Shandong, Kingdom of Gold

Ken Reser
Apr 8, 2005

'Confucius' the great sage once said: "I was not born knowledgeable, I am devoted to antiquity and am quick to seek knowledge."

Located in China's NE and bordering the coast, the Shandong Province is a land steeped in history of Gold Mines, Diamonds, Sapphire, Oil, Iron, Coal & many other minerals. Shandong is the birthplace and eternal resting place of the great philosopher 'Confucius' and a land of much splendor in the shadow of Mt Tai with the fertile delta of the Yellow River embracing its rich agriculture. For hundreds of years the Chinese have dubbed Shandong the Kingdom of Gold. With respect to the eternal yellow metal, Shandong Province produces 26% of China's annual gold production and with new exploration at depth may become one of the world's major gold provinces. (China mined over 212 tons of gold in 2004) (64.5 tons in Shandong Province alone in 2004).

Situated on the confluence of the North China and the Yangtze continental blocks, Shandong is blessed with unique geological structures rich in mineral resources being diversified in each of its several tectonic units. Only now in our time are the depths of these tectonic structures beginning to be tested.

'Confucius' once said: "If work halts, as when it does only one basketful of earth short of completing a mound, it would be I who halt it. If work advances, as when it does with one basketful of earth poured in leveling the ground, it would be I who make it proceed."

Since its acceptance into the WTO, China has hastened to modernize mining laws (White Paper) in order to draw investment and mining expertise from the west. Historically and even today most gold mines are nothing but shallow open pit operations, high-grading the easy low value surface gold. In order to maximize these known gold showings the government has encouraged foreigners to come and joint venture with existing mines, undertake new exploration and form new working relationships beneficial to local communities and infrastructure. One mine producing on a current small scale may in future with modern equipment and technology become another of the world's larger gold deposits and this is the intent of Chinese wisdom in the deregulation and simplification of mining laws and permits.

Goldfields C.E.O. Ian Cockerill in 2003 called China the World's next major gold mining province. He also believes in the potential of major gold finds in the deep complex geological mineral structures of Shandong province and has a JV with Sino Gold of Australia in that area. Goldrea Resources Corp is currently very active in Rushan, Shandong Province in a JV with Shandong Daye Mining Co. Other mining companies from Canada are actively working in China such as Placer Dome, APAC Minerals, SW Resources, Energold, Pacific Minerals, Minco Mining & Metals, Ivanhoe Mines, TVI Pacific & Alcan among others.

One very salient aspect of Chinese reasoning other than gaining western expertise to maximize gold mining potential in China is the fact that mining companies invest equity in joint venture companies, they invest in local infrastructure, they pay taxes and they provide employment at a local level. In China as in all Asian nations the people are most industrious and hard working. Unlike here in the west where we look to our employer for days off for leisure, they in turn look to their employer for extra days and hours of work. When the husband brings home a paycheck for a period of time, soon his wife or sons have a family business to complement their income. Now I do not know if it was Confucius or not who said: "A bird in the hand is worth two in the bush" but it applies to the forward thinking of China's new approach to JV mining with our established mine exploration companies of the west.

In a paper on Mining in China which Placer Dome created they stated the following.
(Excerpt)

Western Business Approach.
Do business
Become friends

Eastern Business Approach.
Become friends
Do business

In China my task is to have friends. It is my friend's task to bring me the project I need.

In China you will find your best friend and your worst enemy, your task is to make sure they are not the same person.

In China everything is possible or impossible, it is up to you. (end of excerpt)

Current large mines in China produce 30,000 to 70,000 oz of gold p/yr. They want mines that produce 300,000 to 400,000 oz p/yr. With modern mining exploration practices and extensive drill testing they will in all probability have a few in due course. From the sheer vastness of China's boundaries, to the hard working industriousness of its people, and the immeasurable wealth of untapped minerals, China is exactly the place for the world's next great gold discoveries to be made.

So, if from my writing you have gained some insight into the potential and security of foreign mining companies venturing into the land of the Golden Dragon and more specifically Shandong Province 'The Kingdom of Gold' then you will realize why China has in recent months and years revised over 2500 Mining Laws and regulations, and why China is a very big part of our gold mining future.

'Confucius' also said: "When three men walk together, there is always something I can learn. Choose to follow what is good in them and correct what is not good."

Ken J. Reser
Investor Relations Consultant
Adanac Moly Corp.  website  (AUA:TSX-V) (PinkSheets:ANCGF) (Frankfurter:A9N)
Goldrea Resources Corp.  website  (GOR:TSX-V)
South Pacific Minerals  website  (SPZ:TSX-V)

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