.98% copper and 0.24 g/t

gold as of March 2007) and Erdenet (reported resources

of approximately 1.78b tonnes at 0.62% copper

and 0.025% molybdenum) and with little modern

exploration having been conducted over large areas of

the country, Mongolia has the potential to emerge as

one of the most attractive exploration frontiers in the

world. Mongolia’s location next to China provides a

ready market for Mongolia’s mineral wealth.

Figure 2:

Copper in outcrop in Gabbro along the Khangai Fault

General Mining Corporation Ltd ~ Prospectus

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1 - Project Overview

1.2.2 Uvs Basin (Potash, GMM 100%)

GMM is targeting solid potash, and lithium and

potassium brines, within the Uvs Basin – a large

closed drainage basin in what was once a sea. GMM

considers the Uvs Basin to be highly prospective for

solid potash as well as lithium and potassium brines

due to:

• the large enclosed basin with high evaporation

rates;

• the presence of a Middle Devonian evaporite

sequence up to 600m thick and confirmation that

sylvite (KCl) precipitation occurred within the basin

with recorded potash intersections of 1.8m at 39%

KCl and 9.7m at 16% KCl at the northern edge of the

basin at Tuz Tag (Russia);

Sample No. KCl

Wt.

%

MgCl 2

Wt.

%

NaCl

Wt.

%

CaSO 4

Wt.

%

• a geological environment suitable for the

deposition of lithium brines; and

• a unique climate that opens the possibility of

utilising low cost evaporative and cold crystallisation

processing methods for lithium and potassium

brines.

The evaporite outcrops in several places within

the basin. At the northern edge, on the Russian

side of the basin, there are several known salt

deposits including Tuz Tag. Limited drilling by

Russian explorers within this deposit produced very

encouraging results close to the surface which are

shown in the following tables.

CaCl 2

Wt.

%

Insoluble

Content

Wt.%

ΣTotal

Salt

Wt.%

Rock Colour

74 65.63 2.58 21.90 3.39 – 4.09 97.59 citreous

71 43.91 0.86 52.43 0.64 0.11 1.39 99.34 flesh-colored

70 10.09 - 72.72 0.48 0.61 15.08 98.98 pink

Sample No. No.

of

Drill

Hole

Depth m KCl

Wt.

%

Table 2: Chemical Analysis of Tuz Tag Surface Samples; from Levenko (1960)

NaCl

Wt.

%

CaSO 4

Wt.

%

CaCl 2

Wt.

%

MgCl 2

Wt.

%

Insoluble

Content,

Wt.

%

ΣTotal

Salt

Wt.

%

187 8 16.5-18.3 39.56 56.58 0.90 0.18 – 1.47 98.79

189 8 23.30-24.30 1.98 95.72 0.50 0.03 – 0.45 98.68

180 7 59.1-68.8 16.21 77.27 1.06 0.32 – 4.26 99.12

183 7 90.7-100.1 3.77 69.42 0.46 1.69 1.26 17.55 94.15

185 7 100.1-106.5 2.55 44.00 5.85 0.10 – 46.21 98.71

171 5 38.2-40.2 1.83 96.23 0.38 0.08 – 0.73 99.25

Table 3: Data of Chemical Analyses of Salt Layers with higher Potash Contents

(Tuz Tag Deposit, Drill Hole 11, Top Salt Layer)

The confirmation of potash within the Middle Devonian evaporite sequence is considered very significant

as it confirms that the receding oceanic waters within the basin reached the point of sylvite settling.

Investors should note that these results are from areas in proximity to, but not contained within the

Company’s licences. Proximity of the Company’s licences to known results does not of itself indicate that

the Company’s licences will contain any minerals. Investors are urged to read the Independent Geologists

Report for Mongolia in section 4 and if necessary consult their own advisor.

Other halite (evaporite) deposits outcrop on the Mongolian side of the basin including Shuuden Uul,

where locals reported to GMM staff the presence of ‘blood red salt’, which may possibly represent

sylvinite (potash). The Middle Devonian sequence outcrops in several other places, including a section

up to 15km in length on GMM’s licence. In other places on GMM’s licences the evaporite presumably lies

below younger sediments.


Figure 3: Shuuden Uul Halite Deposit and Open Pit, Mongolia

The Uvs Basin project comprises five granted exploration licences, which cover a total area

of 2015km 2 . No drilling appears to have been conducted to test the potential for bedded potash

deposits within the Mongolian extent of the basin. Initial studies also suggest that the project

would be amenable to solution mining utilising either evaporative or cold crystallisation methods.

Figure 4: Artisinal mining at Shuuden Uul

The Uvs Basin is well serviced by a sealed road, which leads to railways in Russia. This road and also

power lines from nearby Russian plants, lead directly through GMM’s licences. The Russian railways

lead to markets in China, Europe and to ports in the Russian Far East. Construction on a new railway

in Russia to Kyzyl, just over 200km away by road, has commenced and is due for completion in 2014.

General Mining Corporation Ltd ~ Prospectus

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1 - Project Overview

Why Potash?

Figure 5: Possible export routes for Uvs Basin Potash project

GMM has focused on potash due to its attractive economics and the project’s location next

to the world’s largest consumer and importer of potash (China). Potash is used primarily as

an agricultural fertiliser (plant nutrient) and is a source of soluble potassium, an essential

plant nutrient. Demand for potash is closely linked to the demand for agricultural products.

Increasing demand, particularly from Asia, is set to underpin growth in the potash industry

in coming years. Potash offers an opportunity for a long-life, low-cost resource in a market

that is forecast to grow strongly.

Nitrogen

Phosphate

Potash

0.00% 20.00% 40.00% 60.00% 80.00%

3 months to 30 June 2008

3 months to 30 June 2009

Gross Margin (%)

Figure 6: Potashcorp’s Gross Margins for Potash, Phosphate, Nitrogen

(Source: Potashcorp, 2nd quarter earnings 2009, press release)


1.2.3 Khangai Fault

(Base Metals GMM 100%)

The Company also holds a number of tenements

along the Khangai Fault. GMM’s Khangai Fault

projects comprise five granted exploration licences

covering a number of gabbro-mafic-ultramafic

and porphyry intrusions. The Company’s Khangai

Fault projects are covered in more detail in the

Independent Geologists’ Report for Mongolia in

section 4.

1.2.4 Golden Cross LLC

GMM has established a wholly owned subsidiary in

Mongolia, Golden Cross LLC. This Company now

holds ten exploration licences and one exploration

licence application.

GMM has compiled a large database of geological

information on Mongolia. GMM has also worked

to have its own licences granted and in so doing

has developed strong relationships with local

communities. This approach, combined with its

large database of information on Mongolia, should

allow the Company to capitalise quickly on any

appropriate opportunities.

1.2.5 Galaxy Lithium Alliance

GMM has recently entered into a Strategic Alliance

with ASX-listed Galaxy Resources Ltd (“Galaxy”)

to identify lithium opportunities in Mongolia and

Kazakhstan for joint venture by the parties. Under

the terms of the Agreement Galaxy can earn up to

MAP

LOCATION

INDIAN

OCEAN

Port

Hedland

Perth

OAKAJEE

GERALDTON

Proposed rail corridors under study

MULLEWA

KARARA

Gindalbie Metals Ltd

80% in any lithium project taken up by the Strategic

Alliance, with GMM retaining a free carried 20%

interest to the completion of a bankable feasibility

study.

GMM will utilise its geological database and strong

networks to identify opportunities for subsequent

joint ventures with Galaxy. These opportunities may

also arise from GMM’s own licences in Mongolia

where potential exists for lithium brines.

Australia

1.3 Shoemaker, Western Australia

(Iron, Gold, GMM 50%

earning up to 80%)

1.3.1 Project Summary

The Shoemaker project is located 130km north-east

of Wiluna in Western Australia within the Earaheedy

Basin. The three granted exploration licences cover

an area of approximately 300km2 . The project

focuses on an area of the Frere Formation known as

the Shoemaker Impact Structure (“SIS”). The project

is located approximately 150km from the planned

railway to the Golden West Resources Ltd iron ore

deposit at Wiluna.

GMM is targeting high grade hematite iron ore at

Shoemaker. In addition, there is significant potential

for mineralisation related to the large meteorite

impact event, including gold and uranium.

JACK HILLS

Murchison Metals Ltd

Midwest Corp Ltd

MEEKATHARRA

MT MAGNET

WELD RANGE

Midwest Corp Ltd

SHOEMAKER

WILUNA

WILUNA

Golden West

Resources Ltd

EXTENSION HILL Mt Gibson Iron Ore Ltd

Figure 7: Location of Shoemaker project

General Mining Corporation Ltd ~ Prospectus

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1 - Project Overview

GMM is acquiring a 50% interest in the project

through the issue of 5,000,000 Shares and 2,500,000

Options and payment of $100,000 to Galaxy.

GMM can earn a further 30% through expenditure

of $1,000,000 within two years. The agreement is

conditional upon GMM completing a capital raising

of at least $3,000,000 or a successful listing on the

ASX. Further details of this agreement can be found

in the Solicitor’s Report in Section 7.

The iron formations within the Earaheedy Basin are

subject to exploration further to the north-west by

Rio Tinto, Giralia Resources Ltd and Vector Resources

Ltd. The three granted exploration licences cover

a large part of the SIS, where the Frere Formation

forms a distinct circular pattern. This is presumably

due to a large meteorite impacting directly onto the

Frere Formation. Units of banded iron formations

(“BIF”) and granular iron formations (“GIF”) occur

throughout the Frere Formation within the project.

Numerous supergene enriched iron zones occur

within the BIF and GIF units of the SIS.

Previous regional sampling of the Frere Formation

in the 1970’s included some limited sampling at the

north-western rim of the SIS. Rock samples

returned assays of between 56% and 69.6% Fe with

low phosphorus between 0.02 to 0.04%. Sampling

conducted by Galaxy in 2008 focused on an area on

the north-east rim of the Shoemaker Crater. Fifteen

surface grab samples were taken from outcrops of

hematite iron formation within the Frere Formation

with assay results returning values up to 61.75% Fe

with nine (9) samples returning grades greater than

54.25% Fe.

A detailed gravity survey was also conducted

by Galaxy, which confirmed the presence of a

significant number of gravity highs with estimated

strike lengths of 1000 to 5000m, located around

the SIS within the Frere Formation and associated

with the hematite enriched iron formations. These

represent large exploration targets for hematite iron

ore, with the most significant of the gravity targets

located in the north and north-eastern flank of the

SIS, where Amax undertook sampling and on the

southern flank.

Initial work is expected to focus on defining and

prioritising drill targets through field reconnaissance

and drilling of prioritised targets. Further gravity

surveys covering the south-eastern corner of the

project area and western edge of the SIS are also

proposed to be undertaken.

The Shoemaker project represents an exciting target

for iron ore exploration. Whilst the threshold for

a project in this region of Western Australia to be

economically viable is considered high, the Directors

are confident that there is significant scope identified

to date for this project to meet those thresholds.


1.4 Other Australian Projects

1.4.1 Mt Kinahan, Western Australia

(Manganese, GMM 100%)

The Mt Kinahan project lies to the south-east of

Halls Creek in the Kimberley region of Western

Australia. The project covers a significant length of

a prospective manganese horizon that is also the

subject of exploration by Ausquest Limited (Wolfe

Project). The project is also prospective for base

metals, with several high grade copper pods along a

north-east trending fault.

1.4.2 Eyre, Western Australia

(Base Metals, Rare Earths, Uranium,

GMM 100%)

GMM is targeting two distinct magnetic and gravity

features which may relate to an iron-carbonatite, ironoxide-copper-gold

(“IOCG”) or a mafic intrusive.

At the Eyre prospect, a ground magnetic survey

conducted by the Company revealed a large distinct

elliptical magnetic anomaly with a 700nT magnetic

high. This magnetic high is approximately 8km in

diameter with an interpreted depth to magnetic

source of approximately 580m.

The presence of an alkaline environment, confirmed

by nearby oil wells and Government water bores

at a depth of 400m, confirms the prospectivity for

carbonatite or IOCG related mineralisation.

The Eyre project is located on Crown Land and

Pastoral Leases with easy access from the Nullarbor

Highway. The project is ready to drill.

1.4.3 Veevers, Western Australia

(Base Metals, GMM 100%)

The Veevers project is located in the Great Sandy

Desert in the north-east of Western Australia near

the Northern Territory border. The project covers

a large magnetic dipole anomaly (5km by 3.5km)

on the flank of a basement (gravity) high defined

by previous extensive geophysical surveys by CRA

Exploration Pty Ltd. A single drill hole was sunk

to test the anomaly. The hole was drilled to 432m

where it was abandoned due to drilling conditions.

The target remains untested despite its prospectivity

for carbonatite or IOCG mineralisation styles.

1.4.4 Webb, Western Australia

(Base Metals, GMM 100%)

The Webb project is located in the Great Sandy

Desert in the east of Western Australia along the

Northern Territory border. Previous work conducted

by Geoscience Australia identified the Mt Webb

Granites as having significant potential for IOCG

mineralisation. Initial exploration by BHP defined a

large 6 mGal gravity anomaly (3km by 6km) with

an estimated depth to basement of 300m+ which

BHP considered prospective for hematite IOCG

mineralisation. Difficulties in negotiating access to the

tenement for drilling led to the abandonment of the

project. GMM has negotiated an access agreement

that will allow drilling to commence on completion

of a heritage survey.

General Mining Corporation Ltd ~ Prospectus

17


18

2. PROFILES OF DIRECTORS & MANAGEMENT

Michael Wright

(Non-executive Chairman)

B.Bus

Mr. Wright has had over 25 years experience in the

resources industry, particularly in the management

of listed resource companies in the gold, minerals

and oil and gas sectors. During that time he has held

positions with Herald Resources, Laurel Bay Petroleum,

Occidental Oil, the Griffin Coal group, Arthur Andersen

and others. An executive director of Herald Resources

from 1993 to 2008, Mr. Wright oversaw the development

of six mines since joining that company. As part of that

process, he was also instrumental in some of the early

resource loans and innovative hedging arrangements in

their infancy in Australia. In the last five years of his

tenure to 2008, the market capitalisation of Herald grew

from $50m to over $500m.

Dr. Boris Matveev

(Managing Director Elect)

PhD, GradDipBus, MAIG

Dr. Matveev has 28 years experience in the mining and

exploration industry and in geoscientific research in

Australia, Africa, the USA and FSU including the last 15

years in senior and executive positions with ASX and

AIM listed resource companies. His technical expertise

includes exploration management, remote sensing

& GIS and environmental management. As executive

director of Carnegie Minerals plc, Dr. Matveev recently

oversaw the development of a West African industrial

mineral project from an early exploration stage to

mining operations and export of mineral concentrates

to China. Before moving to Australia in 1994, he held

the position of associate professor and senior research

positions at leading Moscow universities where he

undertook projects in geology and natural resource

management. Dr Matveev’s appointment as Managing

Director is conditional upon GMM listing on the ASX.

Halite, Shuuden Uul, Mongolia


Craig Readhead

(Non-Executive Director)

B Juris Llb.

Mr Readhead holds the degrees of Bachelor of Law

and Bachelor of Jurisprudence from the University

of Western Australia. He has spent the last 30 years

practicing in the resources law area and was a

partner of a major Perth law firm before forming his

own practice 10 years ago. He is now a principal

of the law firm Allion Legal. Mr Readhead has had

a significant role in the development of a number

of mining projects within Australia, Africa and South

East Asia. Mr Readhead is director of a number of

listed and unlisted companies including Galaxy

Resources Ltd.

Robert Wanless

(Non-executive Director)

Mr. Wanless is a prospector and mining investor

with 32 years mining industry experience. He

was employed by Placer Exploration Limited as a

professional prospector and exploration supervisor

covering South East Asia and Australia including

exploration at Laloki, Watut and Pleysumi (PNG)

and throughout Western Australia. Since then he

embarked on all aspects of mineral exploration,

assessment, acquisition, fieldwork, development

and mining, mainly in Western Australia. He has

negotiated numerous mining related sale and joint

venture agreements with international and Australian

mining companies involving gold, base metals and

industrial mineral properties. Recently he managed

the Alicia Gold Mine in Western Australia. He is a

past founding director of ASX listed Greenstone

Resources NL and current founding director of ASX

listed Galaxy Resources Ltd.

Christopher Wanless

(Non-executive Director)

Llb (Hons)/BEc

Mr. Wanless has a Hons Degree in Law and

a Bachelors degree in Economics both from

Monash University, Melbourne. He has worked for

infrastructure consulting firm The Peron Group as a

management consultant.

He also has practical field experience in mineral

exploration having worked for Greenstone Resources

NL and Galaxy Resources Ltd. He is a director of

Quaalup Investments Pty Ltd, a private resource

investment company. Chris is also a director of the

Company’s Mongolian subsidiary, Golden Cross LLC.

Lindsay Colless

(Joint Company Secretary )

CA, JP (NSW), FAICD

Mr. Colless is a member of the Institute of Chartered

Accountants in Australia with 15 years experience

in the profession and a further 29 years experience

in Commerce, mainly in the mineral and petroleum

exploration industry in the capacities of financial

controller, company secretary and director. He is a

director of a number of public listed companies and

company secretary for Alkane Resources Ltd.

Karen Brown

(Joint Company Secretary)

BEc(Hons)

Ms. Brown is an honours graduate in Economics from

the University of Western Australia. Ms. Brown has

considerable experience in corporate administration

of listed companies over a period spanning 24 years,

primarily in the mineral exploration industry and is

currently the company secretary for Austral Africa

Resources Limited, Newland Resources Ltd and

Northern Star Resources Ltd.

Lhagva Choyon

(Manager, Golden Cross LLC)

Mr. Choyon holds a Bachelor of Science (Geology) and

Masters in Mineral Exploration from the Mongolian

University of Science and Technology, School of

Geology. Mr. Choyon has previously worked as a

Senior Exploration Geologist for Ivanhoe Mines

Mongolia and Ivanhoe Australia Limited. Mr. Choyon

has over seven-year exploration geology experience

in Mongolia and Australia with emphasis on IOGC

and porphyry style mineralization systems. Choyon

has been managing exploration on drilling projects,

directing field teams on mapping and geochemistry

programs, and conducting project reviews.

General Mining Corporation Ltd ~ Prospectus

19


20

3 - Details of the Offer

3 - Details Of The Offer

3.1 Shares Offered For Subscription

This Prospectus invites investors to apply for up to

40,000,000 Shares at a price of $0.20 for each Share

to raise up to $8 million, before costs of the Offer. All

Shares offered under this Prospectus will rank equally

with existing Shares on issue.

All application monies are payable in full on application.

3.2 Priority Entitlement to Certain Galaxy

Shareholders

In accordance with the Strategic Alliance, GMM has

agreed to set aside 40% of the Shares to be issued under

the Offer to Galaxy shareholders as at 5.00 p.m. WST

26 October 2009 with a registered address in Australia

(“Priority Offer”). Shares will be allocated under the

Priority Offer at the Directors’ discretion.

If you are a Galaxy shareholder eligible to participate in

the Priority Offer you will receive a letter from Galaxy

advising you of the Priority Offer and your Holder

Identification Number (“HIN”) or Shareholder Reference

Number (“SRN”). Eligible Galaxy shareholders must

provide their HIN or SRN on the Application Form

where indicated.

Any ineligible applications under the Priority Offer will

be treated as if made under the public Offer.

3.3 Application For Shares

Applicants should read this Prospectus in its entirety in

order to make an informed decision on the prospects

of the Company and the rights attaching to the Shares

offered by this Prospectus before deciding to apply for

Shares. If you do not understand this Prospectus, you

should consult your stockbroker, accountant or other

professional adviser in order to satisfy yourself as to the

contents of this Prospectus. The Shares offered by this

Prospectus are speculative in nature.

An Application for Shares can only be made on

the Application Form contained at the back of this

Prospectus. The Application Form must be completed

in accordance with the instructions set out on the

Application Form.

Applications must be for a minimum of 10,000 Shares

(being minimum application monies of $2,000), and

thereafter in multiples of 2,500 Shares ($500).

The Application Form must be accompanied by a

cheque in Australian dollars, for the full amount of your

application monies. Cheques must be made payable

to “General Mining Corporation Ltd – Application

Account” and should be crossed “Not Negotiable”.

Application Forms must not be circulated to prospective

investors unless accompanied by a copy of this

Prospectus.

Completed Application Forms and accompanying

cheques must be received by no later than 5.00 pm

(WST) on the Closing Date by State One Stockbroking

Ltd:

By Delivery to:

State One Stockbroking Ltd

Level 14, 172 St George’s Terrace

Perth WA 6000

or in Sydney to

Level 20, Australia Square

264 George St

Sydney NSW 2000

By Post to:

State One Stockbroking Ltd

PO Box 7625

Cloisters Square WA 6850

or

PO Box R1931

Royal Exchange NSW 1225

The Company reserves the right to extend the Offer

or close the Offer early without notice. Applicants

are therefore urged to lodge their Application Form as

soon as possible.

An original, completed and lodged Application Form,

together with a cheque for the application monies,

constitutes a binding and irrevocable offer to subscribe

for the number of Shares specified in the Application

Form. The Application Form does not need to be

signed to be a valid application. An Application will be

deemed to have been accepted by the Company upon

allotment of the Shares.

If the Application Form is not completed correctly,

or if the accompanying payment of the application

monies is for the wrong amount, it may still be treated

as valid. The Directors’ decision as to whether to treat

the Application as valid and how to construe, amend

or complete the Application Form is final. However,

an Applicant will not be treated as having applied for

more Shares than is indicated by the amount of the

cheque for the application monies.

No brokerage or stamp duty is payable by Applicants in

respect of Applications for Shares under this Prospectus.

3.4 Allocation and Allotment of Shares

The Company reserves the right to reject any Application

or to allocate to any Applicant fewer Shares than the

number applied for. The Company also reserves the

right to reject or aggregate multiple applications in

determining final allocations.

If an Application is not accepted or accepted in part

only, the relevant portion of the Application monies

will be returned to Applicants, without interest.

The Company reserves the right not to proceed with

the Offer or any part of the Offer at any time before

the allocation of the Shares to Applicants. If the Offer

or any part of it is cancelled, all Application monies,

or the relevant Application monies will be refunded to

Applicants without interest.

The Company also reserves the right to close the Offer


or any part of it early, or extend the Offer or any part of

it, or accept late Application Forms either generally or

in particular cases.

The allotment of Shares to Applicants will occur as soon

as practicable after Application Forms and Application

monies have been received for the minimum

subscription of Shares being offered, following which

statements of shareholding will be dispatched. It is the

responsibility of Applicants to determine their allocation

prior to trading in the Shares. Applicants who sell Shares

before they receive their statement of shareholding will

do so at their own risk.

3.5 Application Money Held in Trust

All Application monies will be deposited into a separate

bank account of the Company and held in trust for

Applicants until the Shares are issued or Application

monies returned. Any interest that accrues will be

retained by the Company and will not be paid to

Applicants.

3.6 Minimum Subscription and

Oversubscriptions

The minimum subscription to be raised under this

Prospectus is $4 million. The maximum subscription is

$8 million with the Company reserving the right to take

an additional $1 million in oversubscriptions.

No Shares will be issued pursuant to this Prospectus

until the minimum subscription has been achieved.

Should the minimum subscription not be reached

within four months after the date of this Prospectus, all

applications monies will be dealt with in accordance

with the Corporations Act.

The Company believes the minimum subscription

will provide sufficient working capital to achieve its

objectives as set out in this Prospectus.

3.7 Dividend Policy

The Company anticipates that significant expenditure

will be incurred in the evaluation and development of

the Company’s projects. These activities are expected

to dominate the two year period following the issue of

this Prospectus. Accordingly, the Company does not

expect to declare any dividends during that period.

Subject to the Company achieving sustained profitability,

the Directors will consider paying dividends, having

regard to available cash flow and capital requirements

at the time.

3.8 ASX Listing

The Company will apply to ASX within seven days after

the date of this Prospectus for admission to the Official

List and for official quotation of the Shares, other than

those existing Shares that the ASX is likely to treat as

restricted securities as defined in the ASX Listing Rules.

If the Shares are not admitted to official quotation within

three months after the date of this Prospectus, or such

longer period as ASIC may permit, none of the Shares

offered by this Prospectus will be allotted or issued. In

that circumstance, all Applications will be dealt with in

accordance with the Corporations Act.

The fact that ASX may admit the Company to the Official

List is not to be taken in any way as an indication of the

merits of the Company or the Shares. ASX, its officers

and employees, take no responsibility for the contents

of this Prospectus.

3.9 Sponsoring Broker and Lead Manager

State One Stockbroking Ltd (“State One”) has been

appointed sponsoring broker and lead manager to the

Offer. The terms of the appointment are summarised in

section 11.3 below.

State One will pay a fee of up to 3% in respect of

Applications lodged by any member organisation

of ASX, licensed securities dealer or the holder of an

Australian Financial Securities Licence and accepted

by the Company provided the relevant stamp of the

organisation is on the Application Form.

No brokerage or commission is payable by Applicants

in respect of Shares issued pursuant to this Prospectus.

3.10 CHESS

The Company will apply to participate in the Clearing

House Electronic Sub-register System (“CHESS”)

operated by ASX Settlement and Transfer Corporation

Pty Limited (“ASTC”) (a wholly owned subsidiary of

ASX), in accordance with the ASX Listing Rules and

ASTC Operating Rules. On admission to CHESS, the

Company will operate an electronic issuer-sponsored

sub-register and an electronic CHESS sub-register. The

two sub-registers together will make up the Company’s

register of Shareholders.

The Company will not issue certificates to Shareholders.

Instead, as soon as practicable after allotment, successful

Applicants will receive a holding statement which sets

out the number of Shares issued. A holding statement

will also provide details of a security holder’s HIN (in

the case of a holding on the CHESS sub-register) or SRN

(in the case of a holding on the issuer-sponsored subregister).

Following distribution of these initial holding statements,

an updated holding statement will only be provided at

the end of any month during which changes occur to the

number of Shares held. Shareholders may also request

statements at any other time (although the Company

may charge an administration fee).

3.11 Risk factors of an investment in the

Company

Prospective investors should be aware that an investment

in the Company should be considered speculative and

involves a number of risks inherent with exploration.

Section 10 contains details of key risk factors which

investors should be aware of. It is recommended

that potential investors consider these factors carefully

before deciding whether to invest in the Company.

This Prospectus should be read in its entirety, as it

provides information for potential investors to decide

whether to invest in the Company. If you have any

questions about the desirability of, or procedure

for, investing in the Company, please contact your

stockbroker, accountant or independent advisor.

General Mining Corporation Ltd ~ Prospectus

21


22

Summary

4 - Independent Geological Report

Mongolia

Report Prepared For

General Mining Corporation

by

Exploration Alliance Ltd

October 2009

3rd Floor, Geneva Place,

Waterfront Drive, Tortola,

British Virgin Islands

Chunk of halite from Shuuden Uul halite deposit in Mongolia


Executive summary

Golden Cross LLC (GCC) is a wholly owned

subsidiary of General Mining Corporation

(Australia) (GMM) with ten exploration

licences and one exploration licence

application in northwestern Mongolia,

totalling 3800 square kilometres.

The licences and applications form two

main exploration areas; Uvs Basin and

Khangai Fault Projects. GCC have only

recently acquired or applied for the above

licences, therefore have not performed any

exploration on the licences to date, with

the exception of a brief field visit and data

review.

The majority of GCC’s licences and

applications are situated on or proximal

to the Mongol-Okhotsk Zone, a regional

scale suture zone formed as a result of

closure of the Tethys Ocean during the

Late Paleozoic to Early Mesozoic. Mesozoic

intrusions along the 200 kilometre wide,

3000 kilometre long Mongol-Okhotsk

Zone are recognised as hosting mafic and

ultramafic copper-nickel-PGE deposits as

well as copper porphyry deposits. Several

deposits of this type are already recognised

in Russia, with western Mongolia remaining

relatively under-explored for these styles of

mineralisation.

The Uvs Basin Project contains six

exploration licences and applications

hosting evaporite deposits in the northeast,

with coal beds and orthomagmatic coppernickel

potential in the west. Evaporite

deposits of the Uvs Basin form GCC’s

principal exploration target, with the

potential for four major deposit types:

bedded Devonian potash, lithium and

potassium brines in near surface or

groundwater brines, near surface bedded

soda ash and near surface bedded borax.

Historic data indicates economic grades of

near surface potash deposits (for example

1.8 metres at 39% KCl, Tuz Tag salt deposit)

hosted in Devonian evaporite deposits.

These are overlain by a sub-recent to

Recent evaporite basin with excellent

climatic pre-conditions for the deposition

of potash salts and soda ash.

The Khangai Fault projects are located on

the Mongol-Okhotsk Zone, where several

copper, copper-nickel and polymetallic

mineral occurrences are recognised,

associated with basic (gabbroic) intrusions.

Historic exploration resulted in the

discovery of the Oyut Tolgoi coppernickel

prospect located proximal to, but

outside of, the Khangai Project exploration

licences. The Khangai Fault projects are

also considered prospective for copper

porphyry style mineralisation.

GCC hold a significant exploration package,

which is considered highly prospective

for potash and lithium-potassium brines

in the Uvs Nuur saline basin. Due to its

remote location, this area remains severely

under explored yet the saline basin and

existing Devonian saliferous deposits

indicate there is excellent potential for a

number of deposit types to be discovered.

Additionally, the climatic framework of the

area is suitable for solar evaporation and

cold crystallisation benefication techniques

in any future potash mining operations.

GCC’s licences are also considered

prospective for metalliferous deposits,

especially copper and nickel. Again, this

region remains significantly under-explored

using modern exploration techniques yet

the regional Mongol-Okhotsk suture is

known to host economic metal deposits

along strike in Russia. Therefore, a well

structured and focussed exploration

strategy will be essential in order to explore

the large area, varied geology and wide

range of deposit types sufficiently and costeffectively.

General Mining Corporation Ltd ~ Prospectus

23


24

4 - Independent Geological Report - Mongolia

4 - Independent Geological Report - Mongolia

Table of Contents page

1.0 INTRODUCTION AND TERMS OF REFERENCE 24

2.0 GEOTECTONIC SETTING AND REGIONAL GEOLOGY 26

3.0 DEPOSIT TYPES 27

4.0 UVS NUUR BASIN PROJECT 30

5.0 KHANGAI FAULT PROJECT 36

6.0 CONCLUSION 38

7.0 RECOMMENDATIONS 38

8.0 REFERENCES 39

LIST OF TABLES

Table 1Σ: Buiit Project licence details and mineral occurrence data 26

Table 2Σ: Khangai Fault Project licence details and mineral occurrence data 37

LIST OF FIGURES

Figure 1: Map of Mongolia showing location of GCC licence blocks 26

Figure 2: Terrane map of northwestern Mongolia 27

Figure 3: Evaporite Deposit Model 28

Figure 4: Uvs Nuur Basin licences and DEM 31

Figure 5: Schematic cross section, Uvs Nuur Basin 32

1.0 INTRODUCTION AND TERMS OF

REFERENCE

Exploration Alliance Limited (EAL) were requested

to review and assess the metalliferous exploration

potential of exploration assets held by Golden Cross

LLC (GCC), a wholly owned subsidiary of General

Mining Corporation Limited (GMM). GCC has

been granted ten exploration licences and has one

exploration licence application pending approval.

EAL conducted a site visit of the Uvs Basin

(Khondlon area only) and Khangai Fault projects in

October 2008. EAL understand that this report may

be included as part of a document issued in support

of a listing of GMM on the Australian Securities

Exchange.

1.1 SOURCES OF INFORMATION

Data including geological maps and satellite imagery

was sourced from an existing report prepared for

GCC by an independent consultant (Sanjsuren, 2008).

Further information was derived from a site visit

conducted by EAL in October 2008 and discussion

with local geologists. Information and opinions

regarding the evaporite mineral potential of the Uvs

Basin area is derived from an independent technical

report commissioned by GCC and prepared by

ERCOSPLAN Ingenieurgesellschaft Geotechnik und

Bergbau mbH (ERCOSPLAN) (Rauche et al., 2009).


1.2 SCOPE OF WORK

EAL were requested to report on the exploration

potential of licences held by, and under application

by, GCC, and to provide an independent technical

review of the projects. EAL were also requested to

review and summarise the results of Rauche et al., 2009

with regards to evaporite mineral potential.

1.3 QUALIFICATIONS OF CONSULTANTS

The information in this report that relates to

Exploration Results (excluding evaporite mineral

potential) is based on information compiled by

Mr. Andrew Tunningley, who is a Member of The

Australasian Institute of Mining and Metallurgy.

Mr. Andrew Tunningley is employed as a Principal

Exploration Geologist by EAL, a geological

consultancy providing a wide range of independent

exploration services.

Mr. Andrew Tunningley has sufficient experience

which is relevant to the style of mineralisation

and type of deposit under consideration and to

the activity which he is undertaking to qualify as a

Competent Person as defined in the 2004 Edition of

the ‘Australasian Code for Reporting of Exploration

Results, Mineral Resources and Ore Reserves’. Mr.

Andrew Tunningley consents to the inclusion in the

report of the matters based on his information in the

form and context in which it appears.

Neither EAL nor it’s employees involved in the

preparation of this report have any beneficial interest

in GCC.

EAL will be paid a fee for this work in accordance with

normal professional consulting practice.

1.4 RELIANCE ON OTHER EXPERTS

A report prepared by Geo-Info, Ulaanbaatar, Mongolia

(Sanjsuren, 2008) provided a compilation of historic

data on the licences and licence applications. EAL

visited selected targets taken from Sanjsuren, 2008.

A technical report was prepared by Rauche et al.,

2009 on behalf of GCC in relation to the evaporite

potential of the Uvs Basin evaporite projects. Dr.

Rauche has consented to the use and citation of

his report in section 4.0 Uvs Basin Projects, as the

author does not have the requisite experience to

report on such deposits independently.

1.5 PROPERTY DESCRIPTION AND

LOCATION

GCC’s licences form two main exploration areas;

Uvs Basin and Khangai Fault projects, totalling 3800

square kilometres in northern and northwestern

Mongolia (Figure 1).

