DRAGON MOUNTAIN GOLD LIMITED

ACN 111 005 282

NOTICE OF GENERAL MEETING

TIME: 1:00pm (WST) DATE: 15 December 2011 PLACE: The Celtic Club 48 Ord Street WEST PERTH WA 6005

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

CONTENTS PAGE

Notice of General Meeting (setting out the proposed resolution)	1
Explanatory Statement (explaining the proposed resolution)	2
Glossary	11
Proxy Form	12

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The general meeting of the Shareholders to which this Notice of Meeting relates will be held at 1:00pm (WST) on 15 December 2011 at:

The Celtic Club 48 Ord Street WEST PERTH WA 6005

YOUR VOTE IS IMPORTANT

The business of the General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

NOTICE OF GENERAL MEETING

Notice is given that the general meeting of Shareholders will held at 1:00pm (WST) on 15 December 2011.

The Explanatory Statement provides additional information on matters to be considered at the General Meeting. The Explanatory Statement and the Proxy Form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company at 7.00pm (Sydney time) on 13 December 2011.

Terms and abbreviations used in this Notice of Meeting are defined in the Glossary.

AGENDA

1. RESOLUTION 1 – DISPOSAL OF INTEREST IN LONG PROVINCE RESOURCES LIMITED

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That, for the purposes of ASX Listing Rule 11.2, Clause 5.3 of the Company’s Constitution, and for all other purposes, approval is given for the sale by Warrior Advance Pty Ltd (being a majority owned subsidiary of the Company) of all of the issued shares in Long Province Resources Limited, on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the Resolution is passed and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

DATED: 14 NOVEMBER 2011

BY ORDER OF THE BOARD

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JAY STEPHENSON COMPANY SECRETARY

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the General Meeting to be held at 1:00pm (WST) on 15 December 2011 at The Celtic Club, 48 Ord Street, West Perth, Western Australia.

The purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolution in the Notice of Meeting.

1. RESOLUTION 1 – DISPOSAL OF INTEREST IN LONG PROVINCE RESOURCES LIMITED

1.1 General - ASX Listing Rule 11.2

On 7 November 2011 the Company announced to ASX that the Company and its majority owned subsidiary, Warrior Advance Pty Ltd (Warrior), had entered into a conditional agreement (Agreement) pursuant to which Warrior had agreed to sell 100% of the issued shares in Long Province Resources Limited (LPR), which holds the Lixian Gold Project in China.

A summary of the Agreement is set out in Section 1.3 of this Explanatory Statement.

Listing Rule 11.2 provides that an entity must seek the approval of its Shareholders before disposing of its main undertaking. As the proposed transaction represents the disposal of the Company’s main undertaking, Shareholder approval is sought pursuant to Resolution 1 for the Company’s majority owned subsidiary, Warrior, to sell all of the issued shares in LPR.

1.2 Background

The Company currently holds 84% of the issued capital of Warrior, with the remaining 16% held by Boxwood Investments Limited.

Warrior holds 100% of the issued capital of LPR, a company incorporated in Hong Kong. LPR in turns holds:

(a) 90% of Gansu Long Jin Mining Resources Ltd (a company incorporated in the Peoples Republic of China) which holds the Long Jin Permit (Exploration Permit Number T 0112 0090 2020 25163); and
(b) 87% of Gansu Long Ao Mining Co Ltd (a company incorporated in the Peoples Republic of China) which holds the following four Long Ao Permits:
(i) Shi Baozi Gold Mine (Exploration Permit Number T 0112 0090 2020 25165);
(ii) Da Zhuangli Gold Mine (Exploration Permit Number T 0112 0090 2020 25170);
(iii) Chen Jiagou Gold Mine (Exploration Permit Number T 0112 0090 2020 25172); and

(iv) Taoping Gold Mountain Gold Mine (Exploration Permit Number T 0112 0090 2020 25174).

The above Exploration Permits together comprise the Lixian Gold Project (Project). Further details of the Project are set out in Section 1.4 of this Explanatory Statement.

