Karchiga VHMS

(volcanic hosted massive sulphide) Copper-Gold Project

Licence Location

The Karchiga Copper-Gold deposit is a mid-Palaeozoic aged metamorphosed volcanic hosted massive sulphide deposit (VHMS) located in the extreme north east of the Republic of Kazakhstan, within 40km of the Chinese border. The project is readily accessible and is situated on gentle undulating terrain.

The Karchiga deposit is located within the north west striking, mid-Palaeozoic, Rudny Altai VHMS terrane, the host of numerous world class VHMS deposits, including the Leninigorsk, Zyryanovsk, Maleevsky and Ridder Sokolnoye deposits. The Rudny Altai is ranked in the top four VHMS belts of the world with over 70Mt of contained metal and forms the eastern limb of the Mugodjar-Rudny Altai arc with the western limb hosting the abundant VHMS deposits of the southern Urals.

Project History

The deposit was originally exploited by Chinese artisans in ancient times and was re-discovered and explored by Soviet geologists during the 1940’s and 50’s. The Soviet era exploration included more than 100 cored drill holes and an exploration shaft into the ore body. The deposit has a historical resource (Non-NI 43-101 Compliant) of 6.3Mt grading 2.77% Cu and 0.8 g/t Au. Lero is required to submit an exploration work programme for the Karchiga deposit and surrounding licence holding.

Project Geology

Mineralisation at Karchiga occurs as shallow dipping tabular bodies of massive and disseminated chalcopyrite-pyrite ranging from 2-25m thick that are hosted by highly metamorphosed amphibolite and gneiss. The deposit appears to be geologically continuous and robust.

Karchiga Resource Estimate

In April, 2008 Lero Gold Corporation received a National Instrument 43-101 compliant resource estimate for the Karchiga VMS deposit.

The resource incorporates the 1,879m of confirmation diamond drilling completed by Lero Gold Corporation in Q4 2007 and 86 historical Soviet diamond drill holes and trenches totalling 10,330m. At a 0.50% copper cut-off, the Indicated resource is 4.75Mt @ 2.46% Cu while the Inferred resources total 2.81Mt @ 1.81% Cu.

Table 1: Karchiga Copper Project, Resource estimate April 2008;

Karchiga Central lodes contain 4.75Mt @ 2.46% Cu of the resource within sulphide (Indicated) and 0.71Mt @ 1.49% Cu within oxide (Inferred) material at a 0.50% Cu cut-off. The balance of the resource is contained within an Inferred sulphide resource at Karchiga northeast. The north eastern lodes, which are blind to surface, are located some 200m across strike and lie 150m stratigraphically above the Karchiga Central mineralised zone.

The mineralisation is located within a series of stacked shallow-dipping massive and disseminated sulphide bodies, primarily consisting of chalcopyrite-pyrrhotite and pyrite mineralisation. The lodes have a strike of in excess of 1km and are intersected at depths reaching 200m. The majority of the high grade sulphide mineralisation is concentrated within 100m from surface. Indication of the presence of easterly-plunging higher grade copper shoots is evident from the modelling completed to date and follow-up drilling is planned to evaluate the down dip potential during the 2008 field season.

The resource was calculated using Ordinary Kriging on composite drill hole samples selected within a 0.5% Cu wireframe. All wireframe models were constructed from interpretation of geology and grade boundaries and used to assign block categories within the grade interpolation model. Material types and samples data was subsequently extracted and subset within discrete lodes and grade interpolation constrained to each individual lode separately. A total of seven separate wireframes were constructed to constrain drill hole data. Specific gravity measurements were carried out for the different material types collected from Karchiga diamond drill core and an in-situ bulk density value assigned to the block model.