The Uvs Basin project is located in far northwestern

Mongolia and is divided into two areas; Buiit in

the east and Khondlon in the west. Buiit is located

adjacent to Uvs Lake and is prospective for evaporite

mineral deposits, including potash, soda ash and

lithium and is currently considered to be GCC’s

highest priority exploration project. Khondlon is

prospective for stratiform sylvite in the north and

copper-nickel orthomagmatic deposits in the south.

The Khangai Fault projects are prospective

for orthomagmatic copper-nickel deposits

associated with gabbroic intrusions, porphyry

copper and polymetallic base metal, gold and/

or silver mineralisation. These licences are located

intermittently over a strike length of 430 kilometres

in northwestern and northern Mongolia.

1.6 WORK CONDUCTED BY GCC

GCC contracted Geo-Info, a Mongolian based

consultancy, to prepare a data review of all properties.

This included translation of historic reports and

acquisition of geological maps and satellite imagery.

GCC have conducted a brief field visit to Khondlon

and the Khangai Fault Projects. No exploration,

for example sustained grass-roots reconnaissance,

geophysical surveys, trenching or drilling has been

completed at any of the projects by GCC to date. GCC

contracted ERCOSPLAN to prepare an independent

technical report of the evaporite mineral potential of

the Uvs Basin Project in 2009.

General Mining Corporation Ltd ~ Prospectus

25


26

4 - Independent Geological Report - Mongolia

2.0 GEOTECTONIC SETTING AND

REGIONAL GEOLOGY

Mongolia is situated at the margin of two cratonal

blocks; the North China Platform to the south

and the Siberian Craton to the north. The region

has experienced major terrain accretion events

throughout the Paleozoic, with subsequent postcollisional

extension giving rise in the Paleozoic

to extensive bi-modal volcanism and associated

intrusion of felsic, calc-alkaline plutons and stocks

(Cunningham, 2007 and Parfenov et al., 2007).

Carboniferous sedimentary deposits are known to

be coal bearing and occur in the south Gobi and

northwestern Mongolia, with the northwestern coal

basin extending north into Russia (Sanjsuren, 2008).

The geology of northwestern Mongolia is dominated

by events related to the closure of the Tethys Ocean

during the Late Paleozoic to Early Mesozoic (Parfenov

et al., 2007) (Figure 2). The resulting suture zone,

the Mongol-Okhotsk Zone (MOZ), strikes eastnortheast

over approximately 3000 kilometres and

45 ° 50 °

=

Khuden Khuden (Coal) (Coal)

(Coal)

Bayan-Olgii

90 ° 95 °

90 °

UVS UVS UVS UVS NUUR NUUR NUUR NUUR NUUR NUUR NUUR NUUR NUUR BASIN BASIN PROJECTS

PROJECTS

Ulaangom

Uvs

Khovd

Zavkhan

Khovsgol

KHANGAI KHANGAI KHANGAI KHANGAI KHANGAI KHANGAI KHANGAI FAULT FAULT PROJECTS

PROJECTS

Uliastai

Arkhangai

Govi-Altai

95 °

Mine/Major deposit (Commodity)

Town

Capital

Bayankhongor

Nariin Nariin Nariin Nariin Nariin Nariin Sukhait Sukhait Sukhait Sukhait Sukhait Sukhait Sukhait Sukhait Sukhait Sukhait (Coal) (Coal) (Coal) (Coal) (Coal) (Coal)

(Coal) (Coal) (Coal) (Coal)

Moron Bulgan

Erdenet Erdenet Erdenet (Cu)

(Cu)

Ovorkhangai

M O N G O L I A

Lake

100 °

100 °

Railroad

GCC Licence/Application

Tavan Tavan Tavan Tavan Tolgoi Tolgoi Tolgoi Tolgoi (Coal)

(Coal)

Omnigov

is recognised as being over 200 kilometres wide

(Koval, 1999). Units are down faulted to the north

and the MOZ is inferred as having a sinistral strikeslip

component. Numerous mafic and ultramafic

hosted copper-nickel-PGE deposits and prospects

and copper bearing porphyry deposits and prospects

occur along the length of the MOZ, with the majority

of known deposits occurring in Russia. Such deposits

are typically spatially and temporally associated with

Mesozoic intrusions (Parfenov et al., 2007).

During the Cenozoic, Mongolia experienced an

extended period of quiescence and the development

of a large erosion surface (Cunningham, 2007).

Cenozoic sedimentary deposits are common across

Mongolia and fill basin-and-range physiography

typical of the region.

105 °

Irkutsk

R U S S I A

Selenge

=

ULAANBAATAR

ULAANBAATAR

Tov

Boroo Boroo Boroo (Au)

(Au)

Dundgov

Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Suvarga Suvarga Suvarga Suvarga Suvarga (Cu) (Cu) (Cu) (Cu) (Cu) (Cu)

(Cu) (Cu) (Cu) (Cu)

Dornogov

(Cu)

105 °

110 °

Oyu Oyu Tolgoi Tolgoi Tolgoi Tolgoi Tolgoi Tolgoi (Cu-Au)

(Cu-Au)

Khentii

110 °

Chita

Dornod

Sukhbaatar

115 ° 120 °

C H I N A

115 ° 120 °

%

0 500 km

Figure 1: Location of GCC licences and applications, Mongolia

50 °

45 °


Khuden Khuden (Coal) (Coal) (Coal) (Coal) (Coal) (Coal) (Coal)

(Coal)

C H I N A

Terranes

A A A A A A A A A A A A A A A A A A A A A A A A A l l l l l l l l l l l l l l l l l l l l l t t t t t t t t t t t t t t t t t t t t t a a a a a a a a a a a a a a a a a a a a a i i i i i i i i i i i i i i i i i i i i i M M M M M M M M M M M M M M M M M M M M M M M o o o o o o o o o o o o o o o o o o o o o u u u u u u u u u u u u u u u u u u u u u n n n n n n n n n n n n n n n n n n n n n t t t t t t t t t t t t t t t t t t t t t a a a a a a a a a a a a a a a a a a a a a i i i i i i i i i i i i i i i i i i i i i n n n n n n n n n n n n n n n n n n n n n ss

s ss

s ss

s s ss

ss

s ss

s s ss

s ss

s

3.0 DEPOSIT TYPES

UVS UVS UVS UVS UVS NUUR NUUR BASIN BASIN PROJECTS

PROJECTS

PROJECTS

PROJECTS

PROJECTS

PROJECTS

2

1

Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Tsagaan Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Shiveet Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault Fault

GCC’s licences have the potential to host a range

of metalliferous hydrothermal and orthomagmatic

deposits as well as coal, potash and soda ash. The

main targets for exploration in the Khondlon and

Buiit licences are potash and soda ash in a large

Cretaceous sedimentary basin, with the remainder

of licences being prospective for orthomagmatic

nickel-copper-(PGE) and porphyry copper-

(gold) deposits spatially related to the MOZ.

3.1 POTASH DEPOSITS

Potash deposits occur in almost all geological systems

and are most commonly found in rocks of Devonian,

Carbonifeorus, Permian, Cretaceous and Tertiary

age. Although distributed globally, the majority of

economic potash deposits are located in the northern

hemisphere. The following is summarised from

Rauche et al., 2009.

The majority of potash deposits are of marine origin,

where bodies of seawater become isolated by tectonic

activity and/or sea level changes. Such isolated

bodies become concentrated through evaporation

with eventual salt crystallisation. The least soluble

3

4

5

6

Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Mongol-Okhtosk Zone

Zone

Zone

Zone

Zone

8

7

KHANGAI KHANGAI FAULT FAULT PROJECTS

PROJECTS

Cenozoic Alluvial Basin

Metamorphic Rocks 8

Permian-Triassic Volcanic Belt

Cratonal Block 9

Devonian Turbidite Sequence 1 Hovd

Cambrian Shelf Carbonate Rocks 2 Tsagaan Shiveet

Island Arc

3 Lake

Backarc/ Forearc Basin

4 Uvs Cenozoic Basin

Accretionary Wedge

5 Agardag

Passive Continental Margin 6 Zavkhan

Ophiolite

7 Sangelin

9

H H a a a a a a a a n n n n g g g g a a a a y y y y M M o o o o o o o o o o o o u u u u n n n n t t t t t t a a a a i i n n n n ss

ss

s s

Selenge

Hovsgul

Erdenet Erdenet (Cu) (Cu) (Cu) (Cu) (Cu) (Cu)

(Cu) (Cu)

R U S S I A

Legend

Mine

GCC Licence Block

0 250 km

Boroo Boroo Boroo Boroo Boroo Boroo (Au)

(Au) (Au)

K K h h e e e e e e n n t t i i i i

M M M M M M M M M M M M M M M o o o o o o o o o o u u u n n n t t a a a i i n n n s s

Figure 2: Terranes and major structural lineaments, northwestern Mongolia.

Numbers in legend indicate terrane name (modified from Badarch, 2002)

%

compounds are deposited first through sedimentation,

with the most soluble compounds being the last. A

complete evaporation/salt deposition cycle begins

with basic carbonates (limestone, dolomite, and

sometimes magnesite), followed by sulfates (gypsum

and anhydrite), rock salt, and finally potassium and

magnesium salts. Intermediate layers of clay are

deposited by repeated influxes of fresh water, which

can lead to partial redissolution of the salt deposits.

Eolian transportation of fine grained clastics into the

basin can occur. This process can occur several times

in a basin, resulting in repeated evaporation cycles.

Potash deposits are also known to form in saline

lake environments in graben/rift zones (Figure 3 next

page). Hydrothermal brines are a major source and

controlling factor in such environments, however

“cold” conditions, assuming an equivalent mineral

source and intensive fluid circulation, can also provide

suitable environments for potash deposition.

General Mining Corporation Ltd ~ Prospectus

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28

4 - Independent Geological Report - Mongolia

Figure 3: Schematic diagrams illustrating the

environments for potash deposition in

a) saline lakes

and

b) isolated bodies of seawater.

Due to the relatively low mechanical strength of

evaporites, the whole salt sequences are subject to

intensive deformation of originally horizontal strata.

Furthermore, salt migration and upward movement,

driven by the inverse density contrast between

the salt bodies and their carbonatic and/or clastic

overburden, forms salt domes (diapirs). As a result of

these vertical movements, salt deposits often come

into contact with groundwater and are partially or

completely redissolved.

Brines from natural lakes and pore fluids from

sub-recent/recent evaporite basins are known

as resources for sodium chloride and sodium

carbonate. Such brines are seldom used as a source

for potassium and magnesium salts. In sub-recent

and recent shallow evaporite basins, the source of

potash is the remaining saturated brines enriched in

potassium and magnesium, which occur (i) in the

lakes at the surface or (ii) in the pore cavity of the

young evaporites.

Examples of producing operations are given below:

• Dead Sea Works, Israel: with a concentrated brine

containing about 30% solved salt and a potassium

chloride content of 1.25% equalling 15g/l and a total

annual production of 1.96 million tonnes K O per 2

year (2003) based on solar evaporated Carnallite

• Great Salt Lake, Utah, USA: with a concentrated

brine containing about 27% solved salt and a

potassium content of 0.7% as well as a significant

sulphate concentration, reserves are estimated at 168

million tonnes KCl

• Salar de Atacama, Chile: extracting brine with

15g to 44g potassium per litre and having a capacity

of about 0.5 million tonnes K O per year. The brine

2

of Salar de Atacama has extremely high lithium

contents (0.15%) which makes Salar de Atacama

one of the biggest and richest lithium deposits in

the world.

Two types of potassium salts are recognised as

being economically important; potassium chloride

and potassium sulphate. Potassium chloride (KCl)

occurs as Sylvite, an opalescent or milky white

mineral often occurring with halite and other salt

minerals. Potassium chloride also forms a double salt

called Carnallite when combined with magnesium

chloride. Potassium sulphate (K SO ) forms Arcanite

2 4

and commonly occurs as a double salt combined

with calcium, magnesium and/or sodium.

Common extraction techniques include conventional

underground mining methods (room and pillar

for subhorizontal bodies or cut and fill stoping for

sub-vertical bodies) and solution mining, which

is typically applied to deep sylvite and rock salt

deposits where conventional underground mining

techniques are prohibitively expensive. Solution

mining consists of the in-situ dissolving of solid rock

salt or sylvite and forcing the resultant solution to

surface for processing. Solution mining does not


equire the construction of a shaft, therefore mining

costs are significantly reduced.

Potash ore can be processed by flotation, hot

leaching, electrostatic separation, solar evaporation

and cold crystallisation. Due to the high energy

demands of flotation, hot leaching and electrostatic

separation, solar evaporation and cold crystallisation

are the preferred processing methods. However

this is strongly dependant on local climate. Solar

evaporation and cold crystallisation are both possible

in the Uvs Basin area and are discussed below.

Solar evaporation involves holding brines in surface

ponds, where evaporation either increases the

concentration of the brine or produces a crystal crop

of Sylvite and Carnallite. Impurities such as Halite

also form during this process. The surface pond is

dredged and the resulting slurry is pumped to a

processing plant, where Carnallite is decomposed

with water or a solution of low MgCl concentration

2

dissolving magnesium chloride and leaving a mixture

of potassium and sodium chloride. The process is

carried out at temperatures of about 25°C. A first

screening of the Carnallite-Halite mixture is done at

+20 and -50 mesh. The fractions are then converted

into 20 to 50 mesh KCl. The coarser and finer salt is

then separated. The pure, sufficiently sized potash

crystals can immediately be sold. The Carnallite of

the 20 to 50 mesh can either be further processed by

hot leaching or ground to smaller size.

Cold crystallisation of potassium chloride can be

applied to brines extracted by solution mining.

Usually, such brines contain KCl and NaCl, because

both are components of the potash deposit. Under

the relatively warm environment of the deposit (15 up

to 40°C), both components are solved because their

solubilities are +/- equal in this temperature interval.

For separation of solid KCl, the cold crystallization

technique utilizes the different solubilities of KCl and

NaCl in cold brines. During the winter season the

solution mining brine is pumped into cooling ponds

where the brine cools down and KCl crystallizes. As

with solar evaporation, the crystal mush is harvested

and KCl is washed from the adhered NaCl brine.

3.2 PORPHYRY COPPER-(GOLD) DEPOSITS

Porphyry copper deposits are the world’s largest

source of copper and molybdenum, with significant

by-products such as gold, silver, tin and rare earth

metals. Metal grades are variable, but if present tend

to range between 0.2 % and 1 % copper, 0.07% to 0.3

% molybdenum and 0.4 g/t

gold are considered gold rich (Sillitoe, 1993), where

some deposits, for example Grasberg, contain grades

greater than 1 g/t gold. Porphyry copper deposits

range in size from tens of millions to billions of

tonnes (Richards, 2003 and Sinclair, 2007).

Porphyry copper deposits form in continental

and island arc settings located at destructive plate

margins. The location of porphyry deposits within

these settings is controlled by deep seated arcparallel

structures and their interaction with transfer

or arc normal faults. Where these two fault trends

intersect dilation provides a conduit for rising

magmas and the formation of large batholiths, above

which structurally controlled felsic to intermediate,

calc-alkaline porphyritic stocks and plutons form

with multiple intrusive phases, providing a suitable

environment for the formation of porphyry copper

deposits. Overlying stratovolcanoes are also believed

to play a role in the formation of porphyry copper

deposits, however this is still under debate (Richards,

2003 and Sillitoe, 1993). Although porphyry copper

deposits occur from the Archaean through to Recent,

the majority are dated in the Mesozoic to Cenozoic.

Porphyry copper deposits form large, zoned alteration

cells which can exceed 5 kilometres in diameter

and are still recognised as typically following the

model produced in 1970 by Lowell and Guilbert.

Sulphide mineralisation forms as disseminations,

stockworks veins and breccias commonly with an

inner chalcopyrite-bornite sulphide assemblage

grading outwards into an outer pyrite-dominant

sulphide assemblage. Zoned sulphide assemblages

coincide with an inner potassic alteration zone

grading outwards to phyllic and propylitic alteration

assemblages.

Upper advanced argillic alteration may also be

observed with or without sulphide mineralisation.

Weathering of pyrite can lead to acid rich solutions

which leach copper from oxidised portions of an

exposed porphyry copper deposit and transport

dissolved copper to the water table, where secondary

chalcocite forms as replacement of hypogene

sulphides. As supergene mineralisation requires a

porphyry deposit to have been exposed at surface,

it is not present with all porphyry copper deposits.

Some porphyry deposits may have been exposed

and later buried by sedimentary or volcanic cover,

thus obscuring the deposit and associated supergene

mineralisation.

Within Mongolia major copper porphyry deposits

include Erdenet (1.78 billion tons at 0.62 % copper

and 0.025 % molybdenum) (Figure 1), Oyu Tolgoi

(1.39 billion tonnes at 1.33 % copper and 0.47 g/t

gold), Kharmagtai and Tsagaan Suvarga. After the

recent discovery of Oyu Tolgoi by Ivanhoe Mines

in 2001 there has been a large exploration effort for

General Mining Corporation Ltd ~ Prospectus

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4 - Independent Geological Report - Mongolia

further discoveries in the Tien Shan metallogenic

belt and less so in the northern MOZ, despite the

presence of Erdenet and Boroo mines.

3.3 ORTHOMAGMATIC NICKEL-COPPER

DEPOSITS

Nickel sulphide deposits are hosted by or spatially

and temporally related to gabbroic and ultramafic

intrusions and are commonly exploited for nickel as

well as copper, iron, chrome and platinum group

elements (PGE) as by-products. Nickel-copper rich

deposits tend to be low in PGE and vice versa.

GCC’s licences are believed to be prospective only

for copper-nickel rich deposits, therefore the PGE

rich sub-types will not be discussed.

However, PGE may be present in the nickel-copper

type as a potential by-product and should always be

assayed for in an exploration program.

Typical metal grades for nickel-copper

orthomagmatic deposits range from 0.7 % to 3 %

nickel with 0.2 % to 2 % copper and deposit sizes

range from hundreds of thousands to tens of millions

of tonnes. Sudbury, Ontario (1645 Mt) and Norilsk,

Russia (1903 Mt) form the largest known deposits of

this type. All nickel-copper orthomagmatic deposits

share a relatively simple sulphide assemblage of

pentlandite, pyrrhotite, chalcopyrite and magnetite.

Sulphide is concentrated in mafic and ultramafic

bodies as a primary process, as an intrusive body

cools during ascent. Sulphide forms droplets

which are denser than the magma and therefore

accumulate towards the base of any intrusive body,

either as disseminations or massive sulphide lenses

and tabular bodies.

It is important to recognise that GCC’s exploration

ground does host numerous mafic and ultramafic

intrusive bodies in proximity to large, deep seated

conduits, for example the Khangai Fault. Additionally,

the Oyut Tolgoi copper-nickel prospect proves that

gabbro in this portion of the MOZ is sulphide bearing.

Exploration for nickel-copper orthomagmatic

deposits in GCC’s landholding should therefore focus

on defining mafic and ultramafic intrusive bodies at

or close to surface with geological mapping, historic

data review and acquisition of historic aeromagnetic

data. Once such bodies have been identified, their

palaeodepth must be ascertained, as sulphide bodies

occur towards the base of mafic/ultramafic bodies.

4.0 UVS BASIN PROJECT

4.1 PROPERTY DESCRIPTION AND

LOCATION

The Uvs Basin Project area comprises five exploration

licences and one exploration licence application,

which have been divided into two prospect areas;

Khondlon to the west and Buiit to the east (Figure 4).

The project is located in Uvs Province, northwestern

Mongolia (Figure 1). Buiit is located 130 kilometres

eastnortheast from the provincial capital Ulaangom

and is on the eastern shores of Lake Uvs. Khondlon

is located between 13 kilometres and 68 kilometres

north of Ulaangom. The northern most licence

boundary of the Khondlon area lies approximately

10 kilometres to 20 kilometres south of the Russian

border.

The licences and applications are considered prospective

for both Devonian and sub-recent to recent

evaporite deposits and lithium ± potassium brines,

whereas licence 14404 is prospective for coal in the

north and orthomagmatic nickel-copper in the south.

4.2 ACCESSIBILITY, CLIMATE, LOCAL

RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY

Access is via asphalt road from Ulaangom,

the capital of Uvs Province, approximately 1120

kilometres westnorthwest from Ulaanbaatar. Parallel

to the road from Ulaangom is a high voltage

powerline supplied by Russia. Ulaangom provides

hotel accommodation, basic field supplies such as

fuel and a domestic airstrip. The area is subject to

a boreal steppe climate and has the lowest annual

precipitation at 50°N Latitude of 140 mm per year

(Rauche et al., 2009). Boreal desert climate (annual

precipitation


Licence Details Mineral Occurrence Data

Name Area

(Hectares)

Application Granted No. Name Commodity Longitude Latitude

14404 97,240 Granted III-8-186 Cu 91.833 50.522

III-8-187 Cu 91.849 50.508

VI-8-181 Pb 91.783 50.454

Khondlon

Adraga

Cu 91.831 50.17

Khondlon Adraga

Uul

Cu 91.867 50.15

13848X 14,200 Granted No mineral occurrences recorded

13849X 4,242 Granted No mineral occurrences recorded

14215 46,050 Granted No mineral occurrences recorded

15015 46,420 Granted No mineral occurrences recorded

24245 20,760 Application No mineral occurrences recorded

now a UNESCO World Heritage Site. Lake Uvs is

situated in a continental depression known as the

Uvs Basin which has dimensions of 580 kilometres by

180 kilometres. Lake Uvs measures 84 kilometres by

79 kilometres with an average depth of 11.9 metres

and a maximum depth of 20 metres. The lake has

51 °

50 ° 50.5 °

91.5 ° 92 ° 92.5 °

R R U U S S S S I I A

A

Khondlon Adraga

Altash

Zestin Shil

Huden

III-8-186

III-8-187

VI-8-181

Barun Tserit

14404

24245

13848X

KHONDLON AREA

Khondlon Adraga Uul

Ulaangom

13849X

Davst

91.5 ° 92 ° 92.5 °

Torgalyk

Shuuden Uul

15051

Table 1: GCC licence details and mineral occurrence data, Uvs Basin Project.

Tuz Tag

no outlets and is considered to be of fundamental

importance to the recharge of groundwater in the

region.

93 ° 93.5 ° 94 °

93 °

Davsan

BUIIT AREA

M M O O N N G G O O L L I I A

A

93.5 ° 94 °

Figure 4: GCC licences and mineral occurrences within the Uvs Nuur Basin with Digital

Elevation Model. Cold colours represent low elevation, warm colours represent high elevation.

Note high voltage powerline runs parallel to asphalt road.

14215

Buiit

51 °

50.5 °

50 °

Mineral Occurrence

Legend

Coal

Copper

Lead

Evaporite

GCC Granted Licence

Road

International Border

Boundary of Uuvs Basin

0 35 km

General Mining Corporation Ltd ~ Prospectus

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4 - Independent Geological Report - Mongolia

4.3 HISTORY

Soviet exploration work conducted between 1923

and 1925 discovered the Tuz Tag salt deposit (Figure

4), with various regional exploration programs

conducted through to the 1970s. This included

regional scale mapping and tectonic/structural

interpretations and drilling at the Tuz Tag salt

deposit. These exploration works also identified the

Torgalyk, Shuuden Uul and Davsan halite deposits

and the Barun Tserin gypsum deposit (Figure 4).

The first documented exploration in the Khondlon

area was in 1971, which led to the discovery and

exploration of the Huden coal deposit, situated

immediately north of licence 14404. Work at Huden,

including geological mapping at 1:10,000 scale,

trenching and diamond drilling, defined six hard

coal bearing layers. A small test pit was excavated,

but no large scale mining was conducted. Coal grade

is not known.

1:500,000 scale mapping in the late 1970s also

identified low grade copper in fault hosted quartz

veins at the Khondlon Adraga copper occurrence

in licence 14404. Two trenches were excavated

(137m3 ) and 24 channel samples collected. Further

regional mapping programmes at various scales

were conducted by Russian researchers during the

1990s.

4.4 WORK CONDUCTED BY GOLDEN

CROSS

GCC completed a brief site visit to the Uvs Basin

exploration block to assess the coal prospectivity

of the licence in 2008. In 2009 GCC collected grab

samples from the Shuuden Uul halite deposit as well

as water samples from beneath the ice on Lake Uvs

and in water wells. Samples were submitted to SGS,

Ulaanbaatar and results are detailed in Rauche et al.,

2009. Considerable potassium content was found

in lake sediments with GCC sampling detecting up

to 2.2% potassium (K+) within sediments of Lake

Uvs. This might reflect remobilised minerals from the

outcropping evaporite beds at the northern edge of

the basin, as the potassium content of surface brines

has been proven as low.

4.5 LOCAL GEOLOGY

The Khondlon area is located in the Lake island

arc terrane, with the Tsagaan Shiveet metamorphic

terrane to the west and a large Cenozoic sedimentary

basin (Uvs basin) immediately east (Figure 2).

Outcrop in the licences is sparse, limited to small

hills in the north and south.

Outcrop to the south of licence 14404 comprises

a gabbro stock approximately 4 kilometres by 1

kilometre, striking northeast. This Gabbro is mediumto

coarse-grained, weakly serpentinised with weak

magnetite and trace, disseminated, fine-grained

pyrite. The Gabbro has intruded a bedded, shallowly

north dipping limestone unit with rare marl beds.

Outcrop to the north comprises a folded sequence

of Carboniferous bedded sandstone, siltstone and

carbonaceous units. These units have been folded

to form a shallowly north plunging syncline and are

offset by localised normal faults as a result of postcompressional

extension.

The lithologic succession of the Middle Devonian

in the Khondlon area starts with the multicoloured,

partially saliferous Tserd Uul suite. It consists of

a sequence of calcareous argillite, silty schist,

sandstone, silty sandstone, siltstone, limestone,

dolomite and rare gravellite, conglomerate, porphyry

horizons, tuffs and tuffite.

These sediments contain lenses and layers of

anhydrite/gypsum, rock salt and potassium bearing

salt rocks.

Geochemically, the lower Middle Devonian is

characterised by relatively high contents of boron

and copper and lower contents of titanium and

manganese. It is dated to the Upper Eifelian

(lower saliferous layer) and the Lower Givetian

(upper terrigenous layer). Above these layers lies

a succession of usually grey-coloured sandstone to

siltstone with intercalated conglomerate, limestone,

dolomite and rare gravellite, which belongs to the

Middle Devonian Hushut Uul suite. This sequence is

overlain by the Middle to Upper Devonian Borshon

Gol suite, consisting of sandstone, siltstone, tuff and

calcareous sedimentary rocks.

The deposition of evaporites in the Middle Devonian

was related with the closure of the Okhostk Ocean.

As a whole, these deposits were formed under

conditions of a marine basin covering not only the

considered area, but also the area of the modern

Minusinsk Basin at the time of their deposition.

The Buiit licences are underlain by a greenschist

basement and Middle to Upper Cambrian, Ordovician

and Silurian marine sedimentary units. These units

are overlain by saliferous Devonian marine deposits

composed of conglomerate, sandstone, siltstone,

dolomite, limestone and rare volcanic tuff and

extrusive porphyry.

Devonian sedimentary units contain lenticular

deposits of rock salt and gypsum, which are partially

exposed in the northern portion of the Uvs Basin

and are believed to have formed in a sequence up

to 600 metres thick (Rauche et al., 2009). All units

are overlain by Cenozoic sedimentary cover in a

recent evaporite basin, which is a potential host to

potash and soda ash deposits. Cenozoic cover is also

extensive throughout the Khondlon licence block.


Figure 5: Schematic Depositional

and Process Model of the Uvs Basin.

Thickness of lake sediments and amount

of diapirism in the Central Basin is

unknown, hence hypothetical only.

Geological Cross Section based on

Geological Map of the USSR (1964).

Figure 6: Alteration zone on GMM licence 14404

General Mining Corporation Ltd ~ Prospectus

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4 - Independent Geological Report - Mongolia

4.6 EVAPORITE MINERALISATION

The licences and applications of the Uvs Basin project

(Figure 4) are considered prospective for evaporite

deposits of sylvite, borax, lithium ± potassium

brines and soda ash. The licences are considered

most prospective for potash due to the presence of

a middle Devonian evaporite sequence containing

sylvite (potash). The presence of sylvite within the

middle Devonian Tserd Uul suite at Tuz Tag (Russia)

and Torgalyk (Russia) in the northern margin of the

basin confirm that the receding waters of the basin

reached the stage of sylvite settling.

GCC’s licences are located to the south of Tuz Tag

and Torgalyk, where the middle Devonian Tserd

Uul suite outcrops or is interpreted to lie under

sedimentary cover.

The information presented herein relating to the

evaporite deposits has been summarised from

Rauche et al., 2009.

4.6.1 Khondlon Licences

The Khondlon licences are considered prospective

for stratiform evaporite deposits of Devonian age in

the form of anticline/ dome-like strucures, where salt

rocks have accumulated due to density contrasts and

natural brines from surface lakes (Lake Uvs) and/

or pore brines from recent evaporite deposits. Solid

potash deposits are exposed in the northern Uvs

Basin in an evaporite sequence up to 600 metres

thick (see 4.6.3 Adjacent Properties) therefore

indicating good potential for solid evaporite ores in

the Khondlon licences.

Outcrops of the Middle Devonian Tserd Uul suite,

host to the evaporite mineralisation elsewhere in

the basin, occur on licence 14404. These outcrops

extend for approximately 10 kilometres within

the licence at the base of an uplifted block in the

northern section of the licence. At the western edge

of this outcrop lies the Barun Tserit gypsum deposit.

Another outcrop occurs in the northeastern area of

the licence. The presence of these outcrops indicate

that evaporite mineralisation may be found relatively

close to surface.

In the eastern licences (13848 and 13849) and

applications, no evaporite mineralisation is observed.

However, extensive outcrops of the younger middle

Devonian Hushuut Uul suite are interpreted to

overlie the older Tserd Uul suite, which may exist at

reasonably shallow depths.

4.6.2 Buiit Licences

The Buiit licences are also considered

prospective for stratiform evaporite deposits

of Devonian age, including anticline/dome-like

structures (where salt rocks have accumulated due

to density contrasts and natural brines from surface

lakes (Lake Uvs)) and/or pore brines from recent

evaporite deposits. A soda ash deposit is located

within the Buiit licences, which indicates the subrecent

to recent nature of evaporite deposition in

the area.

Therefore, both Devonian (solid potash mineralisation)

and recent (brine hosted) potassium and/

or lithium mineralisation represent valid exploration

targets. A schematic depositional and process model

of the Uvs Basin is shown in Figure 5.

The Buiit soda ash deposit was discovered during

the exploration for construction materials in 1973

through a 65 line meter core drilling program. The

soda ash occurs in lenses which are concentrated

in two layers hosted in Quaternary sediments. The

deposit occurs over an area of 3000m². The upper

horizon is 0.1-1.5 metres thick, striking over 96

metres and 75 metres wide. A lower horizonstrikes

over 127 metres at 0.25 metres thick and 25 metres

wide. The composition of “soda is sodium sulphate

74.8% in upper horizon and 24.4% in lower horizon”.

Uncertainties in the reported data however leave

some questions regarding the nature of mineralisation

and ore grade at the deposit, therefore the results of

the above historic, unverified work should be used

as a guide to exploration only.

4.6.3 Adjacent Properties

Five prospects have been explored historically in the

Uvs Basin for their evaporite mineral potential;

Barun Tserit (gypsum), Shuuden Uul (rock salt),

Torgalyk (potash, sylvinite), Davsan (rock salt and

soda ash) and Tuz Tag (potash) (Figure 4). Torgalyk

and Tuz Tag are located within the Russian extent of

the basin, several kilometres from the border with

Mongolia.

Although no resource/reserve estimates are available

on the above deposits, important observations with

regards to the evaporite mineral potential of the

Uvs Basin can be drawn from the historic drill data.

Notably, Devonian potash deposition has been

demonstrated at the Tuz Tag salt deposit, where at

least eleven drill holes were completed in the 1950s.

Drilling results include 9.7 metres at 16 % KCl (hole

7, from 59.1 metres) and 1.8 metres at 39 % KCl

(hole 8, from 16.5 metres). Additional historic drill

data from the Torgalyk deposit displays sylvinite


interbedded with potash salts. This data confirms

that the lake, from which these deposits formed

reached the phase of sedimentation of potash salts/

sylvite settling and these same sedimentary deposits

are proposed to underlie GCC’s Uvs Basin licences.

4.6.4 Suitability for Solution Mining

According to a climate study by ERCOSPLAN

(Rauche et al., 2009), the Uvs Basin displays excellent

climatic pre-conditions for the solar evaporation of

brines during the summer and cold crystallisation

during the winter. Such conditions include an arid

environment (annual precipitation of 140 mm);

extreme cold weather (average temperature -3.4°C)

with a large annual temperature amplitude; and high

evaporation rates. In addition, solid potash ores

may also be mined using conventional open pit or

underground mining methods.

4.7 METALLIC MINERALISATION IN THE

KHONDLON LICENCES

The southern part of licence 14404 is considered

prospective for copper-nickel and/or chrome

mineralisation associated with basic and ultrabasic

rocks. A gabbro stock is observed outcropping in

the south emplaced into limestone, over which

two mineral occurrences (Khondlon Adraga and

Khondlon Adraga Uul) are noted and detailed

below, along with other mineral occurrences within

the Khondlon area.

Khondlon Adraga (V-8-184) Copper Occurrence

Khondlon Adraga is located at 417455 mE, 5558305

mN, UTM Zone 46 Northern Hemisphere. EAL

visited the occurrence in October 2008. Outcrop

comprises a 4 kilometre by 1 kilometre, northeast

striking gabbroic intrusion emplaced into a bedded

limestone and marl sequence. The outcrop forms

positive relief in otherwise flat terrain, covered by

flat lying Cenozoic sedimentary units. This Gabbro

is medium- to coarse-grained, inequigranular

and weakly magnetite altered. The gabbro has

been weakly serpentinised and contains trace,

disseminated, fine-grained pyrite.

All units have been offset by two sub-parallel

fault zones trending east-west. Two quartz veins

have developed sub-parallel to the fault zone and

were the focus of two hand excavated trenches

in the 1970s. Quartz veins can be traced over 50 centimetres wide. Individual quartz veins are

composed of white to light grey, fine-grained,

massive quartz with disseminated cubic vugs and

hematite pseudomorphs after pyrite. Trace malachite

and moderate limonite-goethite as fracture fill is

observed spatially associated with quartz veining.