The Company does not hold any significant assets other than its indirect interest in the Project, held via Warrior and LPR.

On 7 November 2011 the Company announced to ASX that the Company and Warrior had conditionally agreed to sell 100% of the issued shares in LPR to Zijin Mining Group Co Limited (Zijin) for consideration of AUD$175,000,000 (Transaction). The Company anticipates that its share of the consideration (after costs of the Transaction) will be approximately AUD$150,000,000.

If completed, the Transaction will realise significant value for the Company’s investment in the Project. Completion of the Transaction is subject to the satisfaction or waiver of conditions precedent which include approval by the shareholders of the Company and Warrior to give effect to the Transaction, and the parties obtaining any third party approvals and consents from any relevant authority which are required to give effect to the Transaction.

On completion of the Transaction, the Company will no longer hold any interest in the Project.

1.3 Summary of the Agreement

Pursuant to the Agreement, Warrior has agreed to sell, and Zijin, through its wholly owned subsidiary, Ding Jin Limited (DJL), has agreed to acquire, all of the issued capital of LPR on the following material terms and conditions:

(a) (Conditions Precedent): completion of the Agreement is conditional upon the following conditions being satisfied before 12:00 noon (Hong Kong time) on 4 January 2012:
(i) the approval by the board and shareholders of Warrior and the Company of the Agreement and the transactions contemplated by the Agreement, and all other consents required under the applicable law being obtained (or waived from compliance);
(ii) all third party approvals being obtained (or waived) from:
- (A) in the case of Zijin – the relevant authority, including from The Stock Exchange of Hong Kong Limited and the Shanghai Stock Exchange; and
- (B) in the case of the Company – the relevant authority, including from the Australian Securities Exchange;
(iii) the warranties provided by Warrior in the Agreement being true and accurate in all respects on and as of completion of the Agreement;
(iv) Warrior providing audited accounts for the year ending 15 November 2011 to DJL;

(v) there being no payment made and no contract entered into by LPR or any of its subsidiaries after 15 November 2011 without the prior written consent of DJL; and
(vi) Warrior delivering a substantial final draft of a consolidated profit and loss account and consolidated balance sheet of LPR and its subsidiaries up to the completion date to DJL at least three business days prior to the completion date;
(b) (Consideration): the consideration shall be AUD$175,000,000, to be paid by DJL to Warrior at completion of the Agreement;
(c) (Adjustment to consideration): Warrior warrants that at completion of the Agreement, there shall be no outstanding loans, debts, guarantees, undertakings, commitments on capital account or unusual liabilities, actual or contingent, made or incurred by LPR or any of its subsidiaries (Liabilities). If such Liabilities do exist at completion of the Agreement, the consideration shall be reduced by the amount of such Liabilities;
(d) (Representations and warranties): Warrior has provided warranties to Zijin and DJL (and agrees to indemnify Zijin and DJL for any breach of such warranties) in respect of the following matters relating to LPR and its subsidiaries:
(i) the accounts;
(ii) taxation, records and returns;
(iii) business and group structure;
(iv) corporate status;
(v) litigation;
(vi) matters since 15 November 2011;
(vii) accuracy of information provided in the Agreement and given to DJL and its advisers; and
(viii) ownership and status of the exploration permits comprising the Project; and
(e) (Governing Law): the Agreement is governed by the law of Hong Kong.

1.4 Description of the Project

The Lixian Gold Project contains a major outcropping gold system within which large scale, structurally controlled high grade mineralisation has been outlined from previous extensive drilling, trenching and adits. The host structures are wide (up to 90m) and can also extend for several kilometres with evidence of persistent mineralisation.

During the 2009/10 Financial Year the Company concentrated its exploration activities on the Liba licence which had the first JORC resource at the Zhao Gou mineralisation which was completed in July 2008.

In December 2009 the Company also announced a JORC resource at its Ma Gou mineralisation. The Inferred Mineral Resource estimate comprises of 19.51 million tonnes at 1.8g/t Au for 1.16 million ounces of contained gold using a lower cut-off grade of 0.5 g/t Au, within the company’s Liba Lease.