It is assumed by the author that historic work was

targeting potential gold mineralisation hosted in

quartz veins. Localised skarn mineralisation is also

reported at Khondlon Adraga but was not observed

in the field. Skarn mineralogy is not reported.

Khondlon Adraga Uul (V-8-189)

Copper Occurrence

Khondlon Adraga Uul is located at 419031 mE,

5555923 mN, UTM Zone 46 Northern Hemisphere,

approximately 3 kilometres south-southeast

of Khondlon Adraga. EAL have not visited the

occurrence and the following is based on a data

review. Outrop comprises layered andesitic volcanic

rocks intruded by diorite. Both these units are

intruded by granite porphyry dykes, measuring 1 to

1.5 metres by 70 to 500 metres. Granite porphyry

dykes contain weak, patchy, disseminated pyritechalcopyrite.

Rare quartz veins are observed spatially

associated with granite porphyry dykes, with

dimensions of 0.1 to 0.2 metres by 15 to 320 metres.

Malachite is observed as fracture fill.

III-8-186 Copper Occurrence

Occurrence III-8-186 is located at 418377 mE, 5595785

mN, UTM Zone 46 Northern Hemisphere. EAL have

not visited the occurrence and the following is based

on a data review. The target is reported as an iron

oxide stained breccia measuring 0.9 metres by 7

metres. Weak malachite fracture fill is noted.

III-8-187 Copper Occurrence

Occurrence III-8-187 is located at 417299 mE, 5597377

mN, UTM Zone 46 Northern Hemisphere. EAL have

not visited the occurrence and the following is based

on a data review. The target is reported as quartzcalcite

veins hosted in sandstone over an area of 5

metres by 15 metres. Iron oxides occur as fracture

fill.

VI-8-181 Lead Occurrence

Occurrence VI-8-181 is located at 413630 mE,

5589836 mN, UTM Zone 46 Northern Hemisphere.

EAL have not visited the occurrence and the following

is based on a data review. The target is reported as

iron oxide staining in sandstone and conglomerate.

4.7.1 Adjacent Properties

The Huden coal deposit is located 1 kilometre north

of licence 14404. The deposit was first discovered in

1971 by Russian workers, and in 1977 an A+B+C1+C2

resource of 9,176,000 tons of coal was calculated

to a depth of 30 metres below surface. Further

exploration work in 1984 and 1985 included 620.75

metres of diamond drilling and 98 m3 of trenching.

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4 - Independent Geological Report - Mongolia

A small test pit has been excavated, however the

timing of this is unknown.

Historic exploration delineated seven coal seams


absence of roads and tracks. The western licences

and applications border a state protected area which

cannot be staked.

5.3 HISTORY

Previous work in the area comprises various

geological mapping and geochemical sampling

programmes conducted in the 1960s and 1970s by

Soviet workers. The main aim of this work was

to explore for economic base-metal and industrial

mineral deposits, with mapping completed on a

1:200,000 scale across the entire area. This exploration

identified Oyut Tolgoi as a gabbro hosted copper-

Name Area

(Hectares)

nickel prospect, where follow-up work included

trenching and diamond drilling in the late 1960s.

Exploration rights to Oyut Tolgoi currently belong

to Camex LLC who are believed to have completed

an unknown amount of diamond drilling at the

property during 2007 and 2008 (Sanjsuren, p.comm).

Bugsein Gol copper occurrence (licence 14593) was

also discovered during this phase of work, where

exploration included limited trenching, rockchip

sampling and geophysical work. The results of this

work were not made available at the time of writing.

Licence Details Mineral Occurrence Data

Application Granted No. Name Commodity Longitude Latitude

13846X 22,720 Granted 5 Lamin Hudag Zn, Cu 95.151 48.944

13847X 73,350 Granted 72 Cu, Ag, Bi 91.184 49.202

7a Tahilt Nuur NaO 95.004 48.919

71 Cu 95.082 49.204

79 Huh Enger Uul Cu, Zn 95.124 49.174

81 Cu 95.158 49.166

14598 5,880 Granted No mineral occurrences recorded

14314 11,200 Granted No mineral occurrences recorded

14593 40,290 Granted Bugsein Gol Cu 99.771 49.233

5.4 WORK CONDUCTED BY GOLDEN

CROSS

GCC have not completed any field work in the

licence area. GCC hired a local consultancy to

prepare a data review of the licences to determine

prospectivity.

5.5 LOCAL GEOLOGY

The Khangai Fault Project straddles the east-west

striking Khangai Fault, which is believed to form the

westernmost extension of the regional scale MOZ.

The Khangai Fault is downthrown to the north with

a sinistral strike-slip movement, and forms a terrane

boundary between the southern Zavkhan Terrane

and the northern Sangelin Terrane (Figure 2). The

Khangai Fault is still active, with the most recent

movement observed in the early 1900s.

The Zavkhan Terrane comprises three main

components; Urgamal, Hutul and Hungui. These

components are composed primarily of a melange

Table 2: GCC licence details and mineral occurrence data, Khangai Fault Project

of Late Proterozoic greenschist and amphibolite

metamorphic facies overlain by rhyolitic and

andesitic volcanic rocks and volcaniclastics. A

Cambrian marine sedimentary facies, composed

of limestone, sandstone and conglomerate is

unconformably overlain by a Devonian to Cretaceous

volcanosedimentary sequence. All units are intruded

by Devonian and Permian granite plutons.

The Sangelin Terrane comprises an Archaean-

Proterozoic metamorphic basement overlain

by Devonian and Permian volcanic rocks,

intruded by Devonian and Permian granite

stocks and plutons. All units are overlain by

unconsolidated Quaternary basin fill sediments.

5.6 ALTERATION AND MINERALISATION

Thirty-two mineral occurrences identified by third

parties are located within the Khangai Fault Project

area (Table 2) and are detailed in Sanjsuren, 2008.

These targets have not been visited by the author or

GCC staff .

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4 - Independent Geological Report - Mongolia

Since EAL’s initial visit GCC’s landholding in this

area has decreased. The most significant mineral

occurrence in the Khangai Fault project is the

Bugsein Gol copper occurrence.

Bugsein Gol is located at 556116 mE, 5453680 mN,

UTM Zone 47, Northern Hemisphere within licence

14593 (Table 2). EAL has not visited the occurrence

and the following is based on a data review.

The occurrence was identified in 1966 by Czech

geologists, who conducted an electrical and induced

polarisation survey, collected 1285 soil samples

and completed an unknown amount of trenching

at the target. Outcrop comprises Permian volcanosedimentary

rocks intruded by Permian and Triassic

quartz porphyry, granite and diorite.

A silica-pyrite alteration zone is recognised at surface

over 3000 metres by


As coal and/or potash represents a shorter time-line

to potential production from any future discoveries

compared to a porphyry or gabbro hosted deposit,

it is recommended that initial exploration is focussed

towards the Uvs Basin projects. Initial work would

include, but is not limited to:

• Historic data review;

• Detailed geological mapping;

• Seismic geophysical survey;

• Topography survey;

• Source drilling company with appropriate

equipment for evaporite exploration.

It is appropriate to assume that the above work will

take the Buiit Project to a drill-ready stage, if warranted,

by the middle to end of the next field season. As

outcrop is poor at the Buiit Project, a stratigraphic drill

program is advisable in order to define the depth and

true width of Devonian evaporite bearing sequences.

The following recommendations are intended for a

target generation exercise through the winter months,

where field work is limited by the weather, at the

Khangai Fault project:

• Prioritise commodity/commodities;

• Prioritise targets from Sanjsuren, 2008;

• Digitise historic geology maps and isolate

intrusive bodies at surface;

• Study age of intrusives compared with other

known deposits in MOZ;

• Acquire and register satellite imagery;

• Acquire aeromagnetic data for the region

(available from MRAM);

• Structure/alteration interpretation from satellite

imagery/aeromagnetic data and geology maps;

• Target generation from above data

interpretation.

Grass-roots reconnaissance of existing targets and

newly generated targets from the above work would

then be required in the next field season. It is also

recommended that geologists with the education

and experience specific to deposit type are hired

for in-country management of industrial mineral

exploration and metalliferous deposit exploration, as

these are two very different fields and require specific

expertise and knowledge.

8.0 REFERENCES

Badarch, G., Cunningham, W. D. and Windley, B.F., 2002.

A New Terrane Subdivision for Mongolia: Implications for

the Phanerozoic Crustal Growth of Central Asia. Journal

of Asian Earth Sciences, V21, p. 87-110.

Cunningham, D., 2007.

Structural and Topographic Characteristics of Restraining

Bend Mountain Ranges of the Altai, Gobi Altai and

Easternmost Tien Shan. In: Cunningham, W.D. and

Mann, P., (eds): Tectonics of Strike-Slip Restraining and

Releasing Bends. Geological Society, London, Special

Publications, V290, p. 219-237.

Eckstrand, O.R. and Hulbert, L.J., 2007. Magmatic nickelcopper-platinum

group element deposits. In: W.D., ed.,

A synthesis of Major Deposit-Types, District Metallogeny,

the evolution of Geological Provinces, and Exploration

Methods, Geological Association of Canada, Mineral

Deposits Division, Special Publication No.5, p.205-223.

Koval, P.V., Grebenshchikova, V.I., Lustenberg, E.E. and

Henney, P.J., 1999. Database of Granites in the Mongol-

Okhotsk Zone, Mongolia-Siberia, and it’s Use in Mineral

Exploration. Journal of Geochemical Exploration, V66,

p.199-210.

Lepeshkov, I., Romasheva, N. and Solovjev, V.,

1958. Potassium bearing salt deposits of Tuva. Docady

Academy of Sciences of USSR, v.119, p.1156-1158 (in

Russian).

Levenko, A., 1960. Devonian of Central and South Tuva,

Dokady Academy of Sciences of USSR, v.199, Nr 6 (in

Russian).

Lowell, J.D. and Gulbert, J.M., 1970. Lateral and

Vertical Alteration-Mineralisation Zoning in Copper

Porphyry Ore Deposits. Economic Geology, v.65, p.373-408.

Parfenov, P.M., Badarch, G., Berzin, N.A., Hwang.

D.H., Khanchuk, A.I., Kuzmin, M.I., Nokleberg, W.J.,

Obelenskiy, A.A., Ogasawara, M., Prokopiev, A.V.,

Rodionov, S.M., Smelov, A.P. and Yan, H., 2007.

Introduction to Regional Geology, Metallogenesis, and

Tectonics of Northeast Asia. U.S Geological Survey. Open-

File Report 2007-1183-A.

Rauche, H., Michajljow, W. and Hopf, H., 2009.

Preliminary Evaluation of the General Potential of

the Potash, Soda Ash and Lithium Project Uvs Nuur,

Mongolia. Independent Technical Report. ERCOSPLAN

Ingenieurgesellschaft Geotechnik und Bergbau mbH.

Commissioned by Golden Cross LLC.

Richards, J.P., 2003. Tectono-Magmatic Precursors for

Porphyry Cu-(Mo-Au) Deposit Formation. Economic

Geology, v.98, p.1515-1533.

Sanjsuren, O., 2008. Geological Investigation Report

on Exploration Licences and Exploration Licence

Applications, West of Mongolia. Unpublished internal

report prepared by Geo-Info.

Sillitoe, R.H., 1993. Gold-Rich Porphyry Copper Deposits:

Geological Model and Exploration Implications. Geological

Association of Canada Special Paper 40, p.465-478.

Sinclair, W.D., 2007. Porphyry Deposits. In: W.D., ed., A

synthesis of Major Deposit-Types, District Metallogeny,

the evolution of Geological Provinces, and Exploration

Methods, Geological Association of Canada, Mineral

Deposits Division, Special Publication No.5, p.205-223.

General Mining Corporation Ltd ~ Prospectus

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40

5 - Independent Geological Report - Australia

26 October 2009

The Directors

General Mining Corporation Limited

129 Edward Street

PERTH WA 6000

Dear Sirs,

5 - Independent Geological Report

Australia

J.L. Geological Services Pty Ltd (JLGS) has been commissioned by General Mining Corporation Ltd (GMM) to

provide an Independent Geologist’s Report on their Australian mineral exploration properties to form part of their

lodgment with the Australian Securities and Investments Commission (ASIC). This report is to be included in a

Prospectus for the proposed admission of GMM to the Australian Securities Exchange (ASX).

DECLARATIONS

Sources of Information

This report is based on information supplied by General Mining Corporation; on published material such as books,

journals and industry publications; on WA open-file statutory mineral exploration reports (WAMEX); on WA mines

and mineral deposits (MINEDEX) information and on databases of airborne and ground geophysical surveys.

Wherever available, the independent geologist has inspected and perused original data, such as assay results,

company reports, government publications and the like. The research was largely office-based, yet the independent

geologist also visited one of the two Kimberley projects.

While the independent geologist has checked the status of the West Australian tenements, responsibility for tenement

maintenance rests with GMM.

This Report is Not a Valuation

This Report is not a valuation and no opinion is expressed as to the value of the individual prospects, vendor or

promoter considerations, nor to the merits of investment in General Mining Corporation.

Limit of Own Work

J.L. Geological Services’ Independent Geologist’s Report covers GMM’s Australian projects. It has been prepared on

the basis of information available up to and including 26 October 2009.

Limitation & Risk

In preparing this report, the independent geologist has endeavoured, by making all reasonable enquiries, to confirm

the authenticity and completeness of the technical data upon which the Independent Geologist’s Report is based.

Several drafts of the report were also provided to GMM, along with written requests to identify any material errors

or omissions prior to lodgment.

Qualifications

Dr. Janos L. Locsei, the author of this report, is the principal of J.L. Geological Services Pty. Ltd. He is a professional

Australian geologist who obtained his PhD in geology from the University of Vienna with distinction in 1970 and

moved to Australia the same year. For more than thirty years he has worked in Australia (Qld and WA), Fiji, Iran

and Thailand on exploration and mining projects. His last position prior to this assignment was that of mining

superintendent at a gold mine in northeast Thailand. Dr. Locsei obtained an MBA from Curtin University in 1999,

and an MSc in Mineral Economics from the WA School of Mines in 2001. He is a Fellow of the Australasian Institute

of Mining and Metallurgy. He has previously prepared, resp. contributed to, project evaluations and Independent

Geologist’s Reports.

Independence

Neither J.L. Geological Services Pty. Ltd., nor any of its employees, have any direct or indirect interest in the projects

which are the subject of this report, nor in the securities of GMM. This report has been prepared in return for

professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the

results of this report or on GMM’s success in its initial public offering.

Conformity

This report has been prepared so as to conform to the requirements of the Australian Securities and Investment

Commission Regulatory Guides 56 (Prospectuses) and 112 (Independence of experts). Also the guidelines of JORC

(2004) have been observed.

Consent

J.L. Geological Services Pty Ltd consent to the inclusion of this report in the General Mining Corporation Prospectus,

be it as electronic or paper media - in the form and context in which it has been prepared.

Dr. Janos L. LOCSEI

Geologist, FAusIMM


Table of Contents page

1. OVERVIEW 41

2. WEST AUSTRALIAN PROJECTS 42

2.1 Shoemaker: E 69/1869-1871 (Iron Ore, Pb-Zn, U, Au) 42

2.2 Eyre: E 69/2369, ELA 2616, ELA 2649 & ELA 69/2650

(Rare Earths, Ni-Cu, Cu-Au-U) 46

2.3 Webb: E 80/3887 and E 80/3985 (Cu-Au-U) 48

2.4 Veevers: ELA 80/3986 (Cu-Au-U, Rare Earths) 51

2.5 Black Hill: E 80/3663 (Silver and Base Metals) 53

2.6 Mt. Kinahan: E 80/3662 (Manganese, Copper) 55

3. REFERENCES 57

4. GLOSSARY OF TECHNICAL TERMS 59

1. OVERVIEW

General Mining Corporation (GMM) has assembled a highly prospective mineral exploration

portfolio comprising six West Australian projects.

One of the GMM projects has extensive surface iron enrichment, another boasts ample outcrops of

high-grade copper mineralization, while several more are well-defined geophysical targets at ‘readyto-drill’

stage. Thus GMM’s quality targets range from the tangible to the conceptual. Some begin

right from the surface, while others are ‘blind’ targets starting at over 400m depth.

The acquisition of the six West Australian projects is partly the result of joint venturing (Shoemaker

Iron Project), regional prospecting (Kimberley tenements) - where outcrop and mineralization can

be observed in the field - and partly that of conceptual considerations. For the latter approach

works like those of Wyborn (2002) on the granites and copper-gold metallogenesis in the Australian

Proterozoic and those of Fraser & al. (2007) on the geodynamic and metallogenic evolution of

Proterozoic Australia were seminal. These publications from Geoscience Australia combine scientific

research with considerations of economic potential. Such papers have supported the selection of

the conceptual targets of the present portfolio.

General Mining Corporation Ltd ~ Prospectus

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5 - Independent Geological Report - Australia

2. WEST AUSTRALIAN PROJECTS

Port Hedland

Karatha

Perth

2.1 Shoemaker Project

Figure 1: GMM’s WA Projects - Location Map

Black Hill

Mt Kinahan

E 69/1869, 1870 & 1871 (Iron, also U, Au, and Pb-Zn)

2.1.1 Location and Access

The Shoemaker Iron Ore Project is located 130 km north-east of Wiluna in Western Australia within the Earaheedy

Basin. The three granted exploration licences (ELs) cover an area of approximately 300km2 over the Shoemaker

Impact Structure on the Nabberu 1:250:000 resp. 1:100,000 sheet areas.

The ELs lie on Cunyu, Granite Peak and Millrose pastoral stations within the Wiluna Shire. Access is good on graded

dirt roads (the project being just 10 km off the Canning Stock Route), but driving on apparently dry salt-lakes can

be treacherous.

A “Standard Heritage Agreement” has been signed by representatives of the Ngaanyatjarra Council in 2005 which

requires a heritage survey to be conducted prior to ground-disturbing exploration activities. This project is the only

one not 100% owned by GMM. Tenement searches show that all three ELs are “authorized for iron”.

Veevers

Webb

Shoemaker

Eyre


2.1.2 Exploration History

Limited data exist on the iron ore potential of the

Shoemaker Iron Ore Project, which has been

subject only to sporadic prior exploration and

no drilling at all for iron ore. Amax Exploration

(Australia) Inc. conducted regional sampling of the

Frere Formation in the 1970’s, including a few spots

at the north-western rim of the Shoemaker structure.

Rock samples returned assays of between 56%

and 69.6% Fe with low phosphorus content (0.02

to 0.04%). One of the steeply dipping hematitegoethite

outcrops sampled by Amax had a measured

true width of thirty metres @ 60.7% Fe (Robinson &

Gellatly 1978, App. 1).

Sample Lithology Fe (%) P

32099 Massive hematite,

partly lateritised

65.9 0.04

32100 Hematite 60.3 0.03

32301 Massive hematite 69.6 0.03

32302 Hematite-goethite 60.7 0.03

32303 Hematite-goethite 56.1 0.02

32390 Lateritised jaspilite 55.6 0.13

32391 Hematite 60.2 0.05

32393 Jaspilite 33.1 0.03

Table 1: Amax sample results from Nabberu Dome

(Shoemaker Impact Structure).(Extracted from Robinson

& Gellatly 1978, App. 1)

Sampling conducted by Galaxy Resources Ltd in

2008 focused on the north-east rim of the Shoemaker

crater. Fifteen surface grab samples were taken from

hematite outcrops within the Frere Formation. Assay

results returned values up to 61.7% Fe, with nine

samples showing grades greater than 54.25% Fe.

Contaminants were relatively low (Galaxy 2008).

A detailed geophysical survey was also conducted

by Galaxy (ibid.), which confirmed the presence

of a significant number of gravity highs with strike

lengths of 1000 to 5000m, located around the

Shoemaker structure within the Frere Formation.

Numerous supergene- enriched iron formations

were also mapped in several of these areas,

although the dip and width of these outcrops is

largely unknown - except for the Amax sampling

in the north-western project area. The southern

part of the Shoemaker structure contains a large,

continuous, E-W oriented gravity high of several

kilometers, where the Frere Formation seems to

disappear beneath shallow cover.

Regionally, several other companies have targeted

and are targeting the Frere Formation for iron ore -

including Rio Tinto Ltd., Giralia Resources Ltd. and

Vector Resources Ltd. No exploration has focused on

the Frere Formation at the Shoemaker structure yet.

Galaxy-GMM are the first to do so.

The area near the GMM-Galaxy ELs has also

been explored for base metals, gold, uranium and

diamonds. Within the Shoemaker Impact Structure

itself, Uranerz Australia Proprietary Limited have been

searching for vein-type uranium in Palaeoproterozoic

rocks in 1978 by means of radiometric, resistivity,

and magnetic surveys, surface sampling, geological

mapping and drilling. Three surface grab samples,

assaying 15 ppm U O each, stand out (Abeysinghe,

3 8

2005).

Drilling by RGC Exploration for base metals within

and on the edges of the impact structure on the

Teague South group of prospects has yielded up to

10m @ 3.5% Pb and also elevated Zn and Ag values

from the carbonate-rich Sweetwaters Well Member

of the Yelma Formation (Edgar 1994).

2.1.3 Meteoric impact structures and

their economic significance

The hypervelocity impact of an asteroid or

comet with the Earth’s surface is an extraordinary

geological process, involving vast amounts of

energy and extreme strain rates, causing

immediate rises in temperature and pressure

that produce fracturing, disruption and structural

redistribution of the Earth’s materials. Some 170

individual terrestrial impact structures or small

crater fields have been recognized world-wide,

and several more are discovered each year (Grieve

2005).

“Meteorite impacts cause conversion of kinetic energy

into thermal energy. Part of this thermal energy is

used to form a melt sheet, part is dissipated to heat

the target rocks and these together with the hot rocks

that elastically rebound from the depth of several

kilometres (central uplift) activate hydrothermal

circulation…. Hydrothermal systems activated by

meteorite-impact events are important because

they may also form economic mineral deposits, as

is documented for several impact structures in the

world” (Pirajno 2005, p. 587).

Resource-forming processes can be linked to

approximately 25% of all terrestrial impact structures

world-wide, either as a direct result of the impact

event or through subsequent modification of the

target rocks (Hawke & Dentith 2006). The giant

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Vredefort - Witwatersrand and the Sudbury impact

structures are the best-known such impacts -

housing world-class ore deposits of Au, U and Ni,

Cu, PGE (platinum group elements) respectively.

Closer in crater-size (some 11 km in diameter) and

commodity type is the Ternovka meteoric structure

located in the Proterozoic fold belt of the Krivoi Rog

Basin, Ukraine, where both iron ore and uranium

have been mined (Grieve 2005).

2.1.4 Geology and Mineralisation

The Shoemaker Impact Structure (formerly known

as the Lake Teague Ring Structure) - over which the

ELs have been granted - lies on the southern edge

of the Palaeoproterozoic Earaheedy Basin, which

overlies the northern margin of the Archaean Yilgarn

Craton.

Figure 2:

Northern Shoemaker iron targets shown against

1:250,000 Earaheedy geology map (top), Galaxy gravity

image (middle) and regional TMI image (bottom).


The Earaheedy Basin follows the Hamersley Basin

in significance as far as iron oxide deposition is

concerned. Two iron formations are found within

the Earaheedy Basin – a Banded Iron Formation

(BIF) and a Granular Iron Formation (GIF). These

are interbedded with shales and exhibit local areas

of iron enrichment. Both iron formations are present

within the Shoemaker tenements.

Mapping by Amax Exploration in 1978 identified

up to eight (8) zones of hematite-goethite occurring

within the Frere Formation. These zones ranged in

thicknesses from 5 metres up to 97 metres. The Amax

geologists drew lithologic-stratigraphic parallels

between the apparently similar iron formations of

the Hamersley and the Earaheedy Basins.

Zone 1, which was only identified immediately to

the south-east of the Shoemaker Impact Crater (then

known as the ‘Nabberu Dome’), was between 36m

and 97m thick, and a strike length of 8 kilometres was

inferred; assays with an Fe content averaging 61.2%

over 58 metres have been obtained, with overall low

grade contaminants of 0.02% P and 0.09% S. None of

the iron zones found within the Shoemaker Project

could be assigned to any of these stratigraphic zones

- possibly due to deformation of the strata following

the impact event. Seven samples taken by Amax at

the north-west of the Shoemaker rim structure within

the current project area returned Fe-assays between

55.6% and 69.6% with low phosphorus content.

Work conducted by the Geological Society of

Western Australia (Piranji 2005) uncovered significant

evidence of post-impact hydrothermal activity arising

from the Shoemaker impact event. This includes

early, high-temperature alkali metasomatism at deep

levels, resulting in granitoid rocks of syenitic affinity

and alkaline composition, with strong enrichment in

Na O, K O, Rb, Sr, Y, Zr, Nb, Ba and REE (Rare Earth

2 2

Elements); it also includes a later, lower temperature

metasomatism at higher levels, manifested in

overprinting by hydrous mineral assemblages.

Pervasive silicification of the Yelma Formation,

partial silicification, cross-cutting quartz-veining in

NE-trending impact-related fractures and pods of

chert and jasperoidal quartz within the granular iron

beds of the Frere Formation bear witness to the later

phases of this hot spring activity.

2.1.5 Potential

There is ample evidence proving Shoemaker as an

impact structure (Pirajno 2002, 2005). Thus the next

step is to seek out the potential economic benefits

of an impact. Hawke (2003) reports impact-related

hot spring activity from the southern flank of the

structural uplift of the Shoemaker Impact Structure.

The same author (2004, p. iii) notes that it is “…

located in an area of known base-metal, iron and

gold occurrences and is prospective for progenetic

and hydrothermal deposits…” (see fig 4.)

The Shoemaker Iron Ore Project represents an

exciting exploration target for iron ore. Whilst the

threshold for an iron ore project in this region

of Western Australia to be deemed economically

viable is considered high, there is scope for this

project to meet that threshold. There has been –

obviously - surface enrichment of iron content in the

Frere formation (with lower-grades to be expected at

depth), yet it is also likely that the impact-alteration

may have led to higher grades. Significantly, the

Shoemaker project appears to contain the most

extensive outcrops of iron enrichment compared

to other areas of the Frere Formation. Geophysical

surveys indicate that large gravity high anomalies,

coincident with mapped outcrops of iron enrichment,

present potentially large exploration targets.

Iron ore is not the only commodity for this project. A

compilation of the economic potential of the region

(Abeysinghe 2005, Fig. 36) shows the Shoemaker

project area being prospective for

- Iron: supergene-enriched granular ironformation;

- Gold: hydrothermal-vein mineralization;

- Base metals: strata-bound-sedimentary

carbonate-hosted mineralization;

- Uranium: “Calcrete areas and palaeochannels

associated with or adjoining the Shoemaker

impact structure are prospective for uranium

mineralization” (Abeysinghe 2005, p. 51).

2.1.6 Shoemaker Proposed Exploration

and Budget

Initial work is to focus on defining and prioritising iron

ore drill targets through field-work, to be followed by

drilling of these targets. A heritage survey should be

completed prior to drilling. Further gravity surveys

covering the south-eastern corner of the project area

and the western edge of the Shoemaker Structure

are also proposed to be undertaken. Of particular

significance, the gravity-high anomalies appear to

be co-incident with magnetic lows, indicating higher

hematite enrichment. Several large magnetic lows

occur in the south-east corner, which may represent

further gravity targets - and if due to hematite rich

iron formations - may offer considerable strike

potential.

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Proposed Work Yr 1 Yr 2 Total

Heritage survey $15,000 $15,000 $30,000

Field reconnaissance $20,000 $20,000 $40,000

Road and drill-site preparation $20,000 $20,000 $40,000

Geophysics $50,000 $50,000 $100,000

Drilling 50-80 RC holes/year S250,000 $250,000 $500,000

Assaying $35,000 $35,000 $70,000

Planning, supervising, reporting $50,000 $50,000 $100,000

Total $440,000 + $ 440,000 = $ 880,000

2.2 Eyre Projects

E69/2369; ELAs 69/2616, 69/2649, 26/2650

(Rare Earths, Ni-Cu, Cu-Au-U)

2.2.1 Location and Access

The Eyre project is situated on the Nullarbor

Plain, 40km north of the Eyre Highway (between

Cocclebiddy and Madura), in the Dundas Shire, on

Moonera pastoral lease.

Access is good, using existing roads and

tracks. Tengraph shows an airstrip just a few

hundred metres south of the EL area.

2.2.3 Exploration History

Regionally and further afield in the Eucla Basin,

on the Culver 1:250,000 sheet area, Canadian

explorer Buffalo Gold Ltd. followed up on BHP’s

regional search for Jinchuan-style Ni-Cu sulphide

mineralisation by sinking a diamond drill hole to

650m on its Hannah project near the Eyre highway.

Unlike BHP in 1998, Buffalo reached basement [at

425m] in 2006 and intersected over 200m of highgrade

metamorphosed mafic gneiss & gabbroic

intrusive. No significant nickel/copper values were

found, though disseminated iron-sulphides were

present.

On the Jubilee and Mason 1:250,000 sheet areas,

280 odd km NNE from GMM’s ground, WMC’s

interpretation of geophysical data indicated the

presence of possible diatremes on their “Western

Desert (Shell Lakes)” project. Surface indicatormineral

sampling identified fresh non-kimberlitic

Shoemaker Proposed Exploration and Budget

chromite and also transported, ‘old’ kimberlitic

indicators (Waugh 1995). A second pass over

partly the same ground by this company (“Mundra

South” project) aimed at diatremes, interpreted from

aeromagnetic and TEM surveys. Though five drillholes

were successful in penetrating the shallow

basement (19 to 140metres), the target mafic

intrusive rocks were not encountered. Instead,

basaltic units erupting onto seafloor silts, as well as

granite and gneiss were found. Tests for diamond

and indicator minerals proved to be negative.

Nonetheless, Richardson (2005, p. 12) concludes

that “the presence of a possible meso-Archaean age

for the underlying regional basement in the area is

somewhat encouraging for diamonds”.

Next to the WMC tenements on the Jubilee Sheet

area De-Beers joint ventured Gunson Resources

Ltd’s “Shell Lakes” diamond project. De Beers

withdrew from the JV - after having drill-tested eight

magnetic anomalies, each with one hole. Every

hole intersected para-kimberlitic pipes. Many more

intrusives have not been tested for diamonds, nor

has nickel exploration run its full course here.

On the Loongana 1:250,000 sheet area, Utah

Development Co. Ltd.’s gravity and aeromagnetic

surveys indicated a mafic/ultramafic sequence or

a layered mafic sill on their “Haig Prospect”, some

90km N of the present GMM tenements. Drilling

to test basement lithologies in 1982 was aborted

at 332m, due to extremely poor drilling conditions

(Ransted 1983).

Helix Resources Ltd. picked up the ground as their

“Loongana Project”, targeting mainly stratiform


eef-style platinum group elements (PGE) with

their aeromagnetic and ground magnetic surveys.

Secondary targets were intrusion-hosted nickel and

copper, as well as iron-oxide copper gold (IOCG).

Helixes two diamond drill holes intersected mafic/

ultramafic cumulates and granitic rocks. Some

anomalous PGE values were obtained. Currently

Richmond Mining Ltd. hold this ground (“Loongana

Project”), targeting nickel mineralization in a maficultramafic

layered complex (Richmond Mining Ltd.

Prospectus 2008).

Focusing now on the area held by GMM: earlier

exploration was carried out by CRA Exploration

Pty Ltd (CRAE) in 1990: CRAE had applied for an

EL over a large, circular magnetic anomaly (some 8

kilometres in diameter, with approximately 700 nT

amplitude) on the Nullarbor Plain. CRAE’s literature

research suggested that 400-500m thickness of

sedimentary cover concealed the crystalline basement

there. CRAE presumed that the magnetic anomaly

might be due to a carbonatite intrusion within the

basement, below the Eucla Basin. Fearing difficult

drilling conditions – such as experienced by Utah on

the Loongana map sheet area – CRAE abandoned

their plans to drill this magnetic anomaly. The

anomaly remains untested and highly prospective.

2.2.4 Geology and Mineralisation

The Eucla Basin lies on the margins of the Yilgarn,

Musgrave and Gawler Cratons. The Basin comprises

a geologically young sedimentary sequence of

Cretaceous and Tertiary, un-conformably overlying

a buried basement. Because of this several hundred

metres thick overburden, little is known about the

rocks below it. Yet it is the Archaean-Proterozoic

basement which might harbour extensive deposits,

such as are known from outcropping Australian

cratons.

The Madura 1:250,000 geological series map shows

the EL surface area as consisting entirely of Cainozoic

material: Nullarbor Limestone and calcareous

clay. Geophysical and sporadic oil and mineral

exploration drill data suggest that the Archaean/

Proterozoic basement is several hundred metres

below the surface.

Geophysics show that the project straddles a regional

gravity high and circular magnetic anomaly. It is not

known what the source of the distinctive magnetic

anomaly is. It may be a relatively magnetite rich rock,

a mafic intrusive, mineralization, or a carbonatite

body.

GMM, the current explorer of this large circular

magnetic anomaly, reviewed past exploration

data and commissioned Geoforce in early 2009 to

conduct a new ground magnetic survey.

The objective of this survey was to detail the magnetic

high observed in the airborne data, and to determine

where the depth to target is a minimum. Ground

survey data over 80 line kilometres were recorded,

modelled and evaluated. The survey resulted in

good correlation between magnetic and model

responses and defined a drill-site, where intersection

of basement with high magnetic response can be

expected (Couston 2009):

Easting 261 500 E

Northing 6 496 220 N

Length 550m to 600m

Dip 70 degrees

Azimuth 0 degrees (N)

Estimated target depth 535m approx

2.2.5 Potential

GMM are targeting carbonatite, IOCG or possibly

mafics-related mineralization at Eyre. The most

likely target is a carbonatite.

GMM’s notion that the geophysical and geologic

setting of the Eyre anomaly is similar to the Sarfartoq

carbonatite in Greenland, where rare earth elements,

uranium, niobium, and phosphorous occur in

economically interesting concentrations (Secher &

Larsen 1980) derives from the fact that both exhibit

an intense magnetic high centre, surrounded by a

magnetic low. Also from the fact, that the Sarfartoq

and the Eyre magnetic anomalies are of similar

intensity. At Sarfartoq the halo of magnetic low

relates to hydrothermal alteration of the granite/

gneiss host rocks.

Closer to home, the Eucla Basin shows similarities to

the Kimberley’s mafic-ultramafic-gabboric intrusives,

carbonatites and kimberlites. According to Gunson

(2002 and 2003) the para-kimberlites discovered by

Gunson lie along the Mundrabilla Fault, a continental

gravity lineament, along which also the Argyle

diamond pipe is sited.

Within Western Australia, several carbonatites are

known to contain economic concentrations of

minerals, including the world-class Mt Weld Rare

Earth carbonatite, which holds resources of 12.2

million tonnes at 9.7 percent REO, making it the

world’s richest Rare Earths ore body. The Mt Weld

deposit also contains potentially economic deposits

of niobium, tantalum, zirconium, and titanium.

Carbonatites elsewhere are known also to be

associated with economic concentrations of copper,

e.g. the large Phalaborwa (Palabora) carbonatite-

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hosted magnetite-copper sulphide deposit in Africa,

with a resource of over 850 mt at 0.5% copper,

plus gold, platinum, palladium and silver. The Eyre

anomaly may also represent an iron-oxide-coppergold

deposit.

GMM’s untested large circular magnetic anomaly

is at the ‘ready-to-drill’ stage, with new groundmagnetic

definition and with drilling-quotes at hand.

2.2.6 Eyre Proposed Exploration and Budget

Proposed Work Yr 1 Yr 2 Total

Field survey and road cutting $10,000 $10,000

Geophysics $95,000 $95,000

Drilling one hole $120,000 $120,000

Assaying $25,000 $25,000

Planning, supervising, reporting $25,000 $15,000 $40,000

Total $180,000 + $110,000 = $290,000

2.3 Webb Project

EL 80/3887 and EL 80/3985 (Cu-Au-U)

2.3.1 Location and Access

GMM’s two abutting tenements, covering a combined

area of 376 km2, lie in the Gibson Desert, some

500km south of Halls Creek in the East Pilbara Shire.

The 670km access from Alice Springs is via roads

and tracks of variable quality. The ELs cover

ground designated for “Use and Benefit of Aborigines”.

GMM have already signed a Heritage

Agreement with the Kiwirrkurra people. Steps

have been taken to commission a Heritage Survey.

Completion of the survey is required prior to commencement

of the drilling program.

2.3.2 Exploration History

While the Arunta Block – more specifically the

Mount Webb area and the Mount Webb granitic suite

- has been overlooked for a long time, R. Budd &

al., in their paper on ‘The metallogenic potential of

Australian Proterozoic granites’ (2002, p. 33) report

that “recent exploration results have confirmed that

this truly ‘greenfields’ area may have some economic

significance. Semicontinuous rock-chip sampling

returned results of 9.1% Cu, 3 g/t Ag and 0.38 g/t

Au over a true width of 4 m and 0.3% Cu and 8

g/t Ag over a true width of 10m. An aircore-drilling

program has confirmed the presence of three Cu-Au-

Ag anomalous areas, of which the largest returned

peak values of 0.21 ppm Au and 896 ppm Cu on

three adjacent 800-m-spaced grid lines (Aurora Gold

Ltd, quarterly report, December 1997).”

On the present GMM EL area BHP Minerals were

active during 1998 and 1999, searching for iron oxide

copper gold (IOCG) mineralisation of the Olympic

Dam type. They targeted the Mount Webb Adamellite

and the associated Pollock Hill Formation for Cu and

Au in an area where an east-west structural belt is

abruptly terminated by north-south structures – seen

both in magnetics and gravity (Raetz 1997). BHP’s

work comprised ground magnetics, gravity and

Protem EM sounding. During their tenure a 400m

line spacing aeromagnetic survey was flown.

Gravity work with 90 stations, contracted by BHP,

has revealed a large, 3km x 6km gravity anomaly

of 6 mgal. The magnetic response over the main

section of this anomaly is weak (20nT) and broad,

thus it does not define a discrete source. Protem

electromagnetic soundings indicate that the depth to

basement is in the order of 300m+ (Grimley 1999).

BHP concluded that several possibilities exist for the

source of the gravity anomaly, the most likely being:

• A dense resistive body, probably a nonmagnetic

mafic intrusion; or

• Hematite IOCG mineralization; or

• Basement high (not indicated by Protem

soundings).

Drill testing was recommended, but never implemented,

due to difficulties negotiating access and to

the weather, and the tenement was surrendered.

To date this anomaly has not been drilled yet.


2.3.3 Geology and Mineralisation

The geology of the ELs can be studied on the

Wilson and Webb 1:250,000 scale GSWA maps.

The surface of the area is largely covered by windblown

desert sands, with occasional Cretaceous

sandstones outcrops. Sandstones and conglomerates

of Upper Proterozoic age comprise the basement.

Some of these erosion-resistant rocks are preserved

in the southern part of the EL. Outcrops of Mount

Webb Granite are shown 3km to the S respectively

SE of E 80/3887. This granite and/or its influence

are likely to be found under recent and Cretaceous

cover within the GMM tenements. The Mount Webb

Suite underlies indeed much of the GMM EL area,

as shown in the ground-breaking work “A newly

discovered major Proterozoic granite-alteration

system in the Mount Webb region, Central Australia,

and implications for Cu-Au mineralisation” (Wyborn

& al. 1998, Fig.1). The above work describes the Mt.

Webb Granite as being heterogeneous, comprising

several types of unaltered granite, sodic-calcicaltered

granite, sericite-altered granite and aplite, and

having a geochemistry resembling those of other

Proterozoic Cu-Au mineralised areas.

GMM’s targets are sub-surface. Thus geophysical

information is crucial to generate and to locate those

targets. GMM has commissioned Geoforce to use

the most detailed publicly available geophysical

data from the project area. There are indeed

good aeromagnetic data sets obtainable from the

Geoscience Australia website, with 400m-spaced

lines, as well as gravity data from 2.5km spaced

stations. The aeromagnetic data were re-gridded

and filtered. A change in character of the magnetic

field over the tenement suggests that the depth to

magnetic basement decreases significantly from W to

E. There is little correlation between the magnetic and

gravity field images. Geoforce consider 3D induced

polarization surveys to be particularly efficient to

delineate the zones of best developed mineralization

and to target further drilling (Godber 2009).

2.3.4 Potential

In their paper on the “Mount Webb Granite Alteration

System” Wyborn & al. (2001, p. 141) highlight the

similarities between the Mount Webb Granite and

its co-magmatic felsic volcanics in the Pollock

Hills Formation and “granites in other Australian

Proterozoic regions, where hydrothethermal Cu and

Au deposits have been linked to magmatic sources

(e.g. eastern Mount Isa Inlier; Gawler Craton)”.

The key criteria which establish the western Arunta

Block as prospective are:

• fractionation trends in the granite, clearly

evident in the geochemical data;

• magmatic alteration effects (including sodic–

calcic, sericitic, and hematite– K-feldspar) in the

granite and country rock; and

• evidence of metallogenically significant

hydrothermal interaction with country rock.

A large number of companies: Aurora-BHP, then also

Cazaly Resources, Nova Energy, Bestgold, Ashburton

Minerals, Toro Energy, Meteoric Resources and others

have applied for ground in this under-explored, yet

highly prospective area.

An Ashburton Minerals Ltd ASX e-Lodgement

(08/02/2007) mentions that “on the NT side of

the border, the Arunta Block is blanket-pegged

and is being actively prospected for a variety

of commodities, including gold, copper and

uranium”. Another lodgment by the same explorer

(17/09/2008) titled “Excellent results indicate new

copper field at Mt Webb” reports multi-element

Figure 3: modelled TMI image for E69/2369

(Source: Geoforce 2009, fig. 4.1).

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rock chip assay results with up to 13% Cu, 19 g/t

Au, 78 g/t Ag, 2.6 g/t Pd, 0.5% Bi and 32% Mn.

It is worth noting that the GMM tenements lie

along the extension of the geochemical Cu-Au-Ag

anomalies and structural trends shown in Fig. 5 of

the Ashburton Minerals Ltd. (08/02/2007) release of

information. [The extrapolation of such trends over

a distance of 80 km is speculative at this stage and

needs a more detailed study of geophysical data.]

Ashburton Minerals’ exploration update from Nov.

2008 reports that all holes from a 5-hole RC drilling

program on their Pokali Prospect have intersected

widespread disseminated copper mineralization. All

holes returned significant copper values, such as 205

m @ 0.1% Cu in one hole, 30m @ 0.3% in another,

Figure 4: Regional setting of the Webb Project.

(After: L. Wyborn & al. 1998, Fig. 1)

26m@ 0.4% in yet another, etc. The Pokali Prospect

is some 88 km ESE of the GMM tenements. GMM

management are hopeful that lithology and structure

will be found to be similar across the distance.

Thus GMM are well positioned, in the right geological

environment, with an established gravity anomaly, to

target a sizeable and potentially world-class deposit

of gold, copper and uranium.

2.3.5 Webb Proposed Exploration Budget

The tenements have been granted, a Heritage

Agreement has been signed, quotes for a Heritage

Survey and for a drilling program have been

obtained. The project is ‘ready to go’.

Proposed Work Yr 1 Yr 2 Total

Access negotiation $50,000 $75,000 $125,000

Heritage Survey $15,000 - $15,000

Field survey, road cutting $25,000 $10,000 $35,000

Geophysics - $50,000 $50,000

Drilling $150,000 - $150,000

Assaying $50,000 - $50,000

Planning, supervising, reporting $50,000 $20,000 $70,000

Total $340,000 + $155,000 = $495,000


2.4 Veevers Project

ELA 80/3986 (Cu-Au-U, Rare Earths)

2.4.1 Location and Access

The Veevers project is located on Vacant Crown

Land some 280km south-southwest of Halls Creek

and 200km southwest of Balgo Mission in the Great

Sandy Desert. Access is through Billiluna, Balgo,

Yagga Yagga and Point Moody. Old seismic survey

lines and tracks - upgraded by CRA Exploration Pty

Ltd (CRA) in 1991 - are still visible on satellite photos.

GMM have applied for a 222.8 km2 exploration

licence in the Kimberley Mineral Field, East Pilbara

Shire.

The affected Native Title area is controlled by the

Ngaanyatjarra Council.

2.4.2 Exploration History

CRA Exploration Pty Ltd had worked their

Exploration Licence 80/1388 over a known

coincident gravity and dipolar (airborne) magnetic

anomaly. CRA had conducted airborne magnetic

surveys, followed by 7km of ground magnetics

and 10 km of gravity survey in 1991. CRA’s interest

in the dipolar magnetic anomaly had been for a

diamondiferous kimberlitic pipe, before – due to

the size and depth of the source – emphasis had

shifted to other targets. GMM’s ELA covers this

same untested geophysical anomaly. GMM have

taken up where CRA left off and started off with a

re-evaluation of all earlier geophysical data.

2.4.3 Geology and Mineralisation

The 1:250,000 Helena GSWA geology plan shows

that virtually all the surface of the licence area is

covered by recent aeolian sandy sediments.

CRA’s exploration work provides valuable

information on what lies under the surface. As

the CRA report (1992, p. 1) states, the “Veevers

magnetic-gravity target lies on the flank of a regional

basement high in the Eastern Canning basin. The

basement high is coincident with interpreted northsouth

faulting on the Helena Platform”. The CRA

geophysical surveys of 1990-1991 had identified

and confirmed coincident gravity and magnetic

anomalies. Modelling of ground magnetic dipolar

response had suggested depth to top of source

700m, though reasonable fits had been obtained

for 300-400m depth (the same depth as interpreted

from helimagnetics). The geometry of helimagnetic

profiles had shown a 3,500m x 5,000m lateral extent

(Christie 1992, p. 3).

A single drill hole had been sunk by CRA to test the

anomaly. The hole was drilled to 432.3 m, where

it was abandoned, due to rods having got stuck.

Nothing in the monotonous sequence of Permo-

Carboniferous wackes and sandstones was found as

the cause of the anomaly, and no magnetic source

was identified. Due to the depth of the target CRA

had thought that it was of no economic importance

and made no further attempt at drilling - back in 1991.

GMM requested that Geoforce re-view and rework

all available geophysical data. This task was

carried out in July 2009. Public regional data were regridded

on a 400m mesh. 2D modelling of a single

N-S profile of magnetic and of gravity data indicated

a maximum depth to source of 770 m for the

magnetic source and 580m for the gravity anomaly.

Geoforce recommended that GMM commission a

further analysis - using the gravity and magnetic data

- to better define the prospectivity of the geophysical

data for IOCG prior to drilling (Godber 2009).

2.4.4 Potential

Since the CRA Exploration drill-hole had been

abandoned at 432.3m depth and thus failed to locate

the source of the anomaly, this coincident magnetic

and gravity anomaly remains highly prospective for

both IOCGU and carbonatite type mineralisation.

Whilst CRA concluded in 1991 that a discovery

would be of limited economic importance beyond

430m, many significant discoveries have been made

much deeper recently, and current exploration

practices are aiming for discoveries at significantly

greater depths. (E.g. Ausquest Ltd’s drilling in 2008 at

their Diamantina Project, where they intersected an

IOCG intrusive system from 960m to 1,790m – based

on a coincident gravity and magnetic anomaly.)

Godber (2009 p. 3) explains that “iron-oxide-coppergold

(IOCG) deposits are a recently recognized class

of hydrothermal ore deposits that can be economically

very significant. With their common coincident

gravity and magnetic anomalies, exploration relies

heavily on ground and airborne magnetic surveys

complemented by…gravity data…The gravity

response is a consequence of the high density of the

iron oxides and mineralization while the magnetic

response reflects the proportion of magnetite in the

iron oxides and less commonly pyrrhotite in the

deposit. Olympic Dam is the most famous Australian

and global IOCG example. Olympic dam is buried

below 200 m, but has a 17 mgal gravity anomaly

with a 3 kilometre half width and a good magnetic

signature. Ernest Henry is buried below 300 m, but

still has a 1.4 mgal gravity anomaly and is magnetic.

Carapateena, though buried at nearly 400m, still has

a 1.3 mgal anomaly”. Godber adds that field data

suffer from the non-uniqueness problem, meaning

that there is no single model solution for a given

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5 - Independent Geological Report - Australia

anomaly. E.g. a gravity anomaly “may be matched

by a small, dense source or by a larger, less dense

source or even a group of variable density sources

spread at different depth with different sizes”.

To sum up: the independent geologist concludes that

CRA Exploration Pty Ltd having conducted detailed

magnetic and gravity surveys over the Veevers

anomaly and having identified both magnetic

and gravity anomalies, the project represents an

advanced target with good potential.

2.4.5 Veevers Proposed exploration and

budget

Figure 5: Gravity and Magnetic images of the Veevers anomaly

with GMM tenement outlines (Source: Geoforce 2009)

Proposed Work Yr 1 Yr 2 Total

Access negotiation $25,000 $25,000 $50,000

Road cutting, mobilisation $50,000 $50,000

Drilling an 800-900m RC/DDC hole $150,000 $150,000

Assaying $15,000 $15,000

Planning, supervising, reporting $15,000 $50,000 $65,000

Total $40,000 + $290,000 = $330,000


2.5 Black Hill Project

E 80/3663 (Silver and Base Metals)

2.5.1 Location and Access

This project is situated in the Kimberley region, 90

km NE of Halls Creek and 20 km E of the Great

Northern Highway. It covers 58.7 km2 within the

Halls Creek Shire on Mabel Downs Pastoral Lease

and on Vacant Crown Land. The Ord River flows

through the northern part of the block.

Black Hill, after which the project is named, is in the

NW-sector of the tenement.

GMM’s Mt. Kinahan project lies 50km to the SW.

Access is difficult at the moment; old tracks into and

within the tenement will have to be re-cut.

2.5.2 Exploration History

During the 1969 field season Pickands Mather & Co.

International investigated a photo-anomaly caused

by light-coloured rocks along the Halls Creek Fault

between Alice Downs and the area now covered

by GMM’s E 80/3663. The company geologist El-

Ansary (1969) noted limestone units along the fault

zone, persisting for many miles, and cutting across

all stratigraphic units. The limestone was anomalous

in nickel, and contained some copper gossans. The

geologist concluded that the limestones along and

within the Halls Creek Fault were of interest, due

to the fact that the carbonate rocks at the Sophie

Downs Copper Showing were known hosts for

mineralization.

In the 1970-ies prospector Robert Wanless (RW)

visited the Black Hill calcite/dolomite outcrops

with an American geologist, who remarked on the

similarity between this black calcite and the host of

the silver mineralization in southwestern USA. RW

and colleagues conducted a regional helicopter

survey of the East Kimberley in 2006, identifying

several zones of black calcite in the Black Hill area.

The two samples they took from one of those black

calcite zones within the present ELA area were

extraordinarily rich in silver: up to 138 ppm Ag (or

nearly 4 ½ ounces/ton). They were also anomalous

in lead: 0.44% [oral communication RW and sighting

of the assay results].

2.5.3 Geology and Mineralisation

The tenement area is comprised largely of

Paleoproterozoic rocks and includes part of the

Black Rock Anticline and of the Biscay Anticlinorium.

It also covers several kilometers strike-length of the

Hall’s Creek Fault Zone (Dixon Range 1:250,000

geological map; Dixon 1:100,000 geological map;

also Report 74 of the WAGS).

The independent geologist visited the Black Hill

area with GMM director Robert Wanless (RW) in

December 2007 for reconnaissance geology and

sampling. During the four days on the ground several

traverses were made and 31 rock chip samples were

collected. The rocks generally encountered were

metavolcanics (metabasalts and minor ultrabasics),

gabbros, amphibolites, metasediments (including

graded pebbly sandstones), while those of special

Figure 6: Black calcite and chlorite schist outcrops

(Photo R. Wanless 2006)

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interest were black chlorite schists, limestones and

dolomites. Several quartz-reefs were also noted and

sampled.

Targeted during this visit were the ‘black calcite’

outcrops, which earlier prospecting has found to be

highly anomalous in silver; in particular the ‘black

calcite’ range, which was noted during RW’s 2006

helicopter reconnaissance to persist for over six

kilometres strike length.

The independent geologist was able to follow this

feature on the ground and to sample it over 1,500

m length. He found that it was indeed open in both

the north and the south. He has formed the opinion

that this be the Halls Creek Fault or an associated

structure. Over half the samples were collected

from this 30-50m wide zone which swells up to

over 100m. The NNE-SSW striking feature typically

consists of dark green (‘black’) chlorite schist forming

dark ridges. While the schist consists of large slatelike

plates, it is often tightly folded. Within and to

the west of this prominent schist are a number of

calcite and dolomite lenses and layers. These are of

a few cm to nearly a metre thick. There are many of

these lenses and layers, comprising 10-30% of the

30-50m wide target-zone. They consist of calcite and

dolomite of light to dark (gray) colour, often with

blobs and irregular veins of milky quartz. Malachite

was frequently observed in the carbonate lenses.

Galena was found in one outcrop. Sampling by the

2.5.5 Black Hill Proposed Exploration

and Budget

It is recommended that detailed prospecting,

geological mapping and geochemical sampling

comprise the initial exploration phase. The target zones

can be traced on satellite images and air-photographs,

due to the dark ridges and the specific vegetation

cover as well as the lighter colours of limestone,

dolomite, ankerite and calcrete in the slopes and flats.

independent geologist could not confirm the earlier

silver values obtained from within the ELA area. He

found, however, several copper occurrences, with of

up to 1.3% Cu in rock chip samples. The majority of

samples had also elevated Mn values.

2.5.4 Potential

The stated exploration targets of this project are

silver-bearing carbonate-rich zones and locations of

black calcite.

Black calcite is a common associate of silver/

manganese ores found in the southwestern silver

fields of the USA. This association is reported, among

others, from the Silver District in Arizona (S.B. Keith

1978), from the Western Mining Districts of the USA

(Hewett & Radtke 1967), as well as from Sonora,

Mexico (Silvermex 2007).

The Halls Creek Fault Zone hosts a number of

hydrothermal vein type copper occurrences in mafic

Tickalara Metamorphics, immediately to the north of

the ELA, and the hosting structures extend into the

GMM tenement area.

Gold occurrences have been described from the

Eastern Zone of the Lamboo Group (Report 74 of

the GSWA). Since the ELA straddles this zone, its

gold potential should be examined as well.

Proposed Work Yr 1 Yr 2 Total

Road cutting, prospecting, sampling $25,000 $50,000 $75,000

Geophysics $50,000 $50,000

Drilling ten RC holes $90,000 $90,000

Assaying $10,000 $25,000 $35,000

Planning, supervising, reporting $20,000 $50,000 $70,000

Total $105,000 + $215,000 = $ 320,000


2.6 Mount Kinahan

Project E 80/3662 (Manganese, Copper)

2.6.1 Location and Access

GMM has been granted the Mount Kinahan

Exploration Licence, covering 227.7 km2 in the

Kimberley Mineral Field, Halls Creek Shire. The EL

straddles the northern part of the Albert Edward

Range 45 km ENE of Halls Creek in the Kimberley

region of Western Australia. The tenement is 29

km [by road] east of the Great Northern Highway,

comprising 17 km of station tracks and 12 km of

tracks cut by exploration companies during the past

few years.

The northern half of the application is on the Sophie

Downs pastoral station, the remainder on vacant

crown land. Castle Creek flows through the EL and

joins the Elvire River south of the block.

2.6.2 Exploration History

During the late 1960-ies Pickands Mather & Co.

International investigated a number of anomalies

detected on air-photos in the East Kimberley. One of

these was a dark-brown colour-anomaly near Cow

Creek (a tributary of Castle Creek), at the western

boundary of the present E 80/3662. Graphitic shales

with several pyritic gossans and anomalous Cu, Zn

and Ag values were found to be the cause of this

colour anomaly. The find was notable because of;

a) the great strike length of the shale horizon,

b) the presence of at least iron sulphide

mineralization,

c) and the association of acid volcanic rocks with

black shales (Barber 1970).

Another Pickands Mather & Co. International

geologist, J.L. Harris (1969) visited a copper showing

about a mile north of Mt. Kinahan (within the

present GMM tenement). Assays from small, highgrade

lenses with chalcociite, cuprite and malachite

assayed up to 65% Cu and ½ oz. of Ag. These lenses

were associated with quartz and sheared rock in a

narrow, near-vertical, NE-trending fault cutting both

the Lower Proterozoic Olympio formation and the

overlying Albert Edward Group.

In the 1970-ies Mr. Robert Wanless was working

as prospector in the East Kimberley. The copper

occurrences he located at that time are the prime

exploration targets of the present enterprise.

During the period 2000-2006 Sipa-Gaia NL held

exploration licences, which covered partially the

same ground as the present GMM tenement. They

were targeting Pb-Zn-Ag-Cd mineralization in the

Eliot Range Dolomite and Cu-Bi-Au anomalies in

the Olympio Formation. After extensive field work

comprising stream sediment, soil and rock chip

sampling, geological mapping and RAB drilling, they

found that the potential for finding an outcropping

or near-surface world-class zinc deposit has been

substantially downgraded. They identified, however

extensive low-grade mineralization and found

evidence for some high-grade mineralization for both

Ag-Pb and Cu. They concluded that the Dixon Range

Project remains an excellent grass-roots exploration

opportunity, with potential for deeper mineralization

– such exploration requiring, however, the resources

of a major company (Brauhart 2003, 2004 and 2005).

2.6.3 Geology and Mineralisation

For regional setting the Antrim 1:100,000 scale

geological map and explanatory notes, the Gordon

Downs 1:250,000 scale geological series sheet, the

1:500,00 scale Plan 3 of WAGS Bulletin 143 and

the 1:500,000 map of WAGS Report 74 have been

consulted.

The rocks of the EL area are largely those of the

Paleoproterozoic Olympio Formation, consisting

of bedded greywacke and shale. This sequence

is unconformably overlain by Middle to Upper

Proterozoic sediments, which consist of sandstone,

conglomerate, siltstone, shale and dolomite.

The following types of mineralisation are known

from within the GMM licence area:

a) Manganese: in altered dolomites. Historic

data and latest sampling by Ausquest (May 2009)

along strike from the GMM ground reveal high Mn

values, many in excess of 20%. Recent mapping by

Ausquest has identified the prospective manganese

horizons as extending into the GMM licence area

b) Copper: In gossan-bearing black shales

of 20-150 m width and several km strike length;

locally significantly enriched in both copper and

silver (fault). The spatial association with likely acid

volcanics and volcanoclastics is encouraging. Harris

(1969, p. 3) surmises: “it is possible that a small highgrade

orebody may exist, though its size is more

likely to be 100,000 tons than 1,000,000 tons” (see

figure 7).

c) High-grade copper mineralization [as detailed

above] with silver credits.

d) Lead-zinc-silver: In the Eliot Range Dolomite.

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5 - Independent Geological Report - Australia

2.6.4 Potential

a) Manganese mineralization: drilling (planned for

the third quarter of 2009) by Ausquest Ltd. on its

exploration licence abutting the southern boundary

of GMM’s E 80/3662 shall be decisive as to GMM’s

manganese aspirations.

b) High-grade copper mineralization.

c) Stratiform Pb-Zn mineralization. The

Neoproterozoic Eliot Range Dolomite contains

low-grade mineralization and “testing prospective

stratigraphy proximal to growth faults is seen as an

excellent exploration strategy for a committed major

company” (Brauhart 2004, p. 11).

Figure 7: Outcrop (3m x 2m) of quartz with copper

carbonate (Photo: R. Wanless 2006)

2.6.5 Mt Kinahan Proposed Exploration

and Budget

Detailed surface mapping, costeaning, channel

sampling and some ground-geophysics (year 1) as

well as drilling (year 2) will be required to define

the extent of manganese and copper mineralization.

Proposed Work Y r 1 Y r 2 T otal

Road cutting, prospecting, sampling $25,000 $80,000 $105,000

Geophysics $ 50,000 $ 50,000

RC drilling $100,000 $100,000

Assaying $ 10,000 $25,000 $35,000

Planning, supervising, reporting $25,000 $50,000 $ 75,000

Total $ 110,000 + $255,000 = $ 365,000


3. REFERENCES

Abeysinghe, P. B., 2005: Mineral occurrences and

exploration potential of the Earaheedy area, Western

Australia: Western Australia Geological Survey, Report

96, 82pp.

Ashburton Minerals Ltd., 2007: Ashburton Minerals

Ltd consolidates Mount Webb Project. ASX release

08/02/2007.

Ashburton Minerals Ltd., 2008: Excellent results indicate

new copper field at Mt Webb. ASX release 17/09/2008.

Ashburton Minerals Ltd., 2008: Exploration update:

further copper hits at Mt Webb, WA. ASX release

14/11/2008.

Ausquest Ltd., 2008: IOCG system intersected at

Diamantina. ASX release 14/08/2008.

Ausquest Ltd., 2009: High-grade bedded manganese

outcrops identified at Wolfe Project. ASX release

26/05/2009.

Ausquest Ltd., 2009: Ausquest expands manganese

position in WA. ASX release 15/09/2009.

Barber, T. St. J., 1969: “Report Castle Creek area”, in

Pickands Mather & Co. International Miscellaneous

Exploration, East Kimberley, 1969 field season, WAMEX

Open File A520 M67.

Blake, D. H., Tyler, I. M., & Warren, R. G., 2000: Gordon

Downs, Western Australia, sheet SF/52-10 (second

edition), Geological Survey of Western Australia, 1:250

000 Geological Series, Map and Explanatory Notes.

Blake, D.H., 1977: Webb, Western Australia, sheet

SF/52-10, Geological Survey of Western Australia,

1:250,000 Geological Series, Map and Explanatory

Notes, 19 pp.

Brauhart, C., 2003: Department of Industry and

Resources Annual Report on Exploration Licence

E80/2597 Dixon Range Project (Covering the period 21

November 2001 to 20 November 2002), WAMEX Open

File A66056.

Brauhart, C., 2004: Department of Industry and

Resources Annual Report Dixon Range Project

Tenements E80/2597. 2810, 2811, 2814, 2815, 2896

covering the period 01/01/2003 to 3 1 / 1 2 / 2 0 0 3 ,

WAMEX Open File A67983.

Brauhart, C., 2005: Department of Industry and

Resources Annual Report Dixon Range Project

Tenements E80/2597. 2810, 2811, 2814, 2815 covering

the period 01/01/2004 to 31/12/2004, WAMEX Open

File A70139.

Budd, A.R., Wyborn, L.A.I. and Bastrakova, I.V., 2001:

The Metallogenic Potential of Australian Proterozoic

Granites. Geoscience Australia, Record 2001/12.

Buffalo Gold Ltd., 2008: “Australia – Nickel

Projects. Hannah Nickel-PGE Project“,

http://www.buffalogold.ca/s/AustraliaNickel.asp

08/04/2008.

Christie, M.H., 1992: Final report on exploration

completed within Exploration Licence E80/1388

(Veevers), Helena 1:250,000 mapsheet,

Western Australia, CRA Exploration Pty. Ltd. Report No.

17839. WAMEX Open File A35274.

Couston. G., 2009: Report to General Mining Corporation

Ltd on Modelling of Ground Magnetics at Moonera

E69/2369. Unpublished company report, 24/03/2009.

Dow, D.B. & Gemuts, I., 1967: Dixon Range, Western

Australia, sheet SE/52-6. Geological Survey of Western

Australia, 1:250,000 Geological Series, Map and

Explanatory Notes,15 pp.

Edgar, W., 1994: RGC Exploration Limited Annual

Report Period 18/07/93 to 17/07/94 Teague. WAMEX

Open File A425601.

El-Ansary, M., 1969: “Report. The Hall’s Creek Fault

Zone, Alice Downs area”, in: Pickands Mather &

Co. International: Miscellaneous Exploration East

Kimberley 1969 field season. WAMEX Open File A520

M67.

Fraser G.L., Huston D.L., Gibson G.M., Neumann N.L.,

Maidment D., Kositcin N., Skirrow R.G., Jaireth S.,

Lyons P., Carson C., Cutten H. & Lambeck A., 2007:

Geodynamic and metallogenic evolution of Proterozoic

Australia from 1870 to 1550 Ma: a discussion.

Geoscience Australia Record 2007/16.

Galaxy Resources Ltd., 2008: Gravity survey and rock

chip sampling confirms iron potential at Shoemaker

Project. ASX-release 22/08/2008.

Gemuts, I. & Smith, J. W., 1968: Gordon Downs,

Western Australia, sheet SF/52-10. Geological Survey

of Western Australia, 1:250 000 Geological Series, Map

and Explanatory Notes, 23 pp.

Geoscience Australia: Geophysics, http:/www.ga.gov.au,

13/03/2008.

Godber, K., 2009: Report to General Mining Corporation

Ltd on re-imaging of gravity and magnetic data EL80-

3887/3995/3996. Unpublished company report, 3 July

2009.

Grieve, R.A.F., 2005: Economic natural resource deposits

at terrestrial impact structures. Geological Society,

London, Special Publications, 2005; v. 248; pp. 1-29.

Grimley, M., 1999: Exploration Licence EL80/2120: Top

Up Rise Annual Report for the period ending 20th May

1999. Unpublished BHP report, July 1999, WAMEX

Open File A58733.

Groves, D.I. & Vielreicher, N.M, 2001: The Phalapowra

(Palabora) carbonatite-hosted magnetite-copper

sulphide deposit, South Africa: an end-member of the

iron-oxide copper-gold-rare earth element deposit

group? Mineral Deposita (2001) 36: 189-194, Springer

Verlag.

Gunson Resources Ltd., 2002: Diamond joint venture

with De Beers Exploration at Shell Lakes, Western

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Australia. Gunson homepage news 15th April 2002.

http://www.gunson.com.au/html/news_f.html,

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Gunson Resources Ltd., 2003: De Beers withdraws from

Shell Lakes diamond JV project. Gunson

homepage news 10th June 2003. http://www.gunson.

com.au/html/news_f.html, 08/07/2009.

Hamdorf, D.J., 1990: First and final report on work

undertaken within EL 69/336 Eyre, Madura 1:250 000

mapsheet area. CRA Exploration Pty Ltd. Report No.

16992, WAMEX Open file A32379.

Harris, J. L., 1969: “Report on Mt Kinahan copper

showing, East Kimberley”, in Pickands Mather &

Co. International: Miscellaneous Exploration East

Kimberley 1969 field season, WAMEX Open File

A520 M67.

Hassan, L. Y., 2000: Mineral occurrences and

exploration potential of the East Kimberley. Geological

Survey of Western Australia, Report 74, 83 pp.

Hawke, P. J., 2003: Interpretation of geophysical data

over the Shoemaker impact structure, Earaheedy Basin,

Western Australia. Western Australia Geological Survey,

Record 2003/6, 18p.

Hawke, P.J., 2004: The geophysical signatures and

exploration potential of Australia’s meteorite impact

structures. Ph.D. thesis, UWA, June 2004.

Hawke, P.J. & Dentith, M.C., 2006: The exploration

potential of Australia’s meteorite impact craters. AESC

2006, pp. 1-6, Melbourne, Australia.

Hewett, D.F. and Radtke, A.S., 1967: Silver-bearing

black calcite in western mining districts. Economic

Geology 1967 62: 1-21.

Keith, S. B., 1978: State of Arizona Bureau of Geology

and Mineral Technology, Geol. Sur. Br. Bull. 192, Index

of Mining Properties in Yuma Co., Arizona: 175 (Table

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Kilgour, B., & Hatch, L., 2002: (compilers). Magnetic

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Meteoric Resources NL, 2009: Land access signed

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Richmond Mining Ltd., 2008: Prospectus. Online: www.

richmondmining.com.au, 24/04/2008, http://www.

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Sonora, Mexico. Press Release. http://biz.yahoo.

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1:250,000 Geological Series, Map and Explanatory

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Tyler I.M., Thorne A. M. and Sheppard S., 1998:

Dixon Range, Western Australia, sheet SE/52-6,

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Geological Series, Map, 2nd edn.