Further exploration by the Company during the 2010 financial year resulted in the JORC resource at Zhao Gou being upgraded to 32.78 million tonnes at 1.5g/t Au for 1.62 million ounces of contained gold using a cut-off grade of 0.5g/t Au (indicated 17.25 million tonnes at 1.8g/t for 0.99 million ounces and inferred 15.53 million tonnes at 1.3g/t for 0.63 million ounces). This was an increase of 47% in contained ounces from the mineral resource estimate reported 12 months previously.

In the 2011 financial year the Company turned its attention to the Jinshan Prospect with the belief that this prospect has the potential to deliver even better results than the Liba Prospect. In June 2011 the Company commissioned Micromine Consulting Services in China to conduct an independent resource estimation for the Jinshan Gold Prospect. The Company was delighted to announce the completion of a maiden resource estimate to JORC Code reporting standards for its Jinshan Gold Prospect part of the Lixian Gold Project in central China (Table 1). The Inferred and Indicated JORC Resource at Jinshan, comprises 27.3 million tonnes at 1.73 g/t for 1.52 million ounces (refer to Table 1 for further details).

This additional 1.5 million ounces at the Jinshan Prospect brings the total JORC Inferred and Indicated Resources at Lixian to 4.3 million ounces and further drilling is expected to increase the total JORC Compliant Resource for the Lixian Project significantly within a short period of time. The table below shows total JORC Compliant Resources for the Lixian Project to date.

Table 1: JORC Compliant Resources for the Lixian Project

Table 1: JORC Compliant Resources for the Lixian Project	Table 1: JORC Compliant Resources for the Lixian Project	Table 1: JORC Compliant Resources for the Lixian Project	Table 1: JORC Compliant Resources for the Lixian Project	Table 1: JORC Compliant Resources for the Lixian Project	Table 1: JORC Compliant Resources for the Lixian Project	Table 1: JORC Compliant Resources for the Lixian Project
Joint Venture	Deposit	Tonnes	Gold Grade (g/t)	Contained Ounces of Gold - Indicated	Gold Grade (g/t)	Contained Ounces of Gold - Inferred
Long Jin (GLJ)	Zhao Gou	32,780,000	1.8	990,000	1.3	625,000
	Ma Gou	19,510,000			1.84	1,154,000
	Sub Total	52,290,000		990,000		1,779,000
Long Ao (GLA)	Jinshan 30	27,300,000	2.02	246,000	1.69	1,275,000
	Sub Total	27,300,000		246,000		1,275,000
	TOTAL	79,590,000		1,236,000		3,054,000

The information in this Explanatory Statement that relates to the Exploration Results and Mineral Resources is based on the information compiled and reviewed by Mr Glenn Sheldon who is a member of the Australasian Institute of Mining and Metallurgy. Mr. Sheldon has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Sheldon consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The data and interpretations of the mineralisation were audited and the resource modelled by Micromine Consulting Services (MCS), geological consultants of Perth Western Australia. The information in this report that relates to Mineral Resources is based on information compiled by Matt Godfrey, who is a Member of the Australasian Institute of Mining and Metallurgy and qualifies as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Matt Godfrey consents to the inclusion in the report of the matters based on their information in the form and context in which it appears.

1.5 Value of the Transaction

The Directors believe that the value to be realised under the Transaction represent the best available outcome for all Shareholders. The Directors believe that the Transaction offers a greater return on equity to Shareholders than continuing to hold the Project, with the consequent cost of further equity and debt capital raisings, as well as the exposure to regulatory, developmental, operational and market related risks.

In considering the value of the Project, the Directors had regard to the requirements for substantial funding to continue to define the resource and to the significant amount of capital which would be required to exploit the resource. Consideration was also given to the regulatory regime in China. As far as possible, Directors also considered the market value of listed companies with similar resources. The directors are satisfied that the cash consideration of $175,000,000 payable by Zijin to Warrior is regarded as fair because:

It adds substantial value per Share in that the price per Share prior to the acquisition was 39 cents and the value per Share of the Company’s share of the Transaction of approximately $150,000,000 is 63.5 cents (prior to any dilution from the exercise of Options);
It recognises the value of the Project;
It eliminates future development and regulatory risk; and
It provides the Company with the capacity to seek out new projects to enhance Shareholder wealth and to consider other capital management initiatives.