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Geological Series, Map and Explanatory Notes, 30 pp.

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December 1993 to 3 December 1994. Western Desert

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Wyborn, L.A.I., Hazell, M., Page, R.W., Idnurm,

M., & Sun, S-.S., 1998: A newly discovered major

Proterozoic granite-alteration system in the Mount

Webb region, Central Australia, and implications for

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1998, 28, pp. 1-6. In: The Metallogenic Potential of

Australian Proterozoic Granites, Abstract 5: Mt. Webb

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metallogenesis in the Australian Proterozoic. Geoscience

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1:250 000 Geological Series, Map and Explanatory

Notes; 20 pp.


4. GLOSSARY OF TECHNICAL TERMS

aeromagnetics Survey made from the air, examining the magnetic characteristics of rocks below.

Ag Silver, a metallic chemical element.

alkali,

(adj. also alkaline)

Metal of the alkali group: lithium, sodium, potassium, rubidium and cesium.

anomaly Local feature with special geophysical, geochemical or other characteristics, potential

indicator of mineralization.

amphibolite A rock consisting mainly of amphibole and containing plagioclase feldspar.

ankerite A calcium iron magnesium carbonate mineral.

anticline A fold in form of an arch.

anticlinorium A major arch, containing several anticlines.

Archaean Oldest geologic time and rocks formed in that time [meaning: ancient].

Au The chemical element gold.

Ba Barium, a heavy metallic element.

basalt A dark volcanic rock.

base metal Metal inferior in value to gold and silver, such as copper, lead or zinc.

Bi Bismuth, a metallic element.

Cainozoic

(Cenozoic)

Latest of the four geologic eras: end of Mesozoic to Present; also its rocks.

calcite A calcium carbonate mineral, main constituent of limestone.

calcrete A surface or near-surface calcium carbonate or carbonate-cemented rock.

carbonate Mineral containing CO - such as calcium-, magnesium- or iron-carbonate.

3

carbonatite Intrusive carbonate- and alkali-rich rock, a possible source of mineralization.

chlorite schist Platy rock containing the green, mica-like mineral chlorite.

costean Trench dug to expose underlying rocks.

craton Relatively rigid and immobile part of the Earth.

Cretaceous The third and latest period of the Mesozoic era, respectively strata from that time.

Cu The chemical element copper.

cuprite A copper mineral, Cu O of red colour.

2

diatreme Volcanic/intrusive vent, such as a diamond-bearing kimberlite pipe or a lamproite.

DoIR Department of Industry and Resources in Western Australia; since 01/01/2009.

dolomite Rock consisting of calcium-magnesium carbonate.

eolian Referring to the wind’s action and the resulting sediments.

fault Fracture in rocks, with relative displacement of the sides.

g/t Gram per ton - a measure of grade or concentration.

fold belt A group of strata that has been deformed together.

galena Lead sulphide or lead glance, PbS, a common ore mineral.

gabbro A dark, coarse and even-grained plutonic (intrusive) rock.

geophysics The science and practice of measuring the physical characteristics of the Earth,

such as conductivity, resistivity and magnetic properties.

geochemistry The study of the absolute and relative abundance of elements of the Earth.

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gneiss Coarse-grained, banded metamorphic (altered) rock.

gravity anomaly Geophysical observation of the Earth’s density, locally deviating from the norm.

greywacke Sandstone-like sedimentary rock fragments in a(n ex-) claymatrix with large quartz,

feldspar and rock.

h(a)ematite An iron oxide mineral: Fe O , the principal mineral of iron ores.

2 3

helimagnetics Helicopter-borne geophysical measurement of magnetic properties of the Earth.

hydrothermal Referring to the activity of hot water and associated dissolved components.

impact crater Structure produced by impact of an asteroid or comet.

intrusive Attribute of igneous rocks which consolidated at depth, e.g. granite, gabbro.

igneous Attribute of rocks originating from hot, molten material [ignis (L.) =fire].

IOCG Iron Oxide, Copper Gold [mineralization].

jasper Cryptocrystalline, impure quartz of various colours.

K Potassium, an alkali metal.

kimberlite A variety of mica-peridotite; as pipe or dike; sometimes host to diamonds.

lithology Rock types, rock assembly.

mafic Attribute of igneous rocks dominated by magnesium and iron silicate minerals.

magmatism Development and movement of magma (hot mobile rock) within the Earth.

magnetics Study of the magnetic properties of the Earth.

malachite A copper-bearing mineral: hydrous copper carbonate, a secondary Cu-mineral.

Mesozoic Era of geologic time between Palaeozoic and Cainozoic; also strata of that era.

metamorphosed Altered by heat and pressure [referring to rocks and minerals].

metasediments Sediments altered by heat and pressure.

metasomatism Replacement of one mineral by another - of different chemical composition.

metavolcanics Volcanic rocks altered by heat and pressure.

meteorite Extraterrestrial matter which has fallen to Earth.

MINEDEX Mine site and mineral deposit database of the WA DoIR.

Mn Manganese, a metallic element.

Mt Million tons.

Na Sodium, an alkali metal.

Nb Niobium, a metallic element.

nT Nanotesla: geophysical unit of magnetic flux density.

ounce, oz. (Troy) 31.1 grams; unit of measure for precious metals such as gold, silver & platinum.

P Phosphorous, a non-metallic element, an undesirable component in iron-ore.

Paleo-, Meso-, Neo- Old-, Mid-, New -; attributes and subdivisions of geologic eras and periods.

Paleozoic One of the four eras in the geologic time scale, characterized by old life-forms.

Pb Lead, a chemical element.

Pd Palladium, a precious metal from the platinum group elements.

Permian Permian period [from Perm, in Russia], sixth and last period of the Paleozoic era.

pipe A steep cylindrical body of rock, such as of kimberlite.

ppm Parts per million [a measure or grade of concentration].

Proterozoic Geologic time before Paleozoic, characterized by the first forms of life; its rocks.


pyrite Iron pyrites, an iron sulphide of the composition FeS 2 .

pyrrhotite Magnetic pyrites.

quartz Silicium dioxide, a common rock forming mineral.

Rb Rubidium, an alkali metal.

RC Reverse Circulation (drillhole)

REO Rare Earth Oxides.

S Sulphur, an element.

schist Micaceous metamorphic rock, with sub-parallel orientation of its minerals.

shale A very fine-grained, consolidated and often laminated sediment.

silicification The introduction of or the replacement by silica (be it quartz or amorphous SiO 2 ).

siltstone A fine-grained, consolidated sediment, grain-size between sandstone and shale.

Sr Strontium, a metal.

stratiform Parallel to composing rock layers.

stratigraphy Sequence of rocks and/or their description.

stratum (pl. strata) Layer(s) [of rock].

sulphide Compound of sulphur, often a metal-compound.

syenite Intrusive igneous rock composed largely of alkalic feldspar.

Tengraph Mining tenement and petroleum title description system at DoIR.

Tertiary Earlier of the two periods of the Cenozoic era, resp. strata from this period.

ultrabasic

(ultramafic)

Igneous rock of usually dark colour, composed of ferromagnesian silicates, metallic

oxides and sulphides, containing virtually no quartz or feldspar.

unconformity Surface of erosion/non-deposition that separates younger strata from older ones.

WAMEX West Australian Mineral Exploration database of the DoIR.

Y Yttrium, a rare metal of the cerium group.

Zn Zinc, a metallic element.

Zr Zirconium, a metallic element.

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6 - Licensing in Mongolia

6 - Licensing In Mongolia

The Company holds a number of projects in

Mongolia

Mongolia is a young democratic country having

achieved independence from the Soviet Union in

1990. After a rocky transition to a market economy

during the 1990s, punctuated by frequent changes of

Government, Mongolia started to slowly put in place

the legal infrastructure to support foreign investment.

Current legal environment

The recent Chinese led commodity boom led to a

debate about how Mongolia should best manage and

profit from its mineral resources. This led to some

populist policies that resulted in increasing demands

for the Government to directly participate in mineral

projects and changes to legislation governing the

resources sector that decreased the certainty of

tenure for Companies.

Recently Mongolia’s Parliament reacted to the

increased interest in its country due to its vast

mineral resource wealth by amending its foreign

investment law so as to make it more difficult and

costly for registered foreign invested companies in

Mongolia. Additionally draft legislation has been

proposed that defines certain business sectors as

being “strategic,” thus allowing the State to control

beneficial ownership of business in these sectors.

It is believed that certain minerals or large mineral

mining projects will be regulated by this law.

In July 2009 Mongolia’s Parliament passed a new

law regulating uranium separately from other

minerals under the premise that it was a “strategic”

mineral. The new legislation allows the State to

take between 34 to 51 percent of the shares of the

companies with existing mineral exploration and

mining licences without payment. This has caused

uncertainty amongst investors and Mongolia’s

Constitutional Court is currently reviewing the

merits of two constitutional challenges that the state

participation aspect of the legislation is tantamount

to expropriation or nationalization.

The flagship Oyu Tolgoi project, owned by Ivanhoe

Mines Ltd and Rio Tinto Ltd, was central to this debate

with negotiations over the amount to which the

Government would participate in or own the project

leading to a deadlock that lasted until October 2009.

The recent signing of the Oyu Tolgoi investment

agreement is seen as a positive sign and it is hoped

that the easing tensions over foreign investment

will now abate and lead to a significant increase in

foreign investment in the country.

Figure 1:

Asphalt road leading through GMM licence 14404 towards Russia


Foreign investors

Mongolia has a foreign investment law that protects

foreign investors’ rights and gives them equal

treatment under the law, freedom to repatriate profits,

and investment agreements that stabilize taxation.

There are also currency controls in place and all

transactions for the sale of goods, services or work

must be expressed and settled in Mongolian National

Tugrik (“MNT”).

2006 Revised Minerals Law of Mongolia

Administration of exploration and mining activity in

Mongolia is largely the responsibility of the Minerals

Resource Authority (“MRA”), an administratively

subordinate agency of the Ministry of Mineral

Resources and Energy (“MMRE”), in accordance with

the 2006 Revised Minerals Law of Mongolia (“Minerals

Law”). Following is a summary of its terms:

Licencing regime

Mongolia currently has a two-part licencing

regime (for all minerals except common minerals

(construction materials) and uranium) whereby the

rights to conduct mineral exploration over a licenced

area are separated from the rights to mine/exploit.

Exploration licences are granted through a public

tender for an initial period of three years and are

renewable for two three-year periods equally a total

period of nine years. At the end of nine years, an

exploration licence must be converted into a mining

licence or the licence-holder must relinquish the

exploration licence to the State.

• Only Mongolian legal entities are entitled to hold

mineral exploration and mining licences.

• Annual fees are payable with respect to each

hectare of licenced land and exploration

licence-holders must satisfy annual expenditure

requirements to maintain its right to conduct

exploration activities in the area. Failure to satisfy

the minimum spend requirements is cause for

licence revocation.

• Exploration licence-holders must prepare an

environmental protection plan on each three

year renewal period, and report yearly on

its exploration activities, and environmental

monitoring in accordance with its environmental

protection plan, pay a reclamation bond, and

report on its safety compliance.

Conversion of Exploration Licences

• The Minerals Law gives the exploration licenceholder

an exclusive right to apply for a mining

licence over the licenced area it previously held

or a smaller portion of the same. See section 10

for Risks with respect to the Company’s licenses.

• The conversion from an exploration to a mining

licence requires that the exploration licence

holder submit a minerals reserve estimate to the

Minerals Professional Council (“MPC”) which

is an ad-hoc council under the MMRE and its

subordinate agency MRA. Upon approval of the

MPC, the exploration licence-holder is required

to submit a collection of environmental reports,

maps and pay the required stamp duty.

• MRA reviews the application, and if all matters

are in order the exploration licence is converted

to a mining licence. The initial term of a mining

licence is thirty years which is extendable for

two additional twenty year periods where the

mining licence-holder has no serious incidents of

environmental violations and the mineral reserve

supports the extension.

• The mining licence holder must submit a


feasibility study for the mining licenced area to

MRA for approval within 60 days for review by

the MPC.

At this stage in the process, the mining licenceholder

is eligible to execute a pre-mining

agreement that allows it a three year period in

which to delay mine development for purposes

of financing, development, construction, etc.

During this period, the mining licence-holder is

requirement to obtain a wide variety of permits

for construction, water use, settlement relocation,

communications, chemicals, etc.

• Prior to commencement of mining activities,

the mining licence holder is required to

obtain final approval of an ad-hoc committee

(“Mine Commission”) whose members are

jointly appointed by MME and the Ministry

of Road, Transportation, Construction and

Urban Development and the Ministry of Nature

and Tourism prior to the commencement of

commercial mine operations.

State Participation in Minerals Deposits of

Strategic Importance

The Minerals Law defines certain minerals deposits

as being of strategic importance. By definition,

a strategically important minerals deposit is any

deposit whose scope may have a potential impact

on national security, national or regional economic

and social development, or that is producing or has

the potential to produce more than five percent of

Mongolia’s total annual Gross Domestic Product.

Where the government of Mongolia determines that

the minerals deposit has the potential of having an

“impact on national security, national or regional

economic and social development,” or “has the

potential to produce more than five percent of total

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64

6 - Licensing in Mongolia

annual Gross Domestic Product,” the State is entitled

to take a percentage of the shares of the licencing

holding company. The shared participation in the

licence-holding company that exploits a minerals

deposit of strategic importance can be up to 34%

of the shares where the State has not undertaken

exploration with State funds in the minerals deposit

area, or up to 50% of the shares of the licence-holding

company where the State has used State funds on

minerals exploration in mineral deposit area.

At present there are approximately fifteen mineral

deposits across Mongolia that have been defined

as being of strategic importance, and none of the

Company’s projects are on that list.

Investment Agreements

A mining licence holder that invests more than

certain threshold amounts over the first five years

of a mining project may apply to the Government

of Mongolia to enter into an investment agreement

(“Investment Agreement”) concerning the stability of

tax rates, the right to sell products at international

market prices, a guarantee that the licence holder

may receive and dispose of income from such sales,

and provisions with respect to the amount and term

of the licence holder’s investment.

The term of each Investment Agreement will depend

on the amount of the five-year commitment.

Royalties

The Minerals Law provides for a royalty at the rate

of five percent with respect to the sales value of

minerals (other than coal and construction minerals)

that are sold, shipped for sale, or otherwise used.

The royalty rate for domestically sold coal and

construction minerals is 2.5%.

Environmental laws

Two environmental laws are applicable to the

Projects: the Law of Mongolia on Environmental

Protection (“EP Law”) and the Law of Mongolia on

Environmental Impact Assessments (“EIA Law”).

The EP Law is the primary law regulating relations

between the State, citizens, business entities and

organizations in order to guarantee the human

right to live in a healthy and safe environment, the

ecological balance between social and economic

development, the protection of the environment

for present and future generations, the proper use

of natural resources and the restoration of available

resources. Alternatively, the EIA Law regulates

relations that arise in connection with the protection

of the environment, prevention of ecological

misbalance, use of natural resources, assessment of

environmental impact and decision-making at the

start of projects.

As with all projects (mining or otherwise) undertaken

in Mongolia that may impact the environment

or human health, the Projects will be required to

submit an environmental impact assessment for

approval by the Ministry of Nature and Environment

(“MNE”) before implementation of each individual

Project. Once approved, the individual Project

will be subject to reporting to, and inspection by,

the MNE and the State Specialized Inspection

Authority, and independent agency reporting to

the Deputy Prime Minister that is responsible for all

inspection of persons (individuals, companies and

organizations), with regard to its completion of the

Project in accordance with the terms of the approved

environmental impact assessment.

Law On Prohibit The Exploration And Mining

Minerals From Beginning Of River Source, and

the Protection Area Of Water Reservoir Land

And Wood Reservoir Area (“Water Basin Law”)

In July 2009, Mongolia’s Parliament passed the

Water Basin Law which attempts to prohibit

mineral exploration and/or mining in river basins

and forested areas. According to the terms of the

Water Basin Law, the Government must define what

it determines to be a “water basin” and “forested

areas.” As yet the Government has not defined

what is meant by “water basins” and “forested

areas.” Existing exploration and mining licences in

those areas will be revoked and the licence-holder

will be compensated.

Tax Laws

In late June/early July 2006, the Mongolian

Parliament passed new legislation significantly

amending Mongolia’s tax laws providing for a more

favourable tax regime for both domestic and foreign

investors. The package of amended laws consisted

of new laws concerning business entity income

tax (“Corporate Tax Law”), personal income tax,

excise tax and value-added tax (“VAT”) and Law of

Mongolia On Windfall Tax (“Windfall Profits Tax”).

Collectively these tax amendments came into effect

on 01 January, 2007 and 12 May, 2009.

Corporate Tax Law

• All income tax rates applicable to business

entities are 10% on the first three billion MNT

(approximately US $2 million) and 25% on

amounts in excess of this amount. In September

2009, Parliament passed an amendment to the

Corporate Tax Law that allows for loss-carry

forward periods of four to eight years which is

double the current provision.

• A broad range of business expenses are allowed

as deductions in calculating taxable income.

• 10% of invested capital in certain priority sectors

can be applied as a credit against other taxes

payable.


VAT Law:

Subject to certain exemptions and other adjustments,

a VAT at the rate of 10% is payable to the Mongolian

State Government with respect to, among other

things, imported and exported goods and services

and goods sold and services rendered within

Mongolia. However, as a general rule almost all

exports are “zero-rated” (i.e. the VAT rate for exports

is 0% and the exporter can credit VAT paid to produce

the exports against other taxes payable). The list of

exempt imported items changes on an annual basis

as approved by the Mongolian Government.

Licence Number Licence Holder Issued date

1 13846X

June 27, 2008

2 13847X June 27, 2008

3 13848X June 27, 2008

4 13849X June 27, 2008

5

6

14215X

14314X

Golden Cross LLC

September 17, 2008

October 17, 2008

7 14404X November 6, 2008

8 14598X March 16, 2009

9 14593X December 30, 2008

10 15015X July 21, 2009

Table 1: Licences held by Golden Cross LLC, GMM’s 100% owned subsidiary

Windfall Profits Tax:

Mongolia’s Parliament hastily passed the Windfall

Profits Tax on copper concentrate and gold metal.

The 68% tax was based on the sales value of copper

concentrate and gold metal over a threshold market

price. This past summer, Mongolia’s Parliament

repealed the Windfall Profits Tax for all purposes

effective as of January 2011.

Figure 2: Overlooking Uvs Nuur towards the Atlas Mountains

General Mining Corporation Ltd ~ Prospectus

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7 - Independent Solicitor’s Report

7 - Independent Solicitor’s Report

Your Ref:

Our Ref:SM:90184

Document377916_2.DOC

21 October 2009

The Board of Directors

General Mining Corporation Ltd

129 Edward Street

Perth WA 6000

Dear Sirs,

Solicitors’ Report

1. INTRODUCTION

This Report is prepared for inclusion in a prospectus

to be issued by General Mining Corporation Ltd

(“Company”) for the issue of up to 40 million fully

paid ordinary shares at $0.20 each to raise up to $8

million, to be dated on or about 21 October 2009

(“Prospectus”).

This Report relates to Western Australian mining

tenements and tenement applications (“Tenements”).

An overview of the Tenements is contained in

Schedule A which is attached to and forms part of

this Report.

This Report also contains a summary of the material

contracts which affect the Tenements, in Schedule B

(“Material Contracts”).

2. SEARCHES

For the purpose of this Report, we have reviewed

Mining Tenement Register Searches” of the

Tenements provided by the Western Australian

Department of Mines and Petroleum (“DMP”). The

DMP searches were conducted on 7 October 2009.

We have obtained “Quick Appraisal” reports from

the DMP summarising information available in the

“TENGRAPH” system maintained by the DMP to

determine if any native title claims were registered

over the area of the Tenements. These searches

were also conducted on 7 October 2009.

3. OPINION

As a result of the searches and enquiries, but subject

to the assumptions and qualifications set out in this

Report, we are satisfied that, as at the date of the

relevant searches:

(a) the details of the Tenements included in

this Report are accurate as to their status and the

Company’s interest; and

(b) where an application for a Tenement has been

lodged, details included in this Report are accurate.

4. ASSUMPTIONS and QUALIFICATIONS

In this Report:

(a) we have assumed the accuracy and

completeness of the “Mining Tenement Register

Searches” and other information obtained from

DMP;

(b) we have assumed the accuracy of information

which has been provided to us by the Company;

(c) the continued holding of the Tenements is

subject to compliance with the terms and conditions

of the relevant legislation and any applicable

agreements;

(d) we have assumed the accuracy and

completeness of any instructions, documents and

information given by the Company or any of its


officers, agents or representatives;

(e) with respect to any application for the grant of

a Tenement, we express no opinion as to whether

such an application will be granted;

(f) with respect to applications which are not

capable of being legally transferred, we have

assumed a constructive trust as the means by which

a beneficial interest is created in the application;

(g) where compliance with the requirements

necessary to maintain a Tenement in good standing

is not disclosed on the searches obtained, we express

no opinion on such compliance;

(h) where plaints or objections have been lodged

against the Tenements we make no comment on the

likelihood of success of such plaints or objections;

(i) where a tenement has been granted we have

assumed that the future act provisions of the Native

Title Act 1993 (Cth) (“NTA”) have been complied

with;

(j) references in Schedule A to any area of land

are taken from details in the searches obtained. It is

not possible to verify the accuracy of the land area

without conducting a survey; and

(k) where Ministerial consent to any agreement or

dealing in relation to a Tenement is being or will

be sought, we express no opinion as to whether

such consent will be granted or the consequences of

being refused.

This Report only relates to the mining, native title and

aboriginal heritage laws applicable to the Tenements

as at the date of this Report. This Report is limited to

the matters expressly contained within it.

5. TENEMENTS GENERALLY

The Company will acquire the Tenements in

Schedule A, as a result of entering into the material

contracts summarised in Schedule B.

6. LEGISLATION

The Tenements comprise granted exploration

licences, prospecting licences and applications for

exploration licences under the Mining Act 1978 (WA)

(“Mining Act”).

Amendments to the Mining Act were passed by

Parliament on 26 October 2004 and came into effect

from 10 February 2006. Tenements applied for prior

to 10 February 2006 are subject to different terms

and conditions.

Exploration Licence

An exploration licence applied for post 10 February

2006 remains in force for a period of five years and

may be extended by an initial term of five years and

by a further period or periods of two years. At the

end of the initial term, 40 percent of the exploration

licence must be relinquished or converted to a

mining lease.

An exploration licence applied for before 10 February

2006 remains in force for a period of five years and

may be extended by a further period or periods

of one or two years on application. At the end of

the third year of the licence, half of the exploration

licence must be relinquished or converted to a

mining lease. At the end of the fourth year half of

the remaining licence must again be relinquished or

converted to a mining lease.

The holder of an exploration licence may apply for

a mining lease in relation to the same land (or part

thereof). If the exploration licence expires prior to

determination of the Mining Lease application, the

rights and obligations of the licence apply as if it is

current until the determination of the Mining Lease

application.

An exploration licence cannot be assigned or any

legal or equitable interest dealt with during the first

year of its term without the prior written consent of

the Minister for State Development (“Minister”).

Applications for Exploration Licences

Applications for exploration licences are not capable

of being transferred prior to grant.

Tenement Conditions

Tenements are granted subject to various conditions

prescribed by the Mining Act. The conditions

regulate the payment of rent and expenditure and

also reporting requirements. Additional conditions

may also be imposed, such as those to address

environmental issues.

The notes to Schedule A refer to endorsements

and conditions of particular note and are not an

exhaustive list of all the applicable conditions relating

to the Tenements. For a full list of the conditions the

DMP register should be searched.

7. LAND ACCESS

Access to much of the land in Australia for the

purpose of conducting commercial activities, such

as mining, is governed by certain Commonwealth

and State legislation which outlines procedures that

must be followed to gain access to land and also

steps that must be taken to ensure that Aboriginal

sites are protected from any damage. The applicable

legislation is summarised below.

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7 - Independent Solicitor’s Report

(a) Native Title

On 3 June 1992, the High Court of Australia held

in Mabo v. Queensland (no. 2) that the common

law of Australia recognises a form of native title.

The Commonwealth Parliament responded to the

Mabo decision by passing the NTA which came into

operation on 1 January 1994.

(b) Native Title Claim Process

Persons claiming to hold native title may lodge an

application for determination of native title with the

Federal Court. The Federal Court will then refer

the application to the Native Title Registrar of the

National Native Title Tribunal (“NNTT”) for the

application of the registration test. If the Native Title

Registrar is satisfied that the lodged claim meets the

registration requirements set out in the NTA, it will

be entered on the Register of Native Title Claims

(“Register”) maintained by the NNTT. Registered

Claimants are given certain procedural rights in

relation to “Future Acts” under the NTA including

the “right to negotiate” procedure.

(c) Future Act Procedures

A Future Act is a proposed activity or development

on land and/or waters that may affect native title,

including the grant of mining or exploration

tenements granted post 1 January 1994. Claimants’

gain the right to negotiate in relation to the grant of

those interests if their native title claim is registered

at the time the Government issues a notice (known

as a section 29 notice), stating it intends to do the act

(i.e. grant the tenement) or is registered within four

months of that time.

Claims which do not meet the registration

requirements are recorded on the Schedule of

Applications Received. Such claims may be

entered on the Register at a later date if additional

information is provided by the claimant that satisfies

the Registration Test.

(d) Right to Negotiate Procedure

Under the right to negotiate procedures, parties

are required to negotiate in relation to the grant of

the proposed Future Act, eg the grant of a mining

tenement. Negotiations are initiated to obtain the

agreement of the relevant native title parties to the

carrying out of the proposed Future Act on the native

title land. The right to negotiate procedure consists of

a statutory six month period of negotiation between

the relevant government party, the native title party

and the grantee, during which time the parties must

negotiate in good faith.

Generally, the grantee party and the registered native

title claim group come to an agreement in relation

to the grant of the tenement. If parties cannot reach

agreement as to the terms of grant, a negotiation

party may apply to the NNTT (as the arbitral body)

to make a determination as to whether the grant may

proceed (and if so, on what conditions). Subject to

Federal Ministerial intervention the agreement of the

parties, or the decision of the NNTT, will determine

whether the mining interest is granted.

It is important to note that where it is proposed to

convert from an exploration licence or prospecting

lease to a mining lease and native title claims are

lodged and registered, it will be necessary to go

through the right to negotiate process with any native

title holders or claimants whose claims are accepted

for registration at the relevant time, unless the

Company enters into agreement with the claimants

relating to conversion.

(e) Expedited Procedure

Some Future Acts might have minimal impact

on the native title rights and interests and many

qualify for “fast tracking”. This process is known as

“expedited procedure” and it is State Government

policy that it will apply to the grant of exploration

and prospecting licences in Western Australia where

the applicant has executed a Regional Standard

Heritage Agreement (“RSHA”) or has an existing

Alternative Heritage Agreement (“AHA”) in place. In

the absence of such an agreement the applications

will be processed under the right to negotiate regime

(discussed above).

A RSHA or AHA is drafted to address Aboriginal

heritage issues on the area the subject of a tenement.

They generally provides for the native title party to

withdraw their objection to the expedited procedure

and consent to the grant of the tenement upon the

terms of the agreement. Amongst other things, the

RSHA or AHA will generally require the conduct

of a heritage survey prior to the conduct of most

exploration activity. A heritage survey involves

members of the claim group and generally an

anthropologist or heritage officer walking over

the land and discussing the proposed exploration

activity and its impact on any heritage issues and

identifying any areas to be protected or excluded

from some activity. The costs of the survey are met

by the tenement holder.


If the proposed grant is advertised under the

expedited procedure, native title parties can lodge

an objection. An objection by a native title party is

not an objection to the tenement being granted, but

is an objection to the application being fast-tracked.

If there is no objection lodged, the tenement can be

granted. If an objection is lodged to the grant of the

tenement under the expedited procedure, the parties

may either negotiate and reach agreement, or apply

to the NNTT for a determination.

Some claimant groups will lodge an objection

despite a RSHA being executed. Generally this

is because they will seek a more ‘favourable’

agreement. In these circumstances it is open to

the tenement applicant to agree to additional terms

with the claimant group, or apply to the NNTT for

a determination. Generally, where the applicant has

executed a RSHA or AHA and there are no registered

sites in the area of the tenement then the NNTT will

determine the tenement can be granted.

(f) Native Title Status of the Tenements

The Tenements relate to land which is currently

the subject of native title claims and native title

determinations. Those claims and determinations

are identified in Schedule A. It is also possible that

additional claims may be made in the future over the

area of the Tenements.

Some of the tenements also relate to Aboriginal

Reserve Land. These are identified in Schedule A and

a summary of the terms of the Deed of Agreement

relating to the area is contained in Schedule B.

In relation to granted or live tenements we presume

that the future act provision of the NTA have been

complied with prior to grant, where we have been

provided with heritage or native title agreements

in relation to the tenement they are identified in

Schedule A. Where the heritage agreements contain

terms broader than those contained in the RSHA’s a

summary of the agreement is included in Schedule B

or where further monies are payable they are noted

in Schedule A.

In relation to the tenement applications, where we

have been advised by the Company that heritage

agreements have been received but not yet executed

by the Company, we presume that the tenement

holders are in the process of negotiating agreements

in relation to their grant. This is noted in Schedule A.

To the extent that native title has not been

extinguished with respect to the underlying land,

it is important to note that where it is proposed to

convert from an exploration or prospecting licence

to a mining lease and native title claims are lodged

and registered, it will be necessary to go through

the right to negotiate process with any native title

holders or claimants whose claims are accepted for

registration at the relevant time, unless the Company

enters into agreement with the claimants relating to

conversion.

We have not undertaken the considerable historical,

anthropological and ethnographic work that would

be required to determine the likelihood that existing

native title claims may be successful, or the possibility

of any further native title claims being made in the

future. In addition, we have not undertaken any

investigations that would determine the content of

any individual rights claimed in or under any native

title claim over the Tenements.

(g) Protection of Aboriginal Sites

Tenements in Western Australia are granted subject

to an endorsement reminding the tenement holder

of its obligation to comply with the requirements of

the Aboriginal Heritage Act 1972 (WA) (“Heritage

Act”).

The Heritage Act protects sites and areas of

significance to Aboriginal people. The Minister of

Indigenous Affair’s consent is required where any

use of land is likely to result in the excavation of

or damage to an Aboriginal site or any object on or

under that site.

There is no requirement or need for a site to be

registered in any public manner or be in any way

acknowledged as an Aboriginal site for it to qualify

as an Aboriginal site for the purposes of the Heritage

Act. A register of sites is maintained by the Aboriginal

Affairs Department of Western Australia.

We have not conducted a search of that register

for the purposes of this Report. The Heritage Act

applies to all Aboriginal sites and objects, whether or

not they are registered under the Heritage Act.

In respect of any Aboriginal sites that are ultimately

identified on any of the Tenements, the Company

will need to ensure that any interference with such

sites is in strict conformity with the provisions of the

Heritage Act.

The Commonwealth Aboriginal and Torres Strait

Islander Heritage Protection Act 1984 also afford

some protection to Aboriginal sites.

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7 - Independent Solicitor’s Report

This Act applies to all of the Tenements and is aimed

at the preservation and protection from desecration

of significant Aboriginal areas and significant

Aboriginal objects. An area or object is found to

be desecrated if it is used or treated in a manner

inconsistent with Aboriginal tradition.

We have not conducted any searches in this regard.

8. MATERIAL CONTRACTS SUMMARY

We have examined the Material Contracts relevant to

the Tenements, a summary of which is contained in

Schedule B to this Report. We have assumed:

(a) that the Material Contracts have been duly

executed and have been, or are, in the course of

being stamped and lodged in compliance with the

relevant legislation;

(b) the authenticity of all seals and signatures;

(c) all of the Material Contracts are within the

capacity and powers of, and have been validly

authorised, executed and delivered by and are

binding on each of the parties to them;

(d) the Material Contracts comprise the entire

agreement of the parties with respect to the subject

matter of the Material Contract; and

(e) each party to the Material Contracts had, and

has full corporate power and authority to observe

and perform all of its obligations under the Material

Contracts.

9. CONSENTS

This Report is provided solely for the benefit of

the Company and the directors of the Company in

connection with the issue of the Prospectus and is

not to be relied on or disclosed to any other person

or used for any other purpose or quoted or referred

to in any public document without our prior written

consent.

Allion Legal consents to being named in this

Prospectus as the authors of this Report.

Allion Legal has given, and has not before the

lodgement of this Prospectus, withdrawn its consent

to the inclusion of this Report in the Prospectus.

10. DISCLOSURE OF INTEREST

Allion Legal will be paid normal and usual

professional fees for the preparation of this Report

and related matters, as set out elsewhere in the

Prospectus.

Yours faithfully

ALLION LEGAL


SCHEDULE A - TENEMENTS

Tenement

Number and

Type

Registered Holder/

Applicant

Application

Date

Grant Date Expiry Date Encumbrances Tenement

Notes

E69/1869 Galaxy Resources Ltd 15.06.06 14.06.11 A. 1, 8

E69/1870 Galaxy Resources Ltd 15.06.06 14.06.11 A. 1, 8

E69/1871 Galaxy Resources Ltd 15.06.06 14.06.11 A. 1, 8

Native

Title

Notes

E69/2369 Quaalup Investments

Pty Ltd

17.01.08 16.1.13

ELA69/2616 General Mining Corp.

Ltd

21.04.09 10

ELA69/2649 General Mining Corp.

Ltd

22.06.09

ELA69/2650 General Mining Corp.

Ltd

22.06.09 2

E80/3887 Quaalup Investments

Pty Ltd

8.09.08 7.09.13 a, b 3,7

E80/3985 Quaalup Investments

Pty Ltd

8.09.08 7.09.13 a,b 3,7

ELA80/3986 Quaalup Investments

Pty Ltd

29.06.07 4, 10

E80/3663 Pegmont Mines NL 16.09.08 15.09.13 c 5,6, 9

E80/3662 Pegment Mines NL 7.02.08 6.02.13 c, d

Encumbrances

A. Application for exemption from drop off lodged but not yet determined.

Tenement Notes

a. The prior written consent of the Minister responsible for the Mining Act 1978 must be obtained

before commencing any exploration activities on the Use and Benefit of Aboriginal Inhabitants

Reserve 40783.

b. Entry on Use and Benefit of Aboriginal Inhabitants Reserve 40783 and activities undertaken

on the licence by any non-Aboriginal lessee, licensee, employee, contractor or agent must be

authorised by an entry permit issued under the provisions of the Aboriginal Affairs Planning

Authority Act 1972.

c. Subject to additional conditions under the Waters and Rivers Commissions Act 1995 and Rights

in Water and Irrigation Act 1914.

d. Consent to mine on Regeneration of Eroded Areas in Ord River Reserve No 28538 is subject to

additional conditions.