1.6 Intentions of the Company if the Transaction is approved and implemented

The proceeds of the sale will allow the Company to actively pursue other investment opportunities in the resources industry. Shareholders should note that, if the Company disposes of its main undertaking as proposed, any future business or asset acquisition will be subject to the Company re-complying with Chapters 1 and 2 of the ASX Listing Rules, as required by ASX Listing Rule 11.1.3.

The Directors will also consider other capital management alternatives with respect to the proceeds.

1.7 Intentions of the Company if the Transaction is not approved and implemented

Warrior, via LPR, will continue to actively explore the Project and evaluate new opportunities in the resource sector. The Company will remain a shareholder in Warrior, and Warrior will remain a shareholder in LPR.

1.8 Indicative Timetable

Subject to ASX Listing Rules and Corporations Act requirements, the Company anticipates completion of the Transaction will be in accordance with the following timetable:

Notice of Meeting despatched to Shareholders	15 November 2011
General Meeting to approve Transaction	15 December 2011
Satisfaction/waiver of all conditions in Agreement	21 December 2011
Settlement of Agreement	21 December 2011

1.9 Effect of the Agreement and Resolution 1 on the Company, Shareholders, Optionholders and Noteholder.

(a) Effect on the Company:

If the Agreement is approved and completed:

(i) the Company will continue to hold 84% of the issued capital of Warrior, however neither the Company nor Warrior will have any interest in LPR or the Project;
(ii) the Company’s assets will comprise cash and loans;
(iii) the Company will continue to evaluate potential exploration/mining opportunities in the resource sector; and
(iv) in accordance with ASX Listing Rule 11.1.3, the Company will be required to re-comply with Chapters 1 and 2 of the ASX Listing Rules in relation to any future asset or business acquisition.
(b) Effect on Shareholders:

If the Agreement is approved and completed, the number of Shares held in the Company by a Shareholder will remain the same.

If the Agreement is approved and completed, the number of Options held in the Company by an Optionholder will remain the same.

(d) Effect on Convertible Noteholders:

If the Agreement is approved and completed, the Noteholder will have the opportunity to convert the Convertible Note on the terms and conditions on the Convertible Note.

1.10 Pro Forma Balance Sheet

An unaudited pro-forma balance sheet of the Company’s audited balance sheet as at 30 June 2011 as a result of the Transaction is set out below:

Dragon Mountain Gold Ltd and Controlled Entities

ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets TOTAL CURRENT ASSETS NON CURRENT ASSETS Property, plant and equipment Exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Employee provisions Unearned Income Financial Liabilities TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses Total equity attributable to equity holders of the Group Non-controlling interest TOTAL EQUITY	Group Audited 30 June 2011 $'000 1,408 3 69 1,480 847 36,984 37,831 39,311 964 13 500 4,162 5,639 5,639 33,672 55,008 4,070 -24,494 34,584 -912 33,672	Pro Forma Adjustments $'000 174,453 -3 -1 174,449 -772 -36,984 -37,756 136,693 -540 -6 - - -546 -546 137,239 - -1,827 113,934 112,107 25,132 137,239	Pro Forma 30 June 2011 $'000 175,861 - 68
			175,929
			75 -
			75
			176,004
			424 7 500 4,162
			5,093
			5,093
			170,911
			55,008 2,243 89,440
			146,691
			24,220
			170,911

1.11 Effect on Capital Structure

The capital structure at the date of this Notice is:

Total number of Shares on issue	235,943,501
Total number of Options on issue	18,650,000

On completion of the Transaction, the issued capital structure of the Company will remain the same as above.