General Mining Corporation Ltd ~ Prospectus

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7 - Independent Solicitor’s Report

Native Title Notes

1. Wiluna Native Title Claim (NNTT no WC99/24).

2. Mirning Native Title Claim (NNTT no WC01/001).

3. Kiwirrurra Native title Determination (FederalCourt No WAD6019_98).

4. Ngururrpa Native Title Determination (Federal Court No WC06/05).

5. Malarngowen Native Title Claim (NNTT no WC99/44).

6. Purnululu Native Title Claim (NNTT no WC94/011).

7. Deed of Agreement between Tjamu Tjamu (Aboriginal Corporation), Ngaanyatjarra Land Council

(Aboriginal Corporation) and Quaalup Investments Pty Ltd undated. It is our understanding that the

agreement was dated on or about November 2007.

8. Heritage Agreement between Dusty Stevens, Jimmy Morgan, Friday Jones and Gaalxy Resources

Limited dated 24 August 2005.

9. Native Title, Heritage Protection and Mineral Exploration Agreement for Purnululu Lands between

Kimberly Land Council Aboriginal Corporation and Pegmont Mines NL dated 10 July 2008. In addition

to the standard heritage survey requirements this agreement requires the tenement holder to pay

to the Traditional Owners an annual amount equivalent to two and a half percent of the Minimum

Annual Expenditure on the tenement.

10. Heritage Agreements have been provided to the tenement holder but then have not, as yet, been

executed.

SCHEDULE B - MATERIAL CONTRACTS

AFFECTING THE TENEMENTS

Deed of Agreement between Tjamu Tjamu

(Aboriginal Corporation), Ngaanyatjarra Land Council

(Aboriginal Corporation) and Quaalup Investments

Pty Ltd dated on or about November 2007

This Deed provides for consent to the grant of

E80/3887 and E80/3985 (“Deed Tenements”) under

the NTA, the Mining Act and the Aboriginal Affairs

Planning Authority Act 1972. The land the subject

of the Deed Tenements is Aboriginal Reserve Land

and is leased by the Aboriginal Land Trust to the

Ngaanyatjarra Land Council. It is also the subject of

a determination that the Tjamu Tjamu (Aboriginal

Corporation) holds native title rights and interests

over the area on behalf of the common law holders.

The Deed provides for consent to the grant of the

Deed Tenements and any replacement tenement,

including the grant of a mining lease over the area of

the Deed Tenement, subject to the tenement holder

complying with the terms of the Deed.

The Deed requires, amongst other things, the

tenement holder to pay to the Land Council $20,000

on execution, $50,000 within seven days of the first

anniversary of the Deed, and annual payments from

the second anniversary of the Deed of $75,000. In

addition the tenement holder is obliged to pay to the

Land Council 5% of the total exploration expenditure

for the year where that amount would exceed the

annual payment made to the Land Council.

In addition the Deed places heritage survey obligation

on the tenement holder (all costs of the surveys

being met by the tenement holder); environmental

protection and rehabilitation obligations including

the use of monitoring teams; and obligations to use

best endeavours to employ and give contractual

preference to members of the native title group.

The Deed also provides that the tenement holder

will not to lodge an application under s18 of the

Aboriginal Heritage Act without the consent of the

Land Council.

Tenement sale agreement for acquisition

from Quaalup Investments Pty Ltd dated 19

December 2007

Under the tenement sale agreement, Quaalup

has agreed to sell exploration licence applications

E80/3887, E80/3985, E80/3986, E69/2369, E45/3086,

E45/3087 and E45/3012 to the Company in

consideration for the issue of 3,700,000 Shares and

1,800,000 Options each with an exercise price of

$0.20 and an expiry dated of three years from the

date of grant. Completion occurred on or about 20


December 2007. Pending grant, Quaalup holds the

applications on trust.

Tenement sale agreement for acquisition

from Niraan Punnya de Silva dated 19

December 2007

Under the tenement sale agreement, Niraan de Silva

has agreed to sell exploration licence applications

E45/3087 and E45/3086 to the Company in

consideration for the issue of 300,000 Shares and

150,000 Options each with an exercise price of

$0.20 and an expiry dated of three years from the

date of grant. Completion occurred on or about

20 December 2007. Pending grant, Niraan de Silva

holds the applications on trust.

Tenement sale agreement for acquisition

from Pegmont Mines, R Wanless, M Dowling

and D Dowling dated 19 January 2008

Under the tenement sale agreement, the vendors

have agreed to sell exploration licence applications

E80/3662 and E80/3663 to the Company in

consideration for the issue of 1,000,000 Shares and

1,000,000 Options each with an exercise price of

$0.20 and an expiry dated of three years from the

date of grant. Completion occurred on or about 20

December 2007. Pending grant, the vendors hold

the applications on trust.

Tenement sale agreement – acquisition 50%

Shoemaker project from Galaxy Resources

Limited dated 30 June 2009

Under the tenement sale agreement, Galaxy has

agreed to sell a 50% interest in exploration licences

E69/1869-I, E69/1870 and E69/1871-I and all relevant

mining information in consideration for $100,000,

5,000,000 Shares and 2,500,000 Options each with

an exercise price of $0.20 and an expiry date three

years from completion of the sale. Completion is

conditional upon, amongst other things, in principle

approval for the Company to either be admitted to

the Official List of the ASX or completing a capital

raising of $3,000,000.

Joint venture agreement Shoemaker

project with Galaxy Resources Limited

dated 30 June 2009

The parties agree to establish an unincorporated joint

venture to explore exploration licences E69/1869-I,

E69/1870 and E69/1871-I with effect from the

Company acquiring an interest in those licences.

The Company will manage and sole fund all

exploration costs until completion of a definitive

feasibility study. The Company will also be required

to contribute to all remaining joint venture costs on

a pro rata basis to its participating interest. A party

may withdraw from the joint venture upon no less

than 20 business days prior to the completion of a

current expenditure program.

Galaxy and the Company have agreed that, if the

Company spends $1,000,000 of the exploration

costs within the first two years, it will increase its

participating interest to 80% interest. Following

a decision to mine, Galaxy must elect to either

contribute to mining or offer its interest to the

Company at a purchase price to be agreed to

determined by an independent expert.

The joint venture agreement contains the usual preemptive

rights and default clauses ordinarily found

in an agreement of its nature.

General Mining Corporation Ltd ~ Prospectus

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8 - Independent Accountant’s Report

8 - Independent Accountant’s Report

23 October 2009

The Directors

General Mining Corporation Limited

129 Edward Street

PERTH WA 6000

Dear Sirs

RE: INVESTIGATING ACCOUNTANT’S REPORT

1. Introduction

This report has been prepared at the request of the Directors of General Mining Corporation Limited (“GMM” or “the

Company”) for inclusion in a Prospectus to be dated on or around 16 November 2009 (“the Prospectus”) relating

to the proposed issue by GMM of 40,000,000 shares to be issued at a price of 20 cents per share to raise up to

$8,000,000. The minimum subscription is $4,000,000 (20,000,000 shares).

2. Basis of Preparation

This report has been prepared to provide investors with information on historical results, the statement of financial

position (balance sheet) of GMM and the pro-forma consolidated statement of financial position of GMM as noted

in Appendix 2. The historical and pro-forma financial information is presented in an abbreviated form, insofar as

it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial

reports in accordance with the Corporation Act 2001. This report does not address the rights attaching to the

securities to be issued in accordance with the Prospectus, nor the risks associated with the investment. Stantons

International Securities has not been requested to consider the prospects for the GMM Group, the securities on offer

and related pricing issues, nor the merits and risks associated with becoming a shareholder and accordingly, has

not done so, nor purports to do so. Stantons International Securities accordingly takes no responsibility for those

matters or for any matter or omission in the Prospectus, other than responsibility for this report. Risk factors are set

out in Section 10 of the Prospectus.


3. Background

GMM was incorporated on 31 May 2007 as General

Mining Corporation Pty Ltd. The initial capital issued

to the promoters was 3,000,000 shares and in the

year ended 30 June 2007 a further 100,000 shares

were issued to raise $5,000. The Company converted

to a public company and altered its constitution in

November 2007.

During the year ended 30 June 2008, the Company

has issued a total of 4,500,000 shares to seed

capitalists to raise a gross $225,000 and also issue a

further 5,000,000 shares at 5 cents each ($250,000)

as a result of acquiring new mineral tenements in

Australia. During the year ended 30 June 2009, the

Company issued 5,900,000 shares at 10 cents each

to seed investors to raise a gross $590,000. A

further 300,000 shares and 300,000 share Options

(Options issued in October 2009) were issued to a

broker as capital raising costs ($43,770) and a further

200,000 shares were issued to extinguish a liability

of $20,000. In September 2009, the Company issued

a further 3,000,000 shares at 12 cents each to raise

a gross $360,000. As part of the latter capital raising

it was agreed to issue 100,000 shares and 100,000

share Options, exercisable at 20 cents each on or

before 31 August 2014 to a Broker as capital raising

costs of $17,870.

In the year ended 30 June 2008 GMM formed a

subsidiary named Golden Cross Company LLC

(“Golden Cross) incorporated in Mongolia for

$11,000. Golden Cross has pegged and applied for

various mineral tenement concessions in Mongolia.

200,000 shares were issued to a third party once

certain Mongolian tenements were granted to

Golden Cross.

The Company in October 2009 entered into an

employment contract with Dr. Boris Matveev

(“Matveev”) to act as the Managing Director of the

Company. The basic terms (from 1 January 2010)

are to be a salary of $220,000 inclusive of statutory

superannuation from 1 January 2010. Six months

notice is required by either party to terminate the

employment. In the meantime, he is providing part

time consultancy services to the Company at a daily

rate of $1,000. Subject to shareholder approval,

Matveev is to be granted 1,500,000 Options

exercisable at 20 cents each, on or before 2 years

from grant date, 1,500,000 Options exercisable at 40

cents each, on or before 2 years from grant date and

1,500,000 Options exercisable at 60 cents each, on

or before 2 years from grant date. The Options will

lapse in the event of the termination of the Executive

Agreement.

In July 2009, the Company signed a tenement sale

agreement and a joint venture agreement with Galaxy

Resources Limited (“Galaxy”) whereby the Company

will acquire a 50% interest in the Shoemaker Iron Ore

Project by paying Galaxy $100,000 in cash and the

issue of $1,000,000 of shares in GMM at a deemed 20

cents per share (5,000,000 shares). In addition GMM

will issue 2,500,000 share Options to Galaxy as part

of the acquisition cost and each share option is to

be exercisable at 20 cents each, on or before 3 years

from issue date. The value ascribed to the issue

of the share Options to Galaxy is $170,000. GMM

can earn a further 30% interest in the Shoemaker

Iron Ore Project through expenditure of $1,000,000

within two years. The acquisition is subject to GMM

completing a capital raising of $3,000,000 or GMM

successfully lists on the ASX. GMM is to sole fund

expenditure until such time a feasibility study is

completed and if this eventuates, Galaxy will then

contribute its proportional share of joint venture

costs.

Potential investors should read the Prospectus in full

that includes two Independent Consulting Geologist’s

Reports (one on Australian tenements and the other

on Mongolian tenements) and an Independent

Solicitors’ Report. We make no comments as to

ownership or values of the current and proposed

mineral tenement interests of the GMM Group.

Further details on all significant contracts entered into

by the Company since incorporation are referred to

in the Independent Solicitors’ Report included in the

Prospectus.

4. Scope of Examination

You have requested Stantons International Securities

to prepare an Independent Accountant’s Report on:

a) The consolidated results (statement of financial

performance) of the GMM Group for the year ended

30 June 2009;

b) The consolidated statement of financial position

of GMM as at 30 June 2009; and

c) The consolidated pro-forma statement of

financial position of GMM at 30 June 2009 adjusted

to include funds to be raised by the Prospectus and

the completion of transactions referred to in note 2

of Appendix 3.

All of the financial information referred to above has

not been audited however has been subject to audit

review. The Directors of GMM are responsible for

the preparation and presentation of the historical

and pro-forma financial information, including the

General Mining Corporation Ltd ~ Prospectus

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8 - Independent Accountant’s Report

determination of the pro-forma transactions. We

have however examined the financial statements and

other relevant information and made such enquiries,

as we considered necessary for the purposes

of this report. The scope of our examination

was substantially less than an audit examination

conducted in accordance with Australian Auditing

Standards and accordingly, we do not express such

an opinion. Our examination included:

a) Discussions with Directors and other key

management of GMM;

b) Review of contractual arrangements;

c) A review of publicly available information; and

d) A review of work papers, accounting records and

other documents.

5. Opinion

In our opinion, the pro-forma consolidated statement

of financial position as set out in Appendix 2

presents fairly, the pro-forma consolidated statement

of financial position of GMM as at 30 June 2009 in

accordance with the accounting methodologies

required by Australian Accounting Standards on

the basis of assumptions and transactions set out

in Appendix 3. No opinion is expressed on the

historical results and statements of financial position,

as shown in Appendix 1, except to state that nothing

has come to our attention which would require any

further modification to the financial information

in order for it to present fairly, the statements of

financial position as at 30 June 2009 and the results

of the period identified.

To the best of our knowledge and belief, there have

been no other material items, transactions or events

subsequent to 30 June 2009 that have come to our

attention during the course of our review which

would cause the information included in this report

to be misleading.

6. Other Matters

At the date of this report, Stantons International

Securities or Stantons International do not have any

material interest in GMM either directly or indirectly,

or in the outcome of the offer. Stantons International

were appointed as auditors of GMM in November

2008. Stantons International Securities and Stantons

International were not involved in the preparation

of any other part of the Prospectus, and accordingly,

make no representations or warranties as to the

completeness and accuracy of any information

contained in any other part of the Prospectus.

Stantons International Securities consents to the

inclusion of this report (including Appendices 1 to 3)

in the Prospectus in the form and content in which

it is included. At the date of this report, this consent

has not been withdrawn.

Yours faithfully

STANTONS INTERNATIONAL SECURITIES

J P Van Dieren - FCA

Director


Investigating Accountant’s Report

APPENDIX 1 – UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

GMM Consolidated

Year ended 30 June 2009

$

Interest income 72

Foreign exchange losses (15,218)

General, consulting and administration costs (56,210)

Depreciation (687)

Consultancy and secretarial costs (133,708)

Employee/Director costs (212,923)

Exploration costs written off (498,240)

International travel and other costs (49,249)

Net (loss) before tax (966,163)

Income tax expense attributable to net loss -

Net (loss) after tax (966,163)

APPENDIX 2 – UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Note GMM Consolidated

30 June 2009 - $

Pro-forma GMM Consolidated

30 June 2009 - $

Current Assets

Cash assets 3 104,953 7,411,005

Receivables 4 18,210 18,210

Total Current Assets 123,163 7,429,215

Non Current Assets

Capitalised acquisition costs 5 - 1,270,000

Investments 6 - -

Fixed assets 10,939 8,000

Total Non Current Assets 10,939 1,278,000

Total Assets 134,102 8,707,215

Current Liabilities

Trade and other payables 7 272,706 -

Short term borrowings 8 13,721 -

Total Current Liabilities

Non Current Liabilities

286,427 -

Owing to GMM 6,14 - -

Total Non Current Liabilities - -

Total Liabilities 286,427 -

Net Assets (Liabilities) (152,325) 8,707,215

Equity

Issued capital 8 1,074,360 9,934,049

Option Reserve 9 16,843 274,633

Translation reserve 26,435 26,435

Accumulated losses 10 (1,269,963) (1,527,902)

Total Equity (Deficiency) (152,325) 8,707,215

General Mining Corporation Ltd ~ Prospectus

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8 - Independent Accountant’s Report

APPENDIX 3

NOTES TO THE UNAUDITED STATEMENT

OF FINANCIAL PERFORMANCE AND

STATEMENTS OF FINANCIAL POSITION

1. Statement of Significant Accounting

Policies

(a) Basis of Accounting

The unaudited consolidated Statement of Financial

Performance and unaudited consolidated Statements

of Financial Position have been prepared in

accordance with applicable accounting standards, the

Corporations Act 2001 and mandatory professional

reporting requirements in Australia (including the

Australian equivalents of International Financial

Reporting Standards) and we have made such

disclosures as considered necessary. They have also

been prepared on the basis of historical cost and do

not take into account changing money values. The

accounting policies have been consistently applied,

unless otherwise stated. The financial statements

have been prepared on a going concern basis that is

dependent on the IPO being successful and/or the

Company raising additional seed capital to continue

in business.

(b) Income Tax

The charge for current income tax expense is based on

the profit for the year adjusted for any non assessable

or disallowed items. It is calculated using tax rates

that have been enacted or are substantially enacted

as at balance date. Deferred tax is accounted for

using the balance sheet liability method in respect of

temporary differences arising between the tax bases

of assets and liabilities and their carrying amounts in

the financial statements. No deferred income tax will

be recognised from the initial recognition of an asset

or liability, excluding a business combination, where

there is no effect on accounting or taxation profit

or loss. Deferred income tax assets are recognised

to the extent that it is probable that the future tax

profits will be available against which deductible

temporary differences will be utilised. The amount

of the benefits brought to account or which may be

realised in the future is based on the assumption that

no adverse change will occur in the income taxation

legislation and the anticipation that the economic

unit will derive sufficient future assessable income

to enable the benefits to be realised and comply

with the conditions of deductibility imposed by law.

(c) Exploration, Evaluation and Development

Expenditure

Expenditure incurred during exploration and the

early stages of evaluation of new areas of interest

and costs of acquisition is capitalised to areas of

interest and carried forward where right of tenure

of the area of interest is current and they are

expected to be recouped through sale or successful

development and exploitation of the area of interest

or, where exploration and evaluation activities in the

area of interest have not yet reached a stage that

permits reasonable assessment of the existence of

economically recoverable reserves. When an area

of interest is abandoned or the directors decide

that it is not commercial, any accumulated costs in

respect of that area are written off in the financial

period the decision is made. Each area of interest is

also reviewed at the end of each accounting period

and accumulated costs written off to the extent that

they will not be recoverable in the future. Where

projects have advanced to the stage that directors

have made a decision to mine, they are classified as

development properties. When further development

expenditure is incurred in respect of a development

property, such expenditure is carried forward as part

of the cost of that development property only when

substantial future economic benefits are established.

Otherwise such expenditure is classified as part of the

cost of production or written off where production

has not commenced.

(d) Plant and Equipment

Each class of property, plant and equipment is carried

at cost or fair value, less where applicable, any

accumulated depreciation and impairment losses.

The carrying amount of the plant and equipment is

reviewed annually by the Directors to ensure it is not

in excess of the recoverable amount of these assets.

The recoverable amount is assessed on the basis of

the expected net cash flows that will be received

from the assets employed and their subsequent

disposal. The expected net cash flows have been

discounted to their present value in determining

recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including

buildings and capitalised leased assets, but excluding

freehold land, is depreciated on a straight line basis

over their useful lives to the Company commencing

from the time the asset is held ready for use. The

asset’s residual value and useful lives are reviewed

and adjusted if appropriate, at each balance sheet

date.

An asset’s carrying value is written down immediately

to its recoverable amount if the asset’s carrying value

is greater than the estimated recoverable amount.

Gains and losses on disposal are determined by

comparing proceeds with the carrying amount.


These gains and losses are included in the income

statement.

(e) Trade and other accounts payable

Trade and other accounts payable represent the

principal amounts outstanding at balance date, plus,

where applicable, any accrued interest.

(f) Recoverable Amount of Non Current Assets

The carrying amounts of non-current assets are

reviewed annually by Directors to ensure they are

not in excess of the recoverable amounts from those

assets. The recoverable amount is assessed on the

basis of the expected net cash flows, which will be

received from the assets employed and subsequent

disposal. The expected net cash flows have been or

will be discounted to present values in determining

recoverable amounts.

(g) Operating Revenue

Revenue represents interest received and

reimbursements of exploration expenditures.

(h) Issued Capital

Ordinary Shares are classified as equity.

Incremental costs directly attributable to the issue

of new shares or Options are shown in equity as a

deduction, net of tax, from the proceeds. Incremental

costs directly attributable to the issue of new shares

or Options, or for the acquisition of a business, are

included in the cost of the acquisition as part of the

purchase consideration.

(i) Principles of Consolidation

The consolidated financial statements comprise the

financial statements of GMM and its subsidiary (“the

Group”). The financial statements of the subsidiary

are prepared for the same reporting period as

the parent company, using consistent accounting

policies.

Adjustments are made to bring into line any dissimilar

accounting policies that may exist. All intercompany

balances and transactions, including unrealised

profits arising from intra-group transactions,

have been eliminated in full. Unrealised losses

are eliminated unless costs cannot be recovered.

Subsidiaries are consolidated from the date on

which control is transferred to the Group and cease

to be consolidated from the date on which control

is transferred out of the Group. Where there is loss

of control of a subsidiary, the consolidated financial

statements include the results for the part of the

reporting period during which GMM has control.

(j) Employee benefits

Provision is made for employee benefits accumulated

as a result of employees rendering services up to the

reporting date. These benefits include wages and

salaries, annual leave, and long service leave.

Liabilities arising in respect of wages and salaries,

annual leave and any other employee benefits

expected to be settled within twelve months of

the reporting date are measured at their nominal

amounts based on remuneration rates which are

expected to be paid when the liability is settled. All

other employee benefit liabilities are measured at the

present value of the estimated future cash outflow

to be made in respect of services provided by

employees up to the reporting date. In determining

the present value of future cash outflows, the market

yield as at the reporting date on national government

bonds, which have terms to maturity approximating

the terms of the related liability, are used.

(k) Share Based Payments

The Group provides benefits to employees (including

Directors) of the Group in the form of share-based

payment transactions, whereby employees render

services in exchange for shares or rights over

shares (“equity-settled transactions”). The cost of

these equity-settled transactions with employees is

measured by reference to the fair value at the date at

which they are granted. The fair value is determined

by an internal valuation using Black-Scholes or

Binomial option pricing models.

The cost of equity-settled transactions is recognised,

together with a corresponding increase in equity,

over the period in which the performance

conditions are fulfilled, ending on the date on

which the relevant employees become fully entitled

to the award (“vesting date”). The cumulative

expense recognised for equity-settled transactions

at each reporting date until vesting date reflects (i)

the extent to which the vesting period has expired

and (ii) the number of awards that, in the opinion

of the directors of the Group, will ultimately vest.

This opinion is formed based on the best available

information at balance date. No adjustment is made

for the likelihood of market performance conditions

being met as the effect of these conditions is included

in the determination of fair value at grant date.

No expense is recognised for awards that do not

ultimately vest, except for awards where vesting

is conditional upon a market condition. Where

an equity-settled award is cancelled, it is treated

as if it had vested on the date of cancellation, and

any expense not yet recognised for the award is

recognised immediately. However, if a new award is

substituted for the cancelled award, and designated

as a replacement award on the date that it is granted,

the cancelled and new award are treated as if they

were a modification of the original award.

General Mining Corporation Ltd ~ Prospectus

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8 - Independent Accountant’s Report

(l) Critical accounting estimates & judgements

In preparing this Financial Report, the Company

has been required to make certain estimates and

assumptions concerning future occurrences. There is

an inherent risk that the resulting accounting estimates

will not equate exactly with actual events and results.

Significant accounting judgements

In the process of applying the Group’s accounting

policies, management has made the following

judgements, apart from those involving estimations,

which have the most significant effect on the

amounts recognised in the financial statements:

Capitalisation of exploration and evaluation

expenditure

The Group has capitalised significant exploration and

evaluation expenditure on the basis either that this is

expected to be recouped through future successful

development (or alternatively sale) of the Areas

of Interest concerned or on the basis that it is not

yet possible to assess whether it will be recouped.

Significant accounting estimates and

assumptions

The carrying amounts of certain assets and

liabilities are often determined based on estimates

and assumptions of future events. The key

estimates and assumptions that have a significant

risk of causing a material adjustment to the

carrying amounts of certain assets and liabilities

within the next annual reporting period are:

Impairment of capitalised exploration and

evaluation expenditure

The future recoverability of capitalised exploration

and evaluation expenditure is dependent on an

number of factors, including whether the Company

decides to exploit the related lease itself, or, if

not, whether it successfully recovers the related

exploration and evaluation asset through sale.

Factors that could impact the future recoverability

include the level of reserves and resources,

future technological changes, costs of drilling and

production, production rates, future legal changes

(including changes to environmental restoration

obligations) and changes to commodity prices. As

at 30 June 2009, the carrying value of capitalised

exploration and evaluation expenditure is $nil

(m) Investments and other financial assets

The Company classifies its investments in the

following categories: financial assets at fair value

through profit and loss, loans and receivables,

held-to-maturity investments and available-for-sale

financial assets. The classification depends on the

purpose for which the investments were acquired.

Management determines the classification of its

investments at initial recognition and, in the case of

assets classified as held-to-maturity, re-evaluates this

designation at each reporting date.

Financial assets at fair value through profit and

loss

Financial assets at fair value through profit and loss

are financial assets held for trading. A financial asset

is classified in this category if acquired principally

for the purpose of selling in the short term. Assets

in this category are classified as current assets.

Loans and receivables

Loans and receivables are non-derivative financial

assets with fixed or determinable payments that are

not quoted in an active market. They are included

in current assets, except for those with maturities

greater than 12 months after the balance sheet date

which are classified as non-current assets. Loans

and receivables are included in trade and other

receivables in the statement of financial position.

Held-to-maturity investments

Held-to-maturity investments are non-derivative

financial assets with fixed or determinable

payments and fixed maturities that the Company’s

management has the positive intention and ability

to hold to maturity. Held-to-maturity investments

are included in non-current assets, except for

those with maturities less than 12 months from the

reporting date, which are classified as current assets.

Available-for-sale financial assets

Available-for-sale financial assets, comprising

principally marketable equity securities, are nonderivatives

that are either designated in this category

or not classified in any of the other categories. They

are included in non-current assets unless management

intends to dispose of the investment within 12

months of the statement of financial position date.

Recognition and derecognition

Regular purchases and sales of financial assets are

recognised on trade date – the date on which the

Company commits to purchase or sell the asset.

Investments are initially recognised at fair value plus

transaction costs for all financial assets not carried


at fair value through profit or loss. Financial assets

carried at fair value through profit or loss are initially

recognised at fair value and transaction costs are

expensed to the statement of financila performance.

Financial assets are derecognised when the rights

to receive cash flows from the financial assets have

expired or have been transferred and the Company

has transferred substantially all the risks and rewards

of ownership.

When securities are classified as availablefor-sale

are sold, the accumulated fair value

adjustments recognised in equity are included

in the statement of financial performance as

gains and losses from investment securities.

Subsequent measurement

Loans and receivables and held-to-maturity

investments are carried at amortised cost using the

effective interest method.

Available-for-sale financial assets at fair value through

profit or loss are subsequently carried at fair value.

Gains or losses arising from changes in the fair value

of the “financial assets at fair value through profit or

loss” category are presented in the income statement

within other income or other expenses in the period

in which they arise.

Income from financial assets at fair value through

profit and loss is recognised in the income statement

as part of income from continuing operations when

the Company’s right to receive payment is established.

Fair value

The fair values of quoted investments are based on

last trade prices. If the market for financial assets is

not active (and for unlisted securities), the Company

establishes fair value by using valuation techniques.

(n) Foreign currencies

Functional and presentation currency

Items included in the financial statements of each

of the Company’s entities are measured using the

currency of the primary economic environment in

which the entity operates (‘the functional currency’).

The consolidated financial statements are presented

in Australian dollars, which is GMM’s functional and

presentation currency.

Transactions and balances

Foreign currency transactions are translated into the

functional currency using the exchange rates prevailing

at the dates of the transactions. Foreign exchange

gains and losses resulting from the settlement of

such transactions and from the translation at year-

end exchange rates of monetary assets and liabilities

denominated in foreign currencies are recognised in

the statement of financial performance. Translation

differences on non-monetary financial assets such as

equities classified as available-for-sale financial assets

are included in the fair value reserve in equity.

2. Actual and Proposed Transactions to

Arrive at Pro-forma Unaudited Consolidated

Statement of Financial Position

Actual and proposed transactions adjusting the 30

June 2009 unaudited Statement of Financial Position

of GMM in the pro-forma consolidated Statement of

Financial Position of GMM are as follows:

(a) The issue of 3,000,000 shares at 12 cents each

to raise a gross $360,000 in September 2009 and the

issue of 100,000 shares ($12,000) and 100,000 share

Options ($5,870) as capital raising costs ($17,870);

(b) The issue of 40,000,000 shares at 20 cents each

to raise a gross $8,000,000 pursuant to the Prospectus

and the issue of 800,000 shares ($160,000) and

800,000 share Options ($69,920) to a broker as

capital raising costs ($229,920);

(c) The payment of 30 June 2009 accounts payable

of $24,785 for GMM, $6,843 for Golden Cross and

other loans totalling $13,721;

(d) The payment of cash expenses of the

Prospectus issue totalling an estimated $600,000 and

the expensing of such costs against equity;

(e) The incurring of additional group administration

and exploration costs of say $130,000 (excluding

Director and Corporate Administration fees of

$40,000 from 1 July 2009 to 30 September 2009) and

further deprecation of say $2,939;

(f) The issue of 937,394 shares at 20 cents each

to eliminate two thirds of outstanding director

and administration fees as at 30 September 2009

(approximately $187,479) and the balance paid in

cash ($93,599) out of the proceeds of the Public

Issue;

(g) The payment of $100,000 to Galaxy and the

issue of 5,000,000 shares at 20 cents each ($1,000,000)

and 2,500,000 share Options with a deemed fair

value of $170,000 to acquire an initial 50% interest

in the Shoemaker Iron Ore Project (total acquisition

cost $1,270,000); and

(h) The payment of statutory costs including stamp

duties on acquisitions estimated not to exceed

$85,000.

General Mining Corporation Ltd ~ Prospectus

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8 - Independent Accountant’s Report

Note 2 Unaudited

Consolidated GMM

30 June 2009

$

Unaudited

Consolidated GMM

Pro-forma

30 June 2009

$

3. Cash Assets

The movements in cash assets are as follows:

Unaudited 30 June 2009 104,953 104,953

Issue of shares pursuant to seed investors (a) - 360,000

Issue of shares pursuant to the Prospectus (b) - 8,000,000

Payment of payables (a)(f) - (138,948)

Prospectus issue costs (d) - (600,000)

Administration costs (e) - (130,000)

Payment to Galaxy (g) - (100,000)

Statutory costs (h) - (85,000)

4. Receivables

104,953 7,411,005

GST receivable/other 18,210 18,210

Prepayments -

5. Capitalised Acquisition Costs

50% interest in Shoemaker Iron Ore Project

18,210 18,210

Cash, shares and Options (g) - 1,270,000

6. Investments

Shares in wholly owned subsidiary

- 1,270,000

Golden Cross LLC 11,000 11,000

Less: Write down of investment in 2008 (11,000) (11,000)

- -

Less eliminated on consolidation - -

- -

Loans to Golden Cross LLC 265,791 265,791

Less eliminated on consolidation (265,791) (265,791)

- -

Total Investments - -

The Company is financing the operations of Golden Cross and thus Golden Cross has unsecured borrowings

from GMM that are interest free and at call. The ability for Golden Cross to repay debts due to GMM (and other

parties) will be dependent on the commercialisation of the mining assets owned by the subsidiary. Losses may

be incurred by the subsidiary and provisions raised against the loans due by the subsidiary to GMM in the books

of GMM.


Note 2 Unaudited

Consolidated GMM

30 June 2009

$

Unaudited

Consolidated GMM

Pro-forma

30 June 2009

$

7. Trade and other payables

Trade and other payables 31,628 31,628

Short term borrowings 13,721 13,721

Owing to directors and others (e) 241,078 281,078

Less: Payment of payables and loans (a)(e) - (138,948)

Less: Payment of liabilities by share issues (d) - (187,479)

8. Issued Capital

286,427 -

19,000,000 shares as at 30 June 2009 1,118,130 1,118,130

3,000,000 shares at 12 cents each (a) - 360,000

100,000 shares to a broker (a) - 12,000

40,000,000 shares pursuant to the Prospectus (b) - 8,000,000

500,000 shares to a broker (b) - 160,000

937,394 shares to eliminate debts (f) - 187,479

5,000,000 shares to Galaxy (g) - 1,000,000

1,118,130 10,837,609

Less: estimated share issue costs (a)(d) (43,770) (903,560)

Pro-forma (68,837,394 shares) 1,074,360 9,934,049

In the event that the minimum subscription of $4,000,000 is received, the number of shares on issue would

decrease to 48,437,394 as 20,000,000 shares (instead of 40,000,000 shares) would be issued under the Prospectus

and 400,000 shares would be issued to the broker instead of 800,000 shares, the issued capital would decrease

to $6,289,749 (cash capital raising costs would decrease by $200,000 to $400,000, share and share option costs

would reduce to $114,960 and share capital costs would decrease to $576,600) and cash at bank would decrease

to $3,611,005. The broker to the issue can elect to receive his brokers fee in shares and if this occurred the broker

would receive a further up to 2,000,000 shares (if $8,000,000 is raised) (1,000,000 shares if $4,000,000 is raised).

9. Option Reserve

Balance at 30 June 2009 16,843 16,843

Issue of Options to a broker (a)(b) - 87,790

Issue of Share Options to Galaxy (g) - 170,000

16,843 274,633

As at 19 October 2009 there are 11,850,000 Share Options outstanding all exercisable at 20 cents each.

• 2,250,000 Options expire on the 11 March 2011

• 2,950,000 Options expire on the 20 December 2010

• 4,000,000 Options expire on the 30 September 2012

• 2,000,000 Options expire on the 28 February 2013

• 550,000 Options expire on the 23 June 2013

• 100,000 Options expire 31 August 2014

General Mining Corporation Ltd ~ Prospectus

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8 - Independent Accountant’s Report; 9 - Corporate Governance

In addition, a further 2,500,000 share Options are to be issued to Galaxy, exercisable at 20 cents each within 3 years

of issue date and 500,000 share Options issued to the broker to the Prospectus also exercisable at 20 cents each,

on or before 5 years from the issue date. In the event that the minimum subscription of $4,000,000 is raised, then

only 400,000 share Options would be issue to the broker. The broker in effect receives 50 share Options for every

share issued pursuant to the public issue under the Prospectus. Furthermore Matveev, subject to shareholder approval

will be entitled to receive 1,500,000 share Options exercisable at 20 cents each within 2 years of the deemed

issue date of 30 June 2010, 1,500,000 share Options exercisable at 40 cents each within 2 years of the deemed issue

date of 30 June 2011 and 1,500,000 share Options exercisable at 60 cents each within 2 years of the deemed issue

date of 30 June 2012. When Matveev becomes entitled to the relevant Options, they will need to be valued and an

expense taken up. Under an agreement with Lhava Choyon (“Choyon”) and Golden Cross, 250,000 share Options

were issued to Choyon in October 2009. Choyon is entitled to receive a further 250,000 share Options in July 2010

exercisable at 20 cents each and expiring on 23 June 2013.

Note 2 Unaudited

Consolidated GMM

30 June 2009

$

Unaudited

Consolidated GMM

Pro-forma

30 June 2009

$

10. Accumulated Losses

Balance as at 30June 2009 1,269,963 1,269,963

Administration, exploration and depreciation costs (e) - 132,939

Director and administration fees (f) - 40,000

Statutory and other costs (g) - 85,000

1,269,963 1,527,902

11. Contingent Liabilities and Commitments

As As at 30 June 2009, the Company has the following contingent liabilities and commitments. Mineral Administration

Services Pty Ltd is a company jointly owned by Mr. Lindsay Colless and Ms. Karen Brown who are also appointed

as joint company secretaries. Fees for the provision of the service are $5,000 per month until the end of the month

in which GMM lists on the ASX and $7,000 per month thereafter. Shares in the Company will be issued in lieu of

two thirds of the fees outstanding at 20 cents per share until 30 September 2009 and thereafter is payable in cash.

The Company has agreements in place effective 1 October 2009 with the non-executive director chairman to pay

annual director fees of $60,000 and other non executive directors $40,000 per annum. It has been agreed that

two thirds of the outstanding fees to 30 September 2009 are to be extinguished by the issue of shares at 20 cents

each. Based on discussions with the Directors and legal advisors, to our knowledge, the Company has no other

material commitment or contingent liabilities not otherwise disclosed in this Investigating Accountant’s Report (refer

Background section 3) and in the Prospectus. Investors should read the Independent Geological Reports and the

Independent Solicitors’ Report for further possible contingencies and commitments. A number of tenements may

be subject to royalty payments on production of minerals.

For details on proposed exploration commitments on mineral tenements, refer to the Independent Consulting Geologist’s

Reports in the Prospectus and sections 4 and 5 of the Prospectus.

12. Rental Of Premises Commitments

The Company has an informal arrangement to sub lease premises at the rate of approximately $1,500 per month.

There is no fixed term. The Company may seek new premises following a successful public listing. The Company

leases premises in Mongolia at the rate of US$546 per month.

13. Management Agreements

The Company has entered into an employment contract with Dr. Boris Mateev as Managing Director effective 1

January 2010. A summary of the financial details on the employment agreement is outlined in the Background

Section of this report and/or in the Material Contracts section of the Prospectus (included in the Solicitors Report).

In addition Choyon (refer note 9 above) is employed as a director of Golden Cross at the rate of US$500 per week

plus social security and insurance payments totalling 10% of the weekly rate.


9 - Corporate Governance

The Directors of the Company believe that

effective corporate governance improves

Company performance, enhances corporate

social responsibility and benefits all stakeholders.

Governance practices are not a static set of principles

and the Company assesses its governance practices

on an ongoing basis. Changes and improvements

are made in a substance over form manner, which

appropriately reflect the changing circumstances of

the Company as it grows and evolves. Accordingly,

the Board has established a number of practices

and policies to ensure that these intentions are met

and that all shareholders are fully informed about

the affairs of the Company.

The Company will have a corporate governance

section on the website at www.generalmining.com.

The section will include details on the Company’s

governance arrangements and copies of relevant

policies and charters.

ASX Corporate Governance Council Best

Practice Principles and Recommendations

(2nd Edition)

For ease of comparison to the recommendations,

the Corporate Governance statement addresses

each of the eight principles in turn. Where the

Company has not followed a recommendation this

is identified with the reasons for not following the

recommendation. This disclosure is in accordance

with ASX Listing Rule 4.10.3.

Principle 1 - Lay solid foundations for

management and oversight by the board

Recommendation 1.1: Companies should establish

those functions reserved to the board and those

delegated to senior executives and disclose those

functions.

The Board operates in accordance with broad

principles set out in its charter which will be

available from the corporate governance section

of the Company’s website. Broadly the key

responsibilities of the Board are:

1. overseeing the Company, including its

control and accountability systems;

2. providing input into and final approval

of management’s development of

corporate strategy and performance

objectives;

3. reviewing, ratifying and monitoring

systems of risk management and

internal control, codes of conduct and

legal compliance;

4. monitoring senior executives’

performance and implementation

strategy;

5. ensuring appropriate resources are

available to senior executives;

6. approving and monitoring the progress

of major capital expenditure, capital

management and acquisitions and

divestures; and

7. approving and monitoring financial

and other reporting.

All Directors and key executives of the Company

have been given formal letters of appointment

outlining key terms and conditions of their

appointment.

Recommendation 1.2: Companies should disclose

the process for evaluating the performance of senior

executives.

Performance evaluations for senior executives are

carried out annually by the Chairman. Performance

during the previous 12 months is assessed

against relevant performance indicators, and role

expectations and goals are set for the following

year.

Recommendation 1.3: Companies should provide

the information indicated in the Guide to reporting

on Principle 1.

The Company will include the disclosure required

by Recommendation 1.3 in its future annual reports.

In accordance with the guide to reporting on

Principle 1, the Company’s Board charter will be

available from the corporate governance section of

its website.

Principle 2 – Structure the board to add value

Details of each Board member’s experience,

expertise and qualifications are set out in section 2

of the Prospectus.

Recommendation 2.1: A majority of the board

should be independent Directors.

The structure of the Board complies with

Recommendation 2.1.

Board structure and composition will be reviewed

as and when the Company’s strategic directions

and activities change. The Company will only

recommend the appointment of additional Directors

to your Board where it believes the expertise and

value added outweighs the additional cost.

General Mining Corporation Ltd ~ Prospectus

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9 - Corporate Governance

Recommendation 2.2: The chair should be an

independent Director.

The structure of the Board complies with

Recommendation 2.2 in that the Chairman does not

fall within the relationships affecting independent

status.

Recommendation 2.3: The roles of chair and chief

executive officer should not be exercised by the

same individual.

The Company complies with this recommendation.

Recommendation 2.4: The board should establish a

nomination committee.

The Company does not comply with ASX

recommendation 2.4 in that there is no separate

nomination committee. Given the Board comprises

four Directors, it has been decided that there

are no efficiencies to be gained from forming a

separate nomination committee. The current Board

members carry out the role that would otherwise

be undertaken by a nomination committee.

Recommendation 2.5: Companies should disclose

the process for evaluating the performance of the

board, its committees and individual Directors.

Each Director will complete an annual formal

evaluation of the Board’s performance.

The Chairman will conduct an informal evaluation

of each Board member’s performance at least

once per annum. The review process will include

a combination of qualitative and quantitative

assessments, the results of which shall be discussed

with the individual Director and the Board.

Recommendation 2.6: Companies should provide

the information indicated in the guide to reporting

on Principle 2.

The Company will include the disclosure required

by Recommendation 2.6 in its 2010 Annual Report.

In accordance with the guide to reporting on

Principle 2, a description of the procedure for the

selection and appointment of new Directors and

the re-election of current Directors will be available

from the corporate governance section of the

Company’s website.

Principle 3 – Promote ethical and responsible

decision making

Recommendation 3.1: Companies should establish

a code of conduct and disclose the code or a

summary of the code as to:

• the practices necessary to maintain

confidence in the Company’s integrity;

• the practices necessary to take into

account their legal obligations and

the reasonable expectations of their

stakeholders; and

• the responsibility and accountability

of individuals for reporting and

investigating reports of unethical

practices.

The Board has adopted a code of business conduct

which expresses certain basic principles that

the Company and employees, consultants and

contractors should follow in all dealings related

to the Company. They should show the highest

business integrity in their dealings with others,

including preserving the confidentiality of other

peoples’ information and should conduct the

Company’s business in accordance with law and

principles of good business practice.

Recommendation 3.2: Companies should establish

a policy concerning trading in Company securities

by Directors, senior executives and employees, and

disclose the policy or a summary of that policy.

A formal securities trading policy has been adopted

whereby Directors and certain key executives are

prevented from trading in the Company’s shares

during the two weeks prior to the announcement

of quarterly, half-year and the full-year reports. This

is a restriction over and above the requirement

to not trade in the Company’s securities when in

possession of inside information which applies

to all Directors, executives and employees of the

Company.

In accordance with the provisions of the

Corporations Act and the ASX Listing Rules, the

Company on behalf of the Directors must advise

the ASX of any transactions conducted by them in

Shares and/or Options in the Company.

Recommendation 3.3: Companies should provide

the information indicated in the Guide to reporting

on Principle 3.

The Company will include the disclosure required

by Recommendation 3.3 in its 2010 Annual Report.

In accordance with the guide to reporting on

Principle 3, the Company’s code of conduct and

securities trading policy will be available from the

corporate governance section of the Company’s

website.


Principle 4 – Safeguard integrity in financial

reporting

Recommendation 4.1: The board should establish

an audit committee.

Recommendation 4.2: The audit committee should

be structured so that it:

• consists only of non-executive Directors;

• consists of a majority of independent

Directors;

• is chaired by an independent chair

who is not chair of the board; and

• has at least three members.

The Company does not comply with

Recommendations 4.1 and 4.2 in that there is no

separate audit committee, and it is not comprised

only of non-executive Directors. Given the Board

comprises four Directors, it has been decided that

there are no efficiencies to be gained from forming

a separate audit committee. The current Board

members carry out the roles that would otherwise

be undertaken by a separate audit committee.

The Board believes the audit committee structure

is appropriate given the Company’s size. The

composition of the audit committee will be assessed

on an ongoing basis in light of the Company’s

overall Board structure and strategic direction.

Recommendation 4.3: The audit committee should

have a formal committee charter.

The Board has adopted a formal audit charter

that sets out the roles and responsibilities of the

audit committee and contains information on

the procedures for the selection and rotation of

the external auditor. When considering financial

matters, the Board functions in accordance with

this charter.

Recommendation 4.4: Companies should provide

the information indicated in the Guide to reporting

on Principle 4.

The Company will include the disclosure required

by Recommendation 4.4 in its 2010 Annual Report.

In accordance with the Guide to reporting on

Principle 4, the audit committee charter and

information on the procedures for the selection of

the external auditor and rotation of auditors will be

available from the corporate governance section of

the Company’s website.

Principle 5 – Make timely and balanced

disclosure

Recommendation 5.1: Companies should establish

written policies designed to ensure compliance with

ASX Listing Rule disclosure requirements and to

ensure accountability at a senior executive level

for that compliance and disclose those policies or a

summary of those policies.

The Board has adopted a formal continuous

disclosure policy outlining procedures for

compliance with ASX continuous disclosure

requirements. The policy is based upon the

Company’s desire to promote fair markets, honest

management and full and fair disclosure. The

disclosure requirements must be complied with in

accordance with their spirit, intention and purpose.

The purpose of the policy is to:

• summarise the Company’s disclosure

obligations;

• explain what type of information

needs to be disclosed;

• identify who is responsible for

disclosure; and

• explain how individuals at the

Company can contribute.

Recommendation 5.2: Companies should provide

the information indicated in the Guide to reporting

on Principle 5.

The Company will include the disclosure required

by Recommendation 5.2 in its 2010 Annual Report.

In accordance with the Guide to reporting on

Principle 5, the Company’s continuous disclosure

policy will be available from the corporate

governance section of the Company’s website.

Principle 6 – Respect the rights of

shareholders

Recommendation 6.1: Companies should design

a communications policy for promoting effective

communication with shareholders and encouraging

their participation at general meetings and disclose

their policy or a summary of that policy.

The Board has adopted a formal continuous

disclosure policy and communication guidelines.

All information disclosed to the ASX is posted on

the Company’s website as soon as it is disclosed

to the ASX. When analysts are briefed on aspects

of the group’s operations, the material used in the

General Mining Corporation Ltd ~ Prospectus

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88

9 - Corporate Governance

presentation is released to the ASX and posted on

the Company’s website. Procedures are in place

to determine where price sensitive information

has been inadvertently disclosed, and if so, this

information is released to the ASX.

Recommendation 6.2: Companies should provide

the information indicated in the Guide to reporting

on Principle 6.

The Company will include the disclosure required

by Recommendation 6.2 in its 2010 Annual Report.

In accordance with the Guide to reporting on

Principle 6, the Company’s continuous disclosure

policy and communications guidelines will be

available from the corporate governance section of

the Company’s website.

Principle 7 – Recognise and manage risk

Recommendation 7.1: Companies should establish

policies for the oversight and management of

material business risks and disclose a summary of

those policies.

Recommendation 7.2: The board should require

management to design and implement the risk

management and internal control system to

manage the Company’s material business risks

and report to it on whether those risks are being

managed effectively. The board should disclose

that management has reported to it as to the

effectiveness of the Company’s management of its

material business risks.

The Company does not have a separate risk

management committee. Given the current size of

the Company and the Board, the Directors believe

there are no efficiencies in forming a separate

committee and the Board as a whole performs this

role.

Financial and operating risks are addressed through

individual approved policies and procedures

covering financial, contract management, safety and

environmental activities of the Company. In addition

to financial audits, the Company’s operations in

Australia will be subject to annual risk management

reviews in accordance with Risk Management

Standard AS/NZS 4360: Risk Management. The

Company engages an insurance brokering firm as

part of the Company’s annual assessment of the

coverage for insured assets and risks. The results of

all the various reviews and insurances are reported

to the Board at least annually.

The Board has adopted a risk management

committee charter. When considering risk

management, the Board acts in accordance with

this charter.

The Board believes that it has a thorough

understanding of the Company’s key risks and is

managing them appropriately.

Recommendation 7.3: The board should discuss

whether it has received assurance from the chief

executive officer (or equivalent) and the chief

financial officer (or equivalent) that the declaration

provided in accordance with section 295A of the

Corporations Act is founded on a sound system of

risk management and internal control and that

the system is operating efficiently in all respects in

relation to financial reporting risks.

The integrity of the Company’s financial reporting

relies upon a sound system of risk management

and control. Accordingly, the persons performing

the functions of chief executive officer and chief

financial officer will be asked to confirm that

any declaration they provide in accordance with

section 295A of the Corporations Act is founded on

a sound system of risk management and internal

control and that the system is operating efficiently

in all respects in relation to financial reporting risks.

Recommendation 7.4: Companies should provide

the information indicated in the Guide to reporting

on Principle 7.

The Company will include the disclosure required

by Recommendation 7.42 in its 2010 Annual Report.

In accordance with the Guide to reporting on

Principle 7, the Company’s risk management

committee charter will be available from the

corporate governance section of the Company’s

website.

Principle 8 – Remunerate fairly and

responsibly

Recommendation 8.1: The board should establish a

remuneration committee.

The Company does not comply with

Recommendation 8.1 in that it has not established

a separate remuneration committee. Given the

current size of the Company and Board, the

Directors believe there are no efficiencies in

forming a separate committee and the Board as a

whole performs this role. The Board of Directors

reviews and approves recommendations in terms

of compensation and incentive plan arrangements

for Directors and senior executives, having regard

to market conditions and the performance of

individuals and the Company.

Recommendation 8.2: Companies should clearly

distinguish the structure of non-executive Directors’

remuneration from that of executive Directors and

senior executives.


The Company’s remuneration policies will be

detailed in the Directors’ Report in future periodic

reports.

Non-executive Directors are remunerated by

way of Director’s fees. Apart from compulsory

superannuation entitlements, non-executive

Directors are not eligible to receive retirement

benefits.

Recommendation 8.3: Companies should provide

the information indicated in the Guide to reporting

on Principle 8.

The Company will include the disclosure required

by Recommendation 8.3 in its 2010 Annual Report.

In accordance with the Guide to reporting on

Principle 8, the remuneration committee charter and

a summary of the Company’s remuneration policy

will be available from the corporate governance

section of the Company’s website.

General Mining Corporation Ltd ~ Prospectus

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10 - Risk Factors

10 - Risk Factors

The Shares offered under this Prospectus should be

considered speculative because of the nature of the

business activities of the Company. Whilst the Directors

recommend the Offer, potential investors should

consider whether the Shares offered are a suitable

investment having regard to their own personal

investment objectives and financial circumstances and

the specific and general risk factors set out below.

This list is not exhaustive and potential investors

should read this Prospectus in its entirety and if in

any doubt consult their professional adviser before

deciding whether to participate in the Offer.

Risks specific to the Company and its

Projects

Limited History of the Company and its Projects

The Company has limited operating history on which

an evaluation of its prospects can be made. The

prospects of the Company must be considered in

light of the risks, expenses and difficulties frequently

encountered by companies in their early stage of

development, particularly in the mineral exploration

sector which has a high level of inherent uncertainty.

Although the Company’s Australian projects have

undergone some limited exploration, that work is

only preliminary. Whilst the Company’s Mongolian

Projects are considered prospective, as they are near

known mineralisations, no exploration has taken

place on the Company’s Mongolian Projects. Further

exploration is required to determine whether the

Company’s projects contain any economically viable

mineral deposits. Even if an apparently viable mineral

deposit is identified, there is no guarantee that it can

be profitably exploited.

Sovereign and Political Risks Associated with

Operating in Mongolia

The Company holds a number of projects in Mongolia.

As set out under section 6, holding projects in a young

democratic country which is experiencing a rocky

transition to a market economy presents a certain

level of uncertainty and risk.

As set out under section 6, the Mongolian Parliament

has previously passed laws that may restrict or limit

the Company’s operations or make them uneconomic.

These include the laws that impose the right to

participate in ‘mineral deposits of strategic importance’.

At present the Company’s Mongolian projects are not

’mineral deposits of strategic importance’. However,

should the Company’s exploration activities lead

to an economically viable mineral deposit, there is

a risk that the Mongolian State may seek to acquire

an interest in those deposits. Furthermore, there is

a risk that the Mongolian Parliament may attempt

to pass further laws that may prejudicially affect the

Company’s operations.

More general risks include economic, social or

political instability or change, hyperinflation,

currency non-convertibility or instability and changes

of law affecting foreign ownership, government

participation, taxation, working conditions, rates of

exchange, exchange control, exploration licensing,

export duties, repatriation of income or return of

capital, environmental protection, mine safety, labour

relations as well as government control over mineral

properties or government regulations that require the

employment of local staff or contractors or require

other benefits to be provided to local residents.

Legal Risks Associated with Operating in

Mongolia

The Company’s Mongolian operations are subject to

the jurisdiction of Mongolia’s courts. The legal system

operating in Mongolia is less developed than more

established countries, which may result in risk such

as:

• political difficulties in obtaining effective legal

redress in the courts whether in respect of a

breach of law or regulation, or in an ownership

dispute;

• a higher degree of discretion on the part of

governmental agencies and the risk that they may

not act in good faith;

• the lack of political or administrative guidance on

implementing applicable rules and regulations

including, in particular, as regards local taxation

and property rights;

• inconsistencies or conflicts between and within

various laws, regulations, decrees, orders and

resolutions; or

• relative inexperience of the judiciary and courts,

including specifically in commercial matters and

cross border transactions.

The commitment to local business people, government

officials and agencies and the judicial system to abide

by legal requirements and negotiated agreements

may be more uncertain, creating particular concerns

with respect to licences and agreements for business.

These may be susceptible to revision or cancellation

and legal redress may be uncertain or delayed. There

can be no assurance that the licences and other

legal arrangements will not be adversely affected by

the actions of the government authorities or others


and the effectiveness of and enforcement of such

arrangements cannot be assured.

In the case where the Company disputes the actions

of the State with regard to its tenements, it is unlikely

that the Company would be successful in raising a

claim in Australian courts for reasons of comity or the

doctrine of sovereign immunity.

Title Risks Associated with the Mongolian

Projects

As noted in section 6, there are a number of conditions

that the Company must satisfy with respect to its

Mongolian licences, including minimum expenditure

and annual reporting requirements that the Company

must comply with to keep the Company’s Mongolian

licences in good standing. There is a risk that

the Company may not be able to satisfy these

requirements, in which case the Company may forfeit

title to the licences.

Specifically the Company notes the following with

respect to its Mongolian licences:

• The mine permitting process is very cumbersome

and there is no comprehensive system for

obtaining permits from a single source. Delays in

obtaining all necessary approvals and permits may

jeopardise the economic viability of a project.

• The Company has only funded the necessary

environmental reclamation funds in 2009 for

two areas of licence 14404X excluding Davst

soum. This failure can be the legal ground for the

suspension of exploration activities for up to three

months and the possibility of revocation of that

licence.

• The Environmental Protection Plans and Reports

for licences 14593X, 14598X, 15015X, 13846X,

13847X, 13848X, 13849X and 14314X have not

been filed. The failure to develop and submit the

Environmental Protection Plan and Report can be

legal grounds for the suspension of exploration

activities for up to three months and the possibility

of revocation of those licences.

The Company is taking all necessary steps to fund

the necessary environmental reclamation funds and

file the relevant plans and reports, and considers the

risk that the above licences will be revoked or that the

Company is liable for a penalty to be low.

Title Risks Associated with the Company’s

Australian Projects

The exploration licences comprising some of the

tenements which the Company holds or in which it

has an interest may be the subject of applications for

extension in the future. If a tenement is not extended,

the Company may suffer significant damage through

loss of the opportunity to discover and/or develop

any mineral resources on that tenement.

In addition, the Company cannot guarantee that those

tenements that are applications for tenements will

ultimately be granted in whole or in part. For more

details on the issue of title to the tenements, refer to

the Independent Solicitor’s Report in section 7 of this

Prospectus.

Environmental Risks

The Company’s projects are subject to Western

Australian, Mongolian and Australian Federal laws

and regulations regarding environmental matters and

the discharge of hazardous wastes and materials. As

with all mining projects, these projects would be

expected to have a variety of environmental impacts

should development proceed.

As noted in section 6, the Mongolian Parliament

has passed the Water Basin Law which attempts

to prohibit mineral exploration and/or mining in

river basins and forested areas. There is a risk that

the Government may determine that parts of the

Company’s Mongolian projects may cover river basins

and forested areas, which may inhibit or prevent the

Company from undertaking mineral exploration and/

or mining operations.

The Company’s projects located in the Uvs Aimag

of Mongolia are located near the World Heritage

listed Uvs Nuur (lake). Exploration licence 13849X is

located within the buffer zone to the Uvs Nuur World

Heritage area. Uvs Nuur and wetlands to the east (Tes

River) of the lake have also been declared a RAMSAR

wetland. Several sites of archaeological importance

are also located within the basin. There is a risk thyat

by virtue of this the Company’s activities may be

stopped over parts of licence 13849X.

The Company intends to conduct its activities in

an environmentally responsible manner and in

accordance with applicable laws and industry

standards. Areas disturbed by the Company’s activities

will be rehabilitated as required by applicable laws and

regulations. The location of the Company’s projects

near a World Heritage site and RAMSAR wetland

may require extensive environmental assessment,

monitoring and reporting.

Currency

Any revenue generated by the Company is expected

to be in US$ while its cost base would be expected

to be in A$, Mongolian National Tugrik (“MNT”) and

US$. Consequently the cross exchange rates for these

currencies will have an impact on the Company’s

expected earnings in A$.

The cross exchange rates are affected by numerous

factors beyond the control of the Company.

General Mining Corporation Ltd ~ Prospectus

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10 - Risk Factors

These factors include Australia’s, Mongolia’s and

the USA’s economic conditions and the outlook for

interest rates, inflation and other economic factors.

These factors may have a positive or negative effect

on the Company’s exploration, project development

and production plans and activities, together with the

ability to fund those plans and activities.

Infrastructure

Several of the Company’s projects are located in

regions within Australia and Mongolia that are poorly

serviced by infrastructure.

The Company’s Shoemaker project is located to the

east of a planned railway to Golden West Resources

Ltd’s Wiluna West Iron Ore Project. The railway is

part of the Oakajee Port and Railway project. The

economic viability of the Shoemaker project may rely

on the construction of this railway and may require

substantial further investment by the Company to

extend the railway to the Company’s project.

Several of the Company’s Mongolian licences are

located in areas that lack access to basic infrastructure

including roads, electricity, running water and health

and emergency services. The Company’s Uvs Basin

project is well serviced by asphalt roads leading to

major railways in Russia. Electricity at the Uvs Basin

project is sourced from nearby Russian plants with

power lines passing through several of the Company’s

licences. Regular disruptions to the electricity supply

occur which may impact on the Company’s activities.

The lack of infrastructure may impact negatively on

the economic viability of any deposits discovered by

the Company in other regions and may require the

Company to negotiate access to existing infrastructure

and/or invest substantial amounts in the upgrade

of existing infrastructure or development of new

infrastructure.

Operating Risks

The current and future operations of the Company,

including exploration, appraisal and possible

production activities may be affected by a range of

factors.

The Company’s Mongolian projects are often subject

to extreme climatic conditions which restrict the

period within which exploration; appraisal and

possibly production activities may take place and

may also place Company personnel at risk if exposed

to these extreme conditions.

Mongolia has a foreign worker quota system that may

make it difficult to hire qualified personal even where

local manpower is unavailable.

A summary of factors that may affect the operations of

the Company, include:

• geological conditions;

• alterations to joint venture programs and budgets;

• unanticipated operational and technical difficulties

encountered in geophysical surveys, drilling and

production activities;

• mechanical failure of operating plant and

equipment, industrial and environmental


accidents, acts of terrorism or political or civil

unrest and other force majeure events;

industrial action, disputation or disruptions;

• unavailability of aircraft or drilling equipment to

undertake airborne electromagnetic and other

geological and geophysical investigations;

• unexpected shortages or increases in the costs of

consumables, spare parts, plant and equipment;

• prevention or restriction of access by reason of

political unrest, outbreak of hostilities, and inability

to obtain consents or approvals;

• current exploration operations and future mine

development of the tenements are subject to

the Company’s ability to obtain a wide range

of permits, licences, and approvals and there

is no guarantee that such permits, licences and

approvals will be granted or will be granted in a

timely manner;

• advancement of the exploration operations to

mine development can be a lengthy process

taking a number of years where the Company’s

projects may be subject to new laws, regulations,

and taxes which may have a material impact on

the Company; and

• restriction of access to infrastructure by Russian,

Chinese or Mongolian authorities.

Exploration, Development, Mining and

Processing Risks

The business of mineral exploration, project

development and mining by its nature contains

elements of significant risk. Ultimate and continuing

success of these activities is dependent on many

factors such as:

• the discovery and/or acquisition of economically

recoverable ore reserves;

• successful

studies;

conclusions to bankable feasibility

• access to adequate capital for project development;

• design and construction of efficient mining and

processing facilities within capital expenditure

budgets;

• securing and maintaining title to tenements and

compliance with the terms of those tenements;


• obtaining consents and approvals necessary for

the conduct of exploration and mining; and

• access to competent operational management and

prudent financial administration, including the

availability and reliability of appropriately skilled

and experienced employees, contractors and

consultants.

Whether or not income will result from projects

undergoing exploration and development programs

depends on the successful establishment of

mining operations. Factors including costs, actual

mineralisation, consistency and reliability of ore

grades and commodity prices affect successful project

development and mining operations.

Mining is an industry which has become subject to

increasing legislative regulation including but not

limited to environmental responsibility and liability.

The potential for liability is an ever present risk. The

use and disposal of chemicals in the mining industry

is under constant legislative scrutiny and regulation.

The introduction of new laws and regulations or

changes to underlying policy may adversely impact

on the operations of the Company.

Native Title (Australia)

The Native Title Act 1993 (Cth) recognises and

protects the rights and interests in Australia of

Aboriginal and Torres Strait Islander people in land

and waters, according to their traditional laws and

customs. There is some uncertainty associated with

native title in Australia and this may impact on the

Company’s operations and future plans.

Native title can be extinguished by valid grants of

land or waters to people other than the native title

holders or by valid use of land or waters. It can also

be extinguished if the indigenous group has lost

their connection with the relevant land or waters.

Native title is not extinguished by the grant of mining

licences, as they are not considered to be grants of

exclusive possession. A valid mining lease prevails

over native title to the extent of any inconsistency for

the duration of the title.

All tenements granted prior to 1 January 1994 are

valid or validated. Tenements granted between 1

January 1994 and 23 December 1996 may be invalid

if they fail to comply with the Native Title Act or for

certain other reasons because of native title. However,

such invalid tenements may be validated if certain

statutory criteria are met. For tenements to be validly

granted (or renewed) the “right to negotiate” regime

established by the Native Title Act must be followed.

It is important to note that the existence of a native

title claim is not an indication that native title in fact

exists to the land covered by the claim, as this is a

matter ultimately determined by the Federal Court.

The Company must also comply with Aboriginal

heritage legislation requirements which require

heritage survey work to be undertaken ahead of the

commencement of mining operations.

A detailed discussion of native title and the claims

is contained in the Independent Solicitor’s Report in

section 7 of this Prospectus.

Future Capital Needs and Additional Funding

Funds raised will be used to carry out the Company’s

objectives (as set out elsewhere in this Prospectus).

The Company’s ability to raise further funds (debt

or equity) within an acceptable time, or a sufficient

amount and on terms acceptable to the Company will

vary according to a number of factors, including:

• the prospectiveness of the Company’s projects

and any other projects that the Company may

acquire;

• the results of exploration, subsequent feasibility

studies, development and mining;

• stock market and industry conditions; and

• the price of relevant commodities and exchange

rates.

Potential Acquisitions

The Company will seek potential acquisitions or new

investments in mineral exploration and production.

Any acquisitions will be subject to risks normally

associated with such acquisitions.

General Economic Risks and Business

Climate

Resource Estimates

Resource estimates are expressions of judgment based

on knowledge, experience and industry practice.

Estimates, which were valid when made, may

change significantly when new information becomes

available. In addition, resource estimates are imprecise

and depend to some extent on interpretations, which

may prove to be inaccurate. Should the Company

encounter mineralisation or formations different

from those predicted by past sampling and drilling,

resource estimates may have to be adjusted and

mining plans may have to be altered in a way which

could have either a positive or negative effect on the

Company’s operations.

Commodity Prices

The Company expects to derive its revenue from the

sale of minerals such as iron ore, base metals and/or

mineral salts. Consequently, the Company’s expected

earnings will be closely related to the price of these

commodities together with the terms of the off-take

General Mining Corporation Ltd ~ Prospectus

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10 - Risk Factors and 11 - Additional Information

agreement(s) under which these metals will be sold.

Commodity prices fluctuate and are affected by

numerous factors beyond the control of the Company.

These factors include worldwide and regional

supply and demand for the specific commodity,

commodity trading on the futures markets, general

world economic conditions and the outlook for

interest rates, inflation and other economic factors on

both a regional and global basis. These factors may

have a positive or negative effect on the Company’s

exploration, project development and production

plans and activities, together with the ability to fund

those plans and activities.

Share Market Conditions

Share market conditions may affect the value of listed

securities regardless of operating performance. Share

market conditions are affected by many factors such

as:

• general economic outlook;

• movements in or outlook on interest rates and

inflation rates;

• currency fluctuations;

• commodity prices;

• changes in investor sentiment towards particular

market sectors; and

• the demand and supply for capital.

Commodity prices are influenced by physical

and investment demand for those commodities.

Fluctuations in commodity prices may influence

individual projects in which the Company has an

interest.

Reliance on Key Personnel

The Company is reliant on a small number of key

personnel and consultants. The loss or one or more

of these key persons could have an adverse impact

on the Company’s business.

It may be particularly difficult for the Company to

attract and retain suitably qualified and experienced

people, given the relatively small size of the Company.

This is more so given some of the Company’s

operations are in a remote part of Mongolia.

Investment speculative

The above list of risk factors should not be taken as

exhaustive of the risks faced by the Company or by

investors in the Company. The above factors, and

others not specifically referred to above, may in the

future materially affect the financial performance of

the Company and the value of the Shares offered

under this Prospectus.

Therefore, the Shares to be issued pursuant to this

Prospectus carry no guarantee with respect to

the payment of dividends, return on capital or the

market value of those Shares. Potential investors

should consider that the investment in the Company

is speculative and consult their professional advisor

before deciding whether to apply for Shares under

this Prospectus.


11 - Additional Information

11.1 Incorporation

The Company was incorporated on 31 May 2007

as a proprietary limited company. The Company

became a limited company on 2 November 2007.

11.2 Rights Attaching To Shares

11.2.1 General

The Shares to be issued pursuant to this

Prospectus are ordinary shares and will as from

their allotment rank equally in all respects with

all ordinary fully paid shares in the Company.

The rights attaching to the Shares arise from a

combination of the Company’s Constitution,

the Corporations Act, the ASX Listing Rules

and general law. A copy of the Company’s

Constitution is available for inspection during

business hours at its registered office.

A summary of the more significant rights is set out

below. This summary is not exhaustive nor does

it constitute a definitive statement of the rights

and liabilities of the Company’s shareholders.

To obtain such a statement, persons should seek

independent legal advice.

11.2.2 Voting Rights

Subject to the Constitution of the Company and

any rights or restrictions at the time being attached

to a class of shares, at a general meeting of the

Company every Shareholder present in person,

or by proxy, attorney or representative has one

vote on a show of hands, and upon a poll, one

vote for each Share held by the Shareholder and

for each partly paid share held, a fraction of one

vote equal to the proportion which the amount

paid up bears to the amounts paid or payable on

that share. In the case of an equality of votes, the

chairperson has a casting vote.