The Company also has one convertible note on issue with a face value of $250,000. The number and face value of this note will remain the same on completion of the Transaction.

1.12 Tax implications for Company

Preliminary advice received by Directors indicates that, subject to specific requirements and tests of the Income Tax Assessment Act1997 being met, the receipt of funds by way of a dividend from Warrior is expected to be tax free to DMG. In order for the dividend from Warrior to be tax free to the Company, it must be paid after 1 July 2012. For it to remain tax free to the Company, the Company must pay the funds to shareholders by way of an unfranked dividend.

1.13 Advantages and disadvantages of the disposal

Set out below are non-exhaustive lists of what the Directors consider to be the advantages and disadvantages of the Transaction.

Advantages

The Directors believe that the following non-exhaustive list of advantages may be relevant to a Shareholder’s decision on how to vote on the proposed Transaction:

(a) the realisation of significant value for the Company’s interest in the Project;
(b) the sale, when completed, would leave the Company in a very strong cash position;
(c) the proceeds of the sale would allow the Company to actively pursue other investment opportunities in the resources industry; and
(d) the capacity for the Company to distribute up to approximately $150,000,000 to Shareholders dependent on the tax implications to the Company as outlined in 1.12.

Disadvantages

The Directors believe that the following non-exhaustive list of disadvantages may be relevant to a Shareholder’s decision on how to vote on the proposed Transaction:

(a) the Company will not be able to participate in or derive any future potential profits from the Project;

(b) the Transaction may not be consistent with the investment objectives of all Shareholders; and
(c) the Company may not be able to identify or acquire suitable new projects which are consistent with its objectives.

1.14 Directors’ recommendation

For the reasons set out in this Explanatory Statement, the Directors consider that the proposed Transaction is in the best interests of the Company and of Shareholders, and recommend that Shareholders vote in favour of the Resolution.

A voting exclusion statement is included in the Notice.

2. ENQUIRIES

Shareholders are requested to contact Jay Stephenson, Company Secretary, on (+ 61 8) 9215 6300 if they have any queries in respect of the matters set out in these documents.

GLOSSARY

$ or AUD$ means Australian dollars.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Company means Dragon Mountain Gold Limited (ACN 111 005 282).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

General Meeting or Meeting means the meeting convened by the Notice.

LPR means Long Province Resources Limited (a company incorporated in Hong Kong).

Notice or Notice of Meeting or Notice of General Meeting means this notice of general meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share.

Optionholder means the holder of an Option.

Project means the Lixian Gold Project in China.

Proxy Form means the proxy form accompanying the Notice.

Resolution means the resolution set out in the Notice of Meeting.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

Transaction means the sale by Warrior of 100% of the shares in LPR.

Warrior means Warrior Advance Pty Ltd (ACN 140 578 712).

WST means Western Standard Time as observed in Perth, Western Australia.

Zijin means Zijin Mining Group Co Ltd, a joint stock limited company incorporated in the People’s Republic of China.

PROXY FORM

APPOINTMENT OF PROXY DRAGON MOUNTAIN GOLD LIMITED ACN 111 005 282

GENERAL MEETING

I/We of

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being a member of Dragon Mountain Gold Limited entitled to attend and vote at the General Meeting, hereby

Appoint

Name of proxy

OR the Chair of the General Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the General Meeting to be held at 1:00pm (WST) on 15 December 2011 at The Celtic Club, 48 Ord Street, West Perth, Western Australia and at any adjournment thereof.

If no directions are given, the Chair will vote in favour of the Resolution.

OR

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Voting on Business of the General Meeting
FOR AGAINST ABSTAIN
Resolution 1 – Disposal of Interest in Long Province Resources Limited
Please note: If you mark the abstain box for the Resolution, you are directing your proxy not to vote on the Resolution
on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll.
If two proxies are being appointed, the proportion of voting rights this proxy represents is
%
Signature of Member(s): Date:
____
Individual or Member 1 Member 2 Member 3
Sole Director/Company Director Director/Company Secretary
Secretary
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Contact Name: _____ Contact Ph (daytime): _________