11.2.3 Dividends

Subject to the Corporations Act, the ASX Listing

Rules and any rights or restrictions attached to a

class of shares, the Company may pay dividends

as the Directors resolve but only out of profits of

the Company. The Directors may determine the

method and time for payment of the dividend.

11.2.4 Winding up

Subject to the Corporations Act, the ASX Listing

Rules and any rights or restrictions attached

to a class of shares, on a winding up of the

Company any surplus must be divided among

the shareholders of the Company in proportion

which the amount paid on the shares bears to

the total amount paid and payable on the shares

of all shareholders of the Company.

11.2.5 Transfer of Shares

Generally, shares are freely transferable, subject

to satisfying the requirements of the ASX Listing

Rules, ASTC Rules, the ACH Clearing Rules and

the Corporations Act. The Directors may decline

to register any transfer of Shares but only where

permitted to do so by the Corporations Act, the

ASX Listing Rules, the ASTC Rules, the ACH

Clearing Rules or under the Constitution.

11.2.6 Directors

The Constitution and the ASX Listing Rules

contain provisions relating to the rotation and

election of Directors.

11.2.7 Calls on Shares

Subject to the Corporations Act and the terms

of issue of a share, the Company may, at any

time, make calls on the shareholders of a share

for all, or any part of, the amount unpaid on

the share. If a shareholder fails to pay a call or

instalment of a call, the Company may, subject

to the Corporations Act and the ASX Listing

Rules, commence legal action for all, or part of

the amount due, enforce a lien on the share in

respect of which the call was made or forfeit the

share in respect of which the call was made.

11.2.8 Further Increases in Capital

Subject to the Corporations Act, the ASX Listing

Rules, the ASTC Rules and the ACH Clearing

Rules and any rights attached to a class of shares,

the Company (under the control of the Directors)

may allot and issue shares and grant Options

over shares, on any terms, at any time and for

any consideration, as the Directors resolve.

11.2.9 Variation of Rights Attaching to

Shares

Subject to the Corporations Act, the ASX Listing

Rules, the ASTC Rules and the ACH Clearing

Rules and the terms of issue of shares in a

particular class, the Company may vary or cancel

rights attached to shares in that class by either

special resolution passed at a general meeting of

the holders of the shares in that class, or with the

written consent of the holders of at least 75% of

the votes in that class.

General Mining Corporation Ltd ~ Prospectus

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11 - Additional Information

11.2.10 General Meeting

Each Shareholder will be entitled to receive

notice of, and to attend and vote at, general

meetings of the Company and to receive notices,

accounts and other documents required to be

furnished to Shareholders under the Constitution,

the Corporations Act and the ASX Listing Rules.

11.3 Sponsoring and Lead Broker

Agreement

The Company has entered into an agreement with

State One Stockbroking Ltd (“State One”) whereby

State One has been appointed sponsoring broker

and lead manager of the Offer.

Under the terms of the appointment, State One will

be paid a 5% management fee on all funds raised,

on the basis that it will pay away its other brokers on

applications bearing their stamp. State One will pay a

fee of 3% in respect of public Applications lodged by

any member organisation of ASX, licensed securities

dealer, or the holder of an Australian Financial

Services License and accepted by the Company

provided the relevant stamp of the organisation is

on the Application Form.

State One may elect to receive its management

fee in Shares. State One will also be entitled to a

sponsoring broker’s fee of between 400,000 Shares

and 1,000,000 Shares (depending on the amount

being raised) plus one free attaching Option with an

exercise price of 20c and exercise date of five years

from the date of listing on the ASX. State One is also

entitled to be reimbursed out of pocket expenses.

The Company has agreed to grant to State One the

right of first refusal in relation to the first $10m of

equity capital raisings required by the Company for

a period of 24 months from the date of listing on

the ASX.

GMM may terminate the agreement should the IPO

not reach the absolute minimum gross raising of $4

million.

State One has also been issued 300,000 Shares and

300,000 Options with an exercise price of $0.20

and an exercise date of 23 June 2013 following the

completion of a seed capital raising in September

2008. A fee of 100,000 Shares and 100,000 Options

with an exercise price of $0.20 and an exercise

date of 31 August 2014 was also paid to State One

following the completion of a seed capital raising in

September 2009.

11.4 Material Contracts

Set out below is a brief summary of certain contracts

which have been entered into by the Company and

which have been identified as material and relevant

to potential investors.

All other material contracts are referred to and

summarised in the Independent Solicitor’s Report

contained in section 7 of this Prospectus.

Director good faith, protection and access deeds

Each of the Directors of the Company have entered

into a deed with the Company whereby the

Company has provided certain contractual rights

of access to books and records of the Company to

those directors and to effect and maintain insurance

in respect of directors and officers liability and

provide certain indemnities to each of the directors,

to the extent permitted by law.

It is also proposed that the Company will enter

into a similar deed with any subsequent Directors

appointed.

Strategic Alliance Agreement Lithium Projects with

Galaxy Resources dated 26 October 2009

The Company and Galaxy have entered into

a strategic alliance agreement with the mutual

objectives of bringing together the Company’s

existing portfolio of possible lithium projects in

Mongolia and Kazakhstan, including the Uvs Basin

project for lithium brines and the Khangai Fault

project for lithium pegmatites, the Company’s project

generation skills, large database of information on

Central Asia and its strategic networks, and Galaxy’s

operational capabilities in advanced lithium project

exploration and mineral project development and

mining.

Each party will bear their own costs whilst identifying

alliance projects. The parties will negotiate in good

faith to establish a joint venture over any area

identified and accepted as a lithium project, subject

to Galaxy having the right to earn up to 80% of

any project by sole funding the project up to the

completion of a bankable feasibility study.

The Company retains rights to all non-lithium

minerals on any licences held by Golden Cross,

and has a right to a free carried 20% interest after

respective project identification costs in any alliance

project up to completion of a bankable feasibility

study.

11.5 Employee Share Option Plan

Under the terms of the Company’s employee share

option plan (“Plan”), the Board may offer free

Options to persons (“Eligible Persons”) who are:


a) full-time or part-time employees (including

a person engaged by the Company under a

consultancy agreement); or

b) Directors of the Company or any subsidiary

based on a number of criteria including contribution

to the Company, period of employment, potential

contribution to the Company in the future and other

factors the Board considers relevant.

Upon receipt of such an offer, the Eligible Person

may nominate an associate to be issued with the

Options.

Number of Options

The maximum number of Options issued under the

Plan at any one time is 5% of the total number of

Shares on issue in the Company provided that the

Board may increase this percentage, subject to the

Corporations Act and the ASX Listing Rules.

Terms of Options

Each option entitles the holder, on exercise to be

issued the number of Shares specified in the option.

There is no issue price for the Options. The exercise

price for the Options will be such price as determined

by the Board (in its discretion) on or before the date

of issue provided that in no event shall the exercise

price be less that the weighted average sale price of

Shares sold on ASX during the five Business Days

prior to the date of issue or such other period as

determined by the Board (in its discretion).

Shares issued on exercise of Options will rank

equally with other ordinary shares of the Company.

Options may not be transferred other than to an

associate of the holder. Quotation of Options on

ASX will not be sought. However, the Company will

apply to ASX for official quotation of Shares issued

on the exercise of Options.

An Option may only be exercised after that Option

has vested and any other conditions imposed by

the Board on exercise satisfied. The Board may

determine the vesting period (if any). An Option

will lapse upon the first to occur of the expiry date,

the holder acting fraudulently or dishonestly in

relation to the Company or the employee ceasing to

be employed by the Company.

If, in the opinion of the Board any of the following has

occurred or is likely to occur, the Company entering

into a scheme of arrangement, the commencement

of a takeover bid for the Company’s Shares, or a

party acquiring a sufficient interest in the Company

to enable them to replace the Board, the Board

may declare an Option to be free of any conditions

of exercise. Options which are so declared may,

subject to the lapsing conditions set out above, be

exercised at any time on or before their expiry date

and in any number.

Future Issues of Shares

New Issues

There are no participating rights or entitlements

inherent in the Options and optionholders will not

be entitled to participate in new issues of capital

offered to Shareholders during the currency of the

Options. However, the Company will ensure that

the record date for determining entitlements to any

such issue will be at least six Business Days after the

issue is announced. Optionholders shall be afforded

the opportunity to exercise all Options which they

are entitled to exercise pursuant to the Plan prior to

the date for determining entitlements to participate

in any such issue.

Bonus Issues

If the Company makes an issue of Shares to

Shareholders by way of capitalisation of profits or

reserves (“Bonus Issue”), each optionholder holding

any Options which have not expired at the time of

the record date for determining entitlements to the

Bonus Issue shall be entitled to have issued to him

upon exercise of any of those Options the number

of Shares which would have been issued under the

Bonus Issue (“Bonus Shares”) to a person registered

as holding the same number of Shares as that

number of Shares to which the optionholder may

subscribe pursuant to the exercise of those Options

immediately before the record date determining

entitlements under the Bonus Issue (in addition to

the Shares which he or she is otherwise entitled to

have issued to him or her upon such exercise). The

Bonus Shares will be paid by the Company out of

profits or reserves (as the case may be) in the same

manner as was applied in relation to the Bonus Issue

and upon issue rank pari passu in all respects with

the other Shares issued upon exercise of the Options.

Reconstruction of Capital

In the event of any reconstruction (including a

consolidation, subdivision, reduction or return) of

the issued capital of the Company prior to the expiry

of any Options, the number of Options to which

each optionholder is entitled or the exercise price

of his or her Options or both or any other terms

will be reconstructed in a manner determined by

the Board which complies with the provisions of the

ASX Listing Rules.

Taxation

Under current taxation laws any taxation liability

in relation to the Options, or the Shares issued on

exercise of the Options, will fall on the participants.

The Company will not be liable to fringe benefits

General Mining Corporation Ltd ~ Prospectus

97


98

11 - Additional Information

tax in relation to Options or Shares issued under the

Plan.

Participation by Directors

Although Directors are eligible to be offered Options

under the Plan, this first requires specific Shareholder

approval due to the requirements of the ASX Listing

Rules and the Corporations Act.

11.6 Interests of Directors

Other than as set out below or elsewhere in this

Prospectus, no Director or proposed Director holds,

or held at any time during the two years before

lodgement of this Prospectus with the ASIC, any

interest in:

a) the formation or promotion of the Company;

b) property acquired or to be acquired by the

Company in connection with:

(i) its formation or promotion; or

(ii) the Offer; or

c) the Offer; and

no amounts, whether cash or shares or otherwise,

have been paid or agreed to be paid, and no

benefits have been given or agreed to be given:

d) to any Director or proposed Director, either to

induce them to become, or to qualify as, a Director

of the Company; and

e) for services provided by a Director or

proposed Director, in connection with:

(i) the formation or promotion of the Company;

or

(ii) the Offer.

Remuneration of Directors

In accordance with the Constitution, the existing

Shareholders of the Company as at the date of this

Prospectus have determined in general meeting that

the maximum total remuneration for non-executive

Directors is to be $250,000 per annum.

The Directors have resolved that each non-executive

director is entitled to receive fees of $40,000 per

annum (inclusive of superannuation) and the

Table 1: Director Option holdings

Chairman of Directors is entitled to receive $60,000

per annum (inclusive of superannuation).

A Director may also be paid fees or other amounts

as the Directors determine if a Director performs

special duties or otherwise performs services outside

the scope of the ordinary duties of a Director. A

Director may also be reimbursed for out of pocket

expenses incurred as a result of their directorship or

any special duties.

Directors’ Holdings

Under the Constitution, the Directors are not required

to hold any Shares in the Company.

The Directors have interests in the following Shares

and Options:

Director Shares Options

Craig Readhead 1,466,417 2,100,000

Robert Wanless 2,600,000 1,900,000

Michael Wright 2,343,227 2,500,000

Chris Wanless 2,400,000 1,900,000

The Directors have each agreed to accept twothirds

(2/3) of their accrued fees, as at 30 September

2009, in Shares at an issue price of $0.20 each with

the remaining one-third (1/3) to be paid in cash

following listing on the ASX. These Shares are

included above. The Options issued to Directors,

officers and other persons total 8,200,000 million and

are on the following terms:

(i) the exercise price of each Option is 20 cents;

(ii) the Options expire at 5.00 pm WST;

(iii) Shares issued as a result of the exercise of any

of these Options will rank equally in all respects

with previously issued Shares;

(iv) the Options are exercisable by completing the

application for exercise of Options and delivering

the same together with payment for the number of

Shares in respect of which the Options are exercised

to the registered office of the Company;

(v) subject to ASX Listing Rules the Options are

Director Options First ExpiryDate Second ExpiryDate

Craig Readhead 2,100,000 2,000,000 on 1/10/12 100,000 on 23/6/2013

Robert Wanless 1,900,000 1,900,000 on 1/10/12

Michael Wright 2,500,000 2,000,000 on 11/3/13 500,000 on 23/06/2013

Chris Wanless 1,900,000 1,900,000 on 1/10/12


freely transferable in whole or part at any time prior

to expiry, however no application will be made for

quotation of the Options on the ASX;

(vi) within 14 days of the receipt of a properly

executed notice of exercise and application monies

the Company will issue to the Option holder the

number of Shares specified in that notice;

(vii) the Company will apply for official quotation

of all Shares issued and allotted pursuant to the

exercise of the Options;

(viii) option holders are permitted to participate in

new issues of securities offered to shareholders on

the prior exercise of the option in which case the

option holder shall be afforded the period of at least

10 business days prior to an inclusive of the books’

closing date (to determine the entitlements to the

issue) to exercise the Option; and

(ix) in the event of any reorganisation (including

consolidation, subdivision, reduction or cancellation)

of capital of the Company, the rights of Option

holders are to be changed to the extent necessary to

comply with ASX Listing Rules on a reorganisation of

capital at the time of the reorganisation.

11.7 Consents

Each of the parties referred to in this section:

a) does not make, or purport to make any

statement in this Prospectus other than those referred

to in this section; and

b) to the maximum extent permitted by law,

expressly disclaims and takes no responsibility for

any part of this Prospectus other than a reference to

its name and a statement included in this Prospectus

with the consent of that party as specified in this

section.

JL Geological Services Pty Ltd has given and has not,

before lodgement of this Prospectus, withdrawn its

consent to being named as the independent geologist

in the form and context in which it is named and to

the inclusion of the Independent Geological Report

included in section 5 of the Prospectus in the form

and context in which it is included.

Exploration Alliance Ltd has given and has not,

before lodgement of this Prospectus, withdrawn its

consent to being named as the independent geologist

in the form and context in which it is named and to

the inclusion of the Independent Geological Report

included in section 4 of the Prospectus in the form

and context in which it is included.

ERCOSPLAN Ingenieurgesellschaft Geotechnik

und Bergbau mbH has given and has not, before

lodgement of this Prospectus, withdrawn its consent

to being named as the independent geologist in

the form and context in which it is named and to

the inclusion of the Independent Geological Report

included in section 4 of the Prospectus in the form

and context in which it is included.

Allion Legal has given and has not, before

lodgement of this Prospectus, withdrawn its consent

to being named as solicitor for the offer and as the

independent solicitor reporting on tenements in

the form and context in which it is named and to

the inclusion of the Independent Solicitor’s Report

included in section 7 of the Prospectus in the form

and context in which it is included.

Galaxy has given and has not before lodgement

of this Prospectus, withdrawn its consent to being

named and statements attributed to it in the form

and context in which those statements appear in this

Prospectus.

Stantons International has given and has not,

before lodgement of this Prospectus, withdrawn

its consent to being named as the independent

accountant and auditor of the Company in the

form and context in which it is named and to the

inclusion of the Independent Accountant’s Report

included in section 8 of the Prospectus in the form

and context in which it is included.

11.8 Interests of Experts and Advisers

Other than as set out below or elsewhere in this

Prospectus:

a) no person named in this Prospectus as

performing a function in a professional, advisory or

other capacity in connection with the preparation or

distribution of the Prospectus, any promoter of the

Company [or broker to the Issue], holds, or held at

any time during the two years before lodgement of

this Prospectus with the ASIC, any interest in:

(i) the formation or promotion of the Company;

(ii) property acquired or proposed to be acquired

by the Company in connection with its formation or

promotion or in connection with the Offer; or

(iii) the Offer; and

b) no amounts have been paid or agreed to be

paid, and no benefits have been given or agreed to

be given, to any of those persons in connection with

the formation or promotion of the Company or the

Offer.

Allion Legal has acted as solicitor to the Offer and

provided advice and assistance in relation to certain

aspects of this Prospectus, the independent solicitors

report, the Company’s due diligence regime and

enquiries and in relation to its application and

General Mining Corporation Ltd ~ Prospectus

99


100

11 - Additional Information

admission to ASX. In respect of these services,

Allion Legal will be paid approximately $30,000.

JL Geological Services Pty Ltd has acted as the

independent geologist for the Company’s Australian

projects and has prepared the Independent

Geological Report included in section 5 of this

Prospectus. JL Geological Services Pty Ltd has been

paid $54,400 (plus GST) in respect of these services.

Exploration Alliance Ltd has acted as the independent

geologist for the Company’s Mongolian projects and

has prepared the Independent Geological Report

included in section 4 of this Prospectus. Exploration

Alliance Ltd has been paid $31,900 (plus GST) in

respect of these services.

ERCOSPLAN Ingenieurgesellschaft Geotechnik

und Bergbau mbH has provided information in

connection with the Company’s Mongolian projects

for the Independent Geological Report included in

section 4 of this Prospectus. Ercosplan has been

paid $30,100 in respect of these services.

Stantons International has acted as the

independent account to the Offer and prepared

the Independent Accountant’s Report included

in section 8 of this Prospectus. Stantons

International will be paid $12,000 (plus GST) in

respect of these services. Stantons International

has agreed to act as auditor to the Company and

will receive fees for rendering these services in

accordance with its normal time based charges.

11.9 Litigation

Legal proceedings may arise from time to time

in the course of the Company’s business. As at

the date of this Prospectus, litigation searches

confirm that the Company is not involved in any

legal proceedings, nor so far as the Directors

are aware, are any legal proceedings pending or

threatened against the Company the outcome of

which will have a material adverse effect on the

business or financial position of the Company.

11.10 Expenses of the Offer

The total expenses connected with the Offer are

estimated to be up to approximately $640,000

assuming a $8 m. These expenses will be borne by

the Company.

$4m raising $8m raising

Investigating

Accountant’s

Report

$ 12,000 $12,000

Solicitor’s Report $30,000 $30,000

Independent

Geologists Report

(Australia)

$54,400 $54,400

Independent

Geologists Report

(Mongolia)

$62,000 $62,000

Other Legal and

Related Costs

$5,400 $5,400

Administration,

printing and other

costs

$24,500 $24,500

Broker Fees and

Commissions

$200,000 $400,000

Lodgement and

Listing Fees

$47,151 $51,375

Total $435,451 $639,675

11.11 Restricted Securities

ASX may classify certain existing Shares on issue in

the Company (as opposed to those to be issued under

this Prospectus) as being subject to the restricted

securities provisions of the ASX Listing Rules. If

so classified, such Shares would be required to be

held in escrow for a period determined by ASX and

would not be able to be sold, mortgaged, pledged,

assigned or transferred for that period without the

prior approval of ASX.

11.12 Tax Considerations

Investors should seek and rely on their own

professional taxation advice in relation to an

investment in the Company.

11.13 Distribution of Prospectus

The Prospectus has been prepared by the Company.

In preparing the Prospectus, the Company has taken

reasonable steps to ensure that the information in

the Prospectus is not false or misleading. In doing

so, the Company has had regard to the prospectus

requirements of the Corporations Act.

Prospective investors should read the full text of the

Prospectus as the information contained in individual


sections is not intended to and does not provide a

comprehensive review of the business and financial

affairs of the Company nor the securities offered

pursuant to the Prospectus.

No persons is authorised to give any information

in relation to or to make any representation

in connection with the Offer described in the

Prospectus that is not contained in the Prospectus.

Any such information or representation may not

be relied upon as having been authorised by the

Company in connection with the Offer.

The Prospectus provides information to assist

investors in deciding whether they wish to invest

in the Company and should be read in its entirety.

If you have any questions about its contents or

investing in the Company you should contact your

stockbroker, accountant or other financial adviser.

11.14 Non-Resident Investors

The Prospectus does not constitute an offer in any

country or place in which, or to any person to

whom, it would not be lawful to make such an offer.

The distribution of the Prospectus in jurisdictions

outside Australia may be restricted by law and

therefore persons who come into possession of the

Prospectus should seek advice on and observe any

of these restrictions. Failure to comply with these

restrictions may violate securities law. Applicants

who are resident in countries other than Australia

should consult their professional advisers as to

whether any governmental or other consents are

required or whether any other formalities need

to be considered and followed to enable them to

subscribe for Shares.

The Prospectus does not constitute an offer in any

place in which, or to any person to whom, it would

not be lawful to make such an offer.

Intending investors resident outside Australia should

first consult their professional advisers as to whether

or not governmental or other consents are required,

or whether formalities need to be observed to

enable them to invest. Intending non-resident

investors should also seek advice in respect of the

taxation effect of an investment in the Company and

dividends that the Company may distribute in the

future.

The return of a duly completed Application Form

will be taken to constitute a representation and

warranty that there has been no breach of such laws

and that all necessary approvals and consents have

been obtained.

No action has been taken to register or qualify the

Shares or the Offer, or otherwise to permit a public

offering of the Shares in any jurisdiction outside

Australia.

11.15 Privacy

The Application Form accompanying this Prospectus

requires you to provide information that may be

personal information for the purposes of the Privacy

Act 1988 (Cth) (as amended). The Company (and

its share registry on behalf of the Company) may

collect, hold and use that person information in

order to assess your Application, service your needs

as a Shareholder and provide facilities and services

that you request and to administer the Company.

Access to information may also be provided to the

Company’s agents and service providers on the basis

that they deal with such information in accordance

with the Company’s privacy policy.

If you do not provide the information requested of

you in the Application Form, the Company’s share

registry may not be able to process your Application

or administer your holding of Shares appropriately.

Under the Privacy Act 1988 (Cth) (as amended), you

may request access to your personal information

held by (or on behalf of) the Company. You can

request access to your personal information by

telephoning or writing to the Company to the

attention of the Privacy Officer.

General Mining Corporation Ltd ~ Prospectus

101


102

12 - Directors’ Statements; plus Glossary

12 - Directors’ Statements

This Prospectus is issued by the Company and its issue has been

authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director

has consented to the lodgement of this Prospectus with the ASIC and

has not withdrawn that consent.

Dated: 26 October 2009

Michael Wright

Chairman

For and on behalf of

General Mining Corporation Limited


Glossary

The following defined terms apply throughout this Prospectus unless the context requires otherwise:

“$” means Australian dollars unless otherwise specified;

“ACH Clearing Rules” means the operating rules of Australian Clearing House Pty Limited ACN

001 314 503;

“Applicant” means a person who completes and lodges an Application Form;

“Application” means an application for Shares pursuant to this Prospectus;

“Application Form” means the application form attached to this Prospectus;

“ASIC” means the Australian Securities & Investments Commission;

“ASTC Rules” means the settlement rules of Australian Settlement and Transfer

Corporation Pty Ltd;

“ASX” means ASX Limited (ACN 008 624 691);

“ASX Listing Rules” means the Listing Rules of ASX as amended from time to time;

“Closing Date” means the last date on which Application Forms may be submitted;

“Company” or “GMM” means General Mining Corporation Limited

(ABN 95 125 721 075);

“Constitution” means the Constitution of the Company;

“Corporations Act” means the Corporations Act 2001 (Cth);

“Directors” or “Board” means the directors of the Company as at the date of this Prospectus;

“Exposure Period” means the period of seven days after the date of lodgment of this

Prospectus with the ASIC, which period may be extended by the ASIC by

not more than seven days pursuant to Section 727(3) of the Corporations

Act;

“Issue” means the issue of up to 40,000,000 Shares under this Prospectus;

“Offer” means the offer of Shares pursuant to this Prospectus;

“Official List” means the official list of ASX;

“Opening Date” means the first date on which Application Forms can be received;

“Priority Offer” means an offer of Shares made to Galaxy shareholders as at 5.00 p.m.

WST on 26 October, 2009 with a registered address in Australia;

“Prospectus” means this prospectus dated 26 October 2009;

“Option” means an option to be issued a Share;

“Shares” means fully paid ordinary shares in the capital of the Company;

“Shareholder” means a holder of a Share(s);

“Share Registry” means Advanced Share Registry Ltd;

“Shoemaker Sale

Agreement”

“Shoemaker Joint

Venture Agreement”

means the tenement sale agreement entered into between General Mining

Corporation Ltd and Galaxy Resources Ltd dated 30 June 2009;

means the joint venture agreement entered into between General Mining

Corporation Ltd and Galaxy Resources Ltd dated dated 30 June 2009;

“Stategic Alliance” means the Strategic Alliance Agreement entered into between General

Mining Corporation Ltd and Galaxy Resources Ltd dated 26 October,

2009; and

“WST” means Western Standard Time.

General Mining Corporation Ltd ~ Prospectus

103


104


Offer Application Form

This Application Form relates to a prospectus dated 26 October 2009 (“the

Prospectus”) and the instructions overleaf. No shares will be issued pursuant

to the Prospectus later than 13 months after the date of the Prospectus.

A

C

D

E

F

Before completing this Application Form, you should carefully read the Prospectus dated 26 October 2009 and the instructions overleaf.

No applications will be accepted later than 5.00pm (WST) 4 December 2009 (subject to the Company’s right to vary this date).

PLEASE READ ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM

I/we apply for

Shares in General Mining Corporation Limited at $0.20 per Share or

(minimum application is 10,000 shares) or such lesser number of Shares

which may be allocated to me/us by the Directors.

Full Name

Title, Given Name(s) & Surname or Company Name

Joint Applicant #2

Joint Applicant #3

,

Postal address

Unit Street Number Street Name or PO Box /Other Information

ACN / ARBN

(For Companies only)

,

Broker/Dealer Stamp

I/we lodge full Application Money

A$ . 0 0

(Cheques to be payable to

General Mining Corporation Limited – Application Account”)

Payment details - cheques to be payable to “General Mining Corporation Limited - Application Account”

I Drawer Bank

BSB Number Account Number

Amount of cheque

B

Adviser Code

Share Registrar Use Only

Broker Code (office use)

City / Suburb / Town State Postcode

Contact Name Home Telephone Number

G CHESS Participant:

Holder Identification Number (HIN)

H

X

Galaxy Shareholder Priority Offer

The Company has agreed to set aside 40% of the Shares to be issued under the Offer to Galaxy shareholders as at 26

October 2009 with a registered address in Australia (“Priority Offer”). Shares will be allocated at the Directors’ discretion.

Please enter your Galaxy HIN/SRN in the box below if you qualify for the Priority Offer and would like Shares to be

allocated to you under the Priority Offer.

Holder Identification Number (HIN) or Securityholder Identification Number (SRN)

E-mail address

Tax File Number or exemption Applicant #2 Applicant #3

DECLARATION

1. I/We declare that by lodging this Application Form, I/we represent and acknowledge that I/we have received, read and understood the Prospectus to which this Application Form relates.

I/We hereby authorise the Company to complete and execute any document necessary to effect the allotment and issue of any Shares to me/us.

2. By lodging this Application Form, I/we declare that this application is completed and lodged according to the Prospectus and that all statements made by me/us are complete and accurate.

3. I/We also declare that this Application Form is completed according to this declaration and agree to be bound by the terms and conditions set out in the Prospectus and the Constitution of

General Mining Corporation Limited.

4. I/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in General Mining Corporation Limited and that no

notice of acceptance of the application will be provided.

5. The accompanying Prospectus should be read carefully. An application made using this Application Form will not be valid if another name is substituted for the name printed on the form.

NO SIGNATURE IS REQUIRED

TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS ATTACHED TO OR ACCOMPANIED

BY THE PROSPECTUS DATED 26 OCTOBER 2009.

A$

Work Telephone Number

Please note that if you supply a CHESS HIN but the name and address details on your form do not correspond

exactly with the registration details held at CHESS, your application will be deemed to be made without the CHESS

HIN, and any securities issued as a result of the IPO will be held on the Issuer Sponsored subregister.


TREATMENT OF APPLICATION

The return of an Application Form with your cheque for the application money will constitute your offer to purchase or subscribe for Shares.

If your Application Form is not completed correctly, or if the accompanying payment is for the wrong amount, it may still be treated as valid.

The decision of the Company as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final. The decision on the number of

Shares to be allocated to you shall also be final. You will not, however, be treated as having offered to purchase more Shares than is indicated on the Application Form.

Investors whose application are not accepted, or are Accepted in respect of a lower number of Shares than the number applied for, will receive a refund of all or part of

their application money without interest, as applicable.

CORRECT FORMS OF REGISTRABLE NAMES

Only legal entities may be registered as holders of the Shares. Applications must be in the full name(s) of natural persons, companies or other legal entities. Shares

cannot be registered in the name of a trust and no trust can be implied. The name of a beneficiary or any other registrable name may be included by way of account

description if completed exactly as described in the examples of correct forms of registrable names below.

Type of Investor Correct

Form

of

Registration

Incorrect

Form

of

Registration

Individual

- Use given name(s) in full, not initials

Persons under the age of 18

- Do not use the name of the minor, use name(s) of parent(s)/guardian(s)

Companies

- Use company title, not abbreviations

Trusts

- Do not use the name of the trust, use name(s) of trustee(s)

Deceased Estates

- Do not use the name of deceased, use personal names of executor(s)

Partnerships

- Do not use the name of partnership, use personal names of partners

Clubs/Unincorporated Bodies

- Do not use name of clubs etc, use personal names of office bearer(s)

Superannuation Funds

- Do not use name of fund use name(s) of trustee(s)

How to complete this form

A

B

C

D

E

JOHN FRED WILLIAMS

MICHAEL JOHN WILSON &

SARAH JANE WILSON


JOHN WILLIAMS PTY LTD

JOHN FRED WILLIAMS


JANE MARY MCDONALD


SARAH JANE WILSON &

MICHAEL JOHN WILSON


JOHN FRED WILLIAMS


SARAH WILSON PTY LTD


Please complete all relevant sections of the Application Form in BLOCK LETTERS.

These instructions are cross-referenced to each section of the Form.

Shares Applied for

Insert the Number of Shares you wish to apply for in Section A. The

application must be for a minimum of 10,000 Shares and thereafter

must be in multiples of 2,500 Shares.

Application Monies

Insert your application money be multiplying the number of Shares

by 20 cents per share in Section B.

Applicant Name(s)

Enter the Full Name(s) and Title(s) of all legal entities that are to be

recorded as the registered holder(s) of the Shares. You should refer

to the back of the Application Form for the correct forms of name

which can be registered. Applications using the wrong form of name

may be rejected.

Up to three joint Applicants may register. An account designation

may be entered on the last line of this section. It should be contained

within brackets with A/C at the end eg .

Postal Address

Enter your Postal Address for all correspondence. All communications

to you from General Mining Corporation Limited will be mailed to the

person(s) and address as shown. For joint applications, only one

address can be entered.

Contact Name

Please insert your Telephone Number(s) and contact name in case

there are irregularities with your application.

GALAXY SHAREHOLDER PRIORITY OFFER

As part of the Priority Offer, the Company will set aside 40% of

the Shares to be issued under the Offer to Galaxy shareholders

as at 5.00 p.m. WST 26 October 2009 with a registered address

in Australia (“Priority Offer”). Shares will be allocated under the

Priority Offer at the Directors’ discretion.

Please enter your Galaxy HIN / SRN in the grey box on the

Application form if you qualify for the Priority Offer.

F

G

H

I

J.F Williams

Andrew Wilson I

J. Williams Co.

John Williams P/L

John Williams Family Trust

Estate of the Late John Smith

Sarah Wilson & Son

ABC Tennis Association

Sarah Wilson Pty Ltd

Superannuation Fund

ACN/ARBN

If the applicant is a company, insert A.C.N. or A.R.B.N

CHESS

General Mining Corporation Ltd (the Company) will apply to the ASX to

participate in CHESS, operated by ASX Settlement and Transfer

Corporation Pty Ltd, a wholly owned subsidiary of Australian Securities

Exchange Limited. In CHESS, the company will operate an electronic

CHESS Subregister of security holdings and an electronic Issuer

Sponsored Subregister of security holdings. Together the two Subregisters

will make up the Company’s principal register of securities. The Company

will not be issuing certificates to applicants in respect of shares allotted. If

you are a CHESS participant (or are sponsored by a CHESS participant)

and you wish to hold shares allotted to you under this Application on the

CHESS Subregister, enter your CHESS HIN. Otherwise, leave this section

blank and on allotment, you will be sponsored by the Company and

allocated a Securityholder Reference Number (SRN).

Tax File Number or Exemption

Enter the tax file number(s) of the applicants. With a joint holding, only the

tax file number of two holders are required.

Cheque Details

• Make your cheque(s) or bank draft(s) payable to

General Mining Corporation Limited - Subscription Account”

in Australian currency. Your cheque(s) or bank draft(s) must be drawn

on an Australian bank.

• Attach your cheque(s) or bank draft(s) to the Application Form where

indicated. Complete the details of your cheque(s) or bank draft(s) in this

section

LODGEMENT OF APPLICATIONS

Return your completed Application Form and cheque(s) or bank draft(s) to:

State One Stockbroking Ltd

Perth: PO Box 7625

Cloisters Square WA 6850

Tel: (08) 9288 3388

Fax: (08) 9321 6998

Sydney: PO Box R1931

Royal Exchange NSW 1225

Tel: (02) 9024 9118

Applications must be received at the above address by 5.00pm (WST)

on 4 December 2009 (subject to the right of the Company to vary this date)

General Mining Corporation Limited

P O

13817-GMM-TISG

G M M


General Mining Corporation Ltd ~ Prospectus

107


108

Summary

129 Edward Street

Perth WA 6000

Tel: (61 8) 9227 1186

Fax: (61 8) 9227 8178